Several entries ago, I wrote about a growing “Arms Race” (blog August 18, 2006) between cable and telcos vying to deliver video services as part of a bundle to consumers, and the beneficial impact on network investment. The observation was prompted by a Cable Labs report concluding that the big telcos' big big investments in fiber technologies would require an investment response by cable somewhere down the line in ordert to remain competitive.
That same blog discussed the AWS, or Advanced Wireless Services auctions ongoing at the FCC. While several of the incumbent wireless licensees are front runners, a consortium of cable companies (SpectrumCo, LLC) is likely to get some spectrum. Which is another way of saying that the arms race, at this stage, is not limited to wireline services; or, if that is the deal, someone forgot to tell the cable consortium. (Note: while I'd like to take credit for creating the dramatically shaded table chock full of data, linked above, I pulled it from the FCC's official auctions homepage.)
Other entries in August concern the proliferation of Wi-Fi hotspots, the expected appearance of other wireless competitors using other technologies (Clearwire is in 28 markets nationwide already) along with incumbent wireless companies (Sprint, Cingular, and Verizon) marketing wireless services that, while not quite 3G or “third generation” in capacity, at the very least provide service capabilities above the current FCC benchmark for broadband services, defined at 200 kps (kilobits per second)(Sprint also plans a Wi-Max network buildout).
Satellite broadband is out there as well, having eliminated the need for the phone uplink to send data; I may be very tempted to try this service out, but haven’t gotten around to digesting the details that stream from DirecTV's home page. They’re not shy about advertising for the service – at least on satellite TV, that is. And DirecTV has another interesting play on a bundled package using the phone wires that it may offer to apartment dwellers and people who live in gated communities (through a venture called DirecPath).
Meanwhile, CLECs (or Competitive Local Exchange Carriers) have turned in some pretty good earnings numbers of late (blog August 15 "Competitive Telecom Carriers Become More Competitive"). Two CLECs, US LEC and Paetec, have merged to pool their resources to take advantage of any customer service fumbles occasioned by the mergers of the large telcos, where one of the stated cost savings behind the mergers in the first place is to serve Enterprise customers, and cable wants to serve these customers too.
About two months ago I surveyed the landscape in a long conversation with a newly minted broadcasting type, and we discussed the probable migration of large telcos into urban areas to compete with cable, while scrambling for content, some of which is produced by broadcasters, and spotted some natural alliances there, and he came up with a nice line, "that it’s back to the future, all over again." By the way, carriers shedding access lines is nothing new, and it too creates opportunities for new operators to streamline these facilities.
To net this all out, the above activities are giving rise to plenty of scrambling among service providers to: 1) upgrade networks to provide more robust services and attractive bundles to consumers; 2) provide better service to customers (because lets face it, if you don’t have a Ph.D. in network engineering, you may find yourself challenged to fully exploit your telecom services these days); and 3) align yourself with content providers and web portals (this has created a web of relationships all its own).
Other than the above, it’s August, and fairly quiet: these are good things.
The Silicon Flatirons Telecommunications Program fall conferences get under way September 7, 2006, complete with an all star wireless cast, given that the topic du jour is “Wireless Revolutions."
This program is fairly lengthy, with tutorials and a panel discussion, which is all the more reason to attend; you’ll get your money’s worth with a stellar group of industry experts, and a networking function thrown in for good measure. The conferences are not expensive, but you do have to make it to Boulder, Colorado to see them. Later this fall, the Silicon Flatirons series will explore cable's frontier and the intricacies of network convergence, again featuring excellent panels of industry experts.
While I try not to get too caught up in endorsements in these pages, I have to make an exception for the Silicon Flatirons series; they are simply excellent events, opening windows into telecom policy that you won't find anywhere else.
