Tales of the Sausage Factory

D Block Drama Erupts! NENA Breaks Ranks! Wireless Carriers At War! Oh, the Humanity!

Yes, for policy wonks in the summer, this is high drama. Once upon a time, before the 700 MHz auction, we used to have two very clear groups of stakeholders in spectrum policy land. We had public safety on one side and commercial wireless carriers on the other. (We also had us public interest folks, but no one — especially in the Wireless Bureau — gave a crap about us.) While these two groups might disagree internally, they solidified into utterly united and utterly opposing camps when confronting each other — regarding the battle for spectrum as a zero sum game with each side trying to wrestle every last MHz out of the other one.

But the 700 MHz changed all that. It cemented the spectrum advantage of AT&T and Verizon over all other carriers, breaking the commercial world into “AT&T and Verizon” and “carriers who need backhaul, roaming agreements, and special access — all of which they buy from AT&T and Verizon.” And it fractured consensus in the public safety community by creating the enormous loose end known as the “D Block.” As readers may recall (and if they don’t, you can check out my extensive coverage of the 700 MHz auction) the D Block was the private part of a public/private partnership where a private entity would bid and then build out the network, then enter into a sharing agreement with the public safety block. Sadly, for various reasons I will not rehash here, this didn’t work out.

And now, just when it looked like public safety was lining up behind AT&T and Verizon to lobby Congress to reallocate the D Block entirely to public safety, all Hell breaks loose. The “not Verizon and AT&T” wireless carriers have introduced a counter proposal to take back the 12 MHz on the public safety side of the partnership and auction the whole 22 MHz for commercial use as one, unpaired block. And they have received the backing, sort of, of the National Emergency Number Association (NENA).

What drama to greet the arrival of Chairman Genachowski and the finally fleshed out full FCC! Commercial wireless carriers at war! Public safety in disarray! Spectrum brother against spectrum brother in the ultimate spectrum policy smackdown!

I analyze the possible deals, the potential winners and losers, and my guesses on odds for success below . . . .

Read More »

Posted in Spectrum, Tales of the Sausage Factory | Also tagged , , , , , , , , | 3 Comments (Comments closed)

Tales of the Sausage Factory

Waxman Gets It Right On USF Reform –Use Subsidies To Open Networks.

Although it doesn’t have a chance of passing this Congress, particularly with the utter gridlock over the bail out, but I gotta give a shout out to Rep. Henry Waxman (D-CA) for his targeted approach to solving the roaming problem in wireless. The proposed bill, H.R. 7000, says that any wireless provider that takes Universal Service Fund (USF) money needs to provide roaming to all other carriers “at just and reasonable rates, consistent with Sections 201 and 202” of the Communications Act. It does not require tariffing or rate regulation. It refers disputes over whether the terms are reasonable or the technology technologically compatible to the FCC, to handle under its well developed wireline procedures.

An entity can opt out of the program at any time by saying it no longer wants high-cost USF subsidy. But if you take government money, you need to provide roaming at just and reasonable rates.

And here is the kicker that makes it effective. The obligation to provide roaming applies to the entity accepting the USF, and any affiliates. In other words, if you have a rural subsidiary of one of the major carriers, then that carrier has to enter roaming agreements for its entire network. So if AT&T or Verizon are getting subsidies for “rural affiliate co.,” taking the money would require them to do roaming agreements on reasonable rates throughout their systems nationally. Don’t like it? Either stop taking public money or sell the rural carrier off to someone else who will do reasonable roaming.

I expect critics to say that this will mean wireless rural carriers will go under and the only thing to do is give wireless carriers money with no strings attached. I am dubious myself. Yes, the larger carriers may value their control over roaming to divest rural carriers. But there are plenty of mid-size carriers or small carriers willing to absorb these companies in exchange for federal subsidies who won’t mind making roaming agreements. Nor am I so convinced that the major carriers will actually decide they’d rather forgo the considerable subsidies they get now simply to preserve their control over roaming. Besides, if excluding parties from commercially reasonable roaming agreements is such an important element of the business model of major carriers, we have a bigger problem that needs to be more broadly addressed.

