Wednesday, October 09
Speaking of the government shutdown, just before doors were locked and websites turned off, we released a new report on competition in the telecommunications industry. To access the report itself, hit the feature spot above. Below is the summary post from last week. — IIA
Earlier today, IIA released a new report authored by Dr. Anna-Maria Kovacs titled “Telecommunications Competition: The Infrastructure-Investment Race.” In the report, Dr. Kovacs finds that outdated regulations that force companies to build and maintain obsolete copper-based legacy telephone networks are unnecessarily diverting investment away from modern broadband networks and services that 95% of U.S. households prefer, desire and use.
The report also finds that the overwhelming majority of U.S. consumers have a plethora of choices to meet their voice, video, and Internet-access communications needs. They rely on the use of smart wireless devices, cellphones, wired Internet-enabled VoIP services, and over-the-top Internet-enabled applications (i.e. Skype), far more than on traditional telephony to stay connected in today’s digital age. These choices are available over different platforms—wireline, cable, wireless, and satellite—that compete on the basis of different economics and different technical characteristics. Those differences enable these platforms to innovate to satisfy a variety of consumer needs, to serve different customer segments, and to make their competition sustainable.
Dr. Kovacs also notes that 99% of all U.S. communications traffic is now carried over these platforms in Internet Protocol, while legacy circuit-switched traffic is now less than 1% of traffic and likely to further decrease to a small fraction of 1% by 2017. Additionally, at year-end 2012, 38% of Americans relied on wireless exclusively, 4% relied on VoIP exclusively and only 5% relied on traditional plain-old-telephony (POTS) exclusively. Another 53% relied on wireless in combination with either POTS (29%) or VoIP (24%).
To illustrate how the current regulatory framework is slowing investment in broadband infrastructure, Dr. Kovacs looks at the incumbent telephone companies’ capital expenditures during the 2006 through 2011 period. She estimates that the incumbents spent a total of $154 billion on their communications networks. More than half of that was spent on maintaining fading legacy networks, leaving less than half to upgrade and expand their high-speed broadband networks. In contrast, cable providers, who are free from legacy network rules, spent a total of $81 billion in capital expenditures over the same six-year period, and were free to dedicate all of it to their broadband infrastructure.
Those are just some of the highlights. Read the full report to get the entire picture of how outdated regulations are unnecessarily diverting investment from broadband. To get a snapshot, check out the video below, which features a number of slides Dr. Kovacs put together to illustrate the report.
Monday, September 16
Via Sue Marek of Fierce Wireless, people in rural areas are increasingly embracing mobile:
A new study from Current Analysis and commissioned by the Competitive Carriers’ Association found that more than 80 percent of rural subscribers plan to purchase a smartphone in the next three months. The study also found that 34 percent of those who own a smartphone use wireless exclusively for their telecommunications needs.
While coverage in rural areas continues to be a concern, the fact that “cord-cutting” is making its way into rural communities is just more evidence that the transition to next-generation, all-IP networks is well underway.
Friday, September 06
In today’s Wall Street Journal, Jeffrey Sparshott looks at how Americans are abandoning traditional landlines in droves:
More than a quarter of U.S. households have ditched landline phones, a trend driven by younger Americans relying on their cellphones, according to Census Bureau data released Thursday.
Just 71% of households had landlines in 2011, down from a little more than 96% 15 years ago. Cellphone ownership reached 89%, up from about 36% in 1998, the first year the survey asked about the devices.
The youngest households are abandoning landlines in droves. About two-thirds of households led by people ages 15 to 29 relied only on cellphones in 2011, compared with 28% for the broader population.
This fundamental shift in how people connect is one of the big drivers of the so-called “IP Transition.” As providers watch their customers change the way they communicate, they’re upgrading their networks to be powered solely by Internet Protocol. And it’s not just providers who see where things are going. As FCC Commissioner Ajit Pai wrote in the National Journal last April:
America is in the midst of a technological revolution, what some call the IP Transition (“IP” stands for the Internet Protocol, which is the technical foundation for all these changes). IP-based networks are different from the copper-based networks of yesteryear in a fundamental way: They were not designed for voice service alone. Instead, IP-based technologies break down every kind of communication (voice, video, e-mail and more) into digital bits and transport those bits more efficiently and cheaply than ever before.