AT&T, once opposed to municipal Wi-Fi buildouts, has decided that if you can’t beat ‘em, join ‘em, having signed up to build a citywide wireless broadband network in
In other Wi-Fi news today, the Wall Street Journal (which also has a piece on the Springfield deal above) reports that the Wi-Fi Alliance will begin an testing and certification program for companies using a different, faster version of the 802.11 standard (802.11n), prior to the formal specs being defined by a committee of the Institute of Electrical and Electronics Engineers (IEEE), which the Wi-Fi Alliance fears could lead to customer confusion and a less-than-stellar user experience. Some manufacturers want to sell the new technology before the ink is put to page on the IEEE formal definition of 802.11n.
The kicker here is that consumers have flocked to laptop computers, in part due to the ease with which Wi-Fi networks allow flexibility and mobility of use.
Just to make sure that everyone’s on the same page, let’s agree that we have entered uncharted markets territory. Since hindsight is… very sharply focused, I find it interesting to observe tidbits from the (continuing) tech bubble fallout earlier in the decade. Today’s Wall Street Journal relates MTV’s woes online. Seems that the mainstream rebel finds itself lost amidst new competition for edgy material, and perhaps a little too centered upon the “TV” – as in reality TV – part of its name, perhaps shortchanging “M” lovers that might otherwise tune in.
Following the tech bubble’s widely publicized bust, “dot-com” was not a charitable appellation, and some large companies steered clear of the online world, or abandoned any fledgling cyberspace efforts lickety split. During broadband’s struggle for respectability, or relevance, several years back, I recall a comment that broadband wouldn’t hit the big time until Hollywood got involved, with the caveat that Hollywood wouldn’t get involved until we hit a tipping point of around 30 million broadband users – and we’re way past that now.
According to a Pew Internet and American Life Project, home broadband adoption by Americans clipped past 84 million as of March 2006. Read the report.
Established names in one medium don’t necessarily instantly translate into another medium, particularly into one as squishy (as in no rules) as the online world, where, going to Pew Internet Project (PIP) again, 48 million Americans have posted content online and the majority of them are home users, with 36 million Americans sharing “their own artwork, photos, stories, or videos” online (emphasis in original). Since the PIP report came out in May, these numbers are off, but something tells me they haven’t gone down.
The WSJ MTV story asserts that online creatures such as YouTube and MySpace are clobbering MTV in terms of unique visitors to their sites: so much for the benefit of a 25 year head start. The article also states that MTV’s parent company, Viacom, may have been overly cautious about embracing the online world until its Chairman, Sumner Redstone, pointed this out. All of which brings me to an interesting little announcement from those online “garage entrepreneurs,” none other than Microsoft and Verizon.
They’ve announced a nice little, co-branded venture to enhance the online experience, making it more personalized, through Microsoft ® Windows Live ™ for Verizon DSL and FiOS Internet users. It’s nice to see when somebody “gets it.” They get hammered for “getting it,” but Verizon certainly likes to see that somebody else “gets theirs” too, and so I wouldn’t want to omit notice of this minor sentence from the press release:
"By expanding our relationship with Microsoft, a leader in Internet solutions, we continue our commitment to creating the best value in broadband, offering more and better choices than cable and creating a superior online experience."
Following a follow-up conversation with a fellow policy watcher about the FCC's Broadband Report – a sort of a semi-annual scorecard that immediately gets tossed into play to effectuate various policy ends – I realized that I had more questions than answers about some of the FCC’s numbers and what the trend lines mean.
First, while wireless services show tremendous growth in the most recently released report, an issue arises – are these wireless services of sufficient bandwidth to constitute viable alternative service offerings to cable or DSL? Keeping in mind the FCC’s baseline of broadband as 200 kbps, Table 1 of the Report shows mobile wireless service growing from 379,000 or so to over 3.1 million from June 2005 to December 2005 (the dates covered in the report).
Tallying every service over 200 kbps might lead to the impression that these are true 3G services, and that any user fed up with cable or DSL has a comparable alternative in a wireless service, depending upon the user's location. A higher bandwidth bar, however, might give a more accurate view of where things stand in terms of service capabilities (but, having created a couple of government forms myself, it's not always easy to get the information you want).
