Spectrum Buzz

By John Celentano, Strategic Marketing, TESSCO Technologies

Seems like radio frequency (RF) spectrum, or lack of it, is a hot topic these days.

Consider the recent buzz on spectrum in the industry.

• AT&T, in addition to owning a large block of 700 MHz spectrum along with its 850/1900 MHz holdings for its cellular network, is willing to plunk down $39 billion to buy T-Mobile USA, ostensibly to gain access to T-Mobile USA’s extensive spectrum holdings across the country. If the deal goes through, AT&T gains T-Mobile USA’s existing 1900 MHz spectrum and more importantly, the 120 licenses of AWS (1.7/2.1 GHz) 20 MHz spectrum for which T-Mobile USA paid $4 billion in the 2006 auction.

• Right behind that, AT&T has offered to buy 22 700 MHz licenses from a rural service provider that operates in parts of Minnesota and Wisconsin.

• Verizon already has started its LTE build-out in the 700 MHz band as an overlay to its existing CDMA 1900 MHz network. The company just announced LTE build-outs in 21 new markets starting in June 2011.

• Sprint with its Network Vision architecture intends to recast its customer access to available spectrum by consolidating its holdings across the 800/900, 1900 and 2500 MHz bands.

• On May 20, 2011, the FCC issued a Public Notice inviting technical input on how to maximize the 2 GHz band for fixed/mobile applications.

• WCAI itself has been vocal in calling for channel allocations that are both wider and contiguous in certain bands such as 2.5 GHz. Such adoption by regulators would make use of this spectrum more “effective and efficient.”

Spectrum translates into bandwidth. More bandwidth means wider channels for carrying information. Wider channels mean faster download speeds that can support a greater array of services: high-speed Internet access, mobile voice, and increasingly, video. And more services simply means greater revenues for the service providers.

Where is all this demand for more spectrum coming from? Quite simply, it comes from the surge in usage of data-intensive smartphones, tablets, and mobile-enabled laptops that is driving demand for any speed, anywhere, any media services. If the carriers are going to deliver, they will need access to more spectrum wherever it can be made available.

Consider what happened when AT&T first released the Apple iPhone. In the beginning, the company was pleasantly surprised at the customer take-rates despite the iPhone’s high purchase price. But then, with literally millions of iPhones coming online in major markets in a matter of months, AT&T began to see its network suddenly bog down as all those data-rich devices tried to get a high-speed connection. Clearly, the company was unprepared for the surge in data traffic usage that iPhones generated. Needless to say, iPhone users were not very happy with AT&T’s performance. So the company embarked on a rapid network upgrade program to expand capacity in both the access network between customers and cell sites, and in the backhaul network that connects cell sites to switching centers. AT&T’s current motivation in scooping up more spectrum likely has as much to do with avoiding future network congestion as it does for providing new data-rich services. In this context, all wireless service providers, whether in metro or rural markets, are facing similar capacity issues.

This situation begs the question: how much investment will be needed to build the network that can handle all this traffic?

Two main factors drive wireless capital expenditures (capex) – the number of wireless devices connected to the network, and the minutes of use (MOUs-voice & data) that each device generates. The number of devices is proliferating when you count smartphones, tablets, mobile-enabled laptops, and growing volume of machine-to-machine (M2M) connections for a host of industrial and commercial applications. And each device is churning out ever-increasing megabits per second of information. Taken together, the data traffic load on the network is expected to grow at high double-digit rates annually with no foreseeable deadline. This means that wireless carriers will book, for some time, significant capex as they expand area coverage and increase data-handling capacity, while beefing up the backhaul network throughput.

In the end, this capex pace and duration will be gated by the amount of spectrum being freed up over the next several years. That will create even more buzz!

It Was 15 Years Ago Today….

Author: Bob Quinn, Sr. Vice President - Federal Regulatory, AT&T

Maybe that doesn’t have the toe tapping groove of the opening line from Sgt. Pepper but it seems a fitting way to mark the 15th Anniversary of the 1996 Telecommunications Act. And, maybe the occasion won’t get the same play that Facebook got for its 7th anniversary last week, but that law was the first major overhaul of America’s communications rules since the 1930s.
Think back to what “communications” meant when Congress wrote that law.

