Wireless Industry: We’re running out of spectrum!
Wireless Industry: We’ve got plenty to room for unlimited ESPN!

America is on the verge of a wireless traffic data jam so bad, it could bring America to its knees.

Or not.

Stop the Cap! notices with some interest that while wireless carriers continue to sound the alarm about a spectrum crisis so serious it necessitates further compressing the UHF television dial and forces other spectrum users to become closer neighbors, the same giant phone companies warning of impending doom are negotiating with online video producers to offer customers “toll-free,” all-you-cat-eat streaming video of major sports events that won’t count against your usage allowance.

ESPN is in talks with at least one major carrier (AT&T or Verizon Wireless) to subsidize some of the costs of its streamed video content so that customers can watch as much as they want without running into a provider’s usage limit. Both Verizon and AT&T have signaled their interest in allowing content producers to pay for subscribers’ data usage. In fact, they don’t seem to care who pays for the enormous bandwidth consumed by streaming video, so long as someone does.

At a recent investment bank conference Verizon Wireless chief executive Dan Mead explained the next chapter in monetizing data usage will allow the company to rake in more revenue from third parties instead of customers already struggling with high wireless bills.

“We are actively exploring those opportunities and looking at every way to bring value to our customers,” said Mead.

Content producers are increasingly frustrated with the stingy caps on offer at AT&T and Verizon Wireless because customers stop accessing that content once they near their monthly usage limit. One large provider admitted to ESPN that “significant numbers” of customers are already reaching their cap before the end of their billing cycle, after which their online usage plummets to limit the sting of overlimit charges.

Offering “toll-free” data could dramatically increase the use of high bandwidth applications and increase profits at wireless providers based on new fees they could collect from content producers. Customers would still be subject to usage limits for all non-preferred content, a clear violation of Net Neutrality principles.

The buffet is open.

But in case you forgot, wireless carriers won exemption from Net Neutrality, arguing their networks lack the capacity to sustain a Net Neutral Internet experience. These same companies claim without more frequencies to handle the massive, potentially unsustainable amount of wireless traffic, the wireless data apocalypse could be at hand in just a few years. It was also the most-cited reason AT&T and Verizon discontinued their unlimited use data plans.

But unlimiting ESPN video? No problem.

In January 2010, Verizon Wireless was singing a very different tune to the FCC about the need to control and manage high bandwidth applications like the “toll-free” streaming video service ESPN proposes (underlining ours):

Wireless broadband services face technological and operational constraints arising from the need to manage spectrum sharing by a dynamically varying number of mobile users at any time. Thus, unlike, for example, cable broadband networks, where a known and relatively fixed number of subscribers share capacity in a given area, the capacity demand at any given cell site is much more variable as the number and mix of subscribers constantly change in sometimes highly unpredictable ways.

Are wireless carriers now part of the problem?

For example, as a subscriber using a high-bandwidth application such as streaming video moves from range of one cell site to another, the network must immediately provide the needed capacity for that subscriber, while not disrupting other subscribers using that same cell site. Of course, the problem is magnified many times over as multiple subscribers can be moving in and out of range of a cell site at any given moment. Moreover, the available bandwidth can fluctuate due to variations in radio frequency signal strength and quality, which can be affected by changing factors such as weather, traffic, speed, and the nearby presence of interfering devices (e.g., wireless microphones).

These problems compound those resulting from limited spectrum. As the Commission has repeatedly recognized in proclaiming an upcoming spectrum crisis, “as wireless is increasingly used as a platform for broadband communications services, the demand for spectrum bandwidth will likely continue to increase significantly, and spectrum availability may become critical to ensuring further innovation.”

A wireless carrier cannot readily increase capacity once it has exhausted its spectrum capacity. Thus, wireless broadband providers are left to acquire additional spectrum (to the extent available) or take measures that use their existing spectrum as efficiently as possible, which they do through a combination of investing in additional cell sites and network management practices that optimize network usage and address congestion so as to provide consumers with the quality of service they expect.

Regulators need to ask why wireless companies are telling the FCC there is a bandwidth crisis of epic proportions that requires the Commission to exempt them from important Net Neutrality principles while telling investment banks, shareholders and content producers the more traffic the merrier, as long as someone pays. Customers also might ask why their unlimited use data plans were discontinued while carriers seek deals to allow unlimited viewing with their preferred content partners.

What is the real motivation? The Wall Street Journal suggests one:

“Creating a second revenue stream for mobile broadband is the holy grail for wireless operators but collecting fees from content companies would probably make the FCC take a close look into the policy implications,” said Paul Gallant, managing director at Guggenheim Securities. An FCC spokesman declined to comment.

The Wall Street Journal takes a closer look at a plan to manage an end run around Net Neutrality by allowing preferred content partners to offer streaming video services exempt from your usage cap. (4 minutes)

Other stories of interest:

1. What Spectrum Crisis: Verizon Wireless Tries to Monetize Video Usage With New App
2. Bulldozing Wireless Net Neutrality: Carriers Want “Toll-Free” Data for Their Partners
3. Proof Verizon’s Banishment of ‘Unlimited Data’ is a Money Grab, Not a Capacity Concern
4. AT&T’s Internet Overcharging Merry-go-Round — Billing App Makers for Your ‘Overusage’
5. AT&T’s ‘Data Tsunami’: Upselling Customers for Higher Profits During Spectrum ‘Crisis’

Verizon casts off its rural landline network for some customers.

Verizon landline customers reporting problems with their service in Pennsylvania may be soon targeted for Verizon’s wireless landline replacement — Voice Link — according to two sources sharing an internal memo with Broadband Reports.

The May 7 memo states that a significant number “selected customers” will be migrated off Verizon’s copper landline network to the Voice Link wireless service. One of the sources recognized the move as an end run around regulators:

“It has become painfully obvious to both our employees and customers that Verizon wishes to divest themselves of all regulated services,” says the source. “Abandoning our regulated wire line customers in favor of fixed point LTE may seem like a clever move but it violates “The Negroponte Principle” and will ultimately bump-up against the immutable laws of spectrum conservation physics.”

“It’s a shame that corporations like Verizon can build a FTTCS based wireless empire with regulatory subsidies provided by their wireline customers and then force them onto the unregulated wireless side,” argues the insider. “Questions of ethics and legality abound and perhaps regulatory over-sight is warranted here.”

Verizon may not get too much oversight from Pennsylvania regulators hoodwinked by the telecom company in the past.

Voice Link is a voice-only wireless home phone replacement that lacks certain calling features, Caller ID with Name for one, and requires the homeowner to provide power (and backup batteries in the event of a power failure). Customers are also dependent on quality reception from the nearest Verizon Wireless cell tower and that it remains in service during severe weather events or prolonged power outages.

Some of the customers likely targeted are still waiting for DSL broadband service from Verizon. If those customers are identified as Voice Link prospects, they will be waiting for broadband forever because Voice Link does not support data services and Verizon cannot supply DSL over a scrapped landline network.

Stop the Cap! has also learned today that the Federal Communications Commission has no problem with Verizon’s unilateral action to switch landline customers to wireless.

A FCC representative told our reader Anne, who is currently fighting Verizon over its plans to abandon landline service on the New Jersey Barrier Island, that they consider Voice Link a functionally equivalent landline service. In a response that could have come directly from Verizon customer service, the FCC helpfully describes the new service Anne already understands and does not want:

Q. What if Verizon is NOT replacing copper with fiber, but is going strictly to wireless?  There will be no landlines whatsoever.  Is that acceptable?