Despite these vast changes in the communications marketplace, the Federal Communications Commission hasn’t caught up. We still view the world as if consumers were at Ma Bell’s mercy, relying on copper lines to get basic voice service. As a result, we have a lot of obsolete rules on our books. (Just two months ago, the FCC finally repealed a rule first adopted by its Telegraph Division during the Great Depression!) These old rules aren’t just harmlessly yellowing with age. They are affirmatively discouraging companies from investing in next-generation networks.
Commissioner Pai’s focus on “obsolete rules” was important then and even more important today. As the Wall Street Journal article shows, Americans are plowing forward into the all-IP future. Providers are working to build out the infrastructure necessary to keep up with them. We simply can’t risk having dusty regulations slow things down.
Friday, August 30
Verizon has flirted with purchasing European-based provider Vodafone for years now, and as Ryan Knutson, Spencer E. Ante, and Dana Cimilluca of The Wall Street Journal report, the talks have heated up again:
Verizon Communications Inc. \ and Vodafone Group PLC have rekindled talks about a buyout of the U.K. company’s stake in their U.S. wireless joint venture in a deal that would likely cost Verizon well over $100 billion, people familiar with the matter said.
Vodafone confirmed Thursday that it was in talks with Verizon to sell its stake, but said there is no certainty an agreement will be reached.
With competition in the U.S. hotter than ever, don’t be surprised if similar international deals start taking shape.
Wednesday, August 21
While the FCC continues to design its critical spectrum auctions, there’s grumbling from some corners of the broadcasting world that many broadcasters won’t be voluntarily coughing up their airwaves. As Brendan Sasso of The Hill reports:
Television stations affiliated with the major networks have no interest in selling their broadcast licenses back to the Federal Communications Commission, according to Preston Padden, the director of a coalition of broadcasters who want to sell their licenses.
“To the best of my knowledge, the commission is extremely unlikely to attract affiliates of ABC, CBS, NBC and Fox to this auction,” Padden said during a panel discussion at a Technology Policy Institute conference. “I am not personally aware of any affiliate of a major network who is planning to participate in the auction.”
Hopefully the FCC figures out a way to incentivize affiliates to put their spectrum up for auctions, otherwise it will be hard for the entire auction to succeed.
Friday, June 14
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.
Monday, June 10
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.
Wednesday, June 05
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.
Wednesday, March 27
Over on his blog Maximum Entropy, Bret Swanson (who is one of our Broadband Ambassadors) digs in to the FCC’s latest Wireless Competition Report:
Each year the Federal Communications Commission is required to report on competition in the mobile phone market. Following Congress’s mandate to determine the level of industry competition, the FCC, for many years, labeled the industry “effectively competitive.” Then, starting a few years ago, the FCC declined to make such a determination. Yes, there had been some consolidation, it was acknowledged, yet the industry was healthier than ever — more subscribers, more devices, more services, lots of innovation. The failure to achieve the “effectively competitive” label was thus a point of contention.
This year’s “CMRS” — commercial mobile radio services — report again fails to make a designation, one way or the other. Yet whatever the report lacks in official labels, it more than makes up in impressive data.
For example, it shows that as of October 2012, 97.2% of Americans have access to three or more mobile providers, and 92.8% have access to four or more. As for mobile broadband data services, 97.8% have access to two or more providers, and 91.6% have access to three or more.
Swanson goes on to point out that the problem with the FCC not taking a stance on whether the wireless industry is competitive may have more to do with the definition of competitive:
The industry has grown so large, with so many interconnected and dynamic players, it may have outgrown Congress’s request for a specific label.
Tuesday, March 26
In a smart piece for Fierce Wireless, Anna-Maria Kovacs, Visiting Senior Policy Scholar at Georgetown University, looks at the FCC’s latest Wireless Competition report:
Of course, consumers have myriad other choices with regard to their wireless experience. They choose among various types of service plans: paid v. prepaid, individual v. family, limited v. unlimited, various mixes of voice/text/data. They also choose among hundreds of devices, a few operating systems, and millions of applications. By the time a consumer has chosen a carrier, a service plan, a device, and operating system, that individual has chosen among literally hundreds of possibilities. It is not surprising that this intense competition at various levels of the wireless ecosystem has provided Americans with the lowest prices and the greatest value in the world.