People were dialing up the Internet to access their Prodigy or CompuServe accounts. But perhaps the great technological innovation of 1996 was America Online’s introduction of the Buddy List to make IM’ing easier. Speaking of AOL, around that time, there was a memorable Time magazine cover story with the headline, “AOL Wins!” Try saying that in front of a mirror today and keeping a straight face. On the wireless front, about 38 million Americans were subscribers and their phone calls went out over the nation’s 24,000 cell towers. Today, there are about 295 million subscribers whose communication goes out over more than 250,000 cell towers.

Your phone was only slightly smaller than your shoe (The first Motorola StarTac wouldn’t hit the market until later in 1996). You watched movies on your VHS recorder, which had finally won the technology battle with Sony’s Betamax, although there was a new DVD technology just coming on the market. You may have finally purchased a car with a CD player but you probably still ran with a Walkman (the Discman still skipped while running). And this new DirecTV satellite video service was making me think I might want to replace my Continental Cable service. iPods? iPhones? iPads? Didn’t exist. I mean, Steve Jobs wasn’t even working at Apple again yet. Satellite radio? Sorry, not for another couple years. Laptops….really expensive. You Tube? Facebook? Google? Mark Zuckerberg was 12, and Larry and Sergey were PhD candidates who had known each other less than a year. Heck, the Today Show was hosted by Katie Couric and Bryant Gumbel instead of Matt and Meredith.

So, a lot’s changed since then.

At the time, no one envisioned the world we live in today. The entire regulatory silo landscape underlying the ’96 Act has collapsed. Cable, Skype and Google competing with plain old telephone service? Long distance a distant memory? Cutting the cord and going wireless only? Watching “TV” over the Internet? Surfing the Internet on a wireless broadband connection? Not really part of the plan in the mid-90s. The idea of integrated services wasn’t fully understood 15 years ago. Does anyone really think we fully grasped the importance of broadband in 1996? Of course, not. How could we? No one could have predicted the extraordinary impact it would have on our lives.

And here we are operating under a regulatory structure that was built around a marketplace that has virtually disappeared. Which leads us to today’s FCC Open Meeting.

The FCC is expected to launch a proceeding that has an almost eerie feeling of late-90s “déjà vu all over again.” The Commission is once again looking at whether to reform two subsidy programs whose problems have hung over the communications marketplace for more than a decade: the Universal Service Fund (USF) and Intercarrier Compensation (ICC).

We salute the Commission for recognizing the need to modernize these broken systems. To state the obvious, we will not realize President Obama’s goal of universal broadband, if USF and ICC are not aligned to the realities of today’s innovative technologies and marketplace. Broadband simply will not be made available to some consumers if the government continues to reward and require providers to offer plain old telephone service in the same way those providers have been delivering service for the past 100 years.

It truly is time to re-examine our communications priorities. At AT&T, we think we should have a clear vision of where we are going. Here is what we think the world will look like: we will move the goal of all Americans having universal access to voice service to one where the goal is provide universal access to broadband service. Broadband is and will continue to be an interstate service and the service will not be “split” (or separated if you like) between federal and state jurisdictions.

The PSTN will ultimately go the way of the Betamax, the VHS player and the Walkman and we will understand that that is a good thing. Broadband subsidies will be only for broadband, will be explicit and provided only in areas where broadband would not exist without the subsidy. We will not subsidize different competitors in a market. The regulatory obligations that attach to those subsidies will be explicit as well.

In recent days, the Commission has seen a parade of companies (often regulatory adversaries) including Google, AT&T, NCTA, NTCA, Verizon, Sprint and others urge reform of the broken, non-transparent subsidy programs. The fact that such a disparate group of competitors has come together should be a sign that the time for the Commission to act is now. I think the Chairman’s speech yesterday and the action by the Commission today do a great job of beginning this long overdue journey.

Reprinted from the AT&T Public Policy Blog.