A. “Yes that is acceptable and it is called Verizon Voice Link.  It is a wireless device that plugs into the telephone lines in your home, allowing customers the ability to use their home telephone to make and receive calls.” — FCC Representative Number : TSR54

“This second FCC response, like the first one, ignores the issue, is unprofessional and is insulting,” says Anne. “Obviously, I already know what Voice Link is.”

Other stories of interest:

1. Verizon to Rural America: Voice Link is Coming Soon; Buy a Satellite Dish If You Want Data
2. Six Months After Sandy, Verizon Abandoning Wired Network in Mantoloking, N.J.
3. Verizon’s Long Term Plan to Abandon Wired Landlines/Broadband in Non-FiOS Areas Begins
4. Verizon Seeks to Abandon Landlines on Fire Island; Wireless or You Are On Your Own
5. Verizon Will Cease Selling Standalone DSL Service May 6th; Voice With DSL Only, Please

Verizon Communications has filed a formal tariff obtained by Stop the Cap! with the New York State Public Service Commission (PSC) that would establish conditions under which it can abandon its wired network in favor of wireless-only service.

If approved, Verizon will be able to drop wired landline and broadband service in any area of the state if the company can:

• certify that a substantial portion of its facilities in an area are destroyed, rendered unusable, or beyond reasonable repair, or,
• demonstrates that the use of wireless to serve specified customers, or groups of customers, is otherwise reasonable in light of the geographic location, the availability of competitive facilities to serve those customers or groups of customers, or in light of other criteria acceptable to the PSC.

Verizon is using the case of Fire Island, N.Y., to attempt a rewrite of New York’s communications tariffs. Although eastern Fire Island suffered some damage from Hurricane Sandy, a considerable amount of Verizon’s infrastructure further west did not survive the storm. Verizon wants to abandon that wired infrastructure, avoid spending money to upgrade the island to fiber optic service, and switch customers to a voice-only, wireless service called Voice Link that would leave Verizon’s DSL customers without broadband.

Although Verizon has currently only applied to drop wired service to the “western portion of Fire Island,” the tariff would set conditions under which Verizon could abandon its landline network for financial reasons in other portions of the state. For example, Verizon could argue that its declining number of rural landline customers are no longer financially viable to serve because of wired network upkeep and upgrade expenses. Verizon’s application would also allow it to abandon older facilities where competitive services (wireless or wired) are available, and allow Verizon’s wireless products to be considered a suitable alternative to meet universal service requirements.

Verizon says it will offer the same basic calling packages that landline customers can get at the same or lower prices. The company also promises to adhere voluntarily to PSC regulations on customer protection, customer complaints, service quality, safety and reliability.

But Verizon does not promise to offer a functionally equivalent wireless replacement for the landline.

For example, Verizon only promises to support voice calls, access local and toll calling, emergency services with E911 capability, assistance services, telecommunications relay services, and directory listings, including the option of non-published service.

Data services are not supported. Current Verizon DSL customers with unlimited use plans will be forwarded to Verizon Wireless to sign up for the same limited use wireless broadband plans already available in the rest of the country (the ones that charge $50 for up to a handful of gigabytes of monthly usage, depending on the plan). Business customers will need to buy new equipment and sign new contracts with Verizon Wireless (or other wireless carriers) to process credit card transactions. Although some voice calling features are supported, an exact list remains unavailable.

In the event of a power failure, a built-in backup battery will provide up to two hours of talk time, after which the line will stay out of service until commercial power is restored.

Verizon Voice Link: The company’s landline replacement, works over Verizon Wireless. (Asbury Park Press)

Because Verizon Wireless’ existing cellular network serving Fire Island is inadequate, the company has agreed to upgrade and improve service to the island.

Verizon argues its wireless solution is the only answer that makes sense.

“The cost of replacing facilities is very high, and if hurricanes or other severe storms occur in the future, there is a significant risk that the newly installed outside plant would again be damaged or destroyed,” argues Verizon’s Manuel Sampedro, who is overseeing Verizon’s service restoration effort on Fire Island. ”Wireless service is already the predominant mode of voice communication on the island.”

But in the event of another major storm, Verizon’s wireless facilities could also be knocked out of service, potentially for weeks, as happened during Hurricane Sandy.

In the nearby coastal city of Long Beach, N.Y., every cell tower in the area failed because of the storm . City Manager Jack Schnirman told the FCC at a recent hearing wireless proved no more robust than any other technology, and described a frustrating experience attempting to reach representatives from major cell phone carriers about when exactly service could be restored.

“Long Beach reached out to one of the carrier’s customer support departments, explained the devastation and inquired about the carrier deploying a cell on wheels,” Schnirman said. “The customer service rep replied, ‘you might want to look that up on the Internet, I don’t know what that is.’ Well obviously, ironically, we had no Internet at that time.”

Customers did not fare any better.

“There was one woman in particular who passed away, of natural causes, an elderly woman,” Schnirman said. “And her daughter had to walk literally a mile and a half from her home to police headquarters just to say, ‘Listen, my mom has passed, and I thought I should tell somebody.’ ”

Wireless carriers are not obligated to provide backup service in the event of a power failure. An FCC effort to set minimal standards for backup cell service was met with legal threats by the wireless industry and the FCC backed down.

Verizon is in a hurry to win approval of its tariff change, requesting its filing be approved and take effort on less than 30 days’ notice with a waiver of the requirement that it publish a public notice about the change in area newspapers.

Reporter David Cay Johnston says Verizon and AT&T’s efforts to abandon the landline are no accident. They are part of a larger lobbying effort to abandon company obligations under the “carrier of last resort” policies that guarantee every American access to quality landline telephone service. Wireless phone service is unregulated. Johnston isn’t the only one reporting on this story. Stop the Cap! has covered it repeatedly since early 2010. (2 minutes)

Other stories of interest:

1. Verizon Seeks to Abandon Landlines on Fire Island; Wireless or You Are On Your Own
2. Verizon’s Long Term Plan to Abandon Wired Landlines/Broadband in Non-FiOS Areas Begins
3. Six Months After Sandy, Verizon Abandoning Wired Network in Mantoloking, N.J.
4. Verizon Will Cease Selling Standalone DSL Service May 6th; Voice With DSL Only, Please
5. AT&T Will Invest $14 Billion to Expand Wired/Wireless Broadband, Abandon Traditional Landlines

Giant telecommunications companies and their lobbyist friends are gushing their approval for President Obama’s latest pick — Tom Wheeler — to head the Federal Communications Commission. What do they know that consumers don’t?

AT&T

I’ve known Tom Wheeler for many years, and he is an inspired pick to lead the FCC.  Mr. Wheeler’s combination of high intelligence, broad experience, and in-depth knowledge of the industry may, in fact, make him one of the most qualified people ever named to run the agency.

Mr. Wheeler will face daunting challenges at the FCC.  Already the pace of technological change is clashing with outdated laws, antiquated rules, and approaches more rooted in the past than the present.  The dedicated career staff at the FCC are grappling with these challenges now.  If the pace of change is to continue, along with the investment and job creation that fuel it, the mission of the FCC in the 21st Century must be re-examined, and its rules and methods modernized.  In this situation, I can think of no nominee more talented or whose leadership skills are more needed. Moreover, Mr. Wheeler will be joining a complement of fellow commissioners who are equally formidable and well suited for this important moment in the FCC’s history.

