Consumers Spent More on Consumer Electronics Over the Last Year

The average U.S. household spent $1,380 on consumer electronics products in the past 12 months, an increase of $151 from last year, according to a new study released by the Consumer Electronics Association.

The average household spent 12 percent more on consumer electronics devices in the past year, which might be especially surprising considering a dip in most other consumer spending over that same period. Of course, sales took a dip in 2008 as well.

Individual consumer spending, as opposed to household spending, also was up 10 percent from the previous 12 month period, CEA says. The average adult spent $794 on consumer electronics in the past 12 months, up from $725 in 2009.

Women spent more on consumer electronics products than they did the year before but still trail men in overall spending. Women spent, on average, $631 on consumer electronics, up $73 from 2009. Men report personally spending $969 in the past 12 months, up $67 from the year before. The average household reports owning 25 consumer electronics products, up from 23 products last year.

CEA’s study also shows that video products continue to be the top devices consumers own, with HDTV ownership continuing to increase. About 65 percent of U.S. homes now own at least one HDTV, an increase of 13 percentage points from last year, making it the top industry growth driver of the past 12 months.

Consumers also are buying HDTVs as secondary sets. The average household now owns 1.8 HDTVs, up from 1.5 in 2009. HDTVs also are also the top product consumers say they want to purchase. About 23 percent of households say they plan to buy a new high-definition set in the coming 12 months.

Ownership of computers also continues to increase. Currently, 86 percent of U.S. households own at least one computer, making it the third most owned CE product category behind televisions and DVD players.

The popularity of netbooks, owned by 12 percent of U.S. households, and laptops, now owned by most households (58 percent), is helping drive the computer category.

"Third Way?" Between Title I and Title II? Are you "Sorta Pregnant?"

One might argue that there's nothing wrong with the Federal Communications Commission trying to find some "middle way" or "third way" between common carrier and data services regulation. FCC Chairman Julius Genachowski, for example, notes that "heavy-handed prescriptive regulation can chill investment and innovation, and a do-nothing approach can leave consumers unprotected and competition unpromoted, which itself would ultimately lead to reduced investment and innovation."

Nor are many likely to disagree completely with the notion that "consumers do need basic protection against anticompetitive or otherwise unreasonable conduct by companies providing the broadband access service."

Likewise, most probably would agree that "FCC policies should not include regulating Internet content, constraining reasonable network management practices of broadband providers, or stifling new business models or managed services that are pro-consumer and foster innovation and competition."

But there is likely to be fierce disagreement about the proposal to regulate broadband access service as a common carrier offering governed by Title II regulations, even though the chairman says the FCC would "forebear" (not impose) all of the obligations and rules that cover Title II services.

The difference is that right now, the government "may not" regulate terms and conditions of service. Under the proposed rules, the government only says it "has the right to do so, but voluntarily agrees not to" impose such rules. There is a vast difference between those two approaches.

The first is a clear "thout shalt not" injunction; the new framework is only a "we promise not to" framework. The chairman argues that this new approach "would not give the FCC greater authority than
the Commission was understood to have" before the "Comcast v. FCC" case.

A reasonable person would find that hard to believe. Moving any service or application from Title I to Title II has unambiguous meaning. One can agree or disagree with the change. One can hardly call this a "reassertion of the status quo." Between Title I and Title II there is a gulf that would have to be crossed. Never before have any Internet services been considered "common carrier."

A mere promise not to act, after the change has been made, will hardly satisfy those who believe Title I is the better framework. Those who believe Title II is the better way to regulate likely will find the proposal satisfying. That would be reason enough to suggest it is not a "third way." There is in fact no third way, except for the Congress to direct the FCC to regulate broadband access as a Title II service.

The problem is that what the "service" is changes over time, making difficult the task of clearly separating what "access" is from what an enhanced feature is. Nor is it easy to differentiate between a "business" access and a "consumer" access. If business access is covered, is packet shaping still permissible? Are quality of service measures still permissible? Are virtual private networks still allowed?

Should consumer services acquire the richness of business services, or should business services be dumbed down to consumer grade? And who gets to decide? Even if one is willing to accept that an ISP cannot, on its own, provide any quality of service measures, can a customer request them? Can a customer demand them?

These are tough questions and there must be scores more people could ask. The problem is that the Title I and Title II frameworks are binary. We do have alternate models in Titles III and VI, as I recall, though I suppose both of those titles would provide more freedom, not less, and Title II is a move in the direction of less freedom.

read it here

Clearwire Emerging as a Wholesaler

Perhaps Clearwire did not initially think its business model would be anchored by wholesale wireless, but that seems to be shaping up as key to its future. Of the 283,000 net new subscribers added in the first quarter of 2010, 111,000 of them, or 39 percent, were gained by wholesale partners.

Most of the other major national wireless providers also have some wholesale operations, but none likely approach Clearwire's percentage. Clearwire’s network is behind Sprint’s 4G services as well as Comcast and Time Warner Cable wireless services. Then there is T-Mobile USA, which seems to need wholesale 4G capacity as well.

It might not be unreasonable to speculate that one reason Clearwire is preparing for a transition to Long Term Evolution, instead of sticking with its WiMAX air interface, is that T-Mobile USA might well require LTE capability in order to sign up.

"There was an agreement before that was really a commercial deal between Intel and Clearwire that would restrict us from using anything other than WiMAX up to, I think it’s February of 2012," said Bill Morrow, Clearwire CEO. "That deal is no longer in effect."

Now, either Intel or Clearwire can give 30 days notice and the deal is over. "So it does give us the flexibility that if we wanted to do a commercial launch of LTE or some other technology, that Intel would not be holding us back," said Morrow.