The National Association of Broadcasters Is Wrong about Spectrum

It appears that the National Association of Broadcasters (“NAB”) is trying to thwart incentive auction legislation by arguing there is no spectrum crisis. In a letter sent to the leaders of the Senate and House Commerce Committees, NAB claims that wireless carriers are sitting on $15 billion of spectrum. They base this claim on an article published by dailywireless.org.

The article’s allegation that wireless providers are sitting on spectrum is just plain wrong. For example, the dailywireless.org article claims that AT&T won’t use its 700 MHz spectrum anytime soon (even though it will begin deployment this year), and that “[t]elecommunication companies should loose [sic] it or use it.” The reality is that, if 700 MHz licensees don’t use their spectrum in a timely manner, they will lose it. The buildout requirements applicable to the 700 MHz band are the strictest the FCC has ever adopted and were designed to ensure that 700 MHz licensees quickly deploy next generation 4G networks based on the LTE standard. Those FCC standards already contain a “use it or lose it” provision that provides more than enough incentive for rapid deployment at 700 MHz. (Disclaimer: I was Chief of the FCC’s Wireless Telecommunications Bureau when the 700 MHz rules were adopted and the auction was held.)

The author of the article apparently believes wireless providers should have begun deploying their 700 MHz networks the moment they received their licenses. Of course, that was impossible. New standards and hardware need to be developed whenever a new spectrum band is made available, which takes time. Hardware designers hadn’t even begun designing chipsets, test equipment, and base stations for LTE when the 700 MHz auction was held, and the LTE standard continues to be further refined and developed. Given this reality, the timetables for deployment in the 700 MHz band are very aggressive: These networks are already under construction only a few years after the auction was held and are relying on the earliest hardware implementations of the LTE standard. In contrast, the broadcasters’ transition from analog to digital took more than 20 years. Work on the digital television standard began in the late 1980’s, but the digital transition wasn’t complete until 2009 – and even then it was the result of a Congressional mandate rather than the voluntary efforts of the broadcasters.

The facts also show that even this aggressive deployment of 4G networks on current spectrum won’t be enough to satisfy consumer demand. AT&T’s mobile network traffic increased 5,000 percent after it began offering the iPhone, and data usage levels continue to rise. If more spectrum isn’t made available, service providers will face a spectrum crisis as early as 2014. America can’t afford to let this happen, and American consumers won’t stand for it.

Fox, Cablevision and the Demise of the Terminating Monopoly

By Hank Hultquist, Vice President-Federal Regulatory, AT&T

Day three of “House” Held Hostage.

While many (ok, just a few) folks are focused on the fate of “House,” the medical TV drama on Fox, we here in Tech/Telecom Policy Land are watching a sea change in what the Fox/Cablevision drama is telling us about the net neutrality debate.

Earlier this year, we filed comments in the FCC’s Open Internet proceeding, explaining, at great length, exactly why the “terminating monopoly” theory of net neutrality regulation (one of the policy justifications used for imposing rules on ISPs), just didn’t make sense in the Internet ecosystem.

Well, in a semi-controlled experiment still underway, Fox and Cablevision are doing a pretty good job proving that point. Some would even say the (ISP) King is dead. Long live the (Content) King. Fox and Cablevision are embroiled in a dispute over retransmission consent that has resulted in Cablevision customers losing access to Fox channels. Over the weekend, the dispute briefly escalated to the point where Fox was allegedly blocking Cablevision’s Internet customers from accessing Fox content on Hulu and Fox.com.

Several prominent supporters of net neutrality regulation, including Representative Ed Markey and Public Knowledge rushed in to complain that such action was inconsistent with the FCC’s Open Internet principle that protects the right of users to access the lawful content of their choice – an irony given that many of those same folks insisted that the FCC’s net neutrality proposals should focus solely on ISPs not content providers like FOX. By way of example, see this comment from Public Knowledge, remarking that the FCC’s Open Internet draft rules only apply to ISPS: “The proposed Open Internet rules make no attempt to regulate broadband access providers in their role as content providers and editors. In fact, the Open Internet rules make no attempt to regulate anyone in their roles as content providers or editors.”

