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Thursday

May102012

Thursday, 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).

Cassandra Heyne | Comments Off | |

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Monday

May072012

Monday, May 7, 2012 at 2:47PM

The Wait is Over: Rosenworcel and Pai Confirmed to FCC

Will the Rural Telecom Industry Find Allies in the New Commissioners?

Almost one year to the day since former FCC Commissioner Meredith Attwell Baker announced her departure and over five months since former Commissioner Michael Copps resigned, the FCC is finally getting some new blood. Ajit Pai (R) and Jessica Rosenworcel (D) were initially nominated by President Obama in October, but their road to the FCC has been fraught with barriers. Senator Chuck Grassley (R-IA) famously blocked the commissioners from taking their positions for over five months while he struggled with the FCC over documents about LightSquared. On April 27, 2012, Grassley reluctantly released his hold on the nominees, although insisted that his LightSquared inquiry was not over. Finally, on May 7, the Senate confirmed the nominees.

Broadcasting & Cable reported that the nominees were approved in the Senate with no objection, and the new commissioners could be sworn in as early as this afternoon—but “Usually it is, at most, a few days between confirmation and installation.” Broadcasting & Cable added that Pai and Rosenworcel “will face some big decisions early on, including media ownership rule review, the definition of multichannel video provider and the framework for spectrum incentive auctions.” Additionally, the new commissioners will be thrown into the depths of USF reform, with many decisions still to be made about the Connect America Fund as well as the recently-undertook contributions reform.

Ajit Varadaraj Pai was previously a partner at Jenner & Block LLP. According to a White House press release from October, 2011, Pai’s past includes stints at the FCC, Senate Judiciary Committee, and Department of Justice. His industry experience includes General Counsel at Verizon Communications. Pai earned his law degree from the University of Chicago, and a B.A. from Harvard University. Pai’s Jenner & Block bio explains, “He draws on extensive experience gained in several senior public sector jobs involving communications, administrative, and constitutional law.” In his position of Deputy General Counsel at the FCC, Pai “supervised more than 40 lawyers, handling a wide range of regulatory and transactional matters involving the cable, Internet, wireless, media, satellite, and public safety industries.”

Pai hails from Kansas, which could be a good omen for the rural telecom industry (although only time will tell). In December, Senator Jerry Moran (R-KS) introduced Pai at the nomination hearing, where he said that Pai will be a great leader at the FCC, and “The FCC also needs commissioners who are committed to the needs of all Americans, including those who live in rural America, so its innovators can compete in the marketplace along with those in urban areas. A native of Parsons, Kansas, Ajit will bring an understanding of the challenges facing our part of the country at this vital time for the future of telecommunications.”

Jessica Rosenworcel’s most recent position was Senior Communications Counsel for the U.S. Senate Committee on Commerce, Science, and Transportation under Senator Jay Rockefeller (D-WV). She also has considerable experience at the FCC, serving in various positions from 1999 to 2007. A White House press release states that Rosenworcel was a communications associate at Drinker Biddle and Reath in the late 1990s. She earned her law degree from New York University School of Law, and her B.A. from Wesleyan University. When she was nominated last fall, Politco reported that “Rosenworcel is known for her thoughtful approach to telecom matters from FCC reform to net neutrality, and carriers many of the same policy values of Rockefeller and Copps.” Rosenworcel will take Copps’ position, and Copps commented that “Her dedication, intelligence and practical good judgment make her an ideal choice for commissioner.” As Rockefeller is typically a strong advocate for rural telecommunications, this could be another good omen that the rural industry will find allies in the new commissioners.

Early reactions from the industry expressed relief that Pai and Rosenworcel are finally able to take their seats at the FCC:

NTCA ceo Shirley Bloomfield expressed satisfaction, stating: "With the ongoing implementation of complicated modifications to the Universal Service Fund and intercarrier compensation support systems, a full complement of commissioners is essential to ensure thorough debate, careful review of facts, and an outcome that serves the best interests of consumers. We’re hopeful that the addition of Rosenworcel and Pai will enable the commission to seek sensible and balanced public policy that sustains broadband investment and operation by small, community-based providers. We look forward to working with them on the challenges and opportunities that small, independent telecom companies face in serving rural consumers and their communities.”
America Cable Association president and ceo Matthew Polka stated, “I am confident that both [Pai and Rosenworcel] will continue the FCC’s long heritage of fact-based decision-making that promotes competition, stimulates private investment and innovation, and protects consumers and the public interest values we all cherish as Americans.” ACA points out that the new commissioners have an understanding of “smaller markets and rural areas.”
NCTA president and ceo Michael Powell commented, “We know that they will each prove to be valuable additions to the Commission, and we look forward to working with them to promote continued investment and innovation in the communications marketplace.”
Free Press ceo Craig Aaron stated, “We’re pleased that the long delay in the Senate is over, and that we will have five commissioners at the FCC once more.”
CTIA president and ceo Steve Largent congratulated Pai and Rosenworcel, and said “their experience in Washington will make them great assets for the Commission. I look forward to working with them on key wireless issues, including the bipartisan and bicameral spectrum issues, to ensure the U.S. wireless ecosystem retains its global leadership position.”
AT&T senior vp-federal regulatory and chief privacy officer Bob Quinn stated, “All of us at AT&T are enthused that they’ll be joining the FCC, where we expect them to have an immediate and constructive impact.” Quinn added, “Our nation’s communications policy framework is in dire need of modernization to reflect today’s technological innovations, consumer demands, and competitive needs…We look forward to working with the full Commission to ensure the continued investment in America’s infrastructure.”
Rural Cellular Association president and ceo Steven Berry said, “Chairman Genachowski should be very pleased to have two bright, well-informed individuals join him…Rosenworcel and Pai will be a real plus to the FCC as they address some of the most difficult policy issues on the table, and we look forward to working with them to ensure competitive connectivity.”

