U.S. Auction of Broadcast TV Spectrum by Mid-2015?

Sometime in 2015, the U.S. Federal Communications Commission hopes most TV broadcasters will be willing to sell their analog 600 MHz TV spectrum back to the government, allowing the FCC to hold a separate auction where U.S. mobile service providers can buy that spectrum.

"I believe we can conduct a successful auction in the middle of 2015," says Tom Wheeler, Federal Communications Commission chairman.

Since 2012, when the Federal Communications Commission voted to launch the

incentive auction process, the United States has been the first nation in the world to implement a new auction process to repurpose broadcast television spectrum for mobile broadband use.

The auction will actually have two linked auctions. In the initial “reverse auction” phase, TB broadcasters will submit bids to give up their 6 MHz channels, selling the spectrum back to the FCC.

There are some 8,402 total television stations operating in the UHF and VHF UHF and VHF bands which can be sold back to the FCC, each assigned a 6 MHz block of spectrum covering a particular local geographical area.

Then spectrum will be “repacked” by the FCC so that broadcasters not willing to sell their spectrum can continue to operatre.

Finally, the FCC will conduct a traditional "forward" auction in which mobile carriers will bid for the spectrum.

The FCC's proposed band plan calls for 5 MHz blocks of spectrum to be auctioned. The FCC anticipates that there will be 6 MHz guard bands to separate spectrum blocks used by carriers, and that the "white space" between the blocks will be open for unlicensed use. "I believe we can conduct a successful auction in the middle of 2015," says Tom Wheeler, Federal Communications Commission chairman.

Another Cycle of Faulty Predictions and Forecasts is Upon Us

This is the time of year where we start seeing lots of stories about “the year ahead.” At least some of the “what will happen in 2014” predictions will prove reliable, especially those which simply extrapolate from trends already in place.

Far harder are predictions about what might happen in five, ten or 20 years. And yet we are compelled to keep making predictions, sometimes for unworthy reasons, such as when trying to prove to others “how smart we are.”

But lots of firms make a business about predictions, because there is a market for such things, even when the forecasts are unreliable. Just how unreliable is the issue.

Philip Tetlock's Expert Political Judgment: How Good Is It? How Can We Know? found that “specialists are not significantly more reliable than non-specialists in guessing what is going to happen in the region they study.”

Sam L. Savage’s The Flaw of Averages points out that plans based on average assumptions are wrong on average, because uncertainty in life is much more pronounced than people generally assume to be the case.

Nassim Talib’s The Black Swan likewise deals with the powerful impact of unpredictable and unexpected developments.

In fact, some would go so far as to say that forecasts always are wrong. That isn’t necessarily a bad thing, as minor fluctuations along a predicted trend line nearly always happen. That is true of most economic forecasting, some argue.

What is important is the trend line, not the actual results that fluctuate around a trend line.

The bigger problem is when a forecast trend fails to materialize at all, has far-lower magnitude than expected or fails to conform to a forecast timeline.

In other words, there are bigger problems when a forecasted series of events fail to happen at all, represents a much-smaller change than expected, or takes significantly longer to occur than expected.

In such cases, whole companies or industries fail to develop, fail to have big consequences and impact or happen too far in the future to have immediate practical consequences.

Forecasts nearly always become less accurate the farther into the future one predicts. One might suggest a logical reason for that failure: we tend to extrapolate present trends into the future, when history suggests different assumptions of unclear dimensions will operate in the future.

Granted, there arguably is a difference between “forecasting,” the attempt to identify ranges of possibilities and “prediction,” the attempt to describe with certitude a future event or set of events.

In practice, the dividing line is likely arbitrary and porous. The future is nearly impossible to predict, and at risk of great, sometimes fundamental error, even when forecasting.

All that said, get ready for the “2014 predictions.” And that isn't a prediction! It's an observation!

Regulators in Mexico, Brazil Act to Spur Competition in Mobile Markets

Regulators in Mexico and Brazil are taking steps they hope will increase the amount of competition in mobile communications markets.

In Mexico, where a brand-new regulatory authority has been created, and where intent to intervene in the communications and television markets has been clear, the Federal Telecommunications Institute (IFT) has notified America Movil that it will be investigated as part of IFT’s examination of market dominance in telecom and TV broadcasting.

