Hitting the Mobile Broadband Trifecta

By Jamal Simmons

As my colleague Rick Boucher has already stated, the spectrum-related initiatives President Obama announced this morning are a “great step” toward getting mobile broadband providers the airwaves they need in order to meet the demands of their customers. That’s the first nugget of good news.

The second nugget of good news, which was also included in this morning’s announcement, is the White House’s report on the state of broadband, which highlights just how far our country has come in providing high-speed Internet access to citizens. Some bullet points from the report:

• In the year 2000, 4.4% of American households had a home connection to broadband; by 2010 that number had jumped to 68%.

• Broadband networks at a baseline speed of >10 megabits per second now reach more than 94% of U.S. homes.

• Overall, average delivered broadband speeds have doubled since 2009. In 2012, North America’s average mobile data connection speed was 2.6 Mbps, the fastest in the world, nearly twice that available in Western Europe, and over five times the global average.

• Annual investment in U.S. wireless networks grew more than 40% between 2009 and 2012, from $21 billion to $30 billion, and exceeds investment by the major oil and gas or auto companies; investment in European wireless networks remained flat during this time period, while wireless investment in Asia (including China) rose only 4%.

• There are over 500 million Internet-connect devices now in American homes and businesses.

Those are some impressive numbers, especially on the investment front, and they underscore just how vibrant and competitive the U.S. wireless market really is.

The numbers also tell us that in order to keep the party lights on, the Federal Communications Commission must pursue policies that encourage investment and innovation. Currently the FCC has two issues burning up its docket. The first is the upcoming spectrum incentive auctions, which need to be transparent and open in order to get the most out of those airwaves. Competition is important – which is already occurring in the telecom market – and so is raising as much money as possible for the U.S. Treasury. Also, we need to ensure companies that can quickly put new spectrum to work powering mobile broadband are in the mix.

The other issue facing the FCC is the upgrade of America’s wired networks so they are better suited for the Internet age. While the baseline speed of >10 megabits per second cited in the White House’s report is good, we can do better. The upgrade to all-Internet based networks will mean substantially faster broadband in more places, but getting there will require substantial investment. It will also mean a close examination — and potential overhaul — of regulations currently governing our nation’s networks.

Neither of these issues is insurmountable, but it will take continued partnership between the government and private industry to keep America at the forefront of both wired and mobile broadband. The numbers in the White House report are encouraging. The President’s push to free up more government spectrum is inspiring. Smart policies when it comes to spectrum auctions and network upgrades will help us hit the trifecta.

Presidential Action on Spectrum

By Rick Boucher

This morning, the White House announced a new series of initiatives aimed at freeing up much-needed spectrum for mobile broadband. From the official White House release:

Today’s initiatives include a Presidential Memorandum directing Federal agencies to enhance the efficiency of their use of spectrum and make more capacity available to satisfy the skyrocketing demand of consumer and business broadband users. The Memorandum directs agencies to increase their collaboration and data-sharing with the private sector, so a full range of stakeholders can contribute its collective expertise to maximizing spectrum efficiency, including through greater sharing of spectrum between Government and commercial users. These efforts will provide access to more spectrum for wireless broadband providers and equipment vendors as they respond to increasingly rapid consumer adoption of smartphones, tablets, and other wireless devices.

The Memorandum also calls upon Federal agencies to increase public-private research and development (R&D) activities, emphasize spectrum efficiency in Government system procurements and spectrum assignments, and improve the accuracy and scope of their reporting on spectrum usage. It empowers a White House-based Spectrum Policy Team to oversee implementation of the Memorandum and make further recommendations. At the same time, the Memorandum requires appropriate safeguards to protect Government systems that rely on spectrum to keep Americans safe.

For spectrum-strapped providers — and the millions of customers they serve — today’s announcement is a great step toward keeping up with demand. But it’s just that, a step. What is urgently needed is a concerted effort to have large swaths of government owned and underutilized spectrum repurposed for commercial auction. Hopefully these new initiatives set us on a path to get there.

We’ll have more on the President’s announcement later on today.

Devices & Data

By Brad

Over at TechCrunch, Ingrid Lunden offers a look at some surprising numbers when it comes to mobile broadband use:

Android has convincingly overtaken Apple as the most popular OS in the smartphone industry both in terms of sales and overall penetration. But when it comes to how much wireless devices are actually used on cellular networks, those who own Apple handsets are disproportionately the biggest users of apps and the mobile web.

All told, users of the iPhone 4, iPhone 4S, and iPhone 5 account for more than half of all 3G traffic. That’s a lot of iPhone owners online.

