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.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WSJ ESPN Toll Free Data 5-9-13.flv[/flv]

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)

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.

The German Internet is functionally broken.

Deutsche Telekom, the largest telecommunications company in Germany, has announced it will introduce a brazen Internet Overcharging scheme for customers signing up for its broadband DSL service, including a throttle that reduces speeds to just 384kbps after as little as 75GB of monthly broadband usage.

For now, only new Telekom Deutschland customers signing up after May 1 will be affected by the usage limits. Customers will be offered the option of upgrading their Call & Surf package to get a larger usage allowance, although many parts of Germany are still reliant on DSL and its variants that cannot deliver the advertised speeds that go with the larger allowances:

• Up to 16Mbps: 75GB per month
• Up to 50Mbps: 200GB per month
• Up to 100Mbps: 300GB per month
• Up to 200Mbps: 400GB per month

“We want to offer customers the best network in the future and we will continue to invest billions to make that happen,” said Michael Hagspihl, marketing director of Telekom Deutschland. “However we cannot continue to sustain higher usage demand while lowering our prices. Customers with very high data volumes will have to pay more in the future.”

Company officials argue German broadband usage demands are accelerating at an ever-increasing rate, putting strain on the company’s network resources.

But critics question if usage demands are the root of the problem, why is DT exempting itself and its “preferred partners” from the data cap, including certain services that offer very high bandwidth video?

The Net Neutrality activist group Netzpolitik.org says DT is “massively violating Net Neutrality while the federal government looks away dreaming that the free market will solve the problem somehow.”

The group points out DT has admitted the speed throttle only applies to content providers who have not partnered up with the German telecom giant.

DT is exempting all of its own in-house content providers, the private television service Entertain, and telephone services (when provided by DT). For everyone else: the speed throttle gets closer the more customers use services like Apple iTunes or Amazon’s Lovefilm service. But DT says those companies can also get special treatment for the right price.

DT’s preferred partner cooperating agreements let “high quality content producers” pay for a managed services contract that guarantees exemption from the speed throttle and prioritization of their traffic on DT’s network, even if it means slowing down non-preferred partner content.

A parody future offer from DT.

“You cannot thumb your nose at Net Neutrality principles any better if you tried,” said Rene Pedersen, an Internet activist in Köln. “DT will have their emasculated two-tier Internet and all of Germany will have to suffer the consequences. Their own arguments do not even make sense. If there is a capacity crisis, how can they exempt some video providers that now consume the most network resources?”

“Until a few years ago, providers – just like the post – were just deliverers of packages,” said Netzpolitik’s Andre Masters. “This principle is called Net Neutrality – the equal treatment of data packets on the Internet, regardless of sender, recipient, or content. Now providers want to have a direct influence on the content sent, because they want to earn more money.”

Technology publisher Heise Online says the new usage restricting tariff has “triggered a veritable sh**storm” among net users who consider a 75GB usage limit untenable, particularly for families with multiple Internet users.

Heise is also critical of claims DT has made in the press that suggests German Internet users must either accept the usage caps or understand the company will have to spend at least €80 billion ($108 billion) to build a national fiber network to manage growing traffic.

In contrast, Goldman Sachs last year estimated the cost of wiring every home in the United States with Google Fiber would cost $140 billion, a number now considered inflated. Verizon FiOS managed to get costs down for its own fiber network to a level that suggests Google would only need around $90 billion — $10 billion more than DT claims it needs.

“DT is being disingenuous when they suggest it will cost €80 billion to solve their capacity problem. For that amount every household in Germany would get their own fiber cable with 200Mbps speeds or more,” Heise writes in their editorial. “To avoid slowing users down with a speed throttle, only a small fraction of this amount is needed to extend the Internet backbone and peering agreements between providers. For years network traffic has grown exponentially and DT has kept up with demand. So why does DT suddenly need to reshuffle the cards now?”

DT has also received criticism for how it has depicted its heavy users — mostly as content thieves and software pirates using file swapping networks to steal copyrighted works. But instead of dealing with copyright violations, DT wants a sweeping usage cap system that punishes every customer that wants to use their broadband connection.

“Customers are not insatiable Gierschlünde who want everything for free,” writes Heise. “They already pay a lot of money to Telekom: 12.5 million DSL customers roughly translates into around a half billion euros in sales per month.”

Back to the future.

The German news magazine Spiegel writes DT’s usage limits strangle the Internet for millions of Germans, especially for competing video providers:

When throttled, customers will need more than 23 hours to watch a DVD-quality movie. At Blu-ray resolution, it will take about two weeks to watch just one film.

[…] The implications of the end of Net Neutrality in Germany represents a form of economic censorship, and German politicians are standing by to watch it happen.

