The Data Bowl

By Brad

Speaking of mobile traffic, Scott Moritz of Bloomberg reports once wireless provider saw a big — and I mean big — jump in traffic during last Sunday’s Super Bowl:

From 8 p.m. to 9 p.m. New York time, a span covering the halftime show and the power disruption during the Feb. 3 game, customers used 78 gigabytes of data inside the New Orleans Superdome, AT&T said yesterday. That was almost double the peak volume of last year’s Super Bowl and the most ever for an in- stadium championship game.

All told, AT&T says mobile traffic was up 80% over last year’s game. That’s a lot of tweets, texts, and whatnot.

Working Together

By Brad

How important is spectrum to the wireless industry? So important that normally fierce competitors are working together. As Phil Godstein of Fierce Wireless reports:

AT&T Mobility, Verizon Wireless and T-Mobile USA inked an agreement with the Department of Defense to explore the possibility of sharing 95 MHz of spectrum that is currently used by the Pentagon and other federal agencies located in the 1755 - 1850 MHz band.

The announcement comes as the FCC and National Telecommunications and Information Administration encourage spectrum sharing between commercial and government users as one way to meet Americans’ seeming insatiable demand for mobile broadband.

So far, Sprint is sitting out the agreement, though Goldstein notes they will “follow the group’s work.”

In Support of the IP Transition

By Brad

Last Friday, IIA submitted comments to the FCC on AT&T’s recent petition regarding the transition from copper wire networks to networks that are all Internet Protocol (IP) based. From those comments:

While the era of the telecom monopoly is long over, monopoly-era regulations persist. In some ways this is predictable, since markets move faster than government, and entrepreneurs innovate more rapidly than policy makers.  By way of example, one of the most counter-productive, monopoly-era regulations still on-the-books is the requirement for legacy carriers to continue maintaining redundant legacy copper (nonIP) networks even when they are no longer needed for the carrier to serve its customers. While these rules made sense at the dawn of the Internet era when little, if any, competition existed, voice remained the essential product and telephone networks had been built via government-guaranteed-rate-of-return exclusivity, they have longbeen overtaken by events. For example, in many regions incumbent telephone companies have retained less than 30 percent of the customers, yet they are still required to cover 100 percent with their pre-IP, voice-grade networks. Voice is today just another application delivered over multiple IP platforms.

You can read our full comments, penned by our Honorary Chairman Rick Boucher and Co-Chairs Bruce Mehlman and Jamal Simmons, here.

The Transition to All IP

By Brad

Fred Donovan of Fierce Enterprise Communications sat down at CES with AT&T vice president of regulatory affairs Hank Hultquist to talk about the company’s plan to transition to an all-IP network. On what the transition will mean for voice communication:

Voice quality is a “perceived obstacle,” Hultquist told FierceEnterpriseCommunications. “I think that perception will change quickly because of the introduction of voice over IP on the mobile side… which will evolve pretty quickly to high-definition voice. High-definition voice has a much wider range of sound, and the voice quality is going to be substantially better than what people have had before.”

“When HD voice over LTE takes off, going forward voice over IP in the enterprise will get much better than the traditional switched voice experience. When that happens, the perceived obstacle will vanish,” he added.

Hultquist also discussed the challenges of maintaining the legacy network of the past:

“The telephone network we all grew up with is now an obsolete platform… that will not be sustainable for the indefinite future. No one is making this network technology any more. It will become increasingly difficult to find spare parts for it. And it is becoming more and more difficult to find trained technicians and engineers to work on it,” Hultquist explained.

“This is a very practical problem. How do we retire this legacy network technology and move into this all-IP world?” he added.

Looking to Partner

By Brad

At Light Reading, Jeff Baumgartner reports satellite provider Dish is still looking for help in order to build out a wireless LTE network:

Dish Network Corp. acknowledges it needs a partner to make its Long Term Evolution (LTE) dreams come true, but there are no hints as to who that might be. “We need a [wireless industry] partner, that much we know,” Dish CEO Joseph Clayton tells the Denver Business Journal. “Who it is remains to be seen.”

Potential partners for Dish, Baumgartner writes, are AT&T and T-Mobile.

Upgrading America’s Communication Infrastructure

By Brad

Big news from the FCC yesterday, as the Commission announced it is forming a “task force” to study how best to transition the country’s communication infrastructure from legacy wireline networks to next generation, IP-based ones. As Brendan Sasso of The Hill reports:

The group will review the FCC’s policies to ensure that they encourage technological transition, protect consumers, promote competition and ensure network reliability, according to the FCC.