The contrary view, however, is that much depends on individual usage needs, so that “2. something G” speeds may be sufficient for some mobile users, but completely inadequate for other users, that is, no substitute for a 3 or 6 Megabit wireline service. General customer use patterns are also relevant, as are the types of devices that people use to connect to the network.
On this score, over the past several months, Barrons has run a gadget of the week column, and this week features a Lenovo laptop with Cingular wireless service built right in. Another gadget from a while back was a Cingular wireless card that enabled speeds of 500 to 750 kbps; nothing spectacular, but good enough in a pinch, or if there is no other connection available.
I’d seen another blogger typing away on his laptop in a variety of situations in some of the House buildings – standing in line waiting to get into a packed hearing, once; taking refuge in the hallway during another hearing, a real snoozer – and while he didn’t exactly go wild over the service he was using (EV-DO), it did allow him to connect to the network and get things done.
Wi-Fi reporting on the FCC's Broadband Report presented another question. My hunch was that Wi-Fi wasn’t reported, so I took a look at the FCC Form 477 filing instructions, to confirm, and found out the instructions run to 17 pages (remember, it's neither easy to make a government form or to get people to fill them out correctly). I also found out that my hunch is probably correct, but without talking to someone at the Commission, I wouldn’t want to “bet the farm” on it.
Entities required to file Form 477 include “Facilities-based Providers of Broadband Connections to End User Locations,” but “do not include providers of fixed wireless services (e.g., “Wi-Fi” and other wireless ethernet, or wireless local area network, applications) that only enable local distribution and sharing of a premises broadband facility.”
The continuing proliferation of Wi-Fi hotspots, and their apparent exemption from filing, means that robust broadband connections may be underreported. It would be impossible to quantify the number of actual users anyway, which may be the reason to exempt these applications from filing, but it would be interesting to find out what’s going on.
IBM purchased an Internet security company named Internet Security Systems for $1.3B. This follows two other purchases this month of management and assets tracking companies, which will help IBM offer services to businesses to protect against data theft and manage other secure customer information, such as that held by banks.
A little over a month ago, at the FCC's Technological Advisory Council (see "Technology Trends" blog July 28), Bill Hancock, one of the presenters, flatly stated that "security is where networking was fifteen years ago" during a presentation that linked consumer confidence, broadband growth, privacy and security in very entertaining fashion.
His slides are posted on the FCC's TAC page from the July 20, 2006 meeting, but it's more fun to see him do his broadband security schtick in person.
The Chairman of the Federal Trade Commission (FTC), Deborah Platt Majoras, spoke out Monday on strong “network neutrality” protections endorsed by some powerful Internet companies in telecom reform legislation making its way through Congress.
The FTC has authority over competition and market issues involving telecommunications matters, along with the Department of Justice and the FCC. The FTC plans to examine the net neutrality issue in a conference this fall involving the FTC’s Internet Access Task Force.
Without any further editorial ado, if interested, one might view the news release from the FTC, together with a copy of Chairman Majoras’ comments here:
The EU has backed a decision by the German telecom regulator ordering Deutsche Telekom (DT) to share its high speed Internet network with rivals. The decision is similar to another telecom regulatory agency decision recently arrived from overseas, affecting Telstra, in
The German government originally agreed with DT that forcing the company to share its high speed network would not allow it to recover a profit on its buildout. The EU disagreed, essentially forcing the German government to reconsider its earlier decision.
DT’s previous posture forced competitors to build their own networks – what the
Under the new decision, the wonderfully named German regulator, the Bundesnetzagentur, or “BNetzA” will set what price DT charges its competitors for access to its network.
Telstra too has been dealt a double whammy over the past couple of weeks – first a decision by the regulator requiring the company to share a planned Fiber to the Node network with competitors, which plans the company promptly shelved – "Fiber to the Not."
