Unlocking Your U.S. Phone Becomes a Crime Jan. 26, 2013

I'll be most of us did not see this coming: on Jan. 26, 2013, it becomes a federal crime for the buyer of a smart phone to unlock  it, at least before the expiration of the contract, if there is one. 

The change is because a smart phone operating system is considered copyrighted material under provisions of the Digital Millennium Copyright Act (DMCA). 

In October 2012, the Librarian of Congress, who can determine exemptions to the DMCA, decided that unlocking mobile phones would no longer be allowed. 

The rule apparently does not apply to devices sold unlocked in the first place, such as full retail price devices, or perhaps any smart phone sold to a user unlocked by the carrier itself. 

Apparently, it will continue to be illegal to unlock a tablet or game console. 

The legal foundation is that users only license, and do not own, the software on their devices. Some might be shocked to learn that the same legal principle  underlies a "purchased" library of songs, as well. 

Actually, it is unclear whether a user actually "owns" the songs in an iTunes library, or are only borrowed. In other words, what used to be a product now is sort of a subscription. 

AT&T Sells Record Number of Smart Phones in 4Q 2012

AT&T Wireless sold a record number of smart phones in the fourth quarter of 2012, selling 10.2 million devices, which AT&T says is the most ever sold by any U.S. service provider in a single quarter. In fact, 89 percent of postpaid phone sales were of smart phones. 

AT&T also reported that wireless revenues grew 5.7 percent year over year, while wireless service revenues grew 4.2 percent.

AT&T had 780,000 wireless postpaid net adds, the largest increase in three years; with a 1.1 million increase in total net wireless subscribers. 

But that growth also came at a price. Since AT&T subsidizes smart phones, and since so many customers purchased Apple iPhones that have the highest subsidy costs in the business, earnings took a hit. In fact, 84 percent of all smart phone sales were iPhones. 

Verizon, for its part, added a "highest-ever" 2.1 million net new wireless contract customers in the fourth quarter, outpacing AT&T's growth. 

As expected, Verizon profit margins on mobile services dropped as smart phone subsidies grew. 

And that is an issue: though service providers want to sell more data subscriptions, which mainly entails selling more smart phones, the device subsidies are a drag on earnings. 

Google to Test Small Cell Network?

For some who worry that Google might someday decide to become an ISP in a bigger way, using either mobile or fiber to the home approaches, here is one more development to stoke concern.

Google filed an application at the Federal Communications Commission seeking permission to test an experimental radio system near its Mountain View, Calif. campus, using as many as 50 base stations and 200 end user devices.

The base stations will be both indoors and outdoors, using a “small cell” design. Indoor sites will have a range of 100 meters to 200 meters, while outdoor cells will have a range of 500 meters to 1000 meters.

Only Google knows what it is testing here. But the specific frequencies requested are 2524 MHz to 2546 MHZ and 2567 MHz to 2625 MHz.

These are bands allocated to the “Educational Broadband Service” (EBS) and the “Broadband Radio Service” (BRS), which are used by Clearwire for its mobile broadband service.

Google has tested a variety of networks and network elements in the past, so the latest effort is not unusual. But Google has suggested spectrum in the 3.55 GHz to 3.65 GHz could be used as part of a shared small cell service.

Google also in the past has asked for permission to test unlicensed devices in the 2.4 GHz band, 5 GHz band, and the 76-77 GHz band, as well as white spaces.

Aside from Google Fiber, Google also has invested in municipal Wi-Fi tests, invested in Clearwire, sponsored airport Wi-Fi and promised a minimum bid for 700-MHz mobile spectrum as well, in 2007.

The point is that Google remains vitally interested in new ways to expand Internet access, especially high-bandwidth, low cost access.

Google says the initial base station deployment will occur inside 1210 Charleston Road, Mountain View (and possibly 1200 and 1220 Charleston Road), and consist of five to 10 base stations (mounted on ceilings, or walls next to the ceiling, six to eight meters above ground), and up to 40 user devices.