“The Technology Transitions Policy Task Force will play a critical role in answering the fundamental policy question for communications in the 21st century: In a broadband world, how can we best ensure that our nation’s communications policies continue to drive a virtuous cycle of innovation and investment, promote competition, and protect consumers?” FCC Chairman Julius Genachowski said in a statement.

FCC Commissioner Ajit Pai, who has called for the formation of a task force since he joined the Commission, is happy with the move. Again from Sasso:

“The analog, circuit-switched copper-wire networks that dominated the 20th century communications marketplace are being replaced by competitive fiber networks that digitally distribute voice, video, and data services. Yet our rules continue to presume static domination by monopoly providers,” Pai said in a statement on Monday.

Also applauding the FCC’s action is AT&T, which in November announced its own plans to work with the FCC in order to smoothly transition its wireline network to all-IP. From the company’s Public Policy Blog:

“Today’s announcement by the FCC to appoint a Technology Task Force to modernize its rules for the transition of traditionally regulated services to applications that ride on an IP broadband infrastructure is welcome news.  As AT&T pointed out in our recent filing, that transition is well underway with more than 70% of consumers having already migrated away from POTS service.  Addressing these issues in a comprehensive process that crosses the smoke-stacked bureau structure that is a remnant of an almost eight decades old telecom law is critically important.

FCC Chairman Julius Genachowski’s full statement about the task force is available on the agency’s website, as is the statement from Commissioner Pai.

The Transition to all Internet

By Brad

Yesterday, AT&T (which is an IIA member) announced it would be investing heavily to speed up Internet Protocol (or IP) transition and expand mobile and wired broadband to many more Americans. Over at Forbes, Larry Downes applauded the announcement:

At a much-reported analyst conference yesterday, AT&T announced plans to accelerate upgrades to both its wired and mobile networks, pledging an additional $14 billion over the next three years, in addition to several billion already committed.

When completed in 2015, according to the company, the new infrastructure will offer AT&T customers faster and more reliable network facilities, which will operate natively in Internet Protocol (IP).  Text, voice, and data will begin life as packets, travel through the network as packets, and arrive on customer devices as packets.

The plan marks a dramatic step forward in a long move by AT&T and other carriers toward a 21st century network infrastructure, signaling the final stage of convergence for old proprietary voice, video, and data networks to the open standards of a single IP network.

Think of it as “Internet Everywhere.”

Downes also addressed concerns from critics of the announcement that AT&T would be leaving rural Americans behind as it retired its old copper network:

[R]ural customers will not be abandoned as part of the plan.  Rather, many more will now have access to high-speed wired networks that rely in large part on fiber, with short copper loops serving the last mile.

Instead of spinning off its rural customers, in fact, AT&T will spend billions bringing high-speed broadband to an additional 57 million customers through expansion of its U-verse technology.  For residents in areas where U-verse technologies will not be immediately deployed, the company has committed to providing an “economic path” to broadband through wireless services based on high-speed 4G LTE networks.

Over at his blog, Bret Swanson of Entropy Economics (and an IIA Broadband Ambassador) laid out AT&T’s announcement succinctly:

This is the end of phone network, the transition to all Internet, all the time, everywhere.

A Boon to the American Economy

By IIA

$14 Billion Investment in U.S. Broadband Infrastructure via Project Velocity IP (VIP) Is Boon to American Economy, Say IIA

Transition to next-generation networks will create jobs, benefit consumers and businesses nationwide

WASHINGTON, D.C. – November 7, 2012 – The Internet Innovation Alliance (IIA), a broad-based coalition supporting broadband access and adoption for all Americans, released the following statement in response to IIA member AT&T announcing plans to invest $14 billion to accelerate the Internet Protocol (IP) transition and bring high-speed, next generation wireless and wireline broadband to millions more consumers and businesses nationwide via Project Velocity IP (VIP):

“With the election now behind us, it is time for America to get back to work.  The broadband economy has powered America’s recovery for the past four years and offers the brightest opportunities for future jobs, innovation and growth.  In the right policy environment, we can expect to see remarkable efforts by entrepreneurs and employers to expand the reach and power of next-generation networks.

“Today’s exciting announcement by AT&T is one striking example of what our innovators are capable of doing.  There are others across the nation, from garage start-ups to Fortune 50 companies.

“The Internet Innovation Alliance is eager to work with policy makers around the country, highlighting what works and how the right investment environment can re-ignite our national energies and spur continued innovation across the nation.”