The Necessity of Open Auctions

By Brad

Speaking of spectrum and the FCC, in an op-ed for the Wall Street Journal, Robert Hahn and Peter Passell — the former a professor at the University of Oxford, the latter editor of the Milken Institute Review — argue the Commission’s spectrum auctions must be open to all bidders willing to invest and deploy airwaves quickly:

There is still an important role for the FCC in regulating wireless, but it is limited. The first priority should be making more spectrum available to the highest bidders by accelerating the pace of government auctions. Once spectrum is sold, owners should be free to resell it to other wireless carriers (or to other industries that value it more). For without more bandwidth (and free-market allocation of privately controlled spectrum), access to data-hungry services like HD video will be undermined, along with the incentives to develop the next generation of wireless devices.

There’s no denying the temptation to intervene on behalf of the underdogs in the marketplace. But the lessons from the long, checkered history of economic regulation are painfully clear: The cures are often worse than the disease.

For similar thoughts, see this blog post from our Honorary Chairman Rick Boucher.

The “Jessica Principles”

By Brad

In an opinion piece for Politico, former FCC advisor David Goodfriend weighs in on recent remarks from FCC Commissioner Jessica Rosenworcel regarding the Commission’s upcoming spectrum incentive auctions:

Rosenworcel articulated how reforms to the FCC’s wireless licensing policy — which allows us to use devices like cellphones and tablet computers — can help millions of consumers and drive job growth in one of the most dynamic sectors of our economy. But her approach should not be limited to telecommunications policy.

Goodfriend goes on to highlight what he’s calling the “Jessica Principles” for crafting spectrum auctions. Among them is putting consumers first, making the process open and transparent, adhering to simplicity:

Well-intentioned, bright people in government often come up with ridiculously complex answers to difficult questions. Every good manager will tell you, though, that simplicity is its own virtue. We should pursue it wherever possible. Rosenworcel addressed one of the most complex tasks facing the FCC today: how to design a license auction where broadcasters have an incentive to sell their licenses back to the public and wireless providers have an incentive to buy those licenses and turn them into useful wireless broadband services for the public. Complex recommendations abound. Rosenworcel’s call for simplicity should be heeded.

Mobile World

By Brad

Via Mike Snider of USA Today, a new report from PricewaterhouseCoopers finds that when it comes to being online, consumers are increasingly turning to mobile connections:

This year, consumer spending on Internet-connected smartphones, tablets and other devices will surpass home broadband service fees for the first time, according to PricewaterhouseCoopers’ “Entertainment & Media Outlook 2013-2017” report. In four years, nearly 286.7 million in the U.S., or 87% of the population, will have mobile Internet devices, while about 85% of homes will have broadband.

Mobile Internet access spending will top $54 billion in the U.S. this year, compared with $49.6 billion in home Internet spending, the consulting firm estimates in the report, out today. In 2012, home Internet spending ($46.5 billion) slightly outpaced mobile ($44.5 billion).

“We see mobile growing at a much more pronounced rate than broadband, because we are getting toward the saturation point (on home broadband),” says PwC partner Sean De Winter. “Mobile Internet penetration is screaming through the roof.”

All the more reason for the FCC to ensure their upcoming spectrum auctions are designed to be as successful as possible — for providers, the federal government, and consumers.

Senator Thune on Wireless

By Brad

Yesterday, Sen. John Thune, Ranking Member of the U.S. Senate Committee on Commerce, Science, and Transportation delivered prepared remarks for the Committee’s hearing on the State of Wireless Communications. TMCnet has posted the entirety of Thune’s remarks, but here’s a couple highlights.

On the pressing need for more spectrum, Thune said:

“Without enough spectrum, the private sector will not be able to keep pace with consumer demand, which is growing exponentially. We must make it a priority to increase the availability of spectrum for commercial use, both licensed and unlicensed, as quickly as possible.”

As for how the FCC’s upcoming spectrum incentive auctions should be crafted:

“Getting more spectrum into the marketplace, to the parties that value it most, is ultimately the best way for Federal policymakers to encourage new services and spur competition. Unfortunately, some voices, including the Department of Justice, are calling for the Federal Communications Commission to micromanage the allocation of spectrum among wireless carriers. I stand with Chairman Upton, Chairman Walden, and my other colleagues in the House who challenged this perspective in a letter to the FCC in April. I believe the Commission should not pick winners or losers among individual companies, but instead let all interested participants freely compete against one another in the open market.”

Sen. Thune’s full remarks are definitely worth checking out.