Three base stations will employ directional antennas (dual-slant, two-way multiple input/multiple output, with 17 dBi max antenna gain), mounted on walls and directed toward the building interior; of these, base station one will have a beam width of 65 degrees, a 45 degree horizontal orientation, and a -4 degree vertical orientation; base station two will have a beam width of 90 degrees, a 315 degree horizontal orientation, and a -4 degree vertical orientation; and base station three will have a beam width of 65 degrees, a 210 degree horizontal orientation, and a -4 degree vertical orientation.

Subsequent deployments will occur on building rooftops at 1200, 1210, or 1220 Charleston Road, or possibly other buildings located on the Google campus.

Omni-directional antennas will be mounted either on external building walls at roof height, or on antenna masts above rooftops (extending no more than six meters above the rooftop).

Directional antennas may be used. No building on the campus is higher than 25 meters above ground. Google plans to test up to 50 base stations and 200 user devices during the requested experimental license term, and requests authority to deploy in these quantities. 

Each indoor base station will have a radius of approximately 100 meters to 200 meters. Each outdoor base station will have a radius of approximately 500 meters to 1000 meters.

Mobile Broadband Now Shapes Global "Speed" Metrics

A 2010 study by Ofcom, the U.K. communications regulator, found fixed network speeds were about four times faster than mobile speeds. The difference in page loading speeds was more dramatic. Fixed network web pages loaded 17 times faster than the mobile pages.

But simple logic also suggests that measures of broadband speed are becoming quite a bit more nuanced than in the past, as the “typical” form of broadband access becomes a “mobile” connection, not a fixed line connection.

That does not mean the absolute volume of data consumption is related in a linear way to the number of subscribers, only that “typical access speed” is a harder thing to describe, than once was the case. Some 84 percent of smart phone users say they use their smart phones to access the Internet, for example.


By the end of 2011, total global mobile subscriptions reached nearly six billion by end 2011, corresponding to a global penetration of 86 percent, according to the International Telecommunications Union.

Growth was driven by developing countries, which accounted for more than 80 percent of the 660 million new mobile subscriptions added in 2011. That is significant. To begin with, mobile connections typically run slower than fixed connections, and developing market connections tend to run slower than connections in developed markets.
That might explain why, in the third quarter of 2012, the global average connection speed declined 6.8 percent to 2.8 Mbps, and the global average peak connection speed declined 1.4 percent to 15.9 Mbps, says Akamai.

According to Ericsson, mobile data use has grown exponentially since about 2008.

Google Fiber "Is Not a Hobby"

Patrick Pichette Google CFO, said on Google’s recent earnings call that Google Fiber is not a hobby. That could mean lots of things, so ISPs should not necessarily make assumptions about what that statement means.

“We really think that we should be making good business with this opportunity and we are going to continue to look at the possibility of expanding, but right now we just got to nail because we are in the early days,” said Pichette.

“Not a hobby” could mean that Google does not intend to lose money on the venture, and is not simply spending money on a “hero” initiative that is not intended to directly sustain itself over the long term.

Contrast that with Apple’s statements some years ago that Apple TV was, in fact, a hobby, implying that commercial impact was not expected.

But “not a hobby” would unsettle other large ISPs much more if it implied Google was seriously entertaining the notion of becoming an ISP in its own right, on a bigger scale.

Those sorts of fears have been expressed in the past, about Google “becoming a telco.” But Google has become a handset supplier, on a limited scale. Google Voice does earn communications revenue. Google Docs does compete with Microsoft’s “Office” suite.

Google does operate a large global backbone network. Likewise, there are, from time to time, discussions of whether Google (or other big application providers) want to become mobile service providers.

And even at the recent Pacific Telecommunications Council meeting, at least a few attendees I spoke with did express concern that Google might in fact be considering a wider and more significant entry into either the local access or backbone transport markets.

In other words, there remains considerable unease about what Google might decide to do, in the communications business.

The concern might be overblown. But there is no doubt about what Google would prefer, and that is higher speeds for most end users and more investment in access networks by the leading ISPs to enable that.

Google’s challenge to leading ISPs is clear enough.

In a highly-competitive market, the low-cost provider tends, over time, to win. That is true with respect to large tier one telcos competing with large tier one cable operators, for example. You might argue that cable gains in high-speed access and fixed network market share provide a clear example.