FCC Approves Action on WCS

By Brad

Today, the FCC approved a proposal put forward by AT&T and satellite radio provider Sirius XM aimed at freeing up spectrum from the “WCS band” for mobile broadband. Over at the AT&T Public Policy Blog, Vice President of Federal Regulatory Joan Marsh writes about what that will mean for the company’s customers:

We expect to commence deployment of LTE infrastructure in the band in as early as three years, allowing us to enhance our wireless broadband services. Our customers will also win, as additional spectrum capacity becomes available to support surging mobile Internet usage.

Chalk this one up to the government and private sector working together to benefit consumers.

Perils of the Spectrum Crunch

By Brad

In yesterday’s Wall Street Journal, AT&T Chairman and CEO Randall Stephenson laid out the problems his and other wireless companies face when it comes to the coming spectrum crunch:

The demand for mobile data is now roughly doubling every year. Smartphones use 30 times more data than the cellphones they replaced. Meanwhile, the supply of spectrum supporting mobile devices has remained the same since 2008.

That means we’re in a race against time. The demand for spectrum will exceed supply by 2013, according to Federal Communications Commission (FCC) estimates. If that happens, the speed of the mobile revolution will slow down. Prices, download times and consumer frustration will all increase. And at a societal level we risk jeopardizing the future of our nation’s vital mobile Internet infrastructure, which is generating jobs and investment on a scale well beyond the first Internet boom of the 1990s.

Stephenson went on to call for smart government policies when it comes to spectrum allocation, including requiring those who hold spectrum to actually use it, and creating a national model for deploying wireless infrastructure. He also warned readers what will happen if demand for airwaves continues to outpace supply:

Billions of dollars of investment in spectrum deployment will lead to tens of thousands of jobs. It will also multiply the many innovations and high-tech jobs we see today in the development of mobile Internet applications. But when the industry is unable to obtain and deploy spectrum efficiently, we miss the opportunity to create good jobs—and consumers pay the price.

(AT&T is an IIA member.)

More Cuts For T-Mobile

By Brad

Last March, T-Mobile announced it had cut its workforce by 5% in the wake of the blocked merger with AT&T. Now, Brier Dudley of the Seattle Times reports, the company is gearing up for a new round of cutbacks:

T-Mobile USA Chief Executive Philipp Humm warned employees a few months ago that more layoffs would happen by the end of May. It’s happening right on schedule.

Today, the company is informing employees of “a series of organizational changes,” a spokeswoman said.

A net loss of about 900 jobs will result. But even more jobs are likely affected by the changes, which include layoffs and shifts to outsource more work.

Boucher in The Hill

By Brad

“I think it was the wrong decision.”

That’s our own Rick Boucher, as quoted by Andrew Feinberg from The Hill, regarding the FCC’s decision last year to block the proposed merger of AT&T and T-Mobile (a merger, it should be noted, that was partly driven by the need for more spectrum for wireless use).

Cutting Back

By Brad

Via GigaOm’s Kevin Fitchar, comes word that T-Mobile is doing some major restructuring:

T-Mobile USA is consolidating its customer service call centers, shutting down seven facilities in six states by the end of June but hiring new staff in its remaining 17 call hubs. The reorganization will result in as many as 3,300 losing their jobs, but T-Mobile said it would begin hiring up to 1,400 new staff at the remaining call centers.

When all is said and done, T-Mobile will be 1,900 employees smaller and will lose about 5 percent of its U.S. workforce.

In a case of unfortunate irony, one of the major concessions of AT&T’s bid to merge with T-Mobile last year was the company’s pledge to bring thousands of call center jobs back from overseas.

Roaming & Investment

By Brad

In a post at AT&T’s Public Policy Blog, Bob Quinn, the company’s Senior Vice President-Federal Regulatory and Chief Privacy Officer, argues that the recent announcement from wireless carrier Sprint that it was going to rely on roaming to provide customers coverage in Kansas and Oklahoma reveals major flaws in two orders from the FCC:

First, in 2010, the FCC reversed itself by eliminating the Home Market Rule. That rule, which was pretty logical and straightforward, said that, if a carrier owned spectrum, it was good public policy to require them to build out that spectrum and therefore they should not be able to demand roaming from other carriers in those “home markets.” Thus, if Sprint owned spectrum in Kansas and Oklahoma, it wouldn’t have a regulatory “right” to roam. Then, last April, the Commission extended roaming rules that had previously been limited to voice services (and that now contain no Home Market exception) to broadband infrastructure.

