I participated in a panel about the “Wired Home and Wireless Policy” at the Broadband Breakfast Club this morning. The panel was aimed at the impact of convergence on communications policy, though it touched on a number of current policy issues, including the current debate about incentive auction legislation (see my separate post about the spectrum crunch here). I focused my remarks on four emerging trends that are likely to disrupt wireless regulation in 2012: convergence 2.0, cloud computing, hotspot 2.0, and small cells. Read the rest of this entry »
Four Trends that Will Disrupt Wireless Regulation in 2012
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broadband FCC mobile spectrum wireless wireless competition
FCC Chairman Julius Genachowski Rejects Spectrum Compromise in Remarks at CES
In his remarks at the Consumer Electronics Show last week, FCC Chairman Julius Genachowski said the debate over the spectrum crunch has been settled: If we don’t authorize incentive auctions and make more spectrum available, “consumers will face slower speeds, more dropped connections, and higher prices.” He also said the United States would lose the international wireless race and would pay the price in lost jobs, investment and innovation. That’s the bad news. The good news is broad, bipartisan agreement in Congress that we need to get incentive auctions done. Although the House and Senate differ on the details, they have both passed bills that would provide the additional spectrum the FCC Chairman believes will prevent the dire consequences he outlined in his remarks. Game over, everyone wins, right?
Not so fast. The Chairman also said “getting it right is as important as getting it done.” By “getting it right,” he means doing it the FCC’s way rather than the way Congress has proposed. Chairman Genachowski took issue with provisions in the House bill that would prohibit the FCC from allocating cleared spectrum bands for unlicensed use by companies that didn’t pay the price required to clear those bands, and would prohibit the FCC from rigging the auction results by limiting the ability of certain companies to win. Even assuming the FCC would do a better job making such decisions, I can’t agree that doing it the FCC’s way is more important than doing it at all when the FCC Chairman says doing nothing would kill jobs, harm consumers, and hurt our global competitiveness. (For a more detailed look at the substantive issues, see posts here and here.)
As AT&T said on its policy blog last week, “it would be a disservice to the Nation if the FCC is so adamant about preserving and enhancing its own power that it would risk killing this crucial legislation.” The House and Senate have already compromised on the key issue that held up the legislation last year, which was the reallocation of the D Block to public safety. We can’t afford to further delay the deployment of a nationwide, interoperable public safety network or the availability of more mobile spectrum while we argue about the extent of the FCC’s regulatory authority. It’s time to embrace the public safety compromise forged in Congress and declare victory.
House-Senate Spectrum Debate Pits Industry Flexibility Against FCC Mandates
A small group of Senators sent a letter to their leadership yesterday urging that the FCC be given the flexibility to “set aside some spectrum in certain bands for unlicensed use.” The letter attempts to frame the debate in terms of the FCC’s flexibility to determine optimal spectrum use. The assumption underlying this notion is that the FCC is in the best position to make optimal decisions for the high tech industry. The House is apparently unwilling to take that leap of faith. The letter thus begs the real question: Do we believe the technology industry should have the flexibility to adjust spectrum use on the basis of market demand (the House approach)? Or, do we believe that the FCC should mandate how spectrum should be used on the basis of its technocratic expertise (the approach advocated in the letter)? We already know the answer: Experience has proven that maximizing the flexibility of the high tech industry to use spectrum in accordance with market demand maximizes innovation and consumer welfare. Read the rest of this entry »
The House Spectrum Bill Is Already a Compromise
The House recently approved spectrum legislation granting the FCC incentive auction authority. In his statement responding to the bill, Federal Communications Commission (FCC) Chairman Julius Genachowski recognized that the legislation would promote investment, innovation, job creation, and U.S. leadership in mobile broadband. He expressed concern, however, that the bill limits the FCC’s authority to allocate spectrum cleared by auction on an unlicensed basis and restrict auction eligibility.