Then last week the Australian regulator released an interim ruling setting a lower price Telstra could charge one competitor for network access, which in turn may impact Telstra's earnings, based as they are on a higher price per loop (see "No Worries," August 16).
A 60 page report by Cable Labs more or less released by the Wall Street Journal shook up some cable execs, which were upset by the reported conclusion that telco spending on deep fiber networks would force cable companies to respond with upgrades in kind (see “Arms Race” August 18); the cable execs feared investor reaction to the additional spending.
Now, if there’s anything worse than having to upgrade your network to keep up with the competition, it’s someone telling you what you can do with those upgrades, and how much money you can make on such-and-such a widget you've employed to baffle your engineers, so those cable execs should count themselves lucky.
Cable’s previous big spending spree (I’ve heard $60 to $85 billion or even more) followed substantial deregulation of the industry, while telco spending in the
While the retail competition in the EU may have some real impact in terms of service bundles offered, and encourage some pretty cut throat marketing to consumers, the question of who’s paying for upgrades to networks currently in use may present some problems down the road.
If a company seeks to invest in new and improved technologies to differentiate it from competitors, such as fiber in the loop, allowing the competitors access to those upgrades on highly contested terms, and subject to constant re-calibration seems, well, more complicated than the technology employed in the first place.
The FCC’s Advanced Wireless Spectrum (AWS) auctions have brought in over $10 billion to the US Treasury, with the auction still underway. A consortium including satellite video providers DirecTV and EchoStar dropped out as prices climbed; incumbent wireless licensees Verizon (including Vodafone), and T-Mobile are still in the running, along with another group that includes cable operators Time Warner Cable and Comcast. The satellite provider consortium was thought to be pursuing the spectrum for deploying wireless broadband, and may well have concluded that the rich auction prices effectively foreclosed this, licensed spectrum method; other options remain.
In other “arms race” news yesterday, the Wall Street Journal reported that Cable Labs has prepared a 60 page study concluding that cable ops may have to further upgrade their networks to stay competitive with telco network upgrades, from stem to sterm. required to support deep fiber architectures, such as Fiber to the Node (AT&T) or Fiber to the Premises (Verizon), for video service. Cable outfits spent billions over the past decade to upgrade their networks to provide broadband, eventually becoming the dominant US provider platform, and then some, by offering bundled services before bundled services were cool. Cable has signed up millions of customers for voice service at an extremely rapid clip, and the industry effectively is able to offer, today, almost the complete bundle of packages the telcos seek to provide, with wholly owned wireless services being the one exception.
Since these developments are all connected, this morning a colleague sent me an interesting article on free Wi Fi deployments by municipalities (or perhaps some "deep pocketed" alterna-provider: the build in question was Google’s Mountain View, Cali service, turned on this week) and he wondered whether Wi Fi has the potential to be the third pipe to the home, and if so, what this means for regulatory policy decisions that are based upon monopoly or duopoly assumptions, such as net neutrality. As you may be aware, this little gem somehow has very much wrapped itself around the axle of pro-competition legislation that seeks to weaken cable's wireline video delivery monopoly (streamlining regulatory requirements for telcos to provide video service to compete with cable).
Monopoly or duopoly assumptions are not only static; they also have a shelf life, and can be somewhat ungrounded (past predictions of rising prices and anemic deployment don't reflect competitive realities between telco and cable companies today, but they certainly preoccupied many a policy maker during debates over telco sharing obligations): this without another competitor, say, someone like Clearwire, or widespread muni buildouts (see August 16 blog).
My feeling is that offering something for free shoots holes in something that someone else is desperately trying to sell, particularly if the item for sale also comes with considerable strings attached (termination of service fees, narrowed choice of customer premises equipment, on-ramp hassles, etc.), provided that the free service is just as easy to use, and doesn’t present its own weird obligations in kind (e.g., being forced to watch short video trailers or having to click through endless online ads), or steep downsides (network security features modeled after a sieve) that come with use.
