Is 768 kbps the Right Minimum Broadband Definition?

Predictably, comments by satellite and mobile wireless providers to the Federal Communications Commission on minimum broadband speeds have been criticized for setting minimum speeds that are too low, generally 768 kbps in the downstream direction and 200 kbps in the upstream.

Keeping in mind that those standards are minimums, not maximums, standards that are "platform neutral," in a world where different networks have distinct advantages and limitations, must not exclude some providers that are technologically limited in terms of speed, though other attributes of service, such as mobility or extreme low cost, are quite favorable.

That is not to argue that 768 kbps is the best, or only, minimum standard that is platform neutral. It simply is a standard all providers can supply now, as a minimum, on a widespread basis.

Keep in mind that nobody has to buy such services. Fixed wireline and wireless services blew past those speeds long ago. The 768 kbps standard primarily is an issue for at least one satellite provider, and sometimes will be an issue for mobile broadband services, at some locations.

The 768 kbps definition therefore bars no contestants and preserves maximum consumer choice. The marketplace already has moved on to megabit speeds, in most locations. Where megabit speeds are not available, it typically is rural and isolated locations where the cost to provide higher speeds is an issue.

It might be wise public policy not to bar such locations from getting broadband, even at lower speeds, as fast as possible.

Mobile Market Competition is Exploding

Though regulators at the Federal Communications Commission seem to believe otherwise, competition in the mobile industry is in one of those explosive moments, when competition is escalating to new levels. In the prepaid market, multiple carriers have launched unlimited domestic calling plans at prices ranging from about $40 to $55 a month, destroying the price floor for unlimited calling plans.

Sprint has been aggressive with any number of "unlimited use" plans of its own, while AT&T two days ago launched its "A-List" program allowing users to designate five numbers, on any network, for unlimited calling. AT&T family plans can designate 10 such numbers.

Sprint responded 24 hours later with "Any Mobile, Anytime," a new feature of Sprint "Everything Data" plans that allows calling to any U.S. wireless number, on any carrier's network, at any time, without additional charge. The plan moves beyond existing "friends and family" or "calling circle" plans that typically include only mobiles on a single carrier network.

T-Mobile has been running such calling circle programs for a while under the "myFaves" program, allowing designatiion of five numbers on any network that can be called on an unlimited basis, for free.

Taken as a whole, all the moves suggest a new wave of competition now is resetting industry understanding of what a competitive "unlimited" offer looks like. Ultimately, consumer expectations of what features and services should be available on an "unlimited" basis also will change, in ways that provide lots more value.

That carriers are willing to move in this direction is partly a function of intense competition in the wireless market. Such moves also likely are the result of better data mining and lower interconnection costs.

For most users, the difference between "truly unlimited" domestic calling and "a reasonable bucket of minutes" is close to zero. And, without, question, "unlimited" is a better marketing platform. Still, off-network termination carries real costs. That carriers are willing to do so shows the extent of competition in the marketplace.

Execs See Social Media Value, but Fear It As Well

Social media, despite being viewed as a key strategy, worries 80 percent of business executives either because of potential for employee time wasting, or because social media exposes companies to risk of criticism that could damage the company reputation, says Russell Herder and Ethos Business Law.

About 51 percent of executives surveyed say they fear social media could be detrimental to employee productivity, while 49 percent say that social media could damage company reputation.

Despite these apprehensions, social networking is seen as a key strategy. Some 80 percent of respondents believe social media can enhance relationships with customers/clients (81 percent) and build brand reputation (81 percent).

Almost 70 percent feel such networking can be valuable in recruitment (69 percent), as a customer service tool (64 percent) and used to enhance employee morale (46 percent).

The most popular vehicles being used include Facebook (80 percent), Twitter (66 percent), YouTube (55 percent), LinkedIn (49 percent) and blogs (43 percent).

“Particularly as Millennials compose a greater share of corporate ranks, social networks are likely to become more popular as communication channels with customers, colleagues and partners,” says Carol Russell, Russell Herder CEO.

The majority (74 percent) of executives surveyed said that they, personally, visit social media sites at least weekly to read what customers may be saying about their company (52 percent), and routinely monitor competitors’ use of social networking (47 percent). One in three search social media sites to see what their employees are sharing (36 percent); or check the background of a prospective employee (25 percent).

About 10 percent of respondents say they have staff who spend more than 50 percent of their time on such efforts.

Respondents who have not yet have a social media program say confidentiality or security issues (40 percent), employee productivity (37 percent) or simply not knowing enough about it (51 percent) are the reasons why no program is in place.

The Russell Herder/Ethos study found that 40 percent of companies technically block their employees from accessing social media while at work. At the same time, 26 percent of companies use social media to further corporate objectives, and just over 70 percent plan to increase the use of these new opportunities.

Clearwire Offers 50% Off Promotion in September

Clearwire is offering a September promotion providing six months of service at 50 percent off on its entry-level unlimited usage plan, selling for $22.50 during the promotional period.

One normally expects pricing innovations of this sort from new entrants in a market, or competitors seeking to grow their market share rapidly. Clearwire already offers casual use pricing that is akin to casual Wi-Fi hot spot pricing.