Although I appreciate the FCC’s desire for unlimited authority, it isn’t surprising that the House has proposed to limit the scope of the FCC’s delegation over spectrum policies granting special market privileges to favored technologies, services, or industry groups. Rather than make things better, FCC attempts to fine tune the market through government privilege typically result in unintended consequences that make things worse. Read the rest of this entry »
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auction broadband public safety spectrum T-Mobile wireless
Dish Network’s Potential for Competitive Disruption in the Mobile and MVPD Markets
The National Broadband Plan recommended that the FCC “accelerate terrestrial deployment in 90 MHz of Mobile Satellite Spectrum (MSS).” The FCC began implementing this recommendation this year when it granted LightSquared a waiver to use its MSS spectrum for a wholesale terrestrial LTE network intended to “enhance[e] competition among mobile wireless providers.” Until recently LightSquared appeared to be the FCC’s only near-term opportunity for a new nationwide, facilities-based mobile broadband competitor.
That changed a few weeks ago when Dish Network unveiled its own plans to build a terrestrial LTE network using MSS spectrum. Dish Network is buying both DBSD North America and TerreStar, who together hold 40 MHz of MSS spectrum in the 2 GHz band. In its recent application seeking approval for the Terrestar transaction and waivers to provide terrestrial service (available here), Dish Network says that, if its requests are granted, it will make “substantial terrestrial network deployment commitments intended to increase wireless broadband competition, including in rural areas.” (Application at 48.) These commitments include deploying an LTE Advanced network pursuant to a “reasonable, attainable buildout schedule keyed to commercial availability of the LTE Advanced Standard.” (Application at 48.)
Dish Network’s plan to build a new 4G broadband network offers the potential for significant competitive disruption in both the mobile broadband and MVPD markets, especially when combined with the retail and streaming video assets Dish Network acquired from Blockbuster earlier this year. Due to capacity and other limitations inherent in satellite broadband services, satellite TV providers don’t currently offer broadband services capable of competing in urban and suburban markets with the cable modem, DSL, and fiber offerings of other multichannel video programming distributors (MVPDs). The inability of satellite TV providers to offer competitive broadband services in urban and suburban markets is in part why cable operators have maintained approximately 70% market share while Dish Network has competed primarily on price. With its planned 4G deployment, Dish Network could compete on quality of experience by offering video, broadband, telephone, and mobile services on integrated service platforms through Blockbuster’s virtual and retail stores (imagine mobile devices that access a Blockbuster apps store with streaming content, a TV device that seamlessly combines Dish Networks satellite programming with streamed wireless services, etc.). For the first time, Dish Network would be able to compete across the entire value chain.
Dish Network is also well positioned to quickly become a formidable new competitor in the mobile broadband market. Unlike a typical new entrant, Dish Network already has significant brand awareness and customer relationships, existing retail networks, and an industry partnership with Frontier Communications. Dish Network could leverage its 14 million MVPD subscribers, 4 million Frontier Communications customers, and Blockbuster retail stores to quickly generate a nationwide presence in the mobile market and substantially lower its customer acquisition costs. Because Dish Network does not have an embedded base of devices that depend on earlier generations of wireless technology, it would be able to deploy and maintain a single, cost effective LTE Advanced network. Its spectrum would also enable the use of spectrally efficient 20 MHz channels – a channel size some incumbent mobile operators cannot deploy due to the limitations of their spectrum holdings. (For example, Verizon’s current generation LTE network is limited to 10 MHz channels based on its available spectrum.) Although Dish Network may eventually need more spectrum, as a new entrant with no legacy technology concerns, Dish Network wouldn’t face a capacity crunch anytime in the near term.
Given the potential for Dish Network to increase competition in both the MVPD and mobile markets, I expect the FCC to grant the application. It would be difficult for the FCC to deny Dish Network’s application after granting similar relief to LightSquared. Even if the FCC would have preferred to reassign the 2 GHz MSS spectrum using an incentive auction, Dish Network’s commitment to “creating a competitor against the mobile broadband incumbents” (Application at 22) is an offer the FCC is unlikely to refuse.