In arguing to impose those requirements on its competitors, both Sprint and the FCC said that broadband roaming obligations would actually promote “the deployment of broadband facilities and thus expand coverage.”  Good in theory, I suppose, but not in practice, as I stated at the time. As a result of those two FCC Orders, Sprint can now use other folks’ networks rather than pony up its own investment dollars. Nice work if you can get it.

Quinn goes on to explain why his company is hopeful the D.C. Court of Appears will step in to scale back the FCC’s orders:

We remain hopeful that the Court will reject the FCC’s market intervention here and realize that this regulation actually disincents investment by everyone in the marketplace at a time when promoting investment and job growth should be priority #1 for every policymaker in this country.  And it serves as another lesson in why unbridled discretion to shape markets in the name of competition is not always good public policy.

Congress and Spectrum Auctions

By Brad

In a post on AT&T’s Public Policy Blog, the company’s Senior Executive Vice President of External and Legislative Affairs, Jim Ciconni, argues that Congress and not the FCC should have power over spectrum auctions:

The entire principle behind spectrum auctions is to allow free and competitive markets to work, thus ensuring that valuable spectrum goes to the most economically viable uses. This also provides maximum return to the U.S. Treasury.  For the FCC to assert, in the name of ‘fostering competition’, that it should have final say on which companies can bid on spectrum is for them to engage in picking winners and losers. That is not the job of the FCC. When consumers are able to make decisions in a free and competitive market—and wireless is clearly that—the FCC should not be allowed to impose its own will if it doesn’t like the choices those consumers make. 
The FCC should be a neutral arbiter, ensuring fairness and impartially enforcing a system of rules and laws. It should not be empowered by Congress to advantage some companies and disadvantage others, or to impose its preferences on a free market. We commend the Congress for advancing spectrum legislation in a way that helps the economy, maximizes revenue for the Treasury, and ensures that consumers—not regulators—decide who wins and loses in the competitive wireless market. It would be a disservice to the Nation if the FCC is so adamant about preserving and enhancing its own power that it would risk killing this crucial legislation.

The need for more spectrum was a major driving force behind AT&T’s proposed merger with T-Mobile.

2011: A Broadband Year in Review

By IIA

2011 proved to be a mixed year for broadband deployment and adoption in the United States.

On the positive side, the explosive growth in new applications, services, devices and consumer offerings led to considerable innovation and relentless competition. The marketplace remains vibrant with great potential for continued growth. A Federal Communications Commission (FCC) analysis found that 90 percent of all Americans presently enjoy a choice of at least five competing wireless broadband providers, with mobile broadband services leading the information technology revolution. From gaming to health care to government efficiency, broadband applications were increasingly powerful, prevalent and delivered over the cloud.

Also on the positive side, the FCC offered a promising Universal Service Fund (USF) Reform package intended to modernize this essential program from a 20th century “plain old telephone service over land lines” model to a 21st century “broadband by any means” approach. 

“This long overdue transformation of Universal Service to a competitive and efficient broadband program promises to provide essential help to rural communities and entrepreneurs across the nation.  The FCC reforms will eventually help narrow America’s digital divide, but more solutions will be needed to fully accomplish this goal.”

— IIA Honorary Chairman Rick Boucher

On the negative side, the biggest and best opportunity to expand 4G LTE broadband availability to more than 97 percent of all Americans — AT&T’s proposed merger with T Mobile — fell victim to Washington concerns that bigger might prove worse, despite considerable evidence that the merger would bring significant benefits to consumers, create jobs and spur innovation and investment in the wireless industry. 

“There are some in Washington who believe innovation comes from government programs, investment comes from government subsidies, and competition comes from government regulation. But this past decade has taught us that the mobile broadband ecosystem is incredibly competitive, dynamic and only in need of more efficient ways to aggregate spectrum to keep pace. Government is more often the problem than solution here. Federal regulators would do better to focus their attention on updating the outdated laws currently governing our telecom infrastructure.”

— IIA Co-Chair Bruce Mehlman

While policymakers finally seem prepared to advance meaningful spectrum reform, the long-awaited legislation fell victim to broader partisan disagreements over taxes and government spending. Legislation enabling incentive auctions seems poised for early passage in 2012, although the value and impact of such policies could be significantly constrained if FCC rules governing spectrum ownership prove overly cumbersome. 

“The spectrum crunch remains all too real and may be the single biggest barrier to achieving universal broadband in our nation.  While mobile broadband appears poised to close the digital divide for minorities and rural consumers, it can only do so if the bandwidth is available to wireless carriers to build out the needed infrastructure.”