One wonders how much more innovation Clearwire is thinking about, aside from temporary price promotions.

AT&T Adds "A-List" Calling Feature

AT&T has introduced "A-List with Rollover," allowing AT&T customers unlimited mobile calling to and from five “VIP” domestic phone numbers at no additional cost. FamilyTalk members can select unlimited calling to up to 10 lines.

The program essentially extends "free" calling from other AT&T Wireless customers to a select number of numbers off the AT&T network.

When A-List premieres on Sept. 20, customers can manage their A-List exclusively online at www.att.com/alist.

“This is an incredible value for many of our customers that essentially lets them ‘double dip’,” said David Christopher, chief marketing officer, AT&T Mobility and Consumer Markets. “Not only will they not use minutes from their monthly plan when they call their A-List numbers, but our unique Rollover feature means they can keep those minutes for use in future months.

Customers with individual Nation plans of $59.99 or higher can use A-List with Rollover to select up to five domestic phone numbers to call anytime, including landlines and wireless numbers on any network, without using any of the minutes in their plan.

FamilyTalk customers with plans of $89.99 or more can select up to ten numbers which any person in the FamilyTalk plan can call as much as they want.

A-List: Numbers must be entered online at MyWireless Account at att.com/wireless.com. Only standard domestic landline or wireless numbers are eligible.

Broadband Seen as a Utility, Survey Suggests

Nearly 70 percent of all respondents believe uninterrupted broadband access should be as readily available as other utilities like electricity and water, across all ages, race, income brackets and geographic lines, according to a new survey commissioned by SuperComm and conducted by Opinion Research Corporation.

A majority of respondents believe uninterrupted access is essential, while an overwhelming 75 percent of respondents between the ages of 18 and 34 want to see broadband available like other utility services.

Also, almost 80 percent of respondents in the same age group believe faster broadband speeds improve productivity at work.

The results, while hardly surprising, suggest some danger for communications service providers. Demand for broadband is nearly ubiquitous. But the analogy to electrictiy and water, both of which commonly are provided as regulated monopoly services, is potentially worrisome. That is the way the communications business has been viewed for most of its history, and there remains danger of a return to such thinking if service providers do not demonstrate that competition works better than regulation.

Most users do not remember what communications was like before the 1984 divestiture of AT&T. But low rates of innovation and high prices were facts of life back then. Matters arguably improved with the Telecommunications Act of 1996, though many might fault the results, or the amount of competition that was enabled.

Fortunately, we have benefitted from mobility, the Internet and broadband, which together arguably outweigh anything that has been done, or not done, on the telecom regulatory front. Nothing less than continued innovation and advances in consumer welfare will prevent some from attempting to turn back the clock.

Communication Spending Not a Good Economic Predictor

U.S. consumer spending on mobile phone, broadband and other communication services is not a very-good predictor of where the economy is, most of the time. The reason is that spending on such services is so stable, averaging between 2.2 percent and 2.5 percent of household spending. Though consumers might shift a bit at the margins duirng tougher times, they do not necessarily spend much more during buoyant times.

For such reasons, one cannot predict very much about the potential health of the economy by looking at consumer behavior in the area of communications spending. Credit availability, on the other hand, almost always tells us lots.

According to the Federal Reserve consumer credit report for July 2009, consumer credit fell almost $22 billion to $2.74 trillion. The figure has been dropping fairly steadily since the middle of last year.

The July number represents an annual rate of decline of more than 10 percent. Bluntly, the government still has not discovered a way to get large financial firms to loan money, and the economy is not likely to recover sharply until it does.

reviewed the data and told Reuters, “There is no way that this recovery can be sustained unless we see a pickup in household spending," says Bernard Baumohl, chief global economist at The Economic Outlook Group.

The Fed data says a great deal about what is wrong with programs to revive GDP growth. Money spent on long-term infrastructure projects and healthcare may be well-intended and even completely necessary, but that capital does not have the capacity to put people back to work quickly or get them to spend money that they genuinely believe that they do not have.

So the 2009 holiday spending season may be the most important one in memory. If retail spending is flat or declines, it likely will mean that the hibernation of the consumer will continue well into next year.

The good news is that traditional measures of recovery seem to be perking up. The bad news is that the recovery seems fragile. Still, as the saying goes, it is "darkest just before dawn." The recovery is inevitable. The issue many raise is the glide path up from the bottom.

The good news for communications service providers is that the business is structurally stable, year in and year out. The bigger problem remains the structural change in revenue models, away from voice and towards data services. If historic patterns hold, even with a robust economic recovery, consumers will not spend very much more than they do now.

Business behavior is different, owing in part to the changes in employment that can drive spending or restrict it. Most of the revenue changes one typically sees in a downturn are caused by business spending, not consumer spending. So business spending is more contingent on employment changes.

You can make your own guess about the pace of hiring during the recovery. Even there, though, there are changes. Voice lines tradtiionally have been where we have seen the incremental changes. These days, the insistent pressure is from bandwidth demands, which increase steadily each year, almost irrespective of headcount.

If you had to make a guess, you probably would do well to pay close attention to mobile and fixed broadband as the places where growth will be steady and measurable, no matter what the pace of recovery.