Tag Archives: access_providers

Hidden in Plain Sight: FCC Chairman Pai’s Strategy to Consolidate the U.S. Wireless Marketplace

While couched in noble terms of promoting competition, innovation and freedom, the FCC soon will combine two initiatives that will enhance the likelihood that Sprint and T-Mobile will stop operating as separate companies within 18 months. In the same manner at the regulatory approval of airline mergers, the FCC will make all sorts of conclusions sorely lacking empirical evidence and common sense.

FCC Chairman Pai’s game plan starts with a report to Congress that the wireless marketplace is robustly competitive. The Commission can then leverage its marketplace assessment to conclude that even a further concentration in an already massively concentrated industry will not matter. Virtually overnight, the remaining firms will have far less incentives to enhance the value proposition for subscribers as T-Mobile and Sprint have done much to the chagrin of their larger, innovation-free competitors AT&T and Verizon who control over 67% of the market and serve about 275 million of the nation’s 405 million subscribers.

Like so many predecessors of both political parties, Chairman Pai will overplay his hand and distort markets by reducing competition and innovation much to the detriment of consumers. He can get away with this strategy if reviewing courts fail to apply the rule of law and reject results-driven decision making that lacks unimpeachable evidence supporting the harm free consolidation of the wireless marketplace. Adding to the likely of successful overreach, is the possibility of a muted response in the court of public opinion.

So how will the Pai strategy play out? First, the FCC soon will invite interested parties to provide evidence supporting or opposing a stated intent to deem the wireless marketplace sufficiently accessible and affordable throughout the nation. The FCC has lots of evidence to support its conclusion, but plenty of countervailing and inconvenient facts warrant a conditional conclusion, particularly in light of future market consolidation. Wireless carriers have invested billions in network infrastructure and spectrum. Rates have significantly declined as the industry has acquired scale and near full market penetration. Bear in mind that all of this success has occurred despite, or possibly because of a federal law requiring the FCC to treat wireless carriers as public utility telephone companies. Congress opted to treat wireless telephone service as common carriage, not because of market dominance, but because it wanted to maintain regulatory parity with wireline telephone service as well as apply essential consumer safeguards.

How ironic — perhaps hypocritical — of Chairman Pai and others who surely know better to characterize this responsibility as the product of overzealous FCC regulation that has severely disrupted and harmed ventures providing wireless services. Just how has common carrier regulation created investment disincentives for wireless carriers when operating as telephone companies? Put another way, how would removal of the consumer safeguards built into congressionally-mandated regulatory safeguards unleash more capital investment, innovation and competitive juices?

U.S. wireless carriers regularly report robust earning and average revenue per user that rival any carrier worldwide. Of course industry consolidation would further improve margins while relaxation of network neutrality and privacy protection safeguards would create new profit centers. T-Mobile shareholders get a big payout, while the remaining carriers breath a sigh of relief that their exhaustively competitive days are over.

Will the court of public opinion detect and reject the FCC’s bogus conclusion that common carrier regulation has thwarted wireless investment and innovation? That requires a lot of vigilance and memories of the bad old days when no carrier opted to play the role of maverick innovator and marketplace disrupter. With T-Mobile or Sprint merged or acquired, the remaining ventures have ever more incentives not to spend sleepless afternoons competing and devising new ways to stimulate customer interest in changing carriers. T-Mobile and Sprint have offered just about every value enhancement in recent years such as carry forward minutes, reduced roaming charges, unlimited service, new bundles and use your own device at much lower monthly rates. Would these options exist if only three carriers served 95% of the market?

If you think the recent spate of airline mergers has enhanced competition and the air travel experience, then a wireless marketplace with 3 national carriers will work out just peachy.

Written by Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law

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Hidden in Plain Sight: FCC Chairman Pai’s Strategy to Consolidate the U.S. Wireless Marketplace

While couched in noble terms of promoting competition, innovation and freedom, the FCC soon will combine two initiatives that will enhance the likelihood that Sprint and T-Mobile will stop operating as separate companies within 18 months. In the same manner at the regulatory approval of airline mergers, the FCC will make all sorts of conclusions sorely lacking empirical evidence and common sense.

FCC Chairman Pai’s game plan starts with a report to Congress that the wireless marketplace is robustly competitive. The Commission can then leverage its marketplace assessment to conclude that even a further concentration in an already massively concentrated industry will not matter. Virtually overnight, the remaining firms will have far less incentives to enhance the value proposition for subscribers as T-Mobile and Sprint have done much to the chagrin of their larger, innovation-free competitors AT&T and Verizon who control over 67% of the market and serve about 275 million of the nation’s 405 million subscribers.

Like so many predecessors of both political parties, Chairman Pai will overplay his hand and distort markets by reducing competition and innovation much to the detriment of consumers. He can get away with this strategy if reviewing courts fail to apply the rule of law and reject results-driven decision making that lacks unimpeachable evidence supporting the harm free consolidation of the wireless marketplace. Adding to the likely of successful overreach, is the possibility of a muted response in the court of public opinion.