Kovacs’ analysis echoes our own take on the FCC’s report.
Monday, March 25
Via Phil Goldstein of Fierce Wireless, the FCC is aiming to free up some significant frequencies for wireless use within a year:
The FCC signaled it plans to auction new spectrum blocks, the 1695-1710 MHz band and the 1755-1780 MHz band, as early as 2014, giving the CTIA and wireless carriers another victory in their quest to free up more radio waves for mobile broadband.
FCC Chairman Julius Genachowski wrote about the planned auction in a letter to Lawrence Strickling, head of the National Telecommunications and Information Administration. By law the FCC needs to notify the NTIA at least 18 months prior to the start of any auction.
Friday, March 22
Today, the FCC released its 2013 Wireless Competition Report. Rather predictably, the Commission has once again avoided concluding that the wireless market is competitive — despite the fact that four out of five consumers have a choice of five or more wireless service providers. In 2010, the Commission reversed the findings of six successive reports that acknowledged the mobile market’s success.
More Americans are choosing smartphones when they purchase a new phone (67 percent in 2012), and more are using them to go online (104 million in 2011). And according to today’s FCC report, “It is estimated that U.S. mobile data traffic increased 270 percent from 2010 to 2011, and that it has more than doubled each year for the past four years.”
The Commission is painting a picture of the market with this shade of gray to leave room for justification of future wireless regulation. But interestingly enough, FCC Chairman Julius Genachowski this morning stated: “Today, the U.S. broadband economy is thriving. The United States has regained global leadership in key areas of broadband innovation and infrastructure. Thanks to innovative American companies and entrepreneurs — and smart government policies — the U.S. is now the envy of the world in advanced wireless networks, devices, applications, among other areas.”
When measured by availability of consumer choices, options for consumer plans, device alternatives, apps or services, the American wireless market is extraordinarily competitive, far more so than practically any other sector of our economy. Failing to find “effective competition,” as the FCC has again done in this report, is not reflective of market realities.
Federal policy makers should redouble their efforts to make additional spectrum available for auction to commercial broadband providers by quickly conducting incentive auctions, approving secondary market transactions, enacting spectrum sharing arrangements and initiating a process to repurpose additional federal spectrum.
Monday, March 18
More and more Americans are “cutting the cord” and turning to wireless for their communication needs, which has prompted CTIA to put together this great infographic on today’s “Wireless Family.”
Friday, March 08
The folks at CTIA have put together a handy list of 50 wireless facts. Among them:
The wireless industry directly/indirectly employs more than 3.8 million Americans, which accounts for 2.6% of all U.S. employment. In addition, wireless employees are paid 65% higher than the national average for other workers.
Total private sector jobs fell by 5.3 million between April 2007 and June 2011, but the U.S. wireless industry added almost 1.6 million new jobs in the same time period.
As of December 2011, 34 percent of American households were wireless-only.
Despite having less than 5 percent of the world’s population and less than 6 percent of the world’s total wireless subscribers, the U.S. has more than half of global LTE subscribers.
There’s lots more where those came from. Head on over to CTIA and dig in.
Thursday, March 07
At an event hosted by the Hudson Institute earlier today, FCC Chairman Ajit Pai discussed the transition to all-IP networks. During his speech, Pai spoke of two paths the Commission could take when it comes to regulations and technology. One path is rooted in the past — and outdates rules — that could hinder investment and innovation. The other path leads to the future, or the “all-IP world,” as he called it, which has great benefits for health care, education, public safety, and most of all consumers.
Noting that the FCC up until now had a foot on each path, Pai didn’t shy away from his belief that the Commission should be working toward the future, stating the FCC’s decisions around the IP transistion will have “dramatic and real world consequences.” He then made plain his preference for a pilot program — put forward to the FCC by AT&T — to upgrade legacy copper networks to all-IP. As John Eggerton of Broadcasting & Cable reports:
“The FCC has sought and received comments on a proposal to create an All-IP Pilot Program,” Pai said in a speech to the Hudson Institute. “I’ve reviewed the record carefully. And having done so, I am proposing today that the FCC move forward with this program.”