Parenthetically, I sincerely hope everyone’s enjoying irony #2 of this drama – Cablevision being denied access to programming, while it simultaneously refused to provide Verizon with access to a NY gubernatorial debate…IN THE MIDDLE of this dispute with Fox. While Cablevision has never shied away from taking an “aggressive” view of its rights to deny programming to its competitors, you gotta admire the chutzpah in this case.

So, how does Fox’s temporary blocking of Internet content to Cablevision customers show that there’s no terminating monopoly problem on the Internet? Simple, here’s how. As any telecom lawyer/policy wonk will tell you, the so-called terminating monopoly on the PSTN was created by the confluence of two factors that arose from common carrier regulation: the ability of local phone companies to file tariffs requiring long distance companies to pay them access charges and the INABILITY of long distance companies to block calls to those local phone companies.

On the unregulated Internet, we’ve got the opposite situation. Cablevision (the local phone company in this analogy) has no tariffing power, and Fox and presumably other content providers (the long distance companies in this analogy) appear ready to block the transmission of content when they think it’s in their business interest to do so. By the way, this same type of thing occurs every day when ESPN blocks certain premium content for Internet users whose ISPs don’t pay ESPN for the privilege of accessing that content. Far from being the victims of a terminating monopoly as some pro-regulation advocates predicted, these content providers clearly see themselves as possessors of an “originating monopoly.”

The demise of the “terminating monopoly” school of thought has profound implications for the debate over net neutrality. If content providers can collect “tolls” on the Internet and ISPs don’t have the unilateral power to force third parties to pay to “use their pipes,” then what is the point of the net neutrality debate anyway?

Additionally, many people are questioning whether the “Incident at Hulu Hill” represents a net neutrality violation or not? We don’t know the answer for certain, but the question reminded us of a rather prescient statement by Commissioner Michael Copps that might just hint at the FCC’s ultimate answer: “In particular, we need to recognize that the gatekeepers of today may not be the gatekeepers of tomorrow. Our job is not so much to mediate among giants as it is to protect consumers.”

Reprinted from the AT&T Public Policy Blog.

The Danger of Dogma

Hank Hultquist, Vice President-Federal Regulatory, AT&T

Reprinted from the AT&T Public Policy Blog.

One of the central dogmas of the Church of Extreme Net Neutrality (CoENN) is that quality of service on the Internet, or using the preferred nomenclature of the CoENN, “paid prioritization” is the equivalent of a deadly sin.
The CoENN creed against quality of service states that paid prioritization of Internet traffic: (1) has never been contemplated by standards organizations like the Internet Engineering Task Force (IETF); (2) does not exist on the Internet today and, to the extent it exists anywhere, is probably being used nefariously by the pagans; and (3) if it did exist on the Internet, it would be available to and affordable for only a small number of deep-pocketed hegemons.

These iniquities of paid prioritization are spelled out in a recent filing at the FCC in which Free Press preaches the old time religion of the dumb network. But, like so many dogmas, this one turns out to be, well, not exactly true.

Which leads me to the letter we filed yesterday in the FCC’s Open Internet proceeding to correct the record with respect to paid prioritization. In a nutshell, we point out that, contrary to the CoENN’s claims: (1) the IETF documents clearly contemplate and permit differentiated pricing of Internet traffic based on the use of prioritization; (2) paid prioritization of Internet traffic is widely available to businesses today; and (3) such prioritization is often voluntarily purchased by small and medium-sized enterprises, including minority-owned businesses and community organizations.

I think our letter speaks for itself, and provides the details and facts on these three points in a succinct five pages, but I would like to elaborate briefly on a couple of points. First, the elders of the CoENN seem to have adopted a somewhat self-contradictory creed. At various times, Free Press has expressed the view that any router-based prioritization of Internet traffic is by definition harmful to unprioritized packets. Yet now they seem to have endorsed the use of DiffServ, which is a mechanism for router-based prioritization, as long as it is in the control of “end users.”