The federal government sees the Internet as a political bargaining chip and not as the social, cultural and economic tool it represents. The government acts in the interests of certain lobbyists, not Germany’s digital future. This allows German telecommunications companies to focus on their economic self-interests without government policies that demand investment in digital infrastructure.

A number of German Internet users are expected to switch to a cable provider, where available, to escape DT’s impending speed caps.

According to the Frankfurter Rundschau, many German cable companies also reserve the right to limit speeds for customers. But in practice, most don’t impose limits until traffic exceeds 60GB daily, and the speed cap is lifted the next day. A cable industry official says its cap currently impacts about 0.1 percent of customers, almost all who use peer-to-peer file swapping networks. Exempt from measurements that bring customers closer to a speed cap: web browsing, video streaming, and video-on-demand.

For now, Germany’s cable operators facing the same traffic growth DT speaks about find no need to impose further limits, stating their networks are handling the traffic with network upgrades as a normal course of business.

“It calls out DT’s claims as fraudulent, because cable Internet users visit the same websites and do the same things DT’s customers do and there only seems to be an ‘urgent’ problem in need of a speed throttle solution on BT’s network,” says Pedersen. “What needs to be throttled are the financial expectations of DT management and shareholders. The Internet is not their personal vault waiting to be plundered.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/What if Net Neutrality.mp4[/flv]

What if Net Neutrality did not exist?  [Subtitled] (1 minute)

Wheeler

Note to Readers: Tom Wheeler’s blog (mobilemusings.net) was taken offline in late November, 2014. You might still find it archived at archive.org. Because the blog has been taken down, we have removed all of the original links that were originally contained in this piece.

Tom Wheeler has had 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.”

Stop the Cap! has hammered ISPs for a long time for promising “unlimited” broadband but sneaking in “traffic management speed throttles” they call a matter of fairness and we call deceptive marketing.

Virgin Media’s UK broadband customers have just been introduced to the extreme absurdity of selling “insanely fast” fiber broadband that comes with a sneaky spreadsheet guaranteed to confuse all but the most observant byte counters.

Some customers suspect Virgin Media is just retaliating for repeated findings from British regulators that the company runs dodgy advertising that promises one thing and delivers something entirely different in the fine print. More than two dozen of their TV commercials and print advertisements have been banned for deceptive ad claims, ranging from the “fastest broadband in Britain” (not exactly) to promotions promising “free service” that actually costs around £15 a month (what is a dozen quid or so among friends).

So why does Virgin Media need traffic management? They have oversold the service to too many customers and won’t invest enough in upgrades to keep up with demand.

Network overselling is more common that you might think. ISPs understand that all of their customers will not be online at the same time, so there is only a need to provision enough bandwidth to support their assumptions about anticipated usage. If your ISP serves a gated Luddite community, it won’t need the same data pipe required to provide access along University Row. The trick is to use real science and math to correctly anticipate user demand, but many ISPs answer first to their investors, who simply hate spending good money on upgrades. Expansion proposals are about as popular as North Korea’s Kim Jong-un. The result is “good enough” broadband service that is susceptible to overcrowding during prime usage times.

You already know what happens next. Once the kids are home from school and dinner is finished, your online experience quickly s l  o   w    s     t    o     (buffering).

In Britain, some ISPs are notorious for overselling broadband service that advertises speeds in the dozens of megabits, but can’t even break 1Mbps during peak usage times.

How can this be fixed? With investment in upgrades. What do ISPs do instead? They slap on usage caps and “network management” speed throttles that artificially slow browsing speeds for those considered “heavy users.”

Virgin Media was supposed to be a breath of fresh air from usage caps. Instead, the company promises a truly unlimited experience, with limitations.

Virgin’s latest iteration of its “peak time usage policy” resembles a tax table from the Internal Revenue Service. Can you understand it?

Despite this, Virgin calls its broadband service “to all intents and purposes, completely unlimited.”

Where is that British regulator, again?

The company claims less than 3% of its customers will ever be affected by these limits. They might be right if customers avoid online video, downloading large files or games, cloud storage, or allowing other family members to use their connection at the same time. If one is subjected to the speed throttles, Virgin will take away nearly half of the speed customers were sold.

Here is Virgin’s position on all this:

“Our 100Mb customers receive speeds up to 104.6Mb, proven by Ofcom, and even if you’re one of the 2.3 per cent of heavy users we sometimes, temporarily traffic manage you’ll be receiving speeds of around 60Mb — so you can download and stream as much as you like.Today’s update makes it more flexible and responsive to how people are using our services and is designed to reduce the time customers may spend in traffic management, it could be just one hour. We do not have caps, nor do we charge customers more.”

That is true, but Virgin is charging a premium for broadband service speeds they are prepared to automatically take away when a customer persists in using the service they paid to receive.

Virgin could pay their experts to conjure up speed management charts like the one above, or they could invest in network upgrades that make such network management techniques unnecessary.