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Entries by Cassandra Heyne (198)

Thursday
May102012
DateThursday, May 10, 2012 at 3:30PM

FCC’s 2013 Budget Includes $7m Hike in Regulatory Fee Collection 

Genachowski Says FCC Has Highest ROI of Federal Agencies

On May 9, 2012, FCC Chairman Julius Genachowski addressed the Senate Subcommittee on Financial Services and General Government in a hearing about the FCC’s 2013 resource needs. Genachowski delivered a hard sell about how the FCC has the highest return on investment of all federal agencies, but eventually revealed that the FCC needs to collect $346,782,000 in 2013 “to implement our responsibilities under the Communications Act.” This amount is 2% more than 2012’s $339,844,000, which Genachowski claims is “essentially flat adjusting for inflation.” The budget “will be derived entirely from fee collections.”

Genachowski took the opportunity to update members of the Subcommittee, including Senator Dick Durbin (D-IL) and Senator Jerry Moran (R-KS), about the FCC’s plans for spectrum incentive auctions. According to Genachowski, “Incentive auctions are an opportunity to unleash vitally needed additional spectrum for mobile broadband and create tremendous value for American consumers, while raising billions of dollars for deficit reduction. It’s a key part of the puzzle to unleashing the mobile broadband opportunity.” He continued, “Incentive auctions are unprecedented. The U.S. will be the first country in the world to conduct them. It will be a complex task affecting major parts of our economy and involving many challenging questions of economics and engineering.” One translation: incentive auctions will be a very expensive undertaking, and it is currently uncertain exactly how much money will be earned for the U.S. Treasury.

Genachowski also updated the Subcommittee about progress in implementing the National Broadband Plan—which includes incentive auctions. Genachowski commented, “We have been working hard on implementing the broadband plan. Together with my colleagues at the FCC, we have made tremendous progress in the past three years, taking many steps to unleash investment, innovation, and job creation. These include freeing spectrum for both licensed and unlicensed use, modernizing and reforming major programs like the Universal Service Fund, and removing barriers to broadband buildout.”

After a long list of other FCC accomplishments and initiatives, Genachowski dropped the news about needing to increase the budget by 2%. While $7m is by no means an extraordinary amount of money for a federal agency, it should be noted that the 2% increase will come from regulatory fees, which will come from your companies—and ultimately your consumers’ pockets.

Also this week, the FCC released a Notice of Proposed Rulemaking about the 2012 regulatory fee collection target of $339,844,000. The FCC proposes very few changes to the regulatory fee collection methods. The FCC plans to release two additional NPRMs this year seeking input on reexamining the regulatory fee system.

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Thursday
May102012
DateThursday, May 10, 2012 at 12:33PM

Verizon Toys with 1-800 Mobile Data Pricing Concept

Verizon CTO Tony Melone Says New Business Model has a “51-49 Chance”

Earlier this year, and to the chagrin of net neutrality advocates, AT&T announced it was considering different pricing plans that could alleviate the pain consumers feel when they obliterate their data plans too quickly every month. The idea was to base mobile data pricing models—to some extent—on the old-fashioned “1-800” pricing model. An application provider would essentially foot the bill for consumers to access its content via a mobile device, and then the consumer’s data plan would not be depleted. It sounds like a great way for consumers to try new apps that don’t use data and possibly avoid excessive overage charges, but as mentioned above, hard-line net neutrality advocates do not like it.

At the CTIA show in New Orleans this week, Verizon came forward with a similar announcement, according to CNET.  Verizon cto Tony Melone “said that there is a more than 50-50 chance that carriers will adopt a business model that allows destination services, such as Google or Netflix, to pay for clear access to their customers.” Melone continued, “As we move away from flat rate pricing, there is room for a 1-800-type of service where certain destinations could offset the cost of the network to get customers to those destinations.” But of course… “There are net neutrality issues that have to be addressed, too.” He later adjusted his odds of this pricing model coming to fruition to 51-49.

CNET explains that broadband providers see 1-800 pricing as “just another creative business model for keeping up with growing demand on the network,” but it really goes beyond that. Without the networks who invest billions, and the customers who collectively pay billions, the Googles of the world wouldn’t have a business at all—so why can’t they help offset the costs, and maybe give consumers a break?

Well, as CNT explains, “Consumer advocates and others who have supported the notion of net neutrality say that selling priority offers an unfair advantage to companies that are large enough to have money to pay for such preferential access for its customers.” In other words, a start-up app developer entering the market with very little funding might not be able to shoulder the “1-800” cost. The theory then is that this app might be lost in the app store behind all the apps who do pay the providers, and it will never reach a critical mass necessary to attract further funding—thus depriving the world of the next “Angry Birds.”