On behalf of AT&T, I’d like to congratulate Tom Wheeler on his nomination. We look forward to working with him once he is confirmed by the Senate. I also want to congratulate Mignon Clyburn, who will take over as interim-chair of the FCC. She’s an experienced and independent policymaker, passionate about public service, who will lead the agency over the coming months with a steady hand.

– Jim Cicconi, Senior Executive Vice President

National Cable & Telecommunications Association (NCTA) — America’s largest cable industry lobbyist

We congratulate Tom Wheeler on his nomination as Chairman of the Federal Communications Commission. With his significant experience in both the private and public sector, Tom is an exceptional choice to lead the Commission during a time when the telecommunications marketplace is experiencing significant innovation and incredible change. We welcome the appointment of Mignon Clyburn as interim chairman as she is a distinguished and able public servant. We will continue working closely with the entire Commission as they tackle important issues facing America’s dynamic media, technology and telecommunications landscape.

– Michael Powell, NCTA President & CEO and Former FCC Chairman

Comcast/NBC

We congratulate Tom Wheeler on his nomination as Chairman of the Federal Communications Commission.  His vast knowledge of the communications industry, as well as his proven leadership, will be invaluable as the Commission sets its course for our nation’s digital future.  We applaud President Obama’s nomination and we look forward to working with the Commission under Tom’s leadership.

Further, we commend the President’s appointment of Mignon Clyburn as Acting Chair of the FCC.  She has distinguished herself in her service as a Commissioner over the past three and a half years, and has demonstrated that she is well-suited to lead the agency.  She works passionately and tirelessly to ensure that the best interests of all Americans are given serious consideration in each matter before her.  We congratulate Chairwoman Clyburn on her well-deserved appointment as the first female chair of the FCC and look forward to continuing to work with the FCC under her leadership.

As current FCC Chairman Genachowski departs, we wish him the best and thank him for his very successful Chairmanship that has ensured the US remains the leader in the global communications marketplace.

– Comcast CEO Brian Roberts

Telecommunications Industry Association

He has the proven ability to transcend a broad range of industry perspectives to reach balanced outcomes.

– Grant Seiffert, president

CTIA – The Wireless Association — America’s top wireless industry lobbyist

Tom has a deep understanding of communications issues, a passion for hard work and creative thinking, a diverse background that spans the realm of the Internet world and a keen understanding of how mobile wireless broadband can drive our economy and innovation.

I can attest to Tom’s commitment to harness the power of communications technology to improve people’s lives, to drive our global competitiveness, and to advance the public interest,” Genachowski said. “The FCC’s role has never been more essential, and with Tom’s deep policy expertise and his first-hand experience as a technology investor, he is a superb choice to advance the FCC’s mission of promoting innovation, investment, competition, and consumer protection.

Other stories of interest:

1. Change We Can Believe In? Cable/Wireless Industry Lobbyist Will Now Head FCC
2. FCC Commissioner Mignon Clyburn Calls North Carolina’s H.129 A “Broadband Barrier”
3. “Future FCC Chairman” Tom Wheeler’s Fruit Doesn’t Fall Far from Big Telecom’s Tree
4. Former Head of Cable Lobby Could Be Romney’s Pick for FCC Chairman
5. FCC Chairman Opens Wireless Industry Convention Mouthing AT&T Talking Points

Phillip “Friends Can Agree to Disagree” Dampier

Are we being unnecessarily pessimistic and cynical when we oppose the likely nomination of Thomas Wheeler to replace Julius Genachowski as the chairman of the Federal Communications Commission?

Some of our colleagues in the consumer-focused public policy arena suspect we might be.

Stop the Cap! is very skeptical that appointing a former cable and wireless industry lobbyist with 30+ years of experience is the best choice for consumers at the FCC.

Our friend Harold Feld from Public Knowledge, which has announced cautious support for Wheeler’s appointment, has a more optimistic view about his potential:

I understand where my friends are coming from when they look at Wheeler’s resume and think “oh God, another Washington insider, why can’t we ever get a real progressive!” But I cannot agree with Senator Rockefeller’s statement that “a lobbyist, is a lobbyist,” or the view of some that the taint of industry clings insidiously forever and corrodes the soul. It’s been ten years since Wheeler left CTIA, longer than that since he left NTCA. Had he really been interested in advancing the agendas of these industries, he was in an excellent position to do so when he headed up the Obama transition team. He did not. Indeed, Susan Crawford and Kevin Werbach, long-time stalwarts of the public interest who worked for Wheeler on the transition team, have joined other public interest luminaries as Wheelers strongest public supporters. Had Wheeler been working behind the scenes in the transition to promote the incumbents, I expect Susan and Kevin would have known.

I also recognize that support from public interest friends is also not conclusive. But it should surely weigh in the evaluation of Wheeler as much as any blog post. And I recognize I’m also a “Washington insider” and as likely to be led astray by my personal friendships and the whole “Washington Bubble” culture as any other human being. That’s why I’m glad people in the community are asking the right questions and putting Wheeler on notice that, like any Chairman, he needs to prove himself as a champion of the public interest. We at PK have also made it clear we expect Wheeler to not just talk a good game, but to get his hands dirty and make tough decisions that will piss off incumbents. And when we disagree, as we expect we will, have no doubt we will make our displeasure known.

Harold specifically commented on our piece reviewing Wheeler’s personal blog, in which Wheeler fell all over himself praising AT&T’s chief lobbyist Jim Cicconi, and seemed resigned to approving a proposed AT&T/T-Mobile merger with some preconditions:

It is certainly true that behavioral conditions often fall short, are short lived, and that companies generally find ways to work around them (and the FCC’s track record for enforcement is pathetic). Indeed, we at PK made these arguments in the context of the AT&T/T-Mobile merger for why no set of merger remedies could adequately address the harms such a merger would cause. But there is a huge difference between my belief that Wheeler was wrong about the best strategy to advance the public interest and accepting that he was motivated by a covert desire to support consolidation and deregulation.

It is more than likely we will have to do business with Tom Wheeler, and we can certainly understand efforts to paint a more optimistic and hopeful picture of the likely new chairman. But we would be dishonest if we said we have high hopes Wheeler will think first about ordinary Americans before steering the country’s telecommunications future. We have learned from the past.

Remember Your History: Catering to Big Special Interests is Bipartisan

Having covered the telecommunications industry since the 1980s when Dr. John Malone of Tele-Communications, Inc., was the American consumers’ worst nightmare, confronting today’s increasingly consolidated and expensive telecommunications marketplace is a case of “Back to the Future.” The deregulation and industry consolidation abuses in the 1980s riled up both Republicans and Democrats — wherever constituents flooded offices with complaints about the local cable monopoly. The “problem politicians” that reflexively defended the abusers were just as bipartisan. Sen. Tim Wirth (D-Colo.) primarily represented the interests of the cable companies that were headquartered in his state. Current Senate Majority Leader Harry Reid (D-Nev.) also defended the cable companies. Sen. John Danforth (R-Mo.) was outraged at the abuses cable operators like TCI heaped on Missouri consumers and not only introduced legislation to stop the abuse in 1992, he also was instrumental in overriding a presidential veto of the measure.

The first mistake one can make in this fight is characterizing this as “progressive” vs. “conservative.” Real conservatives want all-out competition to manage winners and losers. Progressives want to make sure in the absence of that competition, someone — anyone can act to check the power of concentrated markets that suppress competition, raise prices, and deliver less than compelling service. Five years ago, Barack Obama promised change and a D.C. reset that would have ended “politics as usual.”