So how will the Pai strategy play out? First, the FCC soon will invite interested parties to provide evidence supporting or opposing a stated intent to deem the wireless marketplace sufficiently accessible and affordable throughout the nation. The FCC has lots of evidence to support its conclusion, but plenty of countervailing and inconvenient facts warrant a conditional conclusion, particularly in light of future market consolidation. Wireless carriers have invested billions in network infrastructure and spectrum. Rates have significantly declined as the industry has acquired scale and near full market penetration. Bear in mind that all of this success has occurred despite, or possibly because of a federal law requiring the FCC to treat wireless carriers as public utility telephone companies. Congress opted to treat wireless telephone service as common carriage, not because of market dominance, but because it wanted to maintain regulatory parity with wireline telephone service as well as apply essential consumer safeguards.

How ironic — perhaps hypocritical — of Chairman Pai and others who surely know better to characterize this responsibility as the product of overzealous FCC regulation that has severely disrupted and harmed ventures providing wireless services. Just how has common carrier regulation created investment disincentives for wireless carriers when operating as telephone companies? Put another way, how would removal of the consumer safeguards built into congressionally-mandated regulatory safeguards unleash more capital investment, innovation and competitive juices?

U.S. wireless carriers regularly report robust earning and average revenue per user that rival any carrier worldwide. Of course industry consolidation would further improve margins while relaxation of network neutrality and privacy protection safeguards would create new profit centers. T-Mobile shareholders get a big payout, while the remaining carriers breath a sigh of relief that their exhaustively competitive days are over.

Will the court of public opinion detect and reject the FCC’s bogus conclusion that common carrier regulation has thwarted wireless investment and innovation? That requires a lot of vigilance and memories of the bad old days when no carrier opted to play the role of maverick innovator and marketplace disrupter. With T-Mobile or Sprint merged or acquired, the remaining ventures have ever more incentives not to spend sleepless afternoons competing and devising new ways to stimulate customer interest in changing carriers. T-Mobile and Sprint have offered just about every value enhancement in recent years such as carry forward minutes, reduced roaming charges, unlimited service, new bundles and use your own device at much lower monthly rates. Would these options exist if only three carriers served 95% of the market?

If you think the recent spate of airline mergers has enhanced competition and the air travel experience, then a wireless marketplace with 3 national carriers will work out just peachy.

Written by Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law

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More under: Access Providers, Broadband, Law, Policy & Regulation, Telecom, Wireless

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Net Neutrality Is a Smashing Success by FCC’s Preferred Metric, Reports Free Press Researcher

“If investment is the FCC’s preferred metric, then there’s only one possible conclusion: Net Neutrality and Title II are smashing successes,” says Free Press Research Director S. Derek Turner, author of a new report released by the consumer advocacy group. The report titled, “It’s Working: How the Internet Access and Online Video Markets Are Thriving in the Title II Era,” examines internet-industry developments in the two years since the Federal Communications Commission’s February 2015 Open Internet Order which resulted in the adoption of strong Net Neutrality rules and reclassification of broadband-internet access as a Title II telecommunications service.

“The restoration of Title II for broadband-internet access was designed to preserve what the FCC rightly calls the internet’s virtuous cycle of investment and innovation,” says Turner. “All available data indicate that the 2015 decision to adopt strong rules on a sound legal footing is working as intended, benefiting internet users, broadband-access providers and the myriad businesses that distribute services over the open internet.”

The centerpiece of President Trump’s FCC chairman, Ajit Pai, “is his demonstrably false claim that the mere existence of Title II authority has caused a reduction in broadband investment. … This claim is both false on its face — aggregate investment by publicly traded ISPs is up since the FCC’s vote — and completely illogical. –Turner

Other findings from the report:

“Aggregate capital investments at publicly traded ISPs were 5 percent higher during the two-year period following the FCC’s Open Internet vote when compared to the two years prior to the vote. Claims of a decline are based on manipulated data, and in any event, do not support a causal impact from Title II.”

“Capital investments were higher at 16 of the 24 publicly traded ISP firms (or units) following the FCC’s vote. These increases are due primarily to continued core network expansion.”

“During the two years following the adoption of the Open Internet Order, cable-industry physical network investments increased 48 percent compared to the amount invested during the two prior years. Cable ISPs’ core network investments accelerated dramatically during 2016, representing the highest single-year jump since 1999.”

“Telecom-company spending on fiber-to-the-home network terminals and terminal ports rose nearly 50 percent during 2016.”

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Why Not Connect Cuba’s Gaspar Social Streetnet to the Internet?

I’ve been covering Cuban streetnets (local area networks with independent users that are not connected to the Internet) for some time. Reader Doug Madory told me about Gaspar Social, a new streetnet in Gaspar, a small town in central Cuba. Gaspar Social opened to the public last October and has grown quickly — about 500 of Gaspar’s 7,500 residents are now users.