For too long, we’ve succumbed to the twin arguments that we must subsidize business to get policy goals, but we cannot actually demand anything in return because that would scare away the shy little beasties we are trying to coax, cajole and outright bribe into good behavior. I think it’s time to test that theory a bit. Although I’m doubtful the Waxman bill goes anywhere in the current Congress, I can hope that when Congress reconvenes in 2009 it will be reintroduced and given serious consideration.

Or instead, perhaps carriers will see the writing on the wall and try to solve this problem at the FCC before Congress reconvenes. Either way, its a good bill that nudges us closer to a more pro-competitive roaming policy.

Stay tuned . . . .

Posted in Spectrum, Tales of the Sausage Factory | Also tagged , , , , , | Comments closed

Tales of the Sausage Factory

McCain Invented the Blackberry? Maybe Not, But It May Make A Good Symbol.

I know that staffers often feel intense loyalty to their bosses, but can we please try to keep the hero worship to a minimum? Otherwise, you end up accidentally making the other side’s argument.

According to this story, Douglas Holtz-Eakin, a top McCain policy adviser, held up his Blackberry and told folks: “You’re looking at the miracle that John McCain helped create.” Mind you, Reasearch In Motion is a Canadian company. When sold in the United States, it requires a contract with a wireless carrier. Each carrier controls which models it will permit on its system and what applications it will permit to run.

Or, in other words, the “miracle” is that we not only limit the development of technology in this country and force our hi-tech jobs to other countries, we actually allow a handful of wireless carriers to break the technology, limit it further, and jack up the price. This was probably not the miracle that Holtz-Eakin had in mind.

Still, the voter interested in tech policy and following up on the “McCain Miracle” for wireless would do well to visit the Blackberry Website. Notice how many models Blackberry makes? What applications it can run? Now select country U.S. and compare carrier by carrier. The carriers you can connect to at all each have a limited set of models and applications they permit you to use. Want one of the other Blackberries? Tough. Want to run an application the carrier doesn’t like? Too damn bad. Want to bring your own device so you don’t have to pay an early termination fee justified by an “equipment subsidy?” Dream on.

McCain was quick to dismiss this fulsome praise as a “boneheaded joke.” Still, it is worth noting that I am aware of no major leadership or initiatives by McCain on tech or media issue comparable with, for example, his efforts on campaign finance reform. This is not to say McCain has been devoid of accomplishments. He deserves credit for a strong stance in promoting low-power FM and for twice sponsoring the Community Broadband Act, designed to eliminate restrictions on the ability of local governments to provide broadband services. But by and large, as reflected in his tech policy, McCain’s chief accomplishment for tech — and his plan going forward — is to not do anything and let the private sector work its magic.

If you are satisfied with the “King Log” approach to tech policy and don’t mind that AT&T, Verizon, and other carriers get to call the shots over what Blackberry and other companies can do on wireless networks, then McCain is absolutely your man. If Holtz-Eakin was trying to make the point that McCain will let wireless carriers continue to “own the customer” and control how Blackberry and other devices evolve, and we peons should be content with whatever technological “miracles” the carriers graciously allow us, then he has a point. But if Holt-Eakin was trying to say that McCain got out there, showed real leadership in the face of political presure, and established lasting policies that even his political rivals now try to embrace as their own, sorry. I lived through it, and that ain’t how it happened.

Stay tuned . . . .

Posted in How Democracy Works, Or Doesn't, Tales of the Sausage Factory | Also tagged , , | Comments closed

Tales of the Sausage Factory

A Reminder Why the PK Petition On Mobile Texting Matters (lest you think I only pick on cable operators).

Today’s NYT has this op ed on Obama’s use of text messaging to announce his VP pick. It provides a nice reminder about the importance of the pending Petition by PK and others on text messaging. Filed after Verizon denied NARAL a short code but reversed itself within 24 hours the mobile texting petition often gets bundled with the Comcast complaint as if they were essentially two examples of the same thing. They aren’t. The Comcast complaint asked the FCC to follow through on its previous commitment to prevent broadband providers from blocking or degrading content or applications. For all the (well deserved) hoopla around the decision, it was at heart, as Commissioner Tate described, “a normal enforcement proceeding, regarding a particular complaint within the confines of the specific circumstances presented.”