Said another way, “it depends,” and, as with market alliances based on “must have” content or lifestyle showcasing (such as MySpace, for example), there will no doubt be some interesting business models developed amongst the various network platforms, most likely oriented around full time connectivity and interoperability, since these seem well on their way to becoming desirable end concepts in themselves, and that the management of all these various gizmos and “gotta have its” will be one tricky business, requiring a good amount of ingenuity and technical flexibility, but probably not a bad one to be in.
This, apparently, just isn’t Telstra’s month. Last week, the company disclosed that it would have to scrap plans to build a $3 billion Fiber-to-the-Node deployment on account of a regulatory disagreement over the extent of it sharing obligations on the new facilities with competitors.
This week, the company reported that it may have to lower its earnings guidance courtesy and take a hard look at its dividend following an adverse determination by a regulatory agency. Telstra previously had projected revenue of $22 Australian dollars per line on shared facilities; the Australian telecom regulator issued an interim ruling that would allow Telstra to charge on A$17 to one rival. While the terms apply to only one competitor, the company fears that that the lower rate will be extended across the board to other competitors.
Ah, to be in the good ole US of A, where at least some of these regulatory headaches are behind us. Yesterday I picked up on news reports that CLECs, or Competitive Local Exchange Carriers, have been turning in some pretty hot earnings numbers, and two of these competitive carriers even plan to merge, citing merger confusion fallout at two of their former competitors, AT&T and MCI. And Earthlink, of course, has been on the warpath, introducing a new DSL service for small businesses that eliminates the need for stand alone voice service, and they’ve even got the mayor of
Shift back to
As indicated above, courtesy of Earthlink, Wi-Fi projects continue to proliferate, with economic development being the most often cited driver for cities “bringing their own broadband” in this most extreme fashion. On this score, Cambridge, Maryland even has plans to create a Wi-Fi network in the downtown section, which is very good news, but there are still very rural parts of the county (Dorchester) that would be hard to reach, on account of the fact that there are more muskrats in-county than residents: you take your rural areas as you find them.
Last month’s FCC Technological Advisory Council (TAC) meeting at the FCC explored some of these issues on muni broadband buildouts, and disclosed one interesting trend in the following discussion, which I’ll file under Rapid Market Development.
Note that Earthlink/Google’s SF network will be advertiser supported, as will networks in other cities – it’s the newest trend. Moving a little further afield, note that AOL recently concluded that having eyeballs glued to your free (advertiser supported) content is worth more in the long run than charging for said access, at no small cost to the company from this shift (one quarter of AOL workers "force reduced"). Anyway, while the discussion at the TAC touched on Sacramento deal, I happened to be sitting next to a regulatory policy guru from a large carrier, and she and I discussed another aspect of this (wanting the newest toy) trend.
When her company offers to build a broadband network for a city, which they are more than happy to do, the broadband flavor the company offers to install is DSL, which they can do all day long, day in and day out. Not good enough, say the munis – they want Wi-Fi. In terms of "pimping your outside plant," wired is so yesterday (unless its high in fiber), wireless is in. I wonder what’s going to happen when Wi-Max gets cranking; Intel didn’t pump $600 million into Craig McCaw’s Clearwire for nothing, and Intel has long been a big supporter of Wi-Fi muni projects.
The point of all the above is that the US will likely feature a mosaic of networks, lead by the dreaded “duopoly” – cable and the telcos – which, it seems, in addition to striking fear into the hearts and minds of some policy makers, also seem to be driving prices for consumers straight through the basement: just check the latest offer your mail. The dynamic duopoly is followed by CLECs, rural telcos (who are often CLECing into incumbent territories; expect this trend to continue), munis, satellite, Wi-Fi, and soon, Wi-Max, and we’ll really give the mayor of
Several Competitive Local Exchange Carriers, or CLECs, have made the news recently, taking advantage of what may be a fortuitous turn of events, as well as continued attention to customer service, and a small measure of irony.
