Spectrum Policy Innovations are Coming

If AT&T, Verizon and T-Mobile USA are actively working to explore how to share spectrum now used by the U.S. Department of Defense, that is a signal that the carriers believer there is a serious chance spectrum sharing could happen, even if the carriers typically prefer to use only licensed spectrum.

The immediate focus is a proposed sharing of 95 MHz of spectrum currently used by DoD and other federal agencies, in the 1755 to 1850 MHz spectrum band.

Spectrum sharing, releasing more unlicensed spectrum and new spectrum auctions, plus reassignment of frequencies originally awarded for mobile satellite service are key ways regulators now are trying to make more spectrum available as a way of promoting mobile and wireless competition and innovation.


Since their introduction in 1994, the United States has conducted more than 70 spectrum auctions to assign thousands of wireless licenses.

But regulators also are working to increase the amount and ease of using unlicensed spectrum as well. The "white spaces" spectrum, and a new proposed sharing of 5-GHz spectrum are examples of some of the ways additional spectrum could be made available to existing and new service providers.

If three of the four largest U.S. mobile service providers are working in public on spectrum sharing in the 1755 MHz to 1850 MHz spectrum, it indicates they believe the spectrum will be made available.

What is the "Value" of the Fixed Access Network

Studies of smart phone user behavior confirm what most of us might have concluded, namely that Wi-Fi has become a key access method for smart phone users, and provides the answer to a question some might now be asking about the respective roles of mobile and fixed access networks.

That there are synergies between mobile and fixed networks is incontestable. All forms of access, whether fixed, untethered or mobile, are essentially “tail circuits” that connect users to core networks.

What is harder to determine is precisely where those synergies exist, and how big the synergy might be, when considering the highest value provided by fixed access, as compared to mobile access.

That issue increasingly is important as most people, in virtually all markets, rely on smart phones, potentially raising the issue of mobile substitution for the fixed network, and as fast mobile networks using Long Term Evolution create, in a new way, a chance to substitute mobile networks for Internet access that formerly would really have made sense only on a fixed network.

In other words, the growing question is “what is the value of the fixed network.”

Support for video entertainment, and consumption of large amounts of bandwidth at low cost, to support multiple users, emerges as perhaps the defining “value” of a fixed access connection. The key issue is that, increasingly, most digital appliances used in the home or at work use Wi-Fi, which is a wireless tail for a fixed network.

Android smart phone users tracked for a year by NPD Connected Intelligence use between half a gigabyte a month to about 1 Gbyte a month of mobile network data. Apple iPhone users tend to use a bit more.

Though the data might reflect the smaller number of iPhone users in the sample, consumption tended to run between 0.75 Gbytes a month up to about two gigabytes a month. By December 2012, though, Apple iPhone users were consuming data at about the same rate as Android users.

U.K. Android users send and receive 78% of all their data over WiFi networks, according to Nielsen, which also tracked the data usage of about 1,500 Android users.

Nielsen’s analysis suggests as much as 78 percent of all data consumed by users is using a Wi-Fi connection of some sort.

Data collected by Mobidia shows that Wi-Fi usage is close to ubiquitous in developed markets, where more than 90 percent of smart phone users also use Wi-Fi as a means of data connectivity. In Hong Kong and the Netherlands, use of Wi-Fi by smart phone users is over 98 percent.

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.