The Petition for Declaratory Ruling on mobile text messaging and short codes is not a complaint (although it is an adjudication). It does not seek to punish Verizon as a bad actor, and it only refers to the NARAL incident as an illustration of why the Commission needs to act. Rather, we ask the Commission to decide — for the first time — whether mobile text messaging is a Title II telecommunications service, like the underlying phone number and voice service. If the Commission decides that it is a actually a Title I enhanced service (like the internet access you can buy separately), we ask the FCC to impose rules that would prevent wireless carriers from denying a short code to someone or from messing with anyone’s text messaging.

Not that Verizon or any other provider would be so foolish as to deny the Obama or McCain campaigns short codes or block their text messages. I’m not even worried about independent candidates like Barr and Nader. No, I’m worried about us ordinary schlubs, or even unpopular folks who can’t count on getting a front page story on the NYT if something happens but still deserve the right to organize and spread their message to willing listeners.

More below . . . .

Read More »

Posted in Spectrum, Tales of the Sausage Factory | Also tagged , , , , , , , , , | Comments closed

Tales of the Sausage Factory

An Interesting Tea Leaf on AWS-3/M2Z

Well, I keep saying I will do the big posting on AWS-3/M2Z, and keep not getting to it. So I will just drop a short note for the fellow FCC policy junkies who follow this stuff closely. You can find background on the AWS-3/M2Z business here, here, and here.

The FCC extended the filing deadline on the proposal released June 20 to reapportion spectrum between the AWS-2 band and the AWS-3 band (as well as mandatory content filtering). Comments were originally due on a tight deadline (today). This extends things out to a full 30 days for comments and 14 days for reply, so the new dates are July 25 and August 11. That’s less than what the wireless carriers wanted, and it explicitly rejects the request for the FCC to do its own testing. In fact, the whole tenor of the Order provides a rich field for us FCC-ologists to start gazing in tea dregs and rummaging through pigeon entrails.

More below . . .

Read More »

Posted in Spectrum, Tales of the Sausage Factory | Also tagged , , , , | 1 Comment (Comments closed)

Tales of the Sausage Factory

Cablevision’s WiFi Roll Out — A Wireless Plan B?

As I discussed in the context of the Sprint/Clearwire/Etc. spectrum menage (and discussed a bit more with Gordon Cook on his blog), the reality of the post-700 MHz auction world makes it necessary for cable operators to have some kind of wireless strategy if they want to meet the potential next generation competitive threat from either AT&T and Verizon or possibly from newly en-spectrumed DISHTV. At the same time, cable operators are desperate to avoid the downdrag on the their stock that would come from a heavy investment in wireless licenses and further nvestment in infrastructure — especially when analysts don’t give them a prayer of taking on the wireless carriers in what has become a reasonably mature market. How to resolve this difficult dilemma?

Those cable systems with the combination of resources and forethought to address this have opted for different solutions. Comcast, Time Warner and Brighthouse –through their new partnership with Sprint/Clearwire etc. — have flopped back to the old cable standard of joint ventures and strategic investment. (Anyone else remember @Home Network?) Cox went out and won its own set of licenses covering its cable service area, as did Charter parent Vulcan Enterprises (as have a few lesser systems, such as Washington Post owned CableOne, which captured a bunch of licenses in the AWS auction).

Cablevision tried twice to acquire its own set of licenses: first in the AWS Auction in 2006, and again in the 700 Mhz Auction. Both times Cablevision went home empty-handed, outbid by the wireless giants. With no new spectrum on the horizon, and apparently no invite into the Sprint/Clearwire Happy House ‘o WiMax partnership, Cablevision found itself in need of a spectrum “Plan B.” Happily for Cablevision, there is also such a thing as “unlicensed spectrum” which — as I and other boosters of the competitive power of open spectrum continually point out — is available to everyone and cheap to deploy (relative to building a licensed network from scratch).