The art of the possible — changing the perception that consumer interests take a back seat to the whims of professional lobbyists at the FCC has proved less than successful after four years with Julius Genachowski. President Obama is not completely responsible, but it would be dishonest not to hold him to a promise he would deliver “change we can believe in.”

Instead, at the FCC, we got “change we think we might be able to get away with, maybe, or not.”

Julius Genachowski remained silent on the AT&T/T-Mobile merger until the Department of Justice provided him with political cover to oppose it. He caved on strongly enforcing Net Neutrality, refused to make important regulatory declarations that would have satisfied federal courts the FCC has a right to oversee broadband policy, and near the end of his tenure, hobnobbed with the cable industry and declared his support for usage billing and capped Internet.

Where Does Mr. Wheeler Stand?

(Image: MuniNetworks)

So we must ask ourselves, where does Mr. Wheeler, a man who spent most of his career as a consummate cable and wireless industry lobbyist, fall on these issues?

The best place those of us who have not shared lunch with him can make that determination is in his personal blog. Harold wants us to downplay some of Wheeler’s words written during his six years of blogging:

But in the ten years I’ve been blogging, I know that I’ve said many things that do not necessary reflect what I would have done if I had been the ultimate decisionmaker – as I have said on more than one occasion (noting that actual decisionmakers are not advocates). Certainly anyone who reads ten years worth of Tales of the Sausage Factory (has it really been ten years?) will have an excellent sense of my overall priorities and approach. But I can’t swear that all approximately 500 or so blog posts could hold up today as being either accurate predictions (like Wheeler, I too was a big believer in WiMax) or final expressions of what I would have done as Chair of the FCC.

We certainly agree that Wheeler’s predictions of industry trends like WiMAX, in hindsight, are not deal breakers (although they should serve as reminders that one should avoid picking too many winners and losers). But at the same time, Wheeler’s words on policy matters in nearly 60 articles since 2007 should not be ignored, rationalized away, or dismissed either. In some sense, this is comparable to the vetting process for an appointee to the Supreme Court. To get a feel for the philosophy of an individual, both the White House and Congress pour over one’s writings and public opinions. Being asked to accept someone who can reshape public policy for years based on the personal recommendation of others only goes so far.

Many of Wheeler’s views are profoundly concerning, because they seem to betray a telecom industry conventional wisdom about the state of technology, wireless spectrum, regulation, and competition. His familiarity and comfort working within the paradigm of big cable and wireless is strongly contrasted with his suspicions and surprise regarding interlopers like Google and Apple — dubbed by Wheeler as part of a “Silicon Mafia.” We sense Wheeler seems most comfortable expecting to oversee business as usual, while advocating and accommodating some minor innovation here and there.

What is almost completely absent in most of Wheeler’s writings is the perspective of, or concern for ordinary consumers. What would Mr. and Mrs. Joe Average think about yet another consolidating merger between AT&T and one of its smaller competitors? What impact would another cable merger have on the bills paid by ordinary people in Colorado, Nebraska, or Pennsylvania? Is it good for consumers to advocate eliminating wireless network redundancy, as Wheeler does, after major events from 9/11 to Hurricane Sandy to the recent Boston Marathon attack all reveal wireless networks are susceptible to call volume clogging and extended service outages?

Tom Wheeler is an admirer of AT&T’s top-lobbyist Jim Cicconi.

More importantly, we are disturbed by Wheeler’s perspective about wired infrastructure that could have a major impact on the near future of rural telecommunications. Wheeler comes dangerously close to AT&T’s sentiments about its yesteryear rural landline network and its wish to switch those customers to wireless (with all the added costs, usage caps, and coverage issues). We cannot help but notice Wheeler frames the general issue much like AT&T does: an “evolution” that represents “weaning ourselves” from “the old wireline.” Ask yourself if AT&T is more or less comfortable knowing Mr. Wheeler’s attitudes about its wired telephone network. AT&T considers it an outdated money-loser and a nuisance in its rural service areas. Wireless is a license to print money, just as soon as the FCC and state regulators give the green light to go ahead. Is Wheeler to be the deciding vote?

We Don’t Believe Wheeler is an ‘Industry Plant’

Harold writes:

But while it is important to ask the right questions and give no one a free pass, it is equally important to evaluate the answers and the evidence fairly and accept their logical conclusions. The evidence that Wheeler would have approved the AT&T/T-Mobile merger had he actually been Chairman (rather than playing pundit) is pretty weak. To take that a step further and say that Wheeler’s justification for approving the merger as a means of reregulating the wireless industry was mere sham to hide his true sympathies seems to me exceedingly unjustified.

That mischaracterizes our sentiments about Mr. Wheeler. We do not believe he is some secret industry plant that is itching to deregulate the agency into a stupor. Nor do we believe a theoretical vote in favor of the AT&T/T-Mobile merger is evidence he is in AT&T’s back pocket specifically. Let us be clear: he served as a professional lobbyist for these companies for nearly 30 years. His job was to absorb and reflect the views of the nation’s biggest cable and phone companies both to politicians and regulators. Some remain friends and colleagues.

It is a safe bet most of the industry will welcome and celebrate Wheeler’s appointment. Many know him personally. Many others will feel safe that he is a reachable industry insider already familiar with the issues that concern them. This is what makes the D.C. revolving door so insidious. When you move from the regulated to the regulator (and back again), the only real outsiders are average consumers.

Here is an example of Wheeler admiring AT&T’s prowess in the early days of its attempted merger with T-Mobile. Notice how he characterizes the deal’s opponents:

“The most important times in any merger approval process are the first two weeks when the acquiring company gets to define the discussion and the last four weeks when the concerns raised by others and the analysis by the government congeals to define the issues to be negotiated in the final outcome. AT&T shot out of the blocks brilliantly, framing their action in terms of the spectrum shortage and President Obama’s desire to provide wireless broadband to rural areas. Over the coming months those who were caught by surprise, as well as those who would use the review process to gain their own advantages, will have organized to present their messages.”

Wheeler shows no evidence of being the FCC’s version of a game-changer like Elizabeth Warren. Instead, he’s an avowed admirer of AT&T’s top lobbyist Jim Cicconi. What will that difference mean? The New York Times, reporting more broadly on the problem of D.C.’s revolving door, provides some valuable clues:

Government officials and lobbyists agree that former agency officials have a much easier time getting phone calls or e-mail messages returned from their old colleagues, and that access often extends to greater credibility in arguing their clients’ positions.

One corporate lobbyist who worked as a regulator, asked whether he believed he had an inside edge in lobbying his ex-colleagues, said: “The answer is yes, it does. If it didn’t, I wouldn’t be able to justify getting out of bed in the morning and charging the outrageous fees that we charge our clients, which they willingly pay.”

The lobbyist, who spoke on condition of anonymity because of concerns about alienating government officials, added that “you have to work at an agency to understand the culture and the pressure points, and it helps to know the senior staff.”

Not quite

The most likely outcome of a Wheeler nomination is that he will be quickly approved, maintain the agency’s relatively low profile, and avoid rocking the boat too much. Even he doubts the power of the FCC to effect regulatory change unless those regulated volunteer to submit to more regulation. That means more quid pro quo agreements attached to mergers, acquisitions, and other deals the industry brings the FCC for approval. But as this quote illustrates, the industry remains in the driving seat:

“[...] Jim Cicconi sits astride a process that could determine the future of wireless policy, first for AT&T and then by extension for everyone else. Quite possibly the result of this merger decision will be far wider than the merger itself. At the end of the day we may be talking about a new era of wireless policy based on the Cicconi Commitment.”