Since America Movil has 70 percent market share, the investigation undoubtedly will find that America Movil is a “dominant provider,” and then will face restrictions intended to benefit competitors, in both fixed line and mobile realms.

Actions could range from regulating America Movil more heavily than its rivals, forcing America Movil to unbundle its network or sell assets.

In fact, asset sales already are on the agenda in Brazil, where the Brazilian antitrust authority Cade has ruled that Spain's Telefonica, which owns stakes in two firms operating in the Brazil mobile market, must sell its stakes in TIM Participações SA or seek a new partner for Vivo, Brazil's largest mobile phone carrier and part of Telefonica Brasil.

Cade believes Telefonica, which generates most of its growth from South America, has

too much market share, and is acting to force Telefonica to reduce its presence, since Telefonica has equity stakes in two of the four leading mobile service providers in Brazil.

Telefonica owns all of Vivo and has indirect ownership of TIM Participacoes.

At the moment, Vivo and TIM Participacoes have more than 50 percent market share in the Brazil mobile market.

Vivo has 29 percent share of subscribers, TIM has 27 percent, America Movil has 25 percent and Oi has 19 percent.

Telefonica owns 66 percent of the firm that in turn owns 22.4 percent of Telecom Italia, which further owns TIM Participacoes.

Cade also does not want the number of competitors in the Brazil mobile market to be reduced.

That might prohibit America Movil, Oi and Vivo making a joint bid, then breaking up TIM Participacoes between them. That might suggest an opportunity for a new contestant to enter the Brazil mobile market.

Two Views on Bitcoin

Bitcoin is a store of value, a method of payment and a virtual currency. It's also the subject of rather rampant speculation and some opposition, at the moment.

China's central bank has banned financial institutions from trading the emerging currency, while Bank of America Merrill Lynch, in its first research report on Bitcoin, said the currency has potential to become a "major means" of payment.

The People's Bank of China said in a statement on its website that Bitcoin isn't a currency with "real meaning" and that its legal status was different from other currencies.

Mobile Broadband will be 81% of Total Broadband in Emerging Markets by 2016

 By 2016, mobile broadband will represent 81 percent of broadband connections in emerging markets, according to Qualcomm.

M2M Might Represent 6% of Global Mobile Connections by 2017

Virtually all observers concede that machine-to-machine mobile connections are growing.

The big question is how much growth will happen, and how much revenue M2M will contribute.

By 2017, machine-to-machine links will account for about 17 percent of global mobile data traffic, according to Deloitte analysts.

Berg Insights predicts M2M connections will grow at a compound annual growth rate of 24.4 percent to reach 489.9 million connections in 2018. 

If there are 8.5 billion total mobile connections by 2017, M2M would represent perhaps six percent of global mobile connections.

Chinese iPhone Buyers are Not "Average"

Can Apple succeed in the China market with its strategy of selling primarily in the "premium" segment of the handset market?

Though some doubt it, others think the strategy will work.

Doubters tend to point to low "average" income.

Mean (arithmetic average) and median (half of instances higher, half of instances lower) metrics do suggest something about the amount of income earned by residents in a country, but are not as helpful in illustrating the range of income earned either by individuals or households.

That is significant for sellers of luxury goods, of course, and are key to Apple’s hopes in China, where the Apple iPhone will be a pricey option. Some argue that most consumers will not be able to easily afford an iPhone, since Apple has not released a “low cost” iPhone.

That is not the point, others might say. Apple is pinning its hopes on a segment of the market that can afford the device, and will count on the income of potential buyers in the upper deciles of income distribution in China.

In China, income distribution, if not magnitude, is rather well correlated with income distribution in the United States, for example.

In one measure of income data, looking at the number of individuals whose incomes fall within a specified range of the average gross income of all individuals aged 15+ in that country or region, China and the United States are similar.

In China, 36 percent of people had incomes 200 percent above average, compared to 40 percent in the United States, for example.

Most significantly, the middle class in China, as elsewhere in the developing world, continues to expand in absolute terms.

Amit Daryanani of RBC Capital Markets estimates Apple will see an additional $9 billion to $10 billion in annual revenue added from a deal with China Mobile, for example.

By some measures, an iPhone could cost 10 percent of annual income in China. But that's the point: Chinese iPhone buyers will not have "average" income.