In reality, things might play out differently for some content providers versus others. But, don’t consumers benefit at least from getting some of their favorite apps and services could be “free?” CNET said AT&T cto John Donovan “said it’s tricky to balance the deployment of new technology to satisfy demand for new services from customers with the cost of deploying such services.” Clearly, the same principle is at play in the USF Contributions Reform FNPRM, where the FCC plans to consider broadening the contributions base to include broadband connections for the first time. In the coming months, expect to see the debate over new pricing models for broadband heat up—there will certainly be quite the power-struggle between net neutrality advocates and service providers (again).

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Wednesday
May092012
DateWednesday, May 9, 2012 at 12:45PM

Verizon Moves to End Dry DSL, Congressman Asks “Why?”

Rep. Mike Doyle Questions Verizon CEO McAdam about FiOS, Wireline Deployment

Verizon’s recent decision to stop offering standalone DSL to new customers (and try to push existing customers to uncut the cord) is not going unnoticed on the Hill. On May 7, 2012, Representative Mike Doyle (D-PA) sent a letter to Verizon president and ceo Lowell McAdam asking a series of questions about Verizon’s latest consumer-unfriendly business decision. Rep. Doyle opened by stating that he is “following with great interest Verizon’s proposed transactions with SpectrumCo and Cox,” and that he shares Verizon’s goals of putting spectrum to good use. Doyle quickly moves past wireless though, and cuts right to the chase: “I am concerned about continued investment in the wireline telecommunications and broadband infrastructures in this country.”

Doyle asks Verizon to respond to 5 questions, including:

  • What percentage of the country, especially in Verizon’s LEC footprint, will be served by FiOS in the next 5-10 years? Doyle requests deployment plans for Pennsylvania specifically.
  • Will Verizon continue to deploy FiOS in previously-planned markets, particularly markets where Verizon intends to engage in joint marketing agreements with cable companies?
  • Will Verizon target new customers in areas where it plans to have joint marketing agreements with cable companies?
  • What will happen to Verizon’s DSL market—will Verizon continue to invest in it?

Lastly, Doyle asked: “What was the reason behind Verizon’s recent decision to couple ‘standalone DSL’ service with voice service as of May 6, 2012 for new subscribers or those customers seeking to make changes to their service?” Doyle also requests, “Please provide information that illustrates customer rates for (1) standalone DSL, (2) DSL and voice service packages, and (3) triple play FiOS packages.”

Doyle noted in his letter that the House Energy and Commerce Committee has not yet scheduled a hearing about the proposed Verizon-SpectrumCo/Cox deal, but is this letter a hint that a hearing could be in the pipeline—if Verizon does not respond to the letter in a way that satiates Doyle? The Senate Judiciary Committee held a hearing about the deal back in March, where a Verizon representative vehemently argued that the deal would be good for consumers. But, as we well know, many doubts remain about this deal.

It may not have been in Verizon’s best interest to upset the status quo by discontinuing a service that hundreds of thousands of people actually use—especially since standalone DSL is an affordable option that is (was) widely available. The decision might not sting as much if Verizon were not simultandously seeking approval for joint marketing agreements with cable companies, which many critics take as a sign that Verizon wants out of the wireline broadband business. DSLReports.com noted, “It seems pretty clear Verizon intends to let DSL shrivel and die but won’t acknowledge as much. As a result huge chunks of the country stand to be left on last-generation broadband infrastructure nobody wants to update, and few are asking (or seem to be concerned about) what happens next for these users.” Rep. Doyle seems concerned, and maybe other lawmakers will follow suit now that the ball is rolling.

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Wednesday
May092012
DateWednesday, May 9, 2012 at 12:14PM

House Subcommittee Announces Broadband Loans and Grants Hearing

Hearing to be Held May 16, 2012

The House of Representatives Energy and Commerce Committee’s Subcommittee on Communications and Technology announced an upcoming hearing entitled “Broadband Loans and Grants.” The hearing will be held (and webcast) on Wednesday May 16, 2012 at 10:00 am. The Subcommittee has not yet released any information about witnesses or the questions it is seeking to answer, but Multichannel News had this to say:

“Republican House leaders have expressed concerns about how the BTOP loans and grants created by the American Recovery and Reinvestment Act are being spent, including to what degree they are being used to subsidize competition to existing service, and how the spending is being monitored by the government for waste, fraud and abuse. Those are the same issues that have concerned cable operators facing potential overbuilding with government dollars.”

