A Few Tips for Increasing Your Influence at the FCC

Sharon Gillett, former chief of the FCC's Wireline Competition Bureau, talks about

• some of the FCC major activities affecting broadband  that communities can participate in and/or influence;
• the typical process for moving from policy ideas to actual programs;
• how to work the public comment period; and
• ways in which communities and small or regional ISPs and telcos may partner to influence the FCC policy and programs.

Will U.K. Mobile Market Change after LTE Auctions?

It is of course axiomatic that without access to spectrum, no entity can be in the mobile service provider business. That access can be through owned or leased spectrum, but fundamentally, spectrum access is necessary. That naturally raises the question of whether “winning” fourth generation Long Term Evolution spectrum is “necessary” for a firm to be a market leader in mobile services, in the future.

Some might say so. “The importance of this spectrum auction in shaping the future of the U.K. wireless market cannot be understated,” said Daniel Gleeson, mobile analyst at IHS iSuppli. “Access to spectrum is the main barrier to entry for any company looking to build a new wireless network.”

It is true that seven companies are bidding for spectrum: the country’s four existing mobile operators along with three new players. With only three companies likely to win spectrum, at least one of the United Kingdom’s existing operators is likely to lose out,” said Gleeson.

The four existing players that have entered the auction are EE, O2, Vodafone and Three. The three new entrants are BT, PCCW and MLL Telecom.

Other European spectrum auctions have only seen a maximum of three operators win 800 MHz spectrum. The United Kingdom could follow this pattern, yielding three winners and four losers, IHS iSuppli says.

Among the existing mobile operators, the companies with the most to lose are O2 and Vodafone, which presently do not have 4G spectrum, IHS iSuppli said.

Not securing 800 MHz licenses would be a disaster for O2 or Vodafone, some might argue, even if both firms were to win spectrum at 2.6 GHz. The reason is that 800 MHz is viewed as essential for rural coverage, while the 2.6 GHz spectrum is seen as best suited to urban coverage.

Some might argue that the more likely outcome is that the fourth provider will wind up leasing spectrum from one of the other three providers, so the result might not be catastrophic. Still, owning spectrum arguably is safer than leasing spectrum.

But that analysis assumes the prices paid by the winners are reasonable, in light of the incremental revenue opportunities. Europe’s mobile service providers know well the dangers of overpaying for spectrum, as was the case when the 3G auctions were hold.

Operators overpaid for that spectrum, causing years of financial distress that also threatened  bankruptcy for a few.

So it is possible the U.K. 4G auctions could rearrange business plans, perhaps in unexpected ways. Depending on the outcome, one or two of the leading four providers in the U.K. mobile market might find themselves more limited in terms of national coverage.

One or more of the “winners” might find themselves in more favorable positions, in terms of quality and quantity of spectrum. The auction, by itself, will not immediately change the market share situation. But it could begin a process that does change the market.

DT Delays joyn Launch

Deutsche Telekom apparently has delayed its launch of the “joyn ” messaging service. Joyn originally was scheduled to launch in December 2012 but DT apparently has run into implementation issues.

Joyn, the GSMA-backed effort to create a carrier over the top messaging service, will allow DT customers to chat and send files, free of charge,  on all smart phone tariffs, at no incremental cost incurring data usage charges, for all customers who have a calling plan with flat-rate data usage or text messaging plans.

Some have questioned whether joyn really will be able to compete with WhatsApp and other over the top messaging services, but the retail packaging plan DT has chosen is intended to make joyn usage an amenity for users who already are paying what DT considers to  be reasonable amounts of money for voice and messaging usage.

Smart phone adoption is driving mobile service provider mobile broadband revenue. But smart phones also are cannibalizing service provider voice and messaging revenue.

In 2012 the increase in smart phone penetration will cause voice and messaging revenue erosion of 3.9 percent in Western Europe and 1.6 percent erosion in Eastern Europe, according to Informa Telecoms & Media.

In fact, every increase of 10 percentage points in smart phone penetration in a given market costs Western European operators a 0.5 percent loss of voice and messaging revenue, according to Informa calculations.

Joyn is a service made possible by the “Rich Communication Suite,”  essentially messaging applications built on IP Multimedia Subsystem (IMS) standards.

France Telecom LTE Will Cost More than 3G Service

France Telecom will raise the prices of some of its mobile offers in France when it launches faster fourth-generation Long Term Evolution mobile networks later in 2013, according to  Gervais Pellissier, France Telecom CFO.

France Telecom had done so in the U.K. market when it launched LTE services, boosting plan prices by about six to 10 pounds.

France Telecom plans to launch 4G LTE in France in April 2013.

Justice Department Asks FCC for Time to Review Softbank Acquisition of Sprint

The U.S. Justice Department has asked the Federal Communications Commission to to defer consideration of the Softbank acquisition of Sprint to give DoJ time to review the deal from a national security perspective, Bloomberg reports.

Separately, Dish Network Corp., which has submitted a bid of its own for parts of Clearwire, and also has asked for a careful review of the proposed Softbank acquisition of Sprint, said it won’t seek regulatory action to block the transaction. Dish still is pursuing its own deal to buy parts of Clearwire. 

Some observers might argue that the Dish decision not to try and block the Softbank deal is a signal that what Dish really wants is a business deal with Sprint, not an actual takeover of Clearwire. By that line of thinking, Dish really is seeking leverage to convince Sprint to partner with Dish to help Dish build its own Long Term Evolution network. 

Tablets Outsell PCs 4:1 in 2012

Tablet sales for the full year of 2012 were 267 percent higher compared to 2011. December 2012 alone saw more tablets sold in GfK’s tracked retail channels than notebook sales in the whole of the fourth quarter of 2012, according to researchers at GfK. So you might roughly say that tablets outsold notebooks roughly four to one.

Lower average selling prices might have helped. ASPs declined 23 percent year over year from 2011 to 2012, GfK says. 

YouTube to Introduce Paid Subscriptions

YouTube reportedly will launch paid subscriptions for individual channels, perhaps as early as the second quarter of 2013, according to Advertising Age.  It appears that the first paid channels will cost somewhere between $1 and $5 a month, and likely will be created by programmers already producing original content successfully for YouTube.

YouTube is treating paid subscriptions as an experiment. much like video rentals when it began in 2010. The initial group of channels will be small, likely about 25 at the outset. The revenue split from subscriptions is expected to be similar to the 45-55 split that is common for ads on YouTube. Partners will also have the option to include ads in their pay channels, but its unclear what form those will take.


Machinima, Maker Studios and Fullscreen are likely among the programmers YouTube has asked to submit ideas for paid channels. 

YouTube would initially launch around 25 paid channels. 

In the past, observers have argued that YouTube could represent the "cable TV  of the future." That might be stretching matters, at least for the moment. But if YouTube's new test proves successful, many smaller and niche programmers could find such YouTube distribution appealing.

With constantly climbing programming costs, distributors will be under pressure to pare back offerings to create lower-cost tiers of service. Those tiers will not include many niche or specialized channels. 

That inability to obtain significant carriage on video subscription networks will force budding networks to look elsewhere for audiences, and YouTube might then prove appealing.