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FCC Handcuffs U.S. Mobile
Written by Jim Courtney, an associate editor of Skype Journal.
Having been trained as an engineer, scientist and business person, I’m always amazed at how the U.S., the self-assumed leader of free enterprise and democracy, seems intent on stifling their own economy and innovation ecosystem through ongoing government support of special interests whose business models are challenged by technological innovation and breakthroughs.
This week brought just the latest example. FCC Chairman Kevin Martin told an audience at the CTIA Wireless Convention in Las Vegas that he was dismissing a petition from Skype that would force operators to connect any lawful device to the telephone network provided it doesn’t do harm to the network. This in a world in which Japan, Korea and Europe are providing the infrastructure that has allowed open competition, that separates the pipes from the content — Stockholm is a prime example — and that clearly provides much lower cost and higher participation communications activity for both the consumer and the enterprise.
This decision demonstrates nothing less than a failure on the part of a U.S. government agency to comprehend the technology infrastructure available to enhance business processes, build effective hardware platforms and take advantage of today’s more cost-effective rapid software development tools. And it portends for a less competitive U.S.
As for the impact on Skype’s presence on mobile platforms, it’s negligible at best. There are significant wireless data infrastructure issues that need to be addressed before there can be true VoIP over wireless with a business model that’s acceptable to carriers. Several vendors, such as iSkoot, IM+ for Skype, Fring and Mobivox, have found ways to access Skype via any carrier; they may not always have the full feature set but often having voice and chat is sufficient.
iSkoot has started to develop some carrier partnerships as they have found a way to bring both market advantages and cost savings to carriers using lessons from a SS7-type algorithm. By building on this algorithm, they also provide a means to access Skype for those smartphone owners who are on carriers with whom iSkoot does not have a direct relationship. IM+ for Skype allows you to set up calls not only for your own mobile phone but also to have them sent to other phones, such as one at the office. Mobivox simply provides access to Skype contacts from any phone handset with the help of VoxGirl and her speech recognition capabilities.
Over 80 percent of Skype users are outside the U.S. When a broader U.S. public starts to realize that the communications offerings found in Europe and the Far East are far superior to what they’re being offered, a movement will arise demanding change. It just may take a few years.
By then, with the adoption and implementation of Wi-Fi in homes and offices and the spread of dual mode GSM/Wi-Fi phones, such as any WiFi-enabled Blackberry 8×20, there will be many ways to circumvent the carrier networks. Users will start to ask about applications that they can run over Wi-Fi networks, not carrier networks. Once there is broad user demand for more openness, the politicians will respond.
The Martin recommendation, however, will limit hardware innovation over the long term. It will limit innovation in services and applications and it will put the U.S. at a competitive disadvantage for both business and consumers. But will it also drive the carriers to invest in the infrastructure required to support and match the offerings, both services and applications, available in Europe and the Far East? Will it really encourage the carriers to really open up their systems through appropriate APIs and rewarding business relationships? Should the U.S. (and Canada) be striving harder to have an infrastructure based on the Stockholm model, whereby users have fiber to the end point — effectively built as a regulated utility providing the “pipe” — pay under $20 per month for unlimited very high-speed data (100 Mbps) and have their choice of service providers?
In the meantime, the best response for current users is to go into guerilla warfare mode:
- use iSkoot or IM+ for Skype to access your Skype and SkypeOut contacts from mobile devices such as Blackberry, Nokia and other smartphones
- encourage the implementation and use of readily authenticated Wi-Fi access points at your home, office and other frequently visited locations.
- use applications such as SlingPlayer for Mobile and Qik.com on devices where it is supported and cost effective for the end user.
- show the carriers they are losing significant business.
If a broader base of users than simply “in-the-know” technical geeks start to experience these applications and services, awareness of the issues raised by the Skype petition will be spread virally, and we all know that’s the most effective marketing available. Change can be driven, if enough are aware of the issues and are ready to speak their voice. And isn’t that the American way?
