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Written by Dave Burstein
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Thursday, 30 June 2011 20:20 |
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Googling new FCC Chief Economist Marius Schwartz, I immediately discovered he had been paid by AT&T for papers he wrote about NN. Everyone knows about the confluence of money and influence in DC, where most people think AT&T's lobbyist Jim Cicconi owns the FCC. (He doesn't. In my dozen years on this beat I haven't seen anything that smelled like people being paid off at the FCC, unlike Congress.)
I sent a note asking "In the last three years, approximately how much have you been paid by which parties with financial interests in policy results?" I figured people around the FCC would make a point of disclosure these days. All the papers condemned Commissioner Meredith Baker for taking a multi-million dollar job with Comcast a few months after voting for the Comcast-NBCU merger.
The response: "I was told by the relevant people at the FCC that the appropriate course for me is to file the disclosure forms with the agency." He has no obligation to answer my question. Maybe one of the D.C. reporters can find the answer. Several reported he took the job from the press release without noticing a problem. The Chairman could request Schwartz reveal how much he's been paid.
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Written by Dave Burstein
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Friday, 24 June 2011 15:29 |
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 CTIA President Steve Largent cancelled his subscription after I wrote Deutsche Telecom, Verizon: Our Voice Quality Won't Suck Much Longer. Tony Melone of Verizon understands why I believe all wireless networks suck until they move to HD voice. "You really, really see a quality difference with high-def Voice over IP, which we plan on implementing." Decide for yourself at Telstra's demo, which uses an improved codec but not a higher bit rate. Put on headphones unless you have superior speakers on your computer.
Landlines as well can and should sound better, with France Telecom/Orange leading the way.They are releasing the Samsung SMT W3510 high definition voice fixed phone, using cordless CAT-IQ phones. (That's the replacement for DECT.) They expect "in 2013, interoperability between the various operators, based on common standards, such as CAT-IQ 2.0 for fixed HD Voice or WB-AMR for mobile HD Voice." They are launching fixed HD voice in Tunisia, Spain and Poland.
Orange is also bringing mobile HD to Uganda, Armenia, and the Dominican Republic, as well as to their main European branches. That means that phone calls in Moldavia or Uganda will often be better than anything in the U.S. Verizon's LTE network, soon to be matched by AT&T, is among the finest in the world for data, but voice is still years away. France Telecom is proving again how great competition can be; they had to do this because Xavier Niel included HD in the Revolution FreeBox which is winning subscribers almost as fast as they can be produced.
Telstra in Australia also is jumping in with what they call "The first major advance in mobile voice quality in 20 years." Buy any of four handsets and HD is included at no extra charge. "Telstra expects a large percentage of new devices to be launch with HD Voice support in the coming year."
Steve: you were a great football player and run a good trade show. Sorry to lose you as a reader.
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Written by Dave Burstein
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Tuesday, 31 May 2011 21:10 |
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If I know something in this field that I think is valuable to policy I present it as many places as possible, including FCC filings. Some people think reporters should never have opinions in order to reduce bias. Increasingly, reporters are pointing out they are human and have opinions. I believe it my job to acknowledge and recognize my bias. It's also my job to overcome my bias and report as close to the truth as I can.
My first filing was unusual. It began "I am filing AT&T's latest 10K because I believe many of the claims in other filings, including AT&T's are refuted by a reading of the AT&T SEC filings. In particular, I note that AT&T's capital expenditures dropped by $3B from 2008 to 2009 and even in 2010 were still below 2008. That's a good explanation of their service problems." FCC Chair Bill Kennard at a Wall Street event many years ago explained he was there because they told wall street truths the same companies denied in D.C. I believe an enormous amount of misleading information in D.C. would be ignored if regulators and reporters simply read the wall street filings.
I also filed:
AT&T has made three claims on behalf of this merger that are almost certainly bogus.
The claim that this deal is essential to reaching 95-98% of the U.S. with LTE is bogus. The CITI Columbia report prepared for the Broadband Plan found "Wireless broadband service providers expect to offer wireless access at advertised speeds ranging up to 12 mbps downstream (but more likely 5 mbps or less due to capacity sharing) to about 94% of the population by 2013." Since Verizon and other carriers indicated they would continue past 2013 towards full national coverage, it's almost certain the nation will be at 95-98% by 2015-2016 without AT&T, deal or no deal.