With less than a million total subscribers, it is too early to say how the retail versus wholesale customer mix holds up over time. Should Clearwire pick up T-Mobile USA as a wholesale partner, and as Comcast and Time Warner Cable gear up their wireless operations, it is not hard to envision wholesale growing to be a majority of customers.

FCC Goes for "Tactical" Nukes in Net Neutrality Fight; ISPs Will React as Though "Strategic" Weapons will Ultimately be Used

Federal Communications Commission officials seem well enough aware that proposed new "network neutrality" rules could lead to a reduction of investment in broadband facilities, which is why, reports the the Wall Street Journal, FCC officials are briefing market analysts who cover cable and telco equities before the market opens on Thursday, May 6.

The fear is that even before the rules have been announced, financial analysts will issue downgrades of cable and telco stocks as future revenue streams are jeopardized. Those analyst briefings will happen even before other FCC officials or congressional members are told how the FCC plans to proceed.

Chairman Julius Genachowski apparently plans to circulate a notice of inquiry to other FCC board members next week on his plans to reclassify broadband Internet access, provided by cable or telco providers, as common carrier services under Title II of the Communications Act.

That would put cable companies under common carrier regulation for the first time, something cable industry executives always have opposed, and will fight. Telco executives are hardly any more likely to support the changes.

The problem with the FCC's approach, which is to apply "some" Title II rules, but not all, is that there are no protections from future action that would simply apply all common carrier rules. The FCC wants to believe it can leave ISPs "sort of pregnant." They either are, or aren't, and can be expected to fight as though the outcomes were binary.

As often is the case, a natural desire for a "third way" is not possible. Title I or Title II is the issue. Forbearance rules or not, one or the other is going to apply. Get ready for war.

FCC Will Try to Apply Some Title II Rules to Broadband Access

Federal Communications Commission Chairman Julius Genachowski reportedly has decided to attempt Title II regulation of broadband access services, according to a report by the Wall Street Journal, despite some other reports that he was leaning against such rules.

We should know more on Thursday, May 6. Apparently the FCC will try to thread a camel through a needle, regulating only some parts of  broadband access using Title II rules, without applying every Title II provision that applies to voice services.

It does not appear the chairman will propose new wholesale access rules, but it isn't clear whether strict rules about packet non-discrimination will be sought, theoretically barring quality-of-service features from being offered. That seems unlikely, but much will depend on whether industry participants think the actual new rules open the way for further rules, down the road, that would be highly unacceptable, even if the new immediate rules are not viewed as burdensome. We shall see.

Clearwire Removes Obstacle to LTE Shift

Clearwire says it changed the terms of an agreement with Intel, one of its largest investors, that could eventually lead the way for Clearwire to switch to Long Term Evolution as its radio interface, ending its use of WiMAX. Clearwire and Sprint executives have said in the past they believe the two standards now are so similar it would not be difficult to adopt a unified air interface.

The new terms allow either Intel or Clearwire to exit the WiMAX agreement, which had until now forced Clearwire to use WiMAX through Nov. 28, 2011, with just 30 days notice. Those of you who believe Clearwire ultimately will switch to LTE can take that as a sign Clearwire might make the move before late 2011.

 CFO Erik E. Prusch reiterated the company's view that the overall ecosystem for 4G wireless was converging and as such, the market won’t have the technology wars in the future that it has seen in the past.

The technologies underlying LTE and WiMAX aren’t so far off as to make a transition from one to the other all that expensive in terms of the network costs, but devices that are currently running on the WiMAX network might need to be replaced if Clearwire implements a wholesale technology change on its radio network.

link to webcast

FCC Leaning Against Title II Regulation of Broadband Access

Julius Genachowski, Chairman of the Federal Communications Commission, apparently now is leaning away from any attempt to re-regulate broadband access as a common carrier service, a move that would have set off a political firestorm.

The Washington Post reports that the chairman "is leaning" toward keeping in place the current regulatory framework for broadband services but making some changes that would still bolster the FCC's chances of overseeing some broadband policies.

The sources said Genachowski thinks "reclassifying" broadband to allow for more regulation would be overly burdensome on carriers and would deter investment, a belief likely bolstered by the constant criticism Verizon Communications has taken from investors who have questioned Verizon's investment in fiber-to-the-home almost every step of the way.

Congress could "remedy" the situation by passing new legislation directing the FCC to take action along the lines of reclassifying broadband access as a common carrier service, but prospects for any such legislation are unclear.

Aside from the historic objections cable and telco industry segments have had to common carrier regulation of data services, both industries are widely expected to oppose in the strongest possible way any moves to limit their ability to innovate in the area of services and features for broadband services, especially any moves to prohibit any forms of quality of service features.

"Network neutrality" rules that prohibit any form of packet discrimination would effectively prevent the creation of QoS features guaranteeing video or voice performance, for example, even if those are features end users actually want.

Some policy advocates fear that Internet access providers will not voluntarily and adequately police themselves, but end user pressure has proven to be quite effective in the applications space, and even firms that have attempted some forms of network management have voluntarily agreed not to use some forms of management that essentially
"block" legal applications.

That isn't to argue that there are no dangers, but simply that market pressure and end user outrage have so far proven to be effective inhibitors of anti-competitive behavior. Even without title II common carrier regulation, the amount of end user and policy attention now paid to anti-competitive behavior in the Internet business would effectively encourage responsible ISP behavior.

Proponents opposed to "over-regulating" the developing business have argued that any abuses that do arise can be dealt with as they potentially occur, and that this is preferable to regulating in advance, or that the proper venue is the Federal Trade Commission or Justice Department, in any case.

Aside from all those issues, nobody really believes that anything but growth lies ahead for the broadband access business. 'More bandwidth" does not solve all problems, but does solve many of the concerns users or policy advocates might have about continued progress on the bandwidth front.

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