Streetnets are illegal in Cuba and the government has ignored some and cracked down on others, but they seem to be tolerating them now as long as they remain apolitical and avoid pornography and other controversial material. Last month, Communist Party officials noticed Gaspar Social but did not shut it down. Yoandi Alvarez, one of the network creators, said “they made it clear our network was illegal but they wouldn’t be taking our antennas down” and they were given instructions for applying for a permit.

So, residents of Gaspar can play games, download software, share files, socialize, etc., but they can not access the global Internet. Why not connect Gaspar Social to the Internet?

Gaspar is in the province of Ciego de Ávila and the capital city is Ciego de Ávila. ETECSA has six WiFi hotspots and three navigation rooms in Ciego de Ávila and, as a provincial capital, the city must have many government, medical and educational users. In other words, there must be relatively fast backhaul to the Internet in Ciego de Ávila.

Connecting Gaspar to Ciego de Ávila seems like it would be cheap and easy. As you see below, they are only 28.2 kilometers apart on the road (25 kilometers as the crow flies) and the terrain is flat. (Gaspar’s elevation is 5.1 meters and Ciego de Ávila’s 49 meters).

They could be connected with a high-speed wireless link or fiber. The flat terrain favors a wireless link and the road could provide a right-of-way for fiber. Installing 28 kilometers of fiber would be expensive in the US, but Cuba is not the US. One can imagine a community project using International Telecommunication Union (ITU) L.1700 cable. (For an example of a community fiber project, in Bhutan, click here).

ETECSA is the elephant in this hypothetical room. The ITU tracks regulatory evolution and, as of 2013, Cuba was one of the few remaining first-generation (regulated public monopoly) nations.

I suggested earlier that ETECSA consider streetnets as complementary collaborators rather than competitors or outlaws and last year they allowed a small streetnet to connect to a WiFi hotspot.

Cuba has a well-deserved reputation for improvisation and appropriate-technology innovation. I am not suggesting that they jump suddenly to fourth-generation regulation (regulation led by economic and social policy goals), but that they run a pilot test, connecting Gaspar Social to the Internet.

Here is a short video (1:56) on Gaspar Social:

And here is a longer video (13:48) with interviews of the network creators:

Written by Larry Press, Professor of Information Systems at California State University

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Why Not Connect Cuba’s Gaspar Social Streetnet to the Internet?

I’ve been covering Cuban streetnets (local area networks with independent users that are not connected to the Internet) for some time. Reader Doug Madory told me about Gaspar Social, a new streetnet in Gaspar, a small town in central Cuba. Gaspar Social opened to the public last October and has grown quickly — about 500 of Gaspar’s 7,500 residents are now users.

Streetnets are illegal in Cuba and the government has ignored some and cracked down on others, but they seem to be tolerating them now as long as they remain apolitical and avoid pornography and other controversial material. Last month, Communist Party officials noticed Gaspar Social but did not shut it down. Yoandi Alvarez, one of the network creators, said “they made it clear our network was illegal but they wouldn’t be taking our antennas down” and they were given instructions for applying for a permit.

So, residents of Gaspar can play games, download software, share files, socialize, etc., but they can not access the global Internet. Why not connect Gaspar Social to the Internet?

Gaspar is in the province of Ciego de Ávila and the capital city is Ciego de Ávila. ETECSA has six WiFi hotspots and three navigation rooms in Ciego de Ávila and, as a provincial capital, the city must have many government, medical and educational users. In other words, there must be relatively fast backhaul to the Internet in Ciego de Ávila.

Connecting Gaspar to Ciego de Ávila seems like it would be cheap and easy. As you see below, they are only 28.2 kilometers apart on the road (25 kilometers as the crow flies) and the terrain is flat. (Gaspar’s elevation is 5.1 meters and Ciego de Ávila’s 49 meters).

They could be connected with a high-speed wireless link or fiber. The flat terrain favors a wireless link and the road could provide a right-of-way for fiber. Installing 28 kilometers of fiber would be expensive in the US, but Cuba is not the US. One can imagine a community project using International Telecommunication Union (ITU) L.1700 cable. (For an example of a community fiber project, in Bhutan, click here).

ETECSA is the elephant in this hypothetical room. The ITU tracks regulatory evolution and, as of 2013, Cuba was one of the few remaining first-generation (regulated public monopoly) nations.

I suggested earlier that ETECSA consider streetnets as complementary collaborators rather than competitors or outlaws and last year they allowed a small streetnet to connect to a WiFi hotspot.

Cuba has a well-deserved reputation for improvisation and appropriate-technology innovation. I am not suggesting that they jump suddenly to fourth-generation regulation (regulation led by economic and social policy goals), but that they run a pilot test, connecting Gaspar Social to the Internet.

Here is a short video (1:56) on Gaspar Social:

And here is a longer video (13:48) with interviews of the network creators:

Written by Larry Press, Professor of Information Systems at California State University

Follow CircleID on Twitter

More under: Access Providers, Internet Governance, Policy & Regulation

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