Forbearance Can Impact Telecom Choices
Its been almost eleven years when the Telecom Act of 1996 was announced with much fanfare. It promised a telecom revolution, and instead it got a Bubble, Broadbandits and a battle of the lobbyists. And as they years passed, incumbents neutered it beyond recognition, leaving it toothless and lifeless, much like the royal family of a fallen colonial power. Sure there were some things that microscopically-tilted in favor of the small, independent carriers, but even those are at risk now.
Verizon has petitioned FCC to give it forbearance relief in six major markets from certain wholesale requirements, specifically “unbundled network element” (UNE) discounts it must still provide to competitive local exchange carriers (CLECs). What this means is that Verizon wants to stop selling high-capacity DS-1 and DS-3 connections because it feels competitors are using Verizon’s infrastructure to compete for the enterprise customers.
According to FCC, under the Telecom Act of 1996, “the Commission is required to forbear from any statutory provision or regulation if it determines that the regulation is not needed to protect consumers or to ensure just and reasonable rates and practices by carriers.” Verizon wants FCC to stop applying UNE rules in major metros like New York, Philadelphia and Boston. Verizon has been fighting UNE for sometime. UNE allows competitors to buy “network elements” on a cost-basis. FCC is supposed to decide on this on December 5th.
If FCC approves Verizon’s petition, then basically the competition in local loop in those six regions is going to be decline sharply and that is bad news for smaller CLECs such as Covad and XO Communications. These companies rely on UNE to provide alternative broadband and phone service options.
CLECs are worried that Verizon is going to use any gains from this petition and stamp out competition in other regions such as California and Texas. CLECs have set-up a website, FreeToCompete. Blair Levin, an analyst with Stifel Nicolaus, an investment bank, and an expert on FCC doesn’t believe that Verizon is going to get what it is wishing for and only small parts of Verizon’s petitions might be granted.
So Google Will Bid For Spectrum. Will It Play To Win?
For the past few months, Google CEO Eric Schmidt has hinted at every opportunity that Google (GOOG) will bid for the auction of the 700 MHz spectrum. So it shouldn’t come as a surprise that they issued a press release today and confirmed that they will bid on the so-called C-block of the 700 MHz spectrum.Big deal — because Google is not in it to win it. Like in an opening move in a game of high-stakes poker, Google will place an opening bet, but is unlikely to raise it.Google CEO Eric Schmidt in the press release said:
No matter which bidder ultimately prevails, the real winners of this auction are American consumers who likely will see more choices than ever before in how they access the Internet.
Excuse me, that ain’t the language of a winner. Chris Sacca, Google’s head of special initiatives, in a blog post continues this “consumer-a-winner” theme, though clearly if Google did win this one, it is the winner first, and maybe…just maybe consumers. [Paint me cynical, but I like this change-the-world-consumer-first drivel from presidential candidates, not from for-profit companies with lofty valuations to protect.]
As I had pointed out earlier, FCC Chairman Kevin Martin included some of the Google proposals as part of the rules for this auction, hoping that would attract Google to the bidding process, and help drive up the prices of the spectrum being auctioned.The other companies playing with some seriousness here are AT&T, Verizon and a bunch of others. AT&T CEO Randall Stephenson confirmed his intentions at a Churchill Club event, while Verizon has been doing its best to ensure its win.
In case you want to know what the whole 700 MHz fuss is all about, here are two posts that tell you everything about 700 MHz.
Iowa Telcos: Fight the FUD
NEWS ANALYSIS: Showing perhaps that they learned the lessons of last year’s net neutrality battles, the Iowa telcos and their Internet-based ‘free-calling‘ partners have formed their own ‘grassroots‘ coalition, complete with its own blog-like website to battle what they call “myths” being spread by big telcos, their opponents in the ongoing controversy.
Representatives for the Iowa telcos admitted in email exchanges that a weekend story about the controversy by the Associated Press — which played up sex-chat services in in its lead — brought more urgency to their task, given the widespread reach of the wire service. In a previous letter to the FCC, AT&T had also emphasized the adult-themed services. While such services are not in violation of any laws, the nudge-nudge implications of AT&T’s message (picked up dutifully by AP) were perhaps just the first sign of how nasty this fight may get.