Glued to the Screen

By Brad

These days, when you’re out and about chances are you see scores of people hunched over their smartphones. As Ina Fried of All Things Digital highlights, there’s a reason for that:

There’s no question that we spend a lot of time staring at our phones, but just how much?

Well, on average, it’s about an hour, according to a new study from Experian.

So what are we doing with our phones? According to the Experian, Fried reports, we’re doing a lot of talking and texting, with social networking and surfing the web close behind. Also of interest: iPhone users spend more time with their device than people with Android phones.

Getting Spectrum Auctions Right

By Rick Boucher

Last week Apple announced the 50 billionth app download, despite the App Store being open less than five years. This benchmark is compelling evidence of a vibrant wireless market. However, as more and more Americans embrace mobile technology, wireless providers are running out of spectrum, the wireless airwaves that underpin the mobile industry.

This shortage could affect wireless service. Without additional spectrum, wireless broadband service will deteriorate.  Mobile videos could freeze; downloads might take longer; phone calls could drop. None of the nearly half of Americans who own a smartphone want this to happen.

To avoid this looming problem, more spectrum must be made available for consumer wireless use. A wireless auction, designed to reallocate broadcasters spectrum to wireless carriers, is scheduled for 2014.

Not only could this auction provide much-needed additional spectrum for consumer use, but it could raise as much as $26 billion for the federal treasury. A recent study by the Center for Business and Public Policy at Georgetown University sees it as high as $31 billion. Some of this money will go toward building out a nationwide interoperable public safety network. Other monies will go to reimbursing broadcasters for their spectrum.

However, the FCC is considering adopting auction rules that would favor certain wireless service providers over others. Rather than pushing for an open and competitive auction in which all qualified bidders can bid, the Department of Justice and others seek restrictions on who can fully participate in the auction. The aforementioned study found that limiting who can participate in the auction risks the auction’s success. It went on to say that restricting some bidders could mean $12 billion in lost revenue to the federal government.

Moreover, in addition to the monetary cost, tampering with the auction could delay President Obama’s goal of delivering broadband to 98% of Americans by curtailing the expansion of mobile broadband access. The Georgetown study estimates that predicted higher prices could cause fewer Americans to adopt 4G by 2017.

In short, consumers will pay a cost unless the 2014 spectrum auction is done right. However, if the same rules are applied to all, the auction will succeed and all Americans will benefit from the availability of better mobile broadband connections.

Smart Instead of Dumb

By Brad

Speaking of technology going the way of the Dodo, Zach Epstein of Boy Genius Reports looks at a major shift among consumers:

Smartphones out-shipped feature phones for the first time in Q1 this year and according to market research firm DisplaySearch, smartphones will continue to dominate basic cell phones for the rest of 2013. The firm sees smartphone shipments hitting 937 million units this year, handily topping the 889 million feature phones expected to ship.

Driving this growth is a market for cheaper smartphones, along with the ubiquity of mobile broadband.

Innovation of the Day

By Brad

Wired‘s Duncan Geere reports on a new effort from Google to bring broadband to nations currently without:

Search giant Google is intending to build huge wireless networks across Africa and Asia, using high-altitude balloons and blimps.

The company is intending to finance, build and help operate networks from sub-Saharan Africa to Southeast Asia, with the aim of connecting around a billion people to the web.

Broadband delivered via blimps? How cool is that?

The Post-PC Age

By Brad

Via Brian Proffitt of Read Write Web, the days of the desktop PC may be numbered:

The contraction of the PC market continues faster than ever, eaten by the rapid growth of the tablet market, which is expected to outsell laptop and notebook devices for the first time this year and all PCs by 2015. But portable PCs may still be the saving grace for PC sales in the years ahead.

If there is anything new about the news coming out from IDC’s Quarterly PC Tracker, it’s the increase of the rate of the PC’s decline. IDC had initially predicted a decline of “1.3% in 2013 followed by a gradual increase in volume.” Now the analyst firm is predicting a sharper decline of 7.8% in 2013 and 1.2% down in 2014.

Soon we will be all mobile, all the time.

The Mobile Shopping Experience

By Brad

Sue Marek from Fierce Wireless reports that the world’s biggest retailer is putting a lot of focus on mobility:

Walmart is looking to mobile technology to redefine the shopping experience for its retail customers. Speaking at the CTIA Wireless 2013 conference today, Gibu Thomas, global head of mobile at Walmart, said that the company’s goal is to create mobile tools that are “indispensable for the customer when shopping in our stores.”