The claim that this deal will have a major impact on any "spectrum crunch" is unsupportable. While combining any two carriers' spectrum and customers improves the utilization of that spectrum, the effect is small. T-Mobile claims their spectrum capacity will soon be strained by their existing 30M+ customers, all of whom would be absorbed by AT&T. The additional T-Mobile spectrum will be needed for the former T-Mobile customers. In addition, AT&T President John Stankey has told wall street they really don't have a major spectrum problem for many years and in fact speeds on their network are going up significantly and congestion down.
The claim that this deal will yield increased investment and jobs is gibberish, as far as I can tell. AT&T has said they will increase their investment by about $8B compared to what it would have been, perhaps $2B/year, which would create jobs. However, T-Mobile currently invests about $3B/year and would almost certainly continue investing at least $2B/year if independent. If this is correct, the deal will result in lower investments as well as firing tens of thousands of T-Mobile employees. (Synergies.)
I believe it is wildly improbable that AT&T would have stopped investing in LTE after reaching 80% in 2013. Verizon is on track to be at 92+% in 2013 and continue building.
I cannot believe that AT&T's plan for 2014-2017 did not include upgrading their existing towers for LTE, increasingly inexpensive. Stopping at 80% would leave Verizon with a compelling advantage across 20% of the U.S. The additional cost of going from 80% coverage to 96% is between $1B and $4B by inference from AT&T filings. That's between 2% and 4% of their annual capex.
In this filing, I am discussing data that is often in error in the D.C. discussion and not my opinion about the merger. The goal is to keep the facts straight. Elsewhere, I've expressed the opinion the deal should be rejected immediately.
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As always, if I have any mistakes please let me know ASAP. |
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Written by Dave Burstein
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Saturday, 25 June 2011 23:58 |
The current average U.S. home draws about 20 gigabytes/month, already 2 to 10 times what carriers with LTE offer. So raising the wireless capacity is a high priority for wireless to be a real alternative. In rural areas, there are typically 10 0's of MHz unused, enough spectrum to offer far more robust wireless service. Today's best technology, LTE, can only use 20 MHz; the 2013 version, LTE Advanced, can use 40 or even 100 MHz. That will be great, iff the politicians find a way to make it practical. Today's licensing rules get in the way and it's time to change them.
There's massive unused spectrum in most low density areas, far more than LTE knows how to handle. LTE is designed for up to 20 MHz, which limits the total capacity to 30-70 megabits per second. (More right by the transmitter, less if many are on the outskirts.)
Germany's leading the way to near 100% coverage with LTE, with Vodafone already covering 1,000 small towns. The speeds go "up to 50 megabits" although few homes get that speed. The problem is the capacity. Even the 70 euro (~$100) service is capped at 30 gigabytes, not enough for families that want to watch much video.
Chris Neisinger of Verizon intends to actively deploy LTE Advanced in 2013. We are not talking science fiction here but a near term product. The standard is complete and leading manufacturers are promising the base stations today they are shipping today will only require a software upgrade.
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Written by Dave Burstein
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Wednesday, 22 June 2011 13:17 |
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For better or worse, the merger will produce less investment and fewer jobs. AT&T's promised "synergies" of tens of billions will mean massive numbers of job cuts. Careless AT&T advocates are looking very silly spreading a claim around D.C. that the merger would create 96,000 jobs. AT&T has said they will invest $8B more over 4-7 years, about $50-75/year for each customer added from the deal. That sounds about right for maintenance capex on average bills close to $1,000/year. For each $billion invested, they claim 12,000 more jobs. However, T-Mobile's investment, now $2.8B/year, would be lost.
The net effect on investment of the merger is negative, even making an assumption that T-Mobile would be cutting investment if not merged. If you take the implication of the T+$8b and apply the same analysis they used to get the additional 96k jobs, the result is about 40,000 fewer jobs. Cutting about $11b means destroying 132,000 jobs by this logic. The calculation came to me with a caveat, "Obviously that's as dumb as the 96k, but live by the sword die by the sword." Adding to that all the other jobs at T-Mobile that AT&T tells Wall Street they will cut, and the result is far fewer jobs if the merger goes through.