While writing this, I ran across a similar story with a snazzy title, in Telephony Online, so maybe I am on to something here.
Late last week, Earthlink announced a new DSL offering aimed at the small business market where the customer is unable to get shared DSL and voice services from their local provider. Earthlink handles the installation and necessary hardware at no additional cost, and touts the service as eliminating “the added expense of a local phone line and is a perfect solution for small and medium-sized businesses that can't get DSL from their local phone company” according to a company rep quoted in the news.
I believe we used to call this service “UNE-L” for Unbundled Network Element Loop, but I have to admit that I like the ring of Earthlink’s sales pitch much better. For those who may be interested, UNE-L offered a combination of facilities-based and leased-based competition, where the competitive carrier would lease a copper loop from the incumbent carrier, install its own DSL equipment at the Central Office, and: Presto! rescue yet another customer from the grasp of poor service offered by "the other brand." Layering Voice over Internet Protocol (or VoIP) service on the DSL removes the need (for some) for standalone, circuit switched voice service, and completes the rescue package.
Some CLECs once pursued a business model of offering data service on the high frequency band of the copper loop, while the incumbent offered traditional voice service, but there were some pricing issues, lots of them actually, since so many of these regulatory fights are about pricing, with all of its attendant distortions (in some states, the value the incumbents assigned to the high frequency portion of the loop was $0). One might want to keep in mind, though, that technology is like a steamroller, with market changes taking place so very rapidly, driven by voracious consumer adoption of higher quality services of greater capabilities, but for less money, that there are distortions and tensions aplenty without introducing new ones; but I digress...
Continuing with this CLEC revival theme, The Wall Street Journal reported yesterday that two large CLECs have joined forces in a merger. Charlotte, NC-based and Nasdaq-listed US LEC and privately held Paetec, from Fairport, New York, offered an interesting take on why now is an ideal time to join forces: seems that their major competitors (AT&T and MCI, the largest and most powerful CLECs) have been absorbed in mergers of their own (with SBC and Verizon, respectively) with the attendant distractions of smushing together business operations and hordes of employees, who may well be more concerned about their own futures than worried about their customers, who thus become ripe for poaching.
So if I have this right, two competitive carriers’ main competitors have been acquired by incumbents, and these mergers have removed the carriers’ main sources of competition, so two competitive (competitor?) carriers need to merge to stay competitive.
Telephony Online’s article concerns a bunch of other CLECs – Broadwing, Covad, Global Crossing, Time Warner Telecom – which, after surviving some pretty rough times, have recently reported strong quarters, and are doing quite well, business-wise: which is great news for all concerned.
As I outlined yesterday (below), Australia's telecom incumbent, Telstra, has for some time been squabbling with regulators there about sharing obligations on a planned-but-now-canned Fiber to the Node (FTTN) buildout. The parties involved have been lobbing policy claims at one another – that the carrier will not be able to recover its risky investment under the proposed plan, that Australia will fall behind in the global broadband race, so on and so forth, but it seems that the Aussies are not the only country struggling with these and other competitive issues.
There have also been news reports that the EU telecoms administrator (Ms. Viviane Reding) and incumbents of certain nationality (France,
In fact, and while the UK is not involved in the EU dispute – though having had its own share (and perhaps more) of headaches in network sharing debates in the past – recent press reports indicate that new broadband subscriptions in the UK haven’t been up to snuff lately, with an apparently raging “free broadband” debate implicated as one likely culprit for the shortfall.
I recall a former FCC commissioner mentioning to me at a tradeshow, several years ago, that the
In fact, in discussing this cable-telco and teloco-only dynamic the other day with an interested party, we both concluded that, in this respect, the rest of the world was several years behind the US in resolving these issues, and may these issues Rest in Peace, even as they may rage on elsewhere.