Some now would argue that ISPs--both fixed network and mobile ISPs--need to match Google’s own costs, on a gigabyte per cents or gigabyte per dollar basis. How well that can be done, and if it can be done, is the question.

But Google has affected service provider thinking before. Remember several years ago when executives started to routinely say they had to “innovate at Google speed?” Doubtless, most would say no telco really is able to innovate that fast. But it might be argued that service providers do now innovate faster than before.

So it might not be unreasonable to argue that if Google continues to demonstrate new cost models for very high speed access, that service providers will respond.

Shifting to costs equivalent to Google’s costs might be a daunting prospect, but less daunting than what could happen if legacy revenue streams erode faster than new revenue replacements can be created.

It is one thing to argue that telcos, for example, need to incrementally reduce current operating costs. But that argue also hinges on a crucial assumption, namely that current revenue continues to grow on a relatively stable basis, while revenue losses from legacy products do not accelerate in a destabilizing way.

Some might argue that the risk of unexpected revenue trend deterioration is greater than most now assume. In that case, one way or the other, service providers will have to make further adjustments. That is one reason why Google hints that it might expand the Google Fiber program.

Mobile Now Shapes "Average" Internet Access Speeds

What will dramatically-higher mobile broadband and mobile data plan adoption mean for global “average” Internet access speeds? The question already is starting to matter.

By the end of 2011, total global mobile subscriptions reached nearly six billion by end 2011, corresponding to a global penetration of 86 percent, according to the International Telecommunications Union.

Growth was driven by developing countries, which accounted for more than 80 percent of the 660 million new mobile subscriptions added in 2011.

If one assumes a typical mobile connection supports lower speed than a fixed network broadband connection, rapidly growing mobile Internet access will have a huge impact on “average” access speeds.

By end 2011, there were more than one billion mobile broadband subscriptions worldwide. More important is the rate of change. Mobile broadband grew at a 40 percent annual
rate in 2011. That rate will slow over time, of course, but at such rates, the base of users doubles in less than three years.

Also, compare mobile broadband to fixed network broadband subscriptions. At the end of 2011, there were 590 million fixed broadband subscriptions worldwide. In other words, there were nearly twice as many mobile broadband users as fixed network broadband users by the end of 2011.

Furthermore, fixed network broadband growth in developed countries was slowing (a five percent increase in 2011), where developing countries continue to experience high growth (18 percent in 2011).

As you might guess, fixed network broadband penetration remains low in some regions, such as Africa and the Arab states, with 0.2 percent and two percent adoption,  respectively, by the end of 2011.

Also, in 2011, 30 million fixed broadband subscriptions were added in China alone, representing about half ofthe total fixed network subscriptions added worldwide, while fixed broadband penetration reached 12 percent in China.   

One should therefore assume that comparing future “average” or “typical” broadband speeds to past data will be misleading. We might already be seeing that sort of impact.

In the third quarter of 2012, the global average connection speed declined 6.8 percent to 2.8 Mbps, and the global average peak connection speed declined 1.4 percent to 15.9 Mbps, says Akamai.

That statistic likely directly reflects the growing use of mobile networks Since access from mobile devices far outstrips access from fixed network connections, globally, and since mobile network top speeds are less than fixed networks, generally, a growing volume of mobile connections will affect overall “average speed.”

In 2010, global mobile penetration was nearing 80 percent. Early in 2012, global mobile penetration reached 85 percent.

All of that means “average” statistics about broadband access speeds will have to be considered in a more nuanced way from this point forward. As “most” Internet access happens from mobile devices, the “average” connection speed, either peak or average, is going to reflect the “slower” mobile speeds, compared to fixed network connections.

200 Million Global LTE Subscribers in 2013, One Billion by 2016

Just three years after the technology’s original deployment, global subscribers to 4G Long Term Evolution (LTE) networks were used by more than 100 million subscribers in 2012 and will reach 200 million by the end of 2013, according to IHS iSuppli.

That represents a compound annual growth rate of about 139 percent.