Wheeler argued that the inability of the FCC to muster the political will to deal effectively with net neutrality and other broadband regulation made a consent decree around AT&T/T-Mobile the best way to update consumer protection rather than leave these services essentially unregulated.

Wheeler’s recognition of the inability of the FCC to get virtually anything done comes with no assurance he will do any better. Harold himself admits that the FCC’s track record of enforcement is “pathetic.” Has Wheeler written on his blog that he would seek to change that?

Wheeler’s reflections on the failed T-Mobile/AT&T merger present a clear sign he considers it a missed opportunity, with the usual voluntary divestiture of certain assets here and there with time limited pre-conditions that carry all the impact of one of those class action settlements that nets consumers a coupon or a $2 refund. Everybody but consumers walk away winners.

The Justice Department’s antitrust division, in contrast, illustrated the usefulness of a backbone when it quickly declared the merger proposal monstrously anti-consumer and anti-competitive and announced it would sue to stop it. Deal over and dead. When is the last time the FCC issued such a clear-cut, high-profile decision all on its own? Why is it so hard for the FCC to see the same anti-competitive nightmare so visible at the Department of Justice? Public Knowledge and other consumer groups saw the dangers from day one. Does Mr. Wheeler agree with the Justice Department or does he think he can do business with that shrewd AT&T lobbyist Jim Cicconi to get such deals approved the ‘right way?’

Our view remains the country and the Obama Administration could do far better choosing someone to lead the FCC that has not made a career lobbying for big cable and phone companies. If we want to solve America’s rural broadband problems, enforce fair billing practices and Net Neutrality, find new creative ways to utilize and distribute wireless spectrum, and promote competition while restricting industry consolidation, would we do better choosing an ex-industry lobbyist or an engineer, network planner, professional regulator, or an antitrust attorney?

President Obama went with the ex-lobbyist.

Other stories of interest:

1. Change We Can Believe In? Cable/Wireless Industry Lobbyist Will Now Head FCC
2. “Future FCC Chairman” Tom Wheeler’s Fruit Doesn’t Fall Far from Big Telecom’s Tree
3. FCC to AT&T: Justify Your Spectrum Demands, Merger With T-Mobile
4. Verizon Appoints New Head Lobbyist for New York and Connecticut
5. Start the Countdown Clock on Julius Genachowski’s Departure from the FCC

Wheeler

President Barack Obama will shortly nominate a former top cable and wireless industry lobbyist as his choice to represent the interests of the American people at the Federal Communications Commission.

Thomas Wheeler, who has been a telecom industry insider for at least 30 years and today serves as a venture capitalist, will have enormous influence over how the FCC manages the public airwaves, broadband, and wireless spectrum.

The Wall Street Journal reports this afternoon that President Obama may make a formal announcement as early as this Wednesday, with current FCC commissioner Mignon Clyburn serving as interim chair until Wheeler is seated.

Wheeler is expected to take a more industry-friendly attitude at the FCC. As Stop the Cap! noted after reviewing several years of Wheeler’s personal blog, the future FCC chairman would have approved the merger of AT&T and T-Mobile, considers Google, Apple and other technology companies challenging telecom public policy part of a “Silicon Valley mafia,” and praised AT&T’s chief lobbyist as a visionary that could define the wireless industry’s future.

Wheeler’s regulatory philosophy offers that mergers and acquisitions present an opportunity for regulators to impose certain temporary conditions on deals, offering the best opportunity to influence a short-term regulatory outcome. But such preconditions are often mild, quickly expire, and are predictable for the companies involved. When Comcast sought merger approval for its deal with NBCUniversal, one concession was to sell discounted Internet access for poor families — a service Comcast had earlier plans to offer but withheld as a bargaining chip during merger approval talks.

Other stories of interest:

1. Verizon Appoints New Head Lobbyist for New York and Connecticut
2. “Future FCC Chairman” Tom Wheeler’s Fruit Doesn’t Fall Far from Big Telecom’s Tree
3. Our Big Fat Telecom Monopoly: “Competition is So ’90s”; Michael Copps vs. Big Telecom
4. Start the Countdown Clock on Julius Genachowski’s Departure from the FCC
5. The Industry<->Regulator Revolving Door Keeps Turning; Former FCC Boss in as Top Cable Lobbyist

AT&T and Verizon Wireless have the largest share of wireless customers. (Wall Street Journal)

The Department of Justice has recommended the Federal Communications Commission promote competition by setting aside certain future low-frequency wireless spectrum for auctions open exclusively to smaller wireless carriers including Sprint and T-Mobile USA.

“Today, the two leading carriers have the vast majority of low-frequency spectrum whereas the two other nationwide carriers have virtually none,” the Department of Justice wrote in comments to the FCC. “This results in the two smaller nationwide carriers having a somewhat diminished ability to compete, particularly in rural areas where the cost to build out coverage is higher with high-frequency spectrum.”

The Justice Department’s antitrust division has monitored the wireless industry with increasing concern consumers are not getting benefits from a robustly competitive marketplace increasingly concentrated in the hands of two wireless giants: AT&T and Verizon Wireless.

That dominance is made possible, in part, from the control of lower frequency spectrum, particularly in the 600-800MHz range that easily penetrates buildings and delivers a more reliable signal over longer distances than frequencies counted in the gigahertz. Verizon and AT&T control large swaths of these lower frequencies that work well indoors and provide longer distance coverage in rural areas. Conversely, Sprint and T-Mobile, among other smaller carriers, rely heavily on higher frequencies that need a larger network of cell towers to support good signal levels.

It often means rural customers may find reception with AT&T or Verizon Wireless but end up with a roaming indicator or no service at all with smaller providers.

The Justice Department worries that auctioning off future prime 600MHz spectrum carved out of the UHF television band reallocated for wireless services will end up in the hands of the deepest pocketed providers — AT&T and Verizon Wireless, and further hamper the ability of Sprint, T-Mobile and other small carriers to compete.

“Due to the scarcity of spectrum, the Department is concerned that carriers may have incentives to acquire spectrum for purposes other than efficiently expanding their own capacity or services,” writes the DoJ. “Namely, the more concentrated a wireless market is, the more likely a carrier will find it profitable to acquire spectrum with the aim of raising competitors’ costs. This could take the shape, for example, of pursuing spectrum in order to prevent its use by a competitor, independent of how efficiently the carrier uses the spectrum. Indeed, a carrier may even have incentives to acquire spectrum and not use it at all.”

The Justice Department echoes critics’ contentions that given a chance, large wireless carriers will “warehouse” acquired spectrum, unused, denying it from the competition. Carriers object to that claim, calling it baseless. But incentives remain for providers to drag their feet: spectrum warehousing forces competitors to pay even higher prices for other scarce spectrum, the necessity of constructing a larger network of costly cell towers to offer robust coverage, and fighting customers’ perceptions of inferior quality indoor phone reception.

In response, AT&T sent a multi-page, thinly veiled threat to sue if the Commission adopted the recommendations of the Justice Department.

“The Department is quite candid about its motive for this blatant favoritism: it hopes that reducing competition for the spectrum may enable Sprint and T-Mobile ‘to mount stronger challenges’ to AT&T and Verizon,” AT&T wrote in response. “Picking winners and losers in this fashion would be patently unlawful.”