Pai and Rosenworcel's new colleages at the FCC also extend warm welcomes. Commissioner Robert McDowell commented, "Now that we have a full five member FCC, I look forward to all of us rolling up our sleeves and getting to work on several important matters facing the Commission for the benefit of American consumers, including but certainly not limited to: implementation of the new incentive auction legislation, finally putting the power of unlicenced use of the TV “White Spaces” into consumers’ hands, adopting sensible universal service contribution reform, modernizing our media ownership rules to reflect the competitive marketplace of the Digital Age, important transactions requiring expeditious review, and much, much more."

All eyes will be on Pai and Rosenworcel as they embark on their careers as FCC commissioners. Do you think the new commissioners will be rural telecom industry friends or foes?

Cassandra Heyne | Comments Off | |

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Wednesday

Apr182012

Wednesday, April 18, 2012 at 4:04PM

Verizon Tries to Make Cable Deal Palatable with Spectrum Sale

RTG and RCA Skeptical about Verizon’s Spectrum Crisis Cries

If the spectrum crunch/crisis/apocalypse is really so severe, why is Verizon offering to sell some of its highly-prized lower 700 MHz spectrum assets? Two possible answers come up for critics of the Verizon-SpectrumCo/Cox deal: Verizon clearly has plenty of spectrum, and Verizon is trying to sweeten the appeal of the deal to regulators and the industry.

On April 18, 2012, Verizon announced it will sell all of its regional and metro 700 MHz A and B Block licenses, which are not used for its LTE network, if the FCC approves Verizon's proposed $3.9b acquisition of SpectrumCo, Cox and Leap Wireless’ AWS spectrum. Wireless Week reported that the 700 MHz licenses cover urban and rural areas including New York, San Francisco, Atlanta, Los Angeles, Chicago, and Miami—in other words, highly valuable, top-tier markets. A Verizon representative stated, “Provided our acquisition of AWS spectrum is approved, our open sale process will ensure these A and B spectrum licenses are quickly and fairly made available for the benefit of other carriers and their customers.”

Regardless of Verizon’s real intentions, critics are already voicing skepticism and disproval of Verizon’s potential spectrum sale. Rural Telecommunications Group (RTG) general counsel Carri Bennet quickly issued the following statement: “This offering is a lure and what Verizon Wireless really wants is the government’s blessing of its cable-wireless cartel.” Bennet added, “The mere fact that Verizon Wireless is offering spectrum for sale suggests that its capacity and congestion concerns are unfounded…Clearly, Verizon Wireless never was and currently is not starved for spectrum.” Bennet further argued,“This spectrum sale is a well-crafted and well-thought-out distraction by Verizon Wireless designed for it to acquire what it wants most: the approval of federal regulators so that it may form an Axis of Broadband Power with the cable companies and in the process limit consumer choice which will result in higher prices.”

The Rural Cellular Association (RCA) also appears to see through Verizon’s alleged façade. RCA president and ceo Steven Berry responded with the following statement: “This announcement confirms what RCA has said: Verizon has developed a spectrum warehouse exceeding its needs.” Berry also stated that selling this spectrum “is not sufficient to resolve competitive concerns in the industry." Consumer groups did not pull punches, either. The Hill’s Hillicon Valley reported that both Free Press and Public Knowledge criticized Verizon’s announcement as an attempt to “entice regulators into approving the deal.”

Is there any upside to Verizon’s proposed spectrum sale? Like, for example, smaller carriers acquiring some of this 700 MHz spectrum, and expanding LTE networks in rural areas? NTCA ceo Shirley Bloomfield sad on her blog that she "would love to see the rural carriers at least take a close look at these potentially pending sales and not miss an opportunity as spectrum becomes a scarce resource." However, GigaOm was quick to assume that AT&T will “be first in line to pick up whatever Verizon doesn’t want,” and even though the licenses at stake here “don’t gel with Verizon’s 4G plans, they fit perfectly with AT&T’s own LTE network schemes.” It doesn’t really sit well that Verizon would be willing to basically transfer its own spectrum into the hands of its biggest competitor—especially if you believe the hype about the spectrum crisis—but maybe Verizon is just that desperate to convince the FCC to approve its AWS purchase?

RCR Wireless discussed the appeal of new spectrum coming to market: “Potential suitors for the 700 MHz licenses are expected to be extensive as just about every carrier is in need of spectrum in order to support the build out of next-generation networks. The most desperate would seem to include T-Mobile…MetroPCS…and Leap Wireless.” RCR Wireless mentions that AT&T is definitely a “potential suitor,” but an attempted AT&T grab of Verizon spectrum is sure to raise eyebrows.

With this spectrum sale on the table, Verizon is going to have a difficult time playing the “spectrum crisis” card to regulators and the industry, but maybe it was willing to make that sacrifice in the name of consolidation and market power. One thing is certain: the Verizon-SpectrumCo/Cox ordeal just got a lot more interesting.

Cassandra Heyne | Comments Off | |

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