While FCC chairman Kevin Martin said last week that the commission had told large carriers to stop blocking calls to the Iowa-based operations, those infractions were only part of the ongoing tussle. Members of the carrier coalition (ungainly named the Coalition for Carrier Neutrality) as well as other sources of ours inside the telecom biz claim there are network-ops dirty tricks going on that are sporadically limiting call throughput — while also admitting such tactics are almost impossible to prove.
On the above-board side of the battle, Sprint Nextel formally joined the fight by filing its own lawsuit against a group of Iowa telcos and the calling service providers in federal court Tuesday, joining AT&T and Qwest, the latter of which also recently filed a formal complaint with the FCC.
Complicating matters a bit is the fact that the coalition does not speak for all the participants on the Iowa/Internet side of this battle — in fact, some background grumbling has already started from some Internet calling providers, who are charging that some of the newer entrants into the field “got too greedy” and spoiled the game by running up big bills for the large providers.
Still, the coalition, led by veteran D.C. telecom lawyer Jon Canis, showed it can at least match wits with AT&T in a rhetorical battle, squelching the adult-chat argument by noting today on its website that “AT&T, Verizon, and Qwest numbers power adult chat sites such as RedHotDateline, LiveLinks, and TangoByPhone.”
Touche! More to come, we’re sure.
UPDATE: Michael Balmoris, AT&T spokesperson, replied in an email:
We have no relationship — revenue sharing, having these numbers, or otherwise — to the web sites/chat lines these guys cite. Their claims are baseless and are a complete falsehood; underscoring their lack of credibility.
Inside the 700 MHz spectrum land grab
Like a fresh spring breeze, new radio-frequency spectrum is in the air. It is so close that you can almost smell it – and seek to keep others away from it.
The next big spectrum land grab is over 700 Megahertz (MHz.) It’s the promised land of “beachfront property” that broadcasters are set to vacate on February 19, 2009, when the transition to digital television is supposed to be complete. Lots of folks are jockeying now to lock up these airwaves.
Besting the television broadcasters was the battle back in 2005. The high-tech industry teamed up with wireless carriers, and with the public safety officials, to push for DTV legislation forcing broadcasters out of the 700 MHz band.
The gizmo-makers have sought the frequencies for more than a decade. Same with spectrum-poor wireless carriers like T-Mobile. They joined up with Cisco, Dell, Intel and Microsoft to form the High-Tech DTV Coalition in 2005.
They struck a pact with public safety officials, who were also motivated against the broadcasters. Congress had promised public safety 24 of the 108 megahertz once the DTV transition was complete.
With the February 2006 passage of the DTV legislation, 60 of those 108 megahertz will be opened at auction by January 2008. Police and firefighters will get their due. The additional 24 megahertz within the band is already owned by Access Spectrum, Aloha Partners, Pegasus Communications and Qualcomm.
So how will those 60 megahertz get sliced up? Verizon Wireless has been rumored to bid for up to 30, half of what’s available. Other players, including DirecTV, Echostar, Google, Intel, Skype and Yahoo!, have joined a push to ensure that the wireless licenses will be nationwide– and to potentially compete with the incumbents.
But if you don’t want to actually pay for the best frequencies, there’s always the good old-fashioned way: convince politicians to give it to you. Morgan O’Brien has perfected this strategy. He used it in 1990 to convert his radio-dispatcher frequencies into cell-phone licenses and jump start cellular carrier FleetCall.
In 2002, his company, then called Nextel, did it again. With the help of Rudy Giuliani and his Giuliani Partners lobbying firm, Nextel partnered with public safety. It eventually persuaded the FCC to agree to its plan swapping a disjoined band of frequencies for a contiguous 10-megahertz national license.
“If there were a Nobel Prize for lobbying, I would give it to Nextel and Morgan O’Brien,” said J.H. Snider, research director of the New America Foundation’s Wireless Future Program.
But O’Brien’s third attempt, a company called Cyren Call, is turning into a dud. Again, he’s rallied public safety officials, who say that 24 megahertz is not enough for interoperable communications. Cyren Call wants to devote 30 of those 60 megahertz and to a Public Safety Broadband Trust. Conveniently, O’Brien’s company would manage the spectrum. And during down-times (i.e., when there are not wide-scale emergencies), Cyren Call would resell commercial service over the airwaves.