Hence the recent Cablevision announcement that it will deploy a wifi network in conjunction with its cable network. As a Plan B, it has some real advantages over using licensed spectrum, as well as some potential disadvantages. But given Cablevision’s unique deployment situation — it is primarily located in New York City and Long Island which gives it incredible population density for its relatiely small footprint — this fall back position may work for it where it would not work for other cable companies.

A bit more analysis below . . . .

Read More »

Posted in Cable, Tales of the Sausage Factory | Also tagged , , , , , , , , | 1 Comment (Comments closed)

Tales of the Sausage Factory

Chutzpah, Thy Name Is Wireless Incumbent.

So here we are in the middle of the most intensely competitive auction ever. As you can tell looking at the recent postings by fellow Wetmachiner Greg Rose this auction has dramatically pushed up the amount of money paid by bidders for licenses and has created more intense competition for a broader group of licenses than previous auctions, strongly suggesting that — as Greg and I predicted when we first started pushing anonymous bidding in March 2006 — anonymous bidding eliminates all kinds of targeting, collusion and retaliation that typically held back smaller bidders and allowed larger bidders to pick up licenses for a song. An utter smashing success (at least from the perspective of those who favor using auctions for distribution of licenses), right? Who could have a bad word to say about it?

Answer: All the people who hate anonymous bidding BECAUSE it eliminates the ability to signal, retaliate, and collude and thus makes the auction more competitive. i.e. The incumbent wireless licensees (other than Verizon, which wanted anonymous bidding to avoid being targeted).

More below . . . .

Read More »

Posted in Spectrum, Tales of the Sausage Factory | Also tagged , , , , , , , , | Comments closed

Tales of the Sausage Factory

Martin Gets the Ball Rolling On “Blocking” Investigation: What Does It Mean And What Happens Next?

As always, I am impressed with the ability of so many people to hate whatever Kevin Martin does, and for so many different reasons! At CES, Martin announced that the FCC would investigate allegations of blocking content and determine whether they violated the FCC’s four broadband principles. Comcast pledged to cooperate in any investigation (although, unsurprisingly, Comcast representatives — along with supposed object of Martin’s affection AT&T and other big telcos and cablecos — said at CES they would restructure or eliminate FCC altogether).

As I said in my PK blog post, while details remain unclear, I am “cautiously optimistic” that this will be a good thing. But it did not take long for the folks in the “Martin is a bastard 24/7 crwd” to express themselves. DSL reports doubted this would go anywhere, while the “why ya gotta hate on cable” crowd at Techdirt opined that Martin would never investigate if it were a telco rather than a cable co.

So we flash forward to yesterday, when new developments began to percolate out of the FCC. Of significance:

1) The FCC issued a public notice asking for comment on our Petition for Declaratory Ruling that Comcast’s “network management practice” of messing with BitTorrent uploads violated the FCC’s “Broadband Policy Statement,” which includes a principle that network operators may not block or degrade content or applications. In a separate public notice (but as part of the same proceeding), the FCC also seeks comment on the Vuze Petition for Rulemaking on how broadband access providers handle and shape IP traffic generally. (Copy of Vuze Petition here, copy of our Petition here).

2) Separately, the FCC issued a separate public notice seeking comment on a Petition filed by Public Knowledge and the usual suspects asking the FCC to declare that wireless carriers cannot deny short codes or block text messaging. This goes after Verizon’s high profile “oopsie” of denying a request by NARAL for a short code. Although, as we pointed out in the Petition, the more likely and pernicious problem is with plain old anticompetitive blocking, such as denying a short code to VOIP provider Rebtel.com and denying applications to major banks offering competing services.

3) Comcast confirmed that the FCC has lanched a formal inquiry into whether it violated the FCC’s broadband policy statement. Comcast reiterated that it will fully cooperate with the FCC, and expects any investigation to show that Comcast did not block content and has engaged in legitimate network management practices.

Not bad for a commitment made a week ago. But what does it mean and where will it go from here? Analysis below . . . .