In other words, while other countries might desire to create a hard charging, distinctly and technologically different competitor to the incumbent telcos, the US fortunately had this thing called "cable," which was rocking, and still is, investment and services rollout-wise – whilst carriers and regulators elewhere focus considerable attention on developing wireless technologies as an alternative platform to incumbent networks for reaching users, or try to split Central Office (CO) hairs with the sharing obligations.
The Central Office angle has, well, another angle, in that if the number of CO facilities in-country is relatively small, say, like in Iceland (I promised a former colleague that I would one day write about Iceland: I think I need to go there), and this small number of COs may be upgraded to broadband fairly easily, covering a large percentage of the population, well then, the country might very proudly declare broadband victory and move on, with an attendant rise in international broadband rankings, and our consequent fall therein, which critics of current US policy (on both sides) never fail to use as argument for righting this wrong or that with yet another experiment or change in direction.
But these are details. Since the details about the actual number of COs in Iceland escape me at the moment (as I mentioned above, I think I really need to go there), a while back the Financial Times ran a couple of interesting stories about broadband, opportunity, and economic development.
Speaking of economic development – this is related, trust me – guess what reason lies behind municipalities opting to deploy their own broadband networks? Three guesses and the first two don't count...
So the Financial Times runs a story on the a new International Telecommunications Union (ITU) measurement for broadband deployment to citizens, with the current US position in global rankings standing at Number 21, and woe is us, the story next to it, same page, right there in black and peach, really got my attention.
Seems that Paris, as in France (not Texas), the mayor (Bertran Delanoe) announced plans to deploy a city-wide Wi-Fi network (400 free Wi-Fi hotpoints) to keep apace with other world leaders. Here's the economic development angle again: "[t]his is a decisive tool for international competition..."
Another quote: "We can't leave Asian cities like Seoul or Tokyo, or American cities like San Francisco or Philadelphia, to make the running in digital matters." I found this particular quote very interesting. Here we think we are falling behind the rest of the world; in fact, an article making the very point just hit my inbox. Elsewhere, however, some of our initiatives make us look like leaders.
Let it also be known that the SF and Philly projects both involve Earthlink, and SF involves Google. It also should be noted here, however, that the incumbents in both cities weren't exactly thrilled with the city's respective proposals, which "reluctance" deserves some attention, be it another day. (The Stevens bill that passed out of the Senate Commerce Commitee permits muni broadband buildouts, which are prevented in some states).
Let it also be known that Sprint Nextel this week announced big plans to build a nationwide Wi-Max network, at considerable cost ($3 billion USD), which lives in the unlicensed frequency ville, and that today, the FCC begins auctioning Advanced Wireless Spectrum licenses, which may be used by winning bidders for, guess what? broadband deployment.
Oh yeah, and Clearwire (a Wi-Max play headed by "Winning" Craig McCaw) got a $600 million USD cash infusion from Intel.
So maybe things here really aren't all that bad. In fact, although you'd never know it, maybe the international rankings are simply one snapshot in time, not an occasion for more (and permanent) gloom and doom, or a convenient point for argument, since the view from there might just be quite different from that view here.
But I still think I need to go to Iceland.
Rather, the rumblings raise questions about policy direction critical to companies within the US Information and Computer Technologies (ICT) sector. Sooner or later these policy issues are said to implicate national competitiveness, spotlight the international rankings of broadband progress (no one wants to show last, even if they are just snapshots), and eventually impact other related industry segments, including content providers and services industries enabled by broadband connectivity to end users – and thus potentially affecting even the vacation packages industry.
Press reports indicate that Telstra and the Australian telecom regulatory agency have been unable to agree on terms for the incumbent provider’s sharing of a planned, but as yet unbuilt fiber broadband Fiber to the Node (FTTN) network, so it looks like the deal is now off. The two have been grappling over this for some time, with implications rippling outward to possibly scuttle a planned public equity stake sale in Telstra, but bad feelings are bad feelings, and these are very complicated issues, no matter the range of potential solutions.