AT&T also claimed the Justice Department’s recommendations were specifically tailored to help the two competitors, despite the fact neither company has shown much interest in acquiring low-frequency wireless spectrum, much less further expand the reach of their wireless networks:

“It is especially puzzling that the Department feels the need to help Sprint and T-Mobile in particular. Sprint already has by far the largest nationwide portfolio of spectrum, and holds vastly more spectrum than either AT&T or Verizon. It will also have ample financial resources at its disposal, as the Department has already approved Sprint’s purchase by Softbank, a financially strong Japanese company, and Dish Network has now made a competing offer for Sprint, citing the financial and strategic advantages of its own proposed combination.

Regardless of how this bidding war turns out, Sprint will receive a sizable infusion of cash, spectrum or both. T-Mobile, which is owned by Deutsche Telekom, one of the largest telecommunications companies in the world, just recently acquired substantial amounts of spectrum from both AT&T and Verizon, and is on the verge of completing a merger with MetroPCS that will add another trove of spectrum. So it is surely not for a lack of spectrum resources or financial backing that the Department needs to propose a financial giveaway to these companies.

Moreover, neither company even chose to bid at the Commission’s last auction of low-frequency spectrum, nor have they availed themselves of opportunities to acquire such spectrum in secondary markets. If low-frequency spectrum was critical to their business plans, as the Department simply assumes, someone should have informed their management, which has, instead chosen to acquire deep holdings in [higher frequency] PCS, AWS, and BRS/EBS spectrum.”

The Justice Department filing did not name Sprint or T-Mobile directly, but both companies are the only remaining national competitors to both AT&T and Verizon Wireless.

Spectrum set-asides are not unusual in telecommunications regulation. The Canadian Radio-television and Telecommunications Commission set aside significant wireless spectrum exclusively for new entrants to promote competition. Ultimately, the new competitors had little impact with less than a 10 percent market share and all three are now considered up for sale. That spectrum may eventually end up in the hands of the largest Canadian wireless companies regardless of the CRTC’s original intentions when license transfer restrictions expire in 2014. All three could be acquired by one or more of the major providers.

Other stories of interest:

1. FCC on Verizon-Big Cable Spectrum Deal: Sure, Why Not?; But Justice Dept. Thinking Twice
2. Wall Street Wants Two Wireless Carriers for Americans: AT&T and Verizon
3. Moody’s Declares AT&T and Verizon the Winners — Sprint and T-Mobile Can “Never Catch Up”
4. Breaking: Justice Dept. Files Suit to Stop AT&T/T-Mobile Merger
5. The AT&T/Verizon Wireless Duopoly: “Humpty Dumpty Has Been Put Back Together Again”

Rep. Marsha Blackburn (R-Tennessee)

House Republicans pulled out all the stops on Capitol Hill today criticizing the Lifeline subsidy program that provides low-cost phone service to the poor, including one congresswoman questioning whether Boston Marathon bombing suspect Tamerlan Tsarnaev received a free cell phone after newspaper accounts suggested he had previously received welfare benefits.

“I even had one constituent [ask] after it came out that the…terrorists that committed the bombings in Boston were receiving welfare benefits, were they in this program? I think those are the kind of questions that our constituents are asking,” Rep. Marsha Blackburn (R-Tenn.) asked at a House hearing on the Federal Communication Commission’s (FCC) Lifeline program.

Several Republicans criticized the program for handing out free or low-cost cell phones some conservative critics have dubbed “Obamaphones” without much eligibility verification.

Blackburn complained the cost of the program has ballooned in cost over the last 29 years.

“When the Lifeline program was introduced in 1984, it only cost the government $380 million a year. Now that has increased to $2.2 billion,” Blackburn said. “This is the kind of explosive growth this program has seen.”

The House Republican-led investigation is unlikely to net any real changes to the program, but Democratic critics have charged Republicans with playing politics with the poor.

Rep. Henry Waxman (D-Calif.) added some critics have made up myths about the program to score political points.

“Here are the facts: President Obama did not create Lifeline, the government does not give away free cellphones or iPads, nowhere in America except in Tennessee do they call it an ‘Obama phone,’ and eliminating the Lifeline program — or disqualifying wireless services — would not reduce our nation’s budget deficit by a single penny,” Waxman said.

Other stories of interest:

1. Dems Propose Internet for Poor While GOP Slams Lifeline’s “Obamaphones”
2. Pennsylvanians Excited/Outraged About Free Cell Phones & Discounted Broadband for the Poor
3. FCC Outlines Needed Reforms to Lifeline Program; Broadband Discounts Under Consideration
4. Tapped Out Consumers Concerned About New Broadband Tax and Free Cellphones for the Income-Challenged
5. Updated AP Breaking News: Officials Order Cell Service Switched Off in Boston, But We Have Doubts

The Lifeline program became campaign fodder last fall when the Drudge Report released a video showing a minority voter praising Obama for “free phones.”

Two competing philosophies to address the digital divide will clash in Congress this week as Democrats introduce legislation to subsidize Internet access for the poor and Republicans hold hearings critical of the FCC’s existing Lifeline program, which provides low-cost phone service for those on public assistance.

The Broadband Adoption Act, introduced by California Democrat Rep. Dorris Matsui, would reform and expand the Lifeline program to allow participants to choose between a discounted landline, cell phone, or broadband Internet access.

“In today’s digital economy, if you don’t have access to the Internet you are simply at a competitive disadvantage. For example, more than 80 percent of available jobs now require online applications,” Matsui said. “The Internet is increasingly the economic engine for growth and innovation.”

Matsui has introduced similar legislation in the past, but it has never been taken up by the Republican-controlled House.

The bill is co-sponsored by ranking member Henry Waxman (D-Calif.), communications subcommittee ranking member Anna Eshoo (D-Calif.) and five other Democrats.

The thought of discounted Internet access is about as popular with some House Republicans as Lifeline-subsidized cell phone service, which some conservatives have derided as “Obamaphones.”

The House Energy and Commerce Committee will hold a hearing on Thursday to look at Lifeline and consider its future. Members are expected to share stories of waste, fraud, and abuse, particularly over the controversial subsidized cell phone service.

Senator Tom Coburn (R-Okla.) is a regular critic of the program and offered the House committee anecdotal reports that some subscribers have eight or more subsidized cell phones with one subscriber saying that to get one, “she just goes across the street and gets it.” Coburn claimed to have evidence in one case where a man kept a “bag full of subsidized phones that he sells for about 10, 15, 20 bucks each.”

Still seen by some as a luxury, a program that subsidizes cell phones was likely to attract critical attention among politicians.

Senators Claire McCaskill (D-Mo.) and David Vitter (R-La.) both drafted amendments that would end the Lifeline subsidy in its entirety, calling it a waste and abuse of resources.

The program and providers have admitted there have been lapses in eligibility verification and there was fraudulent participation in the program.

Last year, the FCC modified the program to tighten eligibility requirements:

• Required all subscribers to recertify their eligibility and to do so annually by providing documentation of income or program participation;
• Confirmed the program’s restriction of one subsidy per household;
• Started a process to create a State-by-State and/or a National Lifeline Accountability Database to prevent multiple subsidies to the same household;
• Eliminated Link-Up support except for recipients on tribal lands that are served by ETCs that take part in both the low-income Lifeline and high-cost support programs;
• Imposed independent audit requirements on carriers receiving more than $5 million in annual support;
• Directed the FCC and Universal Service Administrative Company staff to take action no later than December 31, 2013, to offer an automated means of determining enrollment in the Medicaid, Food Stamps, and Supplementary Security Income programs, the three most common criteria for Lifeline eligibility;
• Set an interim base subsidy amount of $9.25 per month for non-tribal subscribers.