Protecting jobs unneeded by the economy is not good policy in the long run. Offering equivalent services using fewer workers - automation - is often a good thing for the economy in the long run. Ultimately, productivity, not featherbedding, is better for the economy. But the pain for the people involved is brutal.
Incidentally, economist Scott Wallstein points out that most "jobs created by" arguments are based on misuse of input-output tables.
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Written by Dave Burstein
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Tuesday, 31 May 2011 20:39 |
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Caraza Alexis Milo, new commissioner at Mexico's regulator COFETEL, is an under 40 technocrat with both political experience and a Yale Ph.D. in economics.
Greg Rosston of Stanford and Brian Fontes of NENA are the chairs of the new Commerce Spectrum Advisory Committee (CSMAC.) There are outstanding people on the Committee, including Marty Cooper, an inventor of the mobile phone; Dale Hatfield, Robert Pepper, Mike Calabrese, Mark McHenry, Dennis Roberson, and Susan Crawford, as well as some of the usual lobbyists. D.C. reporters should find an opportunity to meet those people; they are far more likely to steer you to the truth than the usual D.C. sources.
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Written by Dave Burstein
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Saturday, 25 June 2011 17:04 |
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 Robin Bienenstock of Bernstein makes clear why the U.S. has wireless issues: less investment. “Let's take California and Spain as an example. Telefonica has some 33,000 base stations in Spain (yes, miserable, economically imploding Spain). Conveniently, California is a similar size, has a similar topography, and has very similar population density. In California, AT&T has just over 6,000 base stations. The spectrum allocation per pop in these two operators (TEF in Spain and AT&T in California) is remarkably similar. A similar analysis looking at New Jersey and Massachusetts vs the Netherlands shows similar results.
Why are European networks so much denser than American networks? In large part the answer lies (again) in regulation. In Europe, the spectrum auctions of last decade came with 'use it or lose it clauses' that obliged operators to build a minimum of base stations or face sanctions from fines to loss of spectrum. The result is clear to any American visiting Europe… and more frustratingly obvious to any European visiting the States.”
A few years ago, Americans could claim this was acceptable because our prices were lower. That's no longer true, as the gap (by many measures) has been eliminated since the elimination of AT&T Wireless and Nextel, reducing the U.S. from six to four national carriers. If Julius had any courage, he'd raise American standards closer to European ones.
“European spectrum auctions scheduled for 2011 and 2012 will further increase the relative network density of European operators by increasing available spectrum to operators (in some cases by 75%). These auctions will also often require operators to build LTE in rural places before rolling it out in urban settings.” |
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Written by Dave Burstein
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Saturday, 18 June 2011 16:46 |
The OECD report says the U.S. and Canada have some of the highest wireless prices in the world. Canadian wireless carrier Telus doesn't like that conclusion, so hired Nordicity to do a  survey using different assumptions than OECD. The Nordicity survey found Canadian prices, measured Nordicity's way, are actually lower than the OECD average. No surprise; there are so many different wireless plans and so many different way to measure a good analyst can "prove" many contradictions. Nordicity's put "Prepared for Telus" in large print on the title page. They also were clear about the assumptions they used, such as adjusting the figures for the higher income in Canada. The T oronto Sun reported fairly, noting in the first sentence "according to a new report paid for by Telus Corp that challenges the widely held view that Canadians pay too much for wireless." With that said, reporter Stefania Moretti is comfortable including the report's conclusion "Canada has one of the six most competitive wireless market structures in the OECD. Canada is one of only six OECD countries where two leading providers serve fewer than 70% of customers and the top three serve less than 95%." That most countries have very limited wireless competition corresponds to Ralph de la Vega's comment that "the U.S. has one of the most competitive wireless markets in the world." Nearly everywhere else has fewer than out four national companies. I checked the data and confirmed that Ralph is accurate. Consumers in the U.S. pay $billions more since we went from six to four carriers, suggesting to me competition is not strong enough to do away with regulation. For nearly a century, economists assumed that telecom was a "natural monopoly" and therefore needed strong regulation. That wave changed in the 1990's and "competition" and markets were raised as the only way to go. The truth is neither; telecom is a business of scale, which means it will tend toward less competition and therefore more need for regulation of some sort.
Takeaway from Moretti "The influx of new competitors in the wireless market has helped lower rates for Canadians who paid some of the highest fees in the industrialized world."
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