This dual commercial/public safety use would allow Cyren Call to make more efficient use of the spectrum than traditionally done by public safety. But it would also take spectrum off the market. In December, the FCC rejected the Cyren Call, saying: 24 megahertz was enough for public safety.
Those eager to bid on the new airwaves didn’t want to take any chances. That was particularly so after Sen. John McCain, R-Ariz., a champion of the DTV transition, appeared to favor Cyren Call in a January press release.
“Morgan O’Brien’s plan was such a sword of Damocles: half of all the spectrum that they were counting on buying would go away,” said Jerry Brito, senior research fellow at George Mason University’s Mercatus Center (link to http://www.mercatus.org/), who has researched the interoperability dilemma.
The techies resurrected their old DTV coalition. But this time, they went after public safety. Janice Obuchowski, who had been the executive director of the coalition, joined former FCC Chairman Reed Hundt to float an alternative, Frontline Wireless, which would gobble only 10 additional megahertz for public safety. And the coalition funded an attack on Cyren Call, which they said would disrupt the DTV transition and harm consumer welfare.
This time around, Verizon Wireless is an eager participant in the DTV coalition. “Cyren Call’s leaders are the same people who, while at Nextel, created the 800 MHz rebanding scheme,” a reference to the spectrum swap by lobbyists for Verizon, who bitterly opposed the swap.
“Cyren Call is dead,” said a telecommunications industry lobbyist. But when will public safety realize that? It isn’t clear yet whether they will gravitate toward Frontline, a kind of Cyren Call-lite. At least Frontline agrees to bid on the special 10 megahertz they’re seeking.
Data is good, but not without voice
RANT: The U.S. wireless industry’s annual fiesta, CTIA 2007, is finally wrapping up. By all means it looks like a successful show, capped by a news release from CTIA that boasts that data revenues of the industry jumped 77% in 2006 to $15.2 billion, representing about 13% of the total wireless industry revenues, currently pegged at about $125 billion.
Thanks to all those newfangled services – music, videos, television and even the web – the mobile data revenues will increase next year. But that is not a reason for the industry dons to forget what puts gas in their Cadillacs: Voice.
In 2006, voice brought in about $110 billion, and that is such a large amount of money that the U.S. wireless providers should cringe at the fact that they have to use advertising tag lines such as “fewest dropped calls” or ask people to come and try their service for 30 days or switch back for free.
No self-respecting descendant of Ma Bell should be able to sleep at night till they fix the voice network. After all Europeans have managed to lick the dropped call problem, by putting decent enough quality in place. Even the Chinese and Indian carriers with their microscopic ARPU manage to complete calls pretty much everywhere.
What brings on the rant today? How about the for past three days I have been unable to retrieve voicemails, or calls have dropped in mid-sentence, leading to a string of profanities and hence dirty looks from nice old ladies.
Frankly we all suffer this ignominy on a daily basis.
Ask anyone in America – and I do mean anyone – and they will be quick to express their dissatisfaction with their wireless phone company - regardless of carrier. Despite the presence of four large national mobile carriers, the voice network problems are almost universal.
Even those endorsed by industry ranking services are not exactly paragons of quality for there have been instances when their own phones don’t work in their company stores.
Voice is more critical to these mobile carriers than they realize. If the phone doesn’t work, we switch to another one with fewer headaches and buy our data plans from them instead … and the music and the TV and the videos! It’s that basic.
The problem is that FCC and others who are supposed to watch out for the consumer don’t really do their job and make voice call coverage mandatory. Just like they made wireless e911 mandatory! How about a QoS guarantee for the consumers?
Don’t the big phone and telecom operators sign service level agreements with big customers? Why not a similar agreement with the consumers – who frankly spend more money on their telecom services, at least in aggregate. So before they try and bring down Google, it is time for wireless carriers to tend to their own yard. Can you hear me now? Probably not, if I’m calling on a wireless phone.