Pai also noted that in 2011 alone, there were over 317 million wireless connections in the U.S., and at least 47% of all households had “cut the cord” — meaning, dropped traditional landline service in favor of wireless or VoIP. This, he joked, pointed to the IP transition being as “inevitable as another reality series starring a Kardashian.”
You can watch a replay of Pai’s speech here.
Wednesday, January 23
Over at Bloomberg BNA, Paul Barbagallo highlights renewed focus from President Obama and Congress to make more spectrum available for the ever-growing wireless industry:
For much of the last four years, federal policymakers have worked aggressively to find swaths of frequencies that could be made available to wireless carriers to help meet the ever-increasing consumer demand for smartphones and tablet computers, which require more radio spectrum to carry their data transmissions—significantly more than what is needed to carry cellular telephone calls.
That work will continue this year, starting at the FCC.
Later in the piece, our own Co-Chairman Bruce Mehlman is quoted:
“I think we’re going to see bipartisan interest in both inventorying and transferring spectrum from federal government use to private-sector use,” Bruce Mehlman, co-chairman of the Internet Innovation Alliance, a coalition of nonprofits and corporations, including telecom carriers and equipment makers, told BNA.
Mehlman, former assistant secretary of commerce for technology policy under George W. Bush, noted that for the last four years, Congress has placed much of its attention on passing legislation to authorize the FCC to hold incentive auctions.
“A lot of focus is now going to turn to federal spectrum holdings that could be repurposed,” he said.
This is still an important topic. Barbagallo’s full article is definitely worth checking out.
Monday, January 14
The New York Times’ Brian X. Chen attended CES in Las Vegas last week and came away with an interesting take on how mobility is changing our lives:
For several years, technology companies have promised the dream of the connected home, the connected body and the connected car. Those connections have proved illusory. But in the last year app-powered accessories have provided the mechanism to actually make the connections. That is partly because smartphones have become the device people never put down. But it is also because wireless sensors have become smaller, cheaper and ubiquitous.
Chen’s full piece is worth checking out.
Friday, December 21
35.8%, which is the amount of U.S. households that are now wireless only, according to updated numbers from the CDC. That’s a lot of people dropping traditional landlines.
Friday, December 07
The Hill‘s Jennifer Martinez highlights some good news on the public safety front:
The four largest wireless carriers in the United States have agreed to speed up their deployment of a text-to-911 service, which will allow people to send emergency text messages to local 911 call centers, Federal Communications Commission (FCC) Chairman Julius Genachowski announced on Thursday.
Genachowski said AT&T, Verizon, Sprint and T-Mobile are expected to rollout the text-to-911 service in 2013 and the carriers have committed to making the service available nationwide by May 2014.
All told, 90% of wireless users in the U.S. will be able to use the new service.
Wednesday, November 14
The National Journal‘s Juliana Gruenwald reports that with the FCC’s incentive auctions gearing up, a group of broadcasters has banded together to work with the Commission:
The Expanding Opportunities for Broadcasters Coalition will press to obtain the best conditions for broadcasters as the FCC implements legislation passed in February that authorizes the use of incentive auctions to free up TV stations’ spectrum for use by wireless broadband providers.
According to John Eggerton of Broadcasting & Cable, the FCC’s chief is down with the idea:
FCC chairman Julius Genachowski Tuesday gave an “open, transparent and data-driven” shout-out to the new Expanding Opportunities for Broadcasters Coalition, which is being organized by former broadcast exec and one time Association for Independent Television Stations president Preston Padden.
“Incentive auctions will offer significant opportunities for broadcasters—both those that will take advantage of a once in a lifetime financial opportunity, and those that will choose to continue to be a part of a healthy and diverse broadcast marketplace,” said the chairman in response to the creation of the coalition. “I welcome the participation of the new Expanding Opportunities for Broadcasters Coalition in our rulemaking process as the Commission engages all stakeholders in a manner that is open, transparent and data-driven.”