It’s also an area where the rest of the world may be several years behind similar matters raised and resolved in the
In fact, from the second link, above, this caught my eye:
"All you got to do is look around the globe and what is going on in terms of the speeds being put forward on networks in other countries.
"In Australia, the reality is it's falling behind. It's behind now and it's going to fall further behind."
Sound familiar?
Though not exactly hot-off-the-presses news, in July the FCC approved the sale of Adelphia to Time Warner and Comcast Corporation. Adelphia had run into a bit of hot water over the past several years, eventually winding up in bankruptcy, until it landed at the FCC, left with the job of sorting out the pluses, the minuses, the how-tos and wherefores of sorting through the pieces, ultimately concluding that, with respect to the public interest:
“subscribers would benefit from the resolution of the Adelphia bankruptcy proceeding in the form of new investment and upgrades to the network. Additionally, the transactions would accelerate deployment of VoIP and other advanced video services, such as local VOD programming, to subscribers.”
There are a number of different dynamics at work here.
1. Paving the way for new investment and upgrades;
2. Accelerating the rollout of new services, such as VoIP and VoD.
Let’s introduce another dynamic, this from FCC Commissioner Copps’ dissent to the Adelphia license transfer:
3. “Affiliated programming presents special competitive concerns.”
Commissioner Copps worries that because TW and Comcast have ownership interests in popular cable channels, they have reasonable motivation to deny their competitors access to “must have” programming, for their own benefit, presumably twice: they’ve got what’s hot, while the competition does not.
This is earnings reports time, and I’ve seen a number of articles reviewing the “benefits of bundling” – counting subscribers to the big telcos’ new video services over fiber (which are growing), against the number of new cable VoIP adds (which are really growing) – and other, more defensive moves – watching AOL painfully come to grips with what’s really valuable (making AOL services and content free for users with their own broadband connections to stem subscriber losses) AND introducing a new web video search tool – while trying to assess the “complications of three” – such as Sprint Nextel fits into "the big picture.” Analysts had been touting their pure wireless play (as in no wireline assets to lose sleep over like their TWO big competitors do), but this quarter, it looks like they may fumbled aspects of their integration, and continue to lose high RPU Nextel subs.
Since all of the above is public information, and duly, even repeatedly reported in the press, here’s my one liner on what’s really going on:
Customer Churn Creates Chaos*
* If memory serves me correctly, Norman Blumenthal, a distinguished member of the FCC’s Review Board, once wrote a paragraph in an opinion in which every word began with the letter “p.” And just to show that nothing is new under the sun, here is a clip from Cato Institute’s Currents publication (article entitled “Should Freeloading be Considered Theft?”), circa 1995, taking issue with Norman's quote that accessing pay television satellite signals without authorization was like “sneaking into a movie theater.”
As the number of US broadband subscribers continues to grow, the user habits change as well. For example, people with broadband spend more time on line than do dial-up users, and what they do with that time is significant, and in flux in its own right.
A little over a month ago AOL proposed their latest iteration of its BYOB or bring-your-own-broadband policy (Capitol Blog 7/07). From the early “sign up subscribers at any cost” model in the dial-up years (which may have been as much about access to the Internet as anything else), to offering progressively cheaper rates for customers that made the shift to other broadband providers (which you might have learned about only by trying to terminate your subscription) to their latest, perhaps best, best price, the company has struggled to find a place in the broadband world.
Today, the Wall Street Journal online edition reported that the company will eliminate 5,000 jobs as it attempts to replace subscriber revenues with online advertising, anticipating that further subscriber losses lie ahead.
If it’s any consolation (I doubt it will be), WSJ’s print addition reported today that Fosters Group is abandoning broadcast TV advertising in a wholesale shift to web advertising. It seems the Group sees the potential to reach more of their target market consumers (selling beer) by spending their advertising dollars online than using traditional TV.
Since there are very smart people looking at doing to TV what they did to voice, and at least one of these people basically has his own rock band, this should be an interesting but pell mell period for media and people get it.
