One More Reason We Cannot Tell What Impact Common Carrier Regulation Has on Investment

There remains significant debate about the imposition of common carrier regulation on Internet access services, in particular the effect on capital investment in new facilities. Determining any such impact is not an easy, for any number of reasons.

The Phoenix Center for Advanced Legal & Economic Public Policy Studies provides yet one more reason why it is nearly impossible to gauge such impact.

As a mandatory condition of the AT&T deal to buy DirecTV, the Federal Communications Commission  required AT&T to build out fiber to home connections  to 12.5 million customer locations within four years after the deal closed.  

The FCC would rationally fear that its reclassification of broadband Internet access as a Title II telecommunications services will reduce investment incentives, counter to the mandate of Section 706 to promote availability and adoption via infrastructure investment.  

By mandating that AT&T engage in aggressive wireline investment as a condition of its acquisition of a DBS satellite provider (a ridiculous proposition on its face), the Commission virtually ensures that investment will grow by whatever amount it takes to install 12.5 million new fiber-to-home connections by AT&T.

That’s one way to ensure investment. But the investment tells us nothing about the direct impact of common carrier regulation on supplier incentives.

Sprint Spins Off Device Financing to New Mobile Leasing Solutions Company

Sprint spends $10 billion every year on devices. Hence the value of its shifting of device funding to a newly-formed Mobile Leasing Solutions.

Sprint will sell to, and then lease back, devices from Mobile Leasing Solutions. That will result in $1.1 billion in cash proceeds at closing.

The cash proceeds are part of approximately $1.2 billion in total consideration that are expected to be exchanged for approximately $1.3 billion of leased device assets, Sprint says.  

The transaction, which is expected to close in the first week of December, will immediately improve the company’s liquidity position and the funding comes at an attractive cost of capital, which is well below Sprint’s alternatives in the high-yield debt market, the company says.

“Providing mobile devices to customers is the biggest use of cash in the carrier model and with this new structure we have more closely aligned Sprint’s cash flows with those associated with leasing devices to our customers,” said Sprint CFO Tarek Robbiati.

Mobile Leasing Solutions, LLC was formed by a group of equity investors including SoftBank and has secured debt financing from several lenders including international banks and leasing companies.

Brightstar Corp. through its Financial Services Business provided support in structuring the transaction, including assisting in the formation of Mobile Leasing Solutions, LLC which is utilizing Brightstar's Lease Management and Tracking System.

Brightstar has also been contracted to provide reverse logistics and device remarketing services, which will include a forward purchase agreement that is being finalized with Foxconn, thus minimizing the downside risk of future changes in device residual values.

Who Will Defect to Sprint Because of New "Half Off" Offer?

This chart tells you why some analysts are queasy about Sprint's new half off offer for current subscribers of T-Mobile US, Verizon or AT&T mobile services. 

Some might note that the half-off offer had initially be restricted to consumers on AT&T and Verizon networks. 

The latest offer adds T-Mobile US. 

So some might argue that the likely impact will potentially be felt most by T-Mobile US, the reason being that customers of AT&T and Verizon who found the half-off offer compelling already would have taken advantage of the offer. 

Mobile Represents 94% of Internet Accounts in India

In India, fixed networks support about six percent of Indian Internet access connections, while mobile supports about 93.5 percent of such connections. Since growth rates for mobile Internet are vastly higher than for fixed networks, it is self evident that mobile is the primary platform for Internet access in India.

There were in October 2015 some 375 million Internet users in India, according to the

Internet and Mobile Association of India.

According to the Telecom Regulatory Authority of India, there were in March 2015 about 15.5 million broadband fixed line Internet access accounts and some 3.6 million narrowband accounts, for a total fixed network Internet access base of about 18.9 million.

In March 2015 there were about 83.2 million mobile broadband customers (3G, mostly) and some 199.6 million narrowband mobile consumers (2G), representing some 282.8 million mobile Internet customers.

So fixed Internet access represents about two percent of the narrowband Internet access accounts. Mobile represents 98 percent of narrowband Internet access accounts.

Fixed broadband accounts represent about 16 percent of total Indian broadband Internet accounts. Mobile represents about 84 percent of broadband Internet access accounts.

source: TRAI

source: eMarketer

PTC16 is Coming in January 2016

PTC16 is coming! 


PTC'16: A Truly Unique Industry Experience from PTC-TV on Vimeo.

Moore's Law Not Broken, Intel Says

Moore's Law is not exhausted, Intel says. That matters for all matters related to computing power and storage and the cost of computing and storage.

Moore’s Law, formulated in the 1960s by Intel chairman emeritus Gordon Moore, predicts that the number of transistors on a chip will double roughly every 18 months to 24 months.

That trend has enabled better, faster, smaller and cheaper tech products, and it has allowed miniaturization to proceed so that the gap between circuits is now only 14 nanometers, or 14 billionths of a meter. That has been an issue, though.

Production yields for 14-nanometer chips have been difficult and are behind where Intel wanted to be. But yields are improving. "14-nm is harder than we thought, but we do not see a long-term difference in what we were able to see in the past and what we can achieve in the future,” said Bill Holt, Intel EVP.

So Intel is comfortable the linear trend associated with Moore's Law can continue.

Comcast Stream TV Usage Does Not Count As "Usage" for Internet Access Customers, Nor Should It

“Stream TV” is a managed video service sold by Comcast. For that reason, Comcast high speed Internet access customers are not charged for usage when they watch Stream TV content, any more than they are charged data usage when watching linear TV.

Consumer managed services that happen to use IP are exempt from all network neutrality rules. That applies to carrier voice or messaging, as well, for example.

In some quarters, zero rating is viewed as a violation of network neutrality rules, not in the sense of violating the rule about “best effort” access, but because, some say, zero rating does not “treat all bits equally,” in a business model sense.

For such reasons, some object to T-Mobile US allowing access to all compliant streaming audio or streaming video services without any charges against a mobile Internet service plan bucket, despite the obvious consumer benefits.

Some might argue network neutrality does not--or should not--apply to business models, pricing, terms and conditions for Internet access services.