Specifically, Thomas said that the company will leverage big data to do such tasks as develop automatic shopping lists and other advanced capabilities that will improve the shopping experience.  “Our goal is to create shopping tools that are second nature,” Thomas said. “The true power of mobile is re-inventing capabilities with mass appeal.”

Chairwoman Clyburn Takes the Floor

By Brad

Via John Eggerton of Broadcasting & Cable, acting FCC Chairwoman Mignon Clyburn reiterated the Commission’s focus on mobile broadband while maintaining a “light” regulatory touch:

In her first speech as acting FCC chairwoman, Mignon Clyburn told a CTIA convention audience in Las Vegas Tuesday (May 21), that “maximizing the benefits of mobile communications will continue to be a top priority for the FCC” and that “mobile innovation is key to U.S. competitiveness.”

She said the FCC is on track to issue incentive auction rules by the end of the year.

Milestone of the Day

By Brad

Apple’s App Store, which launched in 2008, has already hit a massive number—and one lucky man received a big gift. Via Joanna Stern of ABC News:

Brandon Ashmore from Mentor, Ohio, hit the app jackpot Tuesday afternoon when he pressed the download button on a word game app called Say the Same Thing and sent Apple over the 50 billion app download mark, winning the $10,000 prize.

50 billion apps and counting. In an ecosystem that didn’t exist just five years ago. Wow.

Broadband & Education

By IIA

Broadband is revolutionizing education across America. To coincide with today’s Technologies in Education Forum, hosted by The Atlantic, we put together the below infographic breaking down all the ways kids are using technology to excel in school.

An embed code so you can post the infographic on your own site is available here. And for more on broadband and education, check out our webinar with iNACOL’s Director of Policy, David Teeter, and Kwame Simmons, principal of Kramer Middle School in Washington, D.C.

You can also read Simmons’ op-ed for the Washington Post.

5G on the Way

By Brad

4G LTE is just starting to be widely adopted here in the States, but as Jon Russell of The Next Web reports, Samsung is already working toward the next big leap in mobile broadband:

The Korean tech giant says its 5G wireless technology will be capable of providing users with data speeds of “up to several tens of Gbps per base station”. That, it says, is “several hundred times faster” than even yet-to-be-released 4G LTE technology.

In practical terms, Samsung’s estimated speeds would allow a movie to be downloaded in under one second, and it could enable a host of new services that feed off the ability to transfer large files quickly.

Mobile broadband is just getting started.

Mobile World

By Brad

At Read Write Web, Brian S. Hall writes about how “mobile is taking over the world,” as he puts it:

Figures published earlier this year from the UN’s International Telecommunication Union (ITU), for example, reveal the amazing spread of mobile connectivity. According to the ITU’s “facts and figures” publication, mobile penetration rates are now about equal to the global population - including an 89% penetration rate in “developing countries,” which currently have the highest mobile growth rates.

In other words, nearly everyone on the planet has a mobile phone — or will have one soon enough.

Agenda Items for the Next FCC Chairman

By Jamal Simmons

It’s official: current Federal Communications Commission (FCC) Chairman Julius Genachowski will be handing over the gavel on May 17th. While Commissioner Mignon Clyburn will lead the agency until Obama nominee Tom Wheeler gets confirmed and sworn in, it’s worth taking a look at the top two pressing issues Wheeler will face once he takes the helm of the Commission.

Agenda Item: IP Transition

The trend is undeniable. Americans are leaving their traditional phone service, dropping their standard connection in favor of wireless and IP-based phone connections. You’re probably one of them. If you have your home phone service bundled with cable, you might not even realize you no longer rely on the plain old telephone service (POTS) network.

With scores of people changing the way they communicate (some estimates peg the number at 500,000 people each month), network providers want to gradually sunset their old networks so they can concentrate billions in investment dollars to new, Internet-based services. In other words, they want to put their money where consumers want to go … and are going.

This transition to all-IP (Internet Protocol) networks won’t be as easy as flipping a switch. Ensuring everyone still has a reliable connection, especially seniors and those living in rural areas, is critical. That’s why AT&T submitted a proposal to the FCC for “beta trials” in select markets to identify potential pitfalls, an idea FCC Commission Ajit Pai strongly endorsed in a speech sponsored by the Hudson Institute back in March. As Pai said in his speech:

Right now, the most critical choice we face is whether to move forward with an All-IP Pilot Program. This program would allow forward-looking companies to choose a discrete set of wire centers where they could turn off their old TDM electronics and migrate consumers to an all-IP platform. Now, you may have noticed that when it comes to the IP transition, everyone has a prediction about what will or will not happen if carriers are allowed to provide services exclusively through an all-IP platform. But as we found out during yesterday’s “snowstorm”—what we Kansans call “weather”—predictions are no substitute for hard facts. Albert Einstein had it right: A “pretty experiment is in itself often more valuable than twenty formulae extracted from our minds.”