Lifeline was first enacted by Congress in 1985, during the Reagan Administration. In 2005, the Bush Administration expanded the program to include cell phone service.

Other stories of interest:

1. FCC Outlines Needed Reforms to Lifeline Program; Broadband Discounts Under Consideration
2. Pennsylvanians Excited/Outraged About Free Cell Phones & Discounted Broadband for the Poor
3. Tapped Out Consumers Concerned About New Broadband Tax and Free Cellphones for the Income-Challenged
4. Comcast’s Discount ‘Internet Essentials’ Off Limits Because of One Late Bill 10 Years Ago
5. Low Income $9.95 Internet Coming to Time Warner, Cox, and Charter… If You Qualify

Wheeler

Tom Wheeler has a blog.

The presumptive leading candidate for America’s next chairman of the Federal Communications Commission also has a major conflict of interest problem, with at least 30 years of working directly for the business interests of the cable and telephone companies he may soon be asked to oversee in the public interest. Wheeler is the former president of the National Cable & Telecommunications Association (NCTA) — the nation’s largest cable industry lobbying group and past CEO of the Cellular Telecommunications & Internet Association (CTIA) — the AT&T and Verizon-dominated wireless trade association. Today Wheeler serves as a managing director at Core Capital Partners, a Washington, D.C.-based venture capital firm that invests in these and other industries.

In more than 60 articles in the last six years, Wheeler has written of his trials and tribulations with federal regulators who simply refuse to see telecom industry wisdom on spectrum management, the legacy telephone network, obstinate broadcasters, outdated regulations, mergers and acquisitions, and the amazing story of private Wall Street investment and its wisdom to naturally shape America’s telecommunications landscape by “letting the marketplace work” unfettered by oversight and consumer protection laws.

Almost entirely absent in Wheeler’s writings is any interest in the plight of ordinary consumers that do business, often unhappily, with the companies Wheeler used to represent. America’s love of many-things Apple and Google, two runaway success stories heavily invested in the digital economy and well-regarded by more than a few consumers, are scorned by Wheeler as part of the “Silicon Valley mafia.”

Wheeler is the consummate Washington beltway insider, a lifelong lobbyist well-positioned to walk through the perpetually revolving door between the public and private sector. Even worse, he has maintained warm regards for not one, but two telecom industry lobbying giants — the cable and wireless industry trade associations that have daily business before the FCC. Whether Wheeler can stand up to his former best friends is open for debate. Wheeler wrote in one blog entry he remains in awe of AT&T’s chief lobbyist, Jim Ciccioni, who he called “one of the smartest and shrewdest policy mavens in the capital.”

Wheeler’s blog makes it clear he would have supported the 2011 attempted merger between AT&T and T-Mobile, with a few temporary token pre-conditions. He heaped scorn on antitrust regulators for missing an opportunity the merger approval could have had on reshaping the American wireless marketplace. Less is more in Wheeler World.

D.C.’s perpetually revolving door keeps on spinning.

Like outgoing FCC chairman Julius Genachowski, Wheeler is a longtime Obama loyalist and was involved in Obama’s 2008 election campaign.

Wheeler relays to C-SPAN’s Brian Lamb in a 2009 interview that who you know in Washington can mean a lot. After Obama entered the 2008 race, Wheeler connected to Obama through a friend — Peter Rouse, who had recently accepted the position of Obama’s chief of staff.

“I picked up the phone one day and there was a message from Barack Obama that he wanted to talk about some issues related to technology,” Wheeler described. “Things began to develop. We got really interested in the potential of this person and the opportunity that he represented for a transformational moment in American history, and we decided that Iowa was the place.”

Wheeler and his wife Carol (employed by the National Association of Broadcasters, itself a lobbying group) had the financial resources in place to put their D.C. jobs on hold and spend six weeks in the Region 2 Obama election office in Ames, Iowa.

After Obama won the election, Lamb predicted Wheeler might find himself at the FCC. Instead, Obama’s college friend and money-bundler Julius Genachowski won the position.

Wheeler’s chances of succeeding Genachowski improved dramatically in mid-April after receiving the written support of several public policy advocates. One of them was Susan Crawford, whose recent book, Captive Audience: The Telecom Industry and Monopoly in the New Guilded Age, railed against many of the policies supported by the largest telecommunications companies Wheeler professionally represented in his roles at the NCTA and CTIA. Some consumer groups wrote President Obama directly, strongly recommended a change from the ‘business as usual’ revolving door:

During his election campaign, President Obama pledged “to tell the corporate lobbyists that their days of setting the agenda in Washington are over.” Yet the president is reportedly considering a candidate for the next FCC chair who was the head of not one but two major industry lobbying groups. After decades of industry-backed chairmen, we need a strong consumer advocate and public interest representative at the helm. It’s time to end regulatory capture at the FCC and restore balance to government oversight.

Those consumer groups have plenty to worry about if Tom Wheeler becomes the next head of the FCC. Stop the Cap! has found several quotes from his blog which paint a picture of a potential FCC chairman devoted to industry interests:

Close Wireless Retail Stores to Save Money and Kill Jobs: “Sprint announced plans to close eight percent of its over 1,500 company-owned retail outlets. Why stop there? Why does it make sense for wireless carriers to operate more stores than Sears and Macy’s combined?”

Wireless network redundancy is a waste of money — an interesting sentiment in light of major wireless network failures during Hurricane Sandy and insufficient capacity during the terrorist attack on the Boston Marathon last week: “The history of the U.S. wireless industry is a network-centric history that wasted untold billions of dollars building duplicative networks and advertising ‘mine is better than yours.’”

The failed merger of AT&T and T-Mobile represented a missed opportunity in Wheeler’s view.

WiMAX is King of the World?: “Back in the mid-1990s new digital technology called Personal Communications Service (PCS) was forecast to be the death knell of the cellular industry. It seemed all anyone could talk about was the “smaller, cheaper, lighter” handsets that would perform feats beyond the capabilities of analog cellular. Now in the mid-2000s the differentiator is speed and throughput and WiMAX is the new hot technology.”

Who needs free over the air television when only 10-15 percent of the country watches?: “What is the purpose of continuing the local TV broadcasting model when between 85 and 90 percent of American homes are connected to cable or satellite services?”

AT&T and Verizon will save us from the Great Recession, except for the fact they laid off “redundant” workers: “In the midst of the first shrinking of global economic growth in almost 70 years, the wireless industry represents what must be the largest non-governmental stimulus program in the world. Wireless is an economic recovery triple play.”

Those mooching broadcasters got their spectrum for free when Verizon and AT&T had to pay real money: “The setting for these theatrics is the digital conversion for which broadcasters lobbied so hard for. Yes, they won new spectrum – which they got for free while all other were paying billions – but getting what they asked for also brought something no one ever imagined. Broadcasting ceased to be broadcasting. Going digital meant that what used to be about moving atoms is now about moving bits.”

We need to verify broadcasters use their spectrum the way we define it or we might take it away: “But threatening a shootout at the OK Corral in order to ‘hang on to every last hertz of spectrum’ is an invitation to irrelevance and proof that the spectrum needs to be assigned to parties that think digitally and see themselves as a part of the solution to the spectrum crisis. Opportunity is knocking for the broadcasters; we’ll see if anyone is at home.”

