Wheeler

Incoming Federal Communications Commission chairman Tom Wheeler believes competition can be a more effective regulator of telecom industry practices and pricing than “micromanaging” the companies selling service.

“The first goal ought to be to make sure there is effective competition,” Wheeler told the Wall Street Journal in an interview Wednesday. “But I also know competition isn’t something that happens all by itself. We very much have a responsibility to make sure that there is access, at reasonable prices, to competitive broadband services. The way you do that is go back to competition.”

But Wheeler refused to share his views on whether Americans now enjoy his definition of “effective competition” from a wireless industry dominated by AT&T and Verizon and wired broadband service available from only one cable and telephone company in most communities.

“The reason why the U.S. is the world leader on the Internet is because we have the home-field advantage,” Wheeler said. “We want to keep that home-field advantage. One of the ways to do that is to keep the environment competitive, so it’s not the regulators determining what companies do.”

But the United States is not a broadband leader in speed, price, or penetration according to the OECD.

Wheeler seems reluctant to intervene in the market unless he is convinced competition is lacking. As a former lobbyist for the same companies he is now tasked with overseeing, a key test will be if Wheeler adopts the industry view that broadband is already a fiercely competitive and highly regulated business, or the one held by many consumer groups that a consolidated telecommunications marketplace retards competition, leading to higher prices and more restrictive service.

In an article posted on the FCC website, Wheeler described the philosophy governing his chairmanship of the FCC:

During my confirmation hearing I described myself as “an unabashed supporter of competition because competitive markets produce better outcomes than regulated or uncompetitive markets.” Yet we all know that competition does not always flourish by itself; it must be supported and protected if its benefits are to be enjoyed. This agency is a pro-competition agency.

We stand for the things that are important regardless of the network technology being used:

• To promote economic growth – technological innovation, growth and national economic leadership have always been determined by our networks; competition drives the benefits of those networks; and we have a responsibility to see to the expansion of those networks, including the appropriate allocation of adequate amounts of spectrum.
• To maintain the historic compact between networks and users – a change in technology may occasion a review of the rules, but it does not change the rights of users or the responsibilities of networks.
• To make networks work for everyone – it isn’t just that we expand high-speed Internet, but what we will be doing with that capacity. How networks enable a 21st century educational system, enable the expansion of capabilities for Americans with disabilities; and assure diversity, localism and speech are basic underpinnings of our responsibility.

One surprising appointment announced by Wheeler was Public Knowledge’s Gigi Sohn, who will become special counsel for external affairs. Sohn has been a frequent critic of the FCC and its former chairman, Julius Genachowski. She is also a strong advocate of Net Neutrality.

Powell

A former chairman of the Federal Communications Commission turned top cable lobbyist rang the warning bell at an industry convention this week, recommending America’s cable operators hurry out usage caps and usage-based billing before a perception takes hold the industry is trying to protect cable television revenue.

Michael Powell, the former head of the FCC during the Bush Administration is now America’s top cable industry lobbyist, serving as president and CEO of the National Cable & Telecommunications Association (NCTA). From 2001-2005 Powell claimed to represent the interests of the American people. From 2011 on, he represents the interests of Comcast, Time Warner Cable, Cox, and other large cable operators.

Attending the SCTE Cable-Tec Expo 2013 in Atlanta, Powell identified the cable industry’s top priority for next year: “broadband, broadband, and broadband.”

The NCTA fears the current unregulated “Wild West” nature of broadband service is ripe for regulatory checks and balances. The NCTA plans to prioritize lobbying to prevent the implementation of consumer protection regulations governing the Internet. Powell warned it would be “World War III” if the FCC moved to oversee broadband by changing its definition as an unregulated “information service” to a regulated common carrier utility.

Powell is very familiar with the FCC’s current definition because he presided over the agency when it contemplated the current framework as it applies to DSL and cable broadband providers.

While Powell has a long record opposing blatant Net Neutrality violations that block competing websites and services, he does not want the FCC meddling in how providers charge or provision access.

Powell believes some of cable’s biggest problems come from bad marketing.

Powell disagreed with statements from some Wall Street analysts like Craig Moffett who earlier predicted the window for broadband usage-based limits and fees was closing or closed already.

Powell does not care that consumers are accustomed to and overwhelmingly support unlimited access. Instead, he urged cable executives to “move with some urgency and purpose” to implement usage-based billing for economic reasons, despite the growing perception such limits are designed to protect cable television service from online competition.

“I don’t think it’s too late,” Powell said. “But it’s not something you can wait for forever.”

Powell pointed to the success wireless carriers have had forcing the majority of customers to usage capped, consumption billing plans and believes the cable industry can do the same.

The NCTA president also described many of the industry’s hurdles as marketing and perception problems.

The cable industry, long bottom-rated by consumers in satisfaction surveys, can do better according to Powell, by making sure they are nimble enough to meet competition head-on.

Powell described Google Fiber as a limited experiment unlikely to directly compete with cable over the long-term, and with a new version of the DOCSIS cable broadband platform on the way, operators will be able to compete with speeds of 500-1,000Mbps and beyond. He just hates that it’s called DOCSIS 3.1, noting it wasn’t “consumer-friendly” in “a 4G and 5G world.”

Kevin Hart, executive vice president and chief technology officer of Cox Communications joked the marketing department would get right on it.

Cruz Control

Sen. Ted Cruz (R-Tex.) has blocked the Senate from voting to confirm Tom Wheeler, the Obama Administration’s pick for the next chairman of the Federal Communications Commission.

Cruz, a Tea Party favorite, does not object to Wheeler’s credentials. He’s upset Wheeler might support a regulatory implementation of portions of the Disclose Act, a bill requiring full disclosure of who pays for political advertising. The bill would require corporations, super PACs, astroturf groups and other special interests to report to the Federal Election Commission when they spend more than $10,000 on airtime for campaign ads.

Cruz and several other Republican senators wrote the FCC in April to warn the bill violates corporate First Amendment speech rights and was unconstitutional.

With no chance the legislation will pass a Republican-controlled House and deadlocked Senate, the bill’s supporters have turned to the FCC with the idea the agency could act independently to require campaign ad disclosures, a suggestion that infuriated conservative Republicans who disapprove of any enhanced oversight powers for the regulator.

Cruz placed a formal hold on Wheeler’s nomination last week as the Senate prepared to vote an end to the 16-day federal government shutdown.

A spokesman from Cruz’s office made it clear as long as Wheeler continued to vacillate on a commitment not to regulate campaign ads, he will not get an up or down vote on his nomination in the Senate.

Observers suggest Cruz’s hold will stall spectrum auctions and, if extended beyond the fall, could eventually freeze Internet expansion programs for schools and libraries.

Acting FCC chairwoman Mignon Clyburn will continue in that role until Wheeler gets confirmed or another appointee is nominated and approved.

Time Warner Cable has added two new lobbying firms, despite running up nearly $4 million in lobbying expenses during the first half of 2013, to advocate a hands-off policy on broadband and changes in how television stations get compensated from cable providers after a month-long dispute with CBS helped fuel subscriber losses.

The Legal Times blog reports Time Warner Cable has hired Dentons and Edwards Wildman Palmer to advocate the company’s positions on broadband deployment, copyright reform, privacy matters, retransmission consent, and the reauthorization of the Satellite TV Extension and Localism Act. Provisions of that legislation have given television stations and broadcast networks leverage to persuade pay television providers