Fortunately, we don’t need to rely on formulae any longer. The FCC has sought and received comments on a proposal to create an All-IP Pilot Program. I’ve reviewed the record carefully. And having done so, I am proposing today that the FCC move forward with this program.

Going forward with beta trials is just part of the greater IP transition discussion Wheeler will no doubt be having as head of the FCC. Also on the burner will be regulations — specifically, what will be the regulatory framework in an all-IP world? The 1996 Telecommunications Act is by all accounts painfully outdated. Modernizing rules to keep pace with today’s technology in ways that encourage continued investment in network infrastructure and protect consumers will be critical for the IP transition to succeed. And Wheeler, from the driver’s seat of the FCC, will need to lead the discussion.

Agenda Item: Spectrum

Outgoing Chairman Julius Genachowski deserves a ton of credit for recognizing the coming “spectrum crunch” (as he’s coined it), but the FCC’s proposed solution to the problem — incentive spectrum auctions — is barely past the 50-yard line. The auctions are still being shaped, the details still being argued over. Some are pushing for limited involvement in the auctions by certain wireless providers. Others question whether enough broadcasters will participate to make a difference.

Meanwhile, thousands of Americans are adopting mobile broadband every day. They are firing up smartphones and tablets for the first time and pushing data into the ether. And all that data is joining the bits and bytes being pushed out from tens of millions of other people who are already relying on a wireless connection to the Internet for their daily activities.

To keep up with this flood of data traveling on their networks, wireless providers have been trying to make deals for spectrum left and right. But it’s still not enough, which means a lot will be riding on the FCC’s spectrum auctions. Will Wheeler and the other Commissioners successfully put together proceedings that are open to all qualified bidders? Auctions that maximize much-needed revenue for the Federal government? As my colleague Rick Boucher succinctly put it:

Only through truly competitive, open spectrum auctions will America’s wireless industry continue to thrive. After all, the best way to ensure competition is to encourage everyone to compete.

These are the two most critical issues Wheeler will face once he’s in charge of the FCC (and underlying both of those issues is the most important part of his job — increasing access for all Americans to participate in the technological revolution we are experiencing. High-speed access to the Internet only increases in importance as job searches, entrepreneurial opportunities, education and health care are all enhanced by being online). While some have criticized his selection given his past life running both the NCTA and the CTIA, such experience offers encouragement that he has the ability to successfully get the job done. As President Obama remarked during the announcement of his selection:

”If anybody is wondering about Tom’s qualifications… [He] is the only member of both the cable television and the wireless industry hall of fame.”

Here’s hoping Wheeler will one day be inducted into the FCC hall of fame as well.

Helping, Not Hurting Consumers

By Brad

In an op-ed for the Huffington Post, American Consumer Institute for Citizen Research President Steve Pociask worries the FCC may end up hurting consumers with its upcoming spectrum incentive auctions:

A basic principle of any well-designed auction process is that it is open and competitive. However, there are some unsettling news reports that this basic principle may be in jeopardy. For one, there has been some recent coaxing by the Department of Justice that the FCC may want to consider favoring its auction to benefit some small wireless providers over larger ones. Along the same lines, there have been suggestions that the FCC may consider rules to prevent the largest two wireless providers, AT&T and Verizon, from participating in the upcoming auctions. If recent headlines and comments from the FCC Chairman are any indication, Sprint and T-Mobile are “getting stronger” and the reality remains: “Every mobile operator out there, including the largest ones, needs more spectrum.”

Here is the problem—protecting competitors does not help competition, and that hurts consumers. Any action by the FCC that would intentionally benefit some competitors at the expense of others runs counter to the intent of Congress to constrain the FCC’s ability to limit participation in the upcoming spectrum auctions. When it comes to picking favorites in the market, that choice should stay with consumers, not regulators.

Back in February, our own Honorary Chairman Rick Boucher had similar thoughts on the FCC’s auctions:

History has shown that when the FCC has tried to pick winners and losers in the wireless market, American consumers have lost. Past attempts by the Commission to favor certain bidders and/or impose rigid regulations on auction winners have drastically diminished auction proceeds, left major blocks of spectrum unused, and led to what FCC Chairman Julius Genachowski himself has labeled “America’s looming spectrum crisis.”