Cicconi

Reduced quality of service is worth it, even if it means shutting down wired telephone service or increasing interference for wireless users: “It is time to abandon the concept of perfection in spectrum allocation. The rules for 21st century spectrum allocation need to evolve from the avoidance of interference to interference tolerance. We’ve seen this evolution in the wired network; it’s now time to bring the chaotic efficiency of Internet Protocol to wireless spectrum policy. What the FCC’s TAC is proposing is that we officially wean ourselves from the old wireline switched circuit world to embrace the reality of IP and its benefits. It’s time to start down the same road with spectrum allocation.“

Did you know your mobile bill is lower than ever and sending data wirelessly costs next to nothing? How much is your limited data plan costing you again?: “As wireless rates have plunged for both voice and data such regulation has less impact than it did in the wireline era anyway. When each connection required an analog circuit, the cost of such a connection, and the return on that investment was a more logical nexus than today’s digital networks where the incremental cost of a packet of information approaches zero.”

AT&T’s propaganda supporting its attempted merger with T-Mobile was brilliant. Those pesky consumer groups and their meddling, truth-telling agenda ruined everything. When Americans think of rural wireless broadband, the first company that comes to mind is T-Mobile, right?: “The most important times in any merger approval process are the first two weeks when the acquiring company gets to define the discussion and the last four weeks when the concerns raised by others and the analysis by the government congeals to define the issues to be negotiated in the final outcome. AT&T shot out of the blocks brilliantly, framing their action in terms of the spectrum shortage and President Obama’s desire to provide wireless broadband to rural areas. Over the coming months those who were caught by surprise, as well as those who would use the review process to gain their own advantages, will have organized to present their messages.”

Wheeler sends a Hallmark card to AT&T’s most powerful lobbyist: “AT&T’s recent negotiations with the FCC on the Net Neutrality/Open Internet issue provide an insight into how the company deals with such a complex issue. Jim Cicconi, AT&T’s Senior Executive Vice President, is one of the smartest and shrewdest policy mavens in the capital.”

What do they know about it?

AT&T’s Jim Cicconi is the go-to-guy for determining future wireless policy, not the FCC: “Randall Stephenson may be channeling Theodore Vail, but Jim Cicconi sits astride a process that could determine the future of wireless policy, first for AT&T and then by extension for everyone else. Quite possibly the result of this merger decision will be far wider than the merger itself. At the end of the day we may be talking about a new era of wireless policy based on the Cicconi Commitment.”

The Justice Department just proved it does not understand regulatory concepts governing relentless corporate telecom mergers because it decided Americans should have at least four wireless companies to choose from, not three: “Thus, the long-term impact of the Justice Department’s decision would appear to be the growing irrelevance of traditional telecommunications regulatory concepts on mobile broadband providers.”

Wheeler lacks the realization wireless providers are moving to usage pricing for fun and profit, not because of spectrum shortages: “Having walked away from taking the easy money, will the Congress remain as committed as they were to selling spectrum? What will be the light at the end of the tunnel for wireless carriers who see their spectrum capacity being consumed by huge increases in demand? Will the resulting shortage mean that usage based mobile pricing becomes a demand dampening and profit increasing tool?“

We don’t need free over the air television. Just tell free viewers to subscribe to cable like everyone else: “I’ve been mystified why broadcasters have declared jihad against the voluntary spectrum auction. Getting big dollars for an asset for which you paid nothing while still being able to run your traditional business over cable (the vast majority of its reach anyway) and maintain a broadcast signal at another point on the dial seems a pretty good business proposition – unless you really are serious about providing new and innovative services and need all that spectrum.”

You don’t deserve free Internet access either, because it hurts the corporate business plans of other providers: “Competition among networks for customers has put the consumer in the enviable position of being told they won’t have to pay for access to Internet services. “Free It,” the advertisements of British network operator “3″ proclaim to promote their unlimited data plan, for instance. The policies that created wireless network competition have trapped operators between holding market share and giving away capacity for ever-increasing data demands. So long as there is one carrier willing to offer its capacity at a low price (or for free), the other carriers must play along thus bringing those who run networks to loggerheads with those who use the networks.”

(Image courtesy: FCC.com)

Google and Apple are privacy invaders that collect your personal data as part of a great Silicon Valley mafia: “If wireless carriers are truly going to become “operators” participating in the broader ecosystem their focus needs to shift from running networks to managing the information created by the 21^st Century’s digital networks. The Silicon Valley mafia hijacked that information, but they could quite possibly be in the process of blowing their escape with the goods by exposing what they were really up to.”

We need a “voluntary” auction of the public airwaves with a subjective standard for what represents their “best use” (ie. the way the wireless industry defines it): “For almost four decades I have listened to businesspeople tell government policy makers to “let the marketplace work.” There is no more effective marketplace than a voluntary auction where everyone is free to decide whether to sell, how much to sell, and at what price to sell. The marketplace for wireless spectrum has spoken through its explosion; now it’s time for the marketplace to be able to decide the best use of spectrum. There is no doubt that some broadcasters will opt to use their spectrum in innovative ways [my firm, Core Capital Partners, has invested in such a belief]. Bully for the broadcast entrepreneurs! The FCC should be encouraging and rewarding of entrepreneurial initiative. Just as clearly, however, some broadcasters will choose other options. It is essential that we get on with offering that option quickly so we can nip the spectrum crunch in the bud, spur innovation, stimulate investment, create jobs, and continue American leadership in wireless services.”

Coming Clean: Wheeler ran astroturf operations that pretended to represent the interests of consumers but actually were little more than corporate sock-puppetry: “In the early days of cable television a cabal of Hollywood and broadcast interests combined to convince the Federal government to deny cable its competitive advantage of more channel choices for consumers. Corporate lobbyists told Congressmen and Senators how cable would mean the end of “free TV” unless it was stopped or controlled. Then these same groups recruited real people – the so-called “grassroots” – to back up their claims. Such lobbyist-organized grassroots efforts were the Standard Operating Procedure (SOP) of political organizing – I know because I used to do it.”

The alliance between Verizon and a cabal of cable companies selling each others’ products is pro-competition: “A TV subscription service like the one Apple is proposing is the heart of what cable is all about. And whatever Google is doing, they aren’t in every TV just for the heck of it. The Mongols of Silicon Valley have been behaving just like their 13^th and 14^th century predecessors. Using new technology to their advantage, the Mongols of the Middle Ages sent invasions in every direction. Soon they had the largest contiguous empire the world has ever seen.  Sound familiar? It may be a case of “my enemy’s enemy is my friend,” but a cable-wireless alliance is an exceedingly logical response to the impending attack. Cable operators have program distribution rights (or leveraged access to them) and Verizon has the high-speed wireless network to deliver to the growing number of mobile devices. Both these players can help each other confront the coming onslaught.”

Other stories of interest:

1. FCC Chairman Julius Genachowski’s Roadshow: Now He’ll Headline the Cable Industry’s Big Splash
2. FCC Chairman Opens Wireless Industry Convention Mouthing AT&T Talking Points
3. The Wall Street Journal’s Revisionist History: AT&T Isn’t the Problem, the Government Is?
4. FCC to AT&T: Justify Your Spectrum Demands, Merger With T-Mobile
5. The Fat Lady Sings: What Happens Next Now That AT&T-Mobile Merger Deal is Dead