Read More »

Posted in Series of Tubes, Tales of the Sausage Factory | Also tagged , , , , , , , , , , , | 1 Comment (Comments closed)

Tales of the Sausage Factory

700 MHz PreGame Show: Reading the Tea Leaves on Verizon and AT&T's Last Moves

Well the short forms are in, and a surprising number of companies are keeping mum about whether they even filed or not. But a few more interesting tidbits have turned up — notably that Echostar will come to the ball without its dance partner from the AWS auction, fellow satellite TV provider DIRECTV. And Clearwire, an anticipated participant, will sit this one out.

But of course, all eyes turn to the expected big boys of the auction, the largest incumbents, the returning champions, those winners of wireless, the masters of mobility, AT&T and Verizon! These are the guys to beat, the multi-billion wireless guerrillas that should be unstoppable and able to dictate to the market whatever they want. With the cable guys eliminated, they should be on easy street. But with Google making its play, and Frontline getting a 25% “designated entity” discount if it bids on D Block, even the mighty incumbents need to tread warily and brace for battle, lest they end up playing the French to Google’s Henry V at the spectrum equivalent of Agincourt.

With the necessary paperwork in to the FCC on December 3 triggering the anti-collusion rules and ending the last chance to say or do anything related to the auction, every last minute twitch and adjustment of the incumbent will be under intense scrutiny. Professional prognosticators, armchair analysts, and even random bloggers like yr hmbl obdn’t will try to read the tea leaves and predict the outcome of the upcomming spectrum steel cage smackdown.

So with this in mind, it is interesting to note the unusual a last minute wireless asset swap between AT&T and Verizon. Traditionally, wireless carriers have avoided these sort of mutually beneficial deals, preferring to duke it out directly with rivals. But AT&T Wireless and Verizon Wireless are now fully assimilated into the ILEC Borg Collective. Is this last minute swap a sign that the major wireless players will act more like wireline incumbents and work to defend their common interests — such as resisting the intrusion of newcomers Google and Frontline? Or is it merely that there are so few players to whom the companies can divest these assets (in both cases, the swaps are for licenses the FCC ordered divested as conditions on acquisitions) profitably before the Dec 3 short form deadline that this trade was inevitable?

And what should we make of Verizon’s announcement it will embrace Google’s “android” open platform for wireless? Is it just another move by Verizon to adjust to the T. Googlii lifestyle needs and turn a challenge to its business model into an opportunity to make huge profits? Or is this a final effort by Verizon to ward off my Apocalyptic Google Prophecy by persuading Google it doesn’t need to win licenses to get what it wants?

Finally, there is Verizon’s Petition for Reconsideration asking the FCC to reverse its decision to allow Frontline to keep its “Designated Entity” bidding credit while still doing 100% wholesale, but only for D Block. Is this just yet-another-round of the non-stop sniping between Frontline and Verizon? A signal that Verizon is interested in D Block? Or even a possible feint to disguise it’s intention to go for C Block and leave D Block to others?

More below . . . .

Read More »

Posted in Spectrum, Tales of the Sausage Factory | Also tagged , , , , , , | 1 Comment (Comments closed)

Tales of the Sausage Factory

The 700 MHz Auction as the Next Front In the Cable/Telco War.

There are many ways to parse the fights in the 700 MHz auction: incumbents v. new entrants, rural v. large incumbents, public safety v. commercial use, and the occassional suggestion by us in the public interest community. But, as I recently indicated elsewhere, an analysis of the band plan fight about large licenses v. small licenses reveals another interesting battle: Telcos v. Cable, with new entrants lining up with Telcos for large licenses and non-vertically integrated wireless carriers like T-Mobile aligning themselves with the cable-dominated consortium SpectrumCo.

What makes me believe license size in 700 MHz auction has become a new front in the fight between telcos and cable cable cos? Why has this new battleground emerged? And what are its implications?

See below . . . .

Read More »

Posted in Spectrum, Tales of the Sausage Factory | Also tagged , , , , , , , , , | 1 Comment (Comments closed)
  • Connect With Us

    Follow Wetmachine on Twitter!

Username
Password

If you do not have an account: Register