The issue of using “government dollars” to subsidize broadband in areas that are already competitive came up in the recent Hill debates about the Farm Bill. The cable industry contributed to that debate as well, arguing that RUS loans were being used for subsidized competition. As far as BTOP is concerned, telecom operators have generally stayed clear from accusations of waste, fraud, and abuse. On the other hand, the state of West Virginia just came under fire for possibly wasting some of its $126m stimulus funding. The state allegedly spent over $22k apiece on routers intended for heavy-duty university and medical facilities, but were instead deployed in small libraries and health centers, according to FierceTelecom.

It will be interesting to see what the witnesses say at this hearing (and who the witnesses are, for that matter). JSICA will follow up with information about this hearing and report on the event.

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Tuesday
May082012
DateTuesday, May 8, 2012 at 2:21PM

At CTIA, Genachowski Shows No Regrets for AT&T;/T-Mobile Decision

Wireless Makes the World a Better Place

FCC Chairman Julius Genachowski addressed the annual International CTIA Wireless convention in New Orleans on May 8, 2012, where he opened his prepared remarks with a yarn about how the new FCC commissioners were nominated by President Truman. Humor aside, Genachowski made some interesting comments about the state of the wireless industry and CTIA member companies’ various innovations and initiatives.  Some of the challenges that Genachowski applauded the wireless industry for tackling include: combating cell phone theft, curbing bill shock, deploying next generation 911 service, and enhancing cybersecurity. “On a series of important matters, working together, we’ve been able to develop real solutions to real problems. This is good for American consumers and good for the wireless industry,” said Genachowski.

Genachowski further expressed awe about milestones reached by the wireless industry, like “more people now have mobile phones than electricity or running water,” and “Smartphone sales now exceed PC sales.” Altogether, “The implications of the mobile revolution for our economy and our quality of life are profound.” As per usual, Genachowski highlighted the number of jobs allegedly created by the wireless industry (1.6m, including 500,000 in the app industry), and the benefits of wireless for education, public safety, and the economy.

The “Internet of Things” is all the rage in the wireless industry right now, especially following AT&T’s big announcement yesterday about AT&T Digital Life, a remote home monitoring and automation portfolio. Genachowski commented, “The Internet of Things has the ability to enable remote health monitoring, smart energy grids and smart, secure homes; to foster more efficient transportation networks, water systems, and logistical support for businesses.” He added, “This isn’t science fiction.” Genachowski noted that the U.S. is leading the global wireless revolution, and “Mobile broadband is changing the world for the better.” However, the wireless industry shouldn’t get too complacent at the top—Genachowski cautioned that the industry must still innovate and invest “in hardware, in software, in air interfaces, in business models, everywhere.”

Perhaps the most provocative statements by Genachowski at CTIA were directed towards AT&T in response to recent claims by AT&T that by not merging with T-Mobile, customers will suffer from higher prices and the industry will suffer from a spectrum shortage. Genachowski said “Some have recently argued that the government’s review of transactions in the wireless space—or, let’s be frank, review of one specific transaction—is somehow causing a shortage of spectrum and leading that company to raise prices for consumers.”

Not true, according to Genachowski: “the overall amount of spectrum available has not changed, except for the steps we’re taking to add new spectrum to the market.” Furthermore, “At its core, the argument—that competition is bad for consumers—is at odds with basic free-market principles.” He elaborated, “The notion that competition drives spectrum inefficiency is at odds with our history with mobile, which demonstrates that competition drives investment in efficiency-enhancing technologies and the evolution of business models to the benefit of consumers and providers alike.” All in all, Genachowski sticks to his convictions about the AT&T/T-Mobile merger, and asserts that this merger “crossed a line.”

Looking to the not-so-distant future, Genachowski hopes to see experimentation in pricing and business models, “accelerated upgrades of network architecture,” small cell and smart antenna advancement, and re-purposing of older wireless technologies to LTE. Genachowski then described the FCC’s Mobile Action Plan, which “goes well beyond incentive auctions,” but seemed rather vague overall with references to “opportunities,” “toolkits,” and “charting the next frontiers of wireless policy.”

After running through a long list of things the FCC is doing to help promote wireless investment and innovation, Genachowski eventually mentioned the Universal Service Fund reforms, where “This was the first time the U.S. recognized mobile services as an independent universal service objective.” He explained that Phase I of the Mobility Fund is fast approaching, and “a number of wireless providers across the country are making great progress extending 4G to rural communities, including through partnerships and sharing arrangements.”

Genachowski wrapped up his 14-page prepared statement by saying “the best is yet to come,” and “Working together, we can seize the opportunities of the mobile revolution and build a brighter future.” If Genachowski’s speech tells us anything, it is that this is an exciting time to be in the wireless industry.

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