— Co-Chair Jamal Simmons

IIA enters 2012 with the hope that the New Year will present viable opportunities to increase broadband investment, deployment and adoption; the belief that lawmakers in Washington can enable and encourage broadband growth; and the admonition (and founding IIA tenet) that policymakers must first do no harm.

Merger Update

By Brad

Last week, the Department of Justice — in response to AT&T withdrawing its proposed merger with T-Mobile from the FCC — announced it would seek to postpone or withdraw its case against the merger. In response, AT&T issued the following response today (via MarketWatch):

“AT&T and Deutsche Telekom advised Judge Huvelle this morning that they wish to stay any further Court proceedings until January 18, 2012, to allow the two companies time to evaluate all options. The U.S. Department of Justice joined in the filing.

“AT&T is committed to working with Deutsche Telekom to find a solution that is in the best interests of our respective customers, shareholders and employees. We are actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals so that we can deliver the capacity enhancements and improved customer service that can only be derived from combining our two companies’ wireless assets.”

Questioning the “Spectrum Screen”

By Brad

In its Staff Memo against the AT&T/T-Mobile merger, the FCC repeatedly referenced its so-called “spectrum screen,” which the Commission uses to calculate local market concentration for wireless. But as John Eggerton of Broadcasting & Cable reports, changes to the screen have raised the eyebrows of two key members of the House:

In a letter to FCC Chairman Julius Genachowski, House Energy & Commerce Committee Chairman Fred Upton (R-Mich.) and Communications Subcommittee Chairman Greg Walden (R-Ore.), asked for info on how the FCC uses the screen in mergers.
The FCC formerly used a set cap to determine whether a merger would concentrate too much spectrum in one geographic area, the legislators pointed out in their letter. That cap was changed in 2003 to a spectrum screen that triggered a more “granular” review. But because that was not adopted in a formal rule, they argue it is uncertain how and why the FCC uses it.
Since the commission apparently changed that screen to reduce the amount of spectrum holding that raises red flags, also without adopting formal rules, and appeared to be treating it less like screen and more like a de facto lack of competition, they had lots of questions they needed answered.

The FCC’s Flawed Footnote

By Brad

When the FCC took the unprecedented step of releasing its draft Staff Memo recommending a rejection of the AT&T/T-Mobile merger plenty of eyebrows were raised. Now, over at The Hill‘s Congress Blog, Internet industry analyst Larry Downes points out the report itself contains a number of startling flaws:

Analysts, legal scholars, and economists have already uncovered plenty of reasons to question the quality of the staff’s analysis of the deal, which was never voted on by the Commissioners. That is, other than Chairman Julius Genachowski, who released it even after the parties withdrew their application to concentrate on an upcoming antitrust trial.

Now another disturbing irregularity has turned up, this time hiding in a footnote. It seems the report’s strongly-worded recommendation to reject the deal is based in large part on fudging one of two preliminary calculations the agency uses to start its merger reviews:  the spectrum screen.

Downes’ full piece is worth checking out.

The Lay of the Wireless Land

By Brad

In a piece for the Wall Street Journal, Holman Jenkins looks at the recent spectrum deal between Verizon and Comcast and what it reveals about the current state of competition in the wireless industry:

How many wireless competitors are too many?
The Federal Communications Commissions thinks we have too few, though most Americans have a choice of five, and that’s one or two more than most advanced countries find they need.
In reality, the problem isn’t too little competition, but not enough revenue to pay for the rapidly growing amounts of bandwidth customers are using. Raising prices and throttling users isn’t working, so the only solution is to cram more and more paying customers onto the network. Even AT&T and Verizon are desperate for more customers, never mind congestion, because that’s the only way they can generate revenues to cover the needed investment.

Later in the article, Jenkins tackles the FCC’s efforts to stop the AT&T and T-Mobile merger:

The FCC opposes a proposed tie-up of AT&T and T-Mobile precisely because agency seers and planners prefer an alternative scenario in which T-Mobile and cable join to build their own 4G network. That’s not gonna happen, for all the reasons Shaw suggests.

Comcast and friends didn’t sell their 4G spectrum to Verizon because they think running a 4G network is a license to print oligopoly profits, as the FCC apparently does. In blocking the T-Mobile acquisition, Washington cites a looming Verizon-AT&T duopoly. The truth is, with its own deal, Verizon leaps so far ahead that it’s becoming Verizon versus a distantly trailing pack.