Free Press apparently does not recognize that content and application providers may also be “end users” of Internet access services. Indeed, to the extent that packets must be marked for prioritization at their origin, content providers may be the “end users” best placed to make use of DiffServ.

One sometimes hears from members of the congregation of the CoENN that the introduction of paid prioritization would enable ISPs to turn best effort Internet transmission into a “dirt road” and force virtually the entire Internet ecosystem to “pay extra” for prioritized transmission. (Query: why would ISPs require such an elaborate scheme to raise rates if they have the market power attributed to them by the CoENN?) Yet now Free Press seems to suggest that ISPs would restrict prioritization to only a few “deep-pocketed Internet giants.” While I enjoy the Da Vinci Code conspiracy theories as much as the next blogger, I do expect at least some superficial consistency.

Finally, Free Press has tried heroically to distinguish “router-based” prioritization from “geographic” prioritization (i.e., CDNs), based on unsubstantiated allegations that geographic prioritization does not result in any displacement of unprioritized traffic. For whatever reason, they apparently never subjected this particular doctrine of the faith to any empirical testing. Well, someone else did and found that geographic prioritization can be quite effective in pushing unprioritized packets to the proverbial slow lane.

The FCC must view with healthy skepticism the interpretations and opinions it receives on technical Internet standards, and how they are operationalized by ISPs, from an advocacy group with no demonstrable expertise or experience in such matters. When it comes to data-driven policy making, there is no room for faith-based initiatives, as Chairman Genachowski testified before Congress last year.

The Not So Elusive Middle Ground

By Jim Cicconi, Senior Executive Vice President-External and Legislative Affairs, AT&T

Amidst the flurry of blogs and op-eds on net neutrality, Title II and broadband reclassification that cross my desk on a daily basis, it was a welcome and refreshing change to read Paul Misener’s piece that ran in CNET last week.

Although I don’t agree with everything the vice president for global public policy at Amazon.com had to say (what do you mean network operators haven’t deployed innovative new services?), Paul does lay out a fair airing of the issues to help reach what some people think is an elusive middle ground.

I was particularly pleased to read Paul’s clear recognition that certain quality-of-service (QoS)/network management practices by ISPs are not only necessary but in the best interest of consumers. I couldn’t agree more.

Paul also correctly notes that net neutrality violations have been extremely rare, both before and after the now infamous Comcast court proceeding. The end-of-the-world scenarios that some groups have used as scare tactics to push their agenda have never come to fruition.

I don’t agree, however, with Paul’s assessment that this is because threats of legislation and regulation have kept network operators “on their best behavior.” AT&T has long committed to preserving a fair and open Internet, and to working hard with all stakeholders to reach some kind of consensus. In fact, last December, building off of others’ thoughts and proposals, I outlined what I believe is a path forward to reaching a middle ground.

Paul’s piece is thoughtful and insightful, and a step in the right direction. I hope more stakeholders take the time to read it and, perhaps, make similar efforts to find a “win-win-win” solution. Between the meetings on the Hill and the meetings at the FCC (which include a broad group of industry players, such as AT&T, Amazon, and OIC), I like to think that it’s possible.

Reprinted from the AT&T Public Policy Blog.

4G Wireless Network Roaming Challenges Cited at WCAI Symposium

Industry representatives participating in the WCAI’s International Symposium panel on roaming last week cited the challenges carriers will face in inking roaming agreements on 4G networks and suggested that the FCC leave data roaming up to the market instead of imposing rules, according to TR Daily coverage. Joan Marsh, vice president-federal regulatory for AT&T, and other panelists cited the difficulty of knowing exactly at this point how roaming agreements for 4G services will work in light of the absence of a standard for LTE technology, as well as uncertainty about the exact applications over networks. Speakers also noted that standards for VoIP offerings over a 4G platform haven’t been adopted. Jim Schlichting, senior deputy chief of the FCC’s Wireless Bureau, suggested that one of the factors the FCC will consider when mulling whether to change its roaming rules is the expectation of consumers when using the mobile Internet. He noted the agency also must consider whether it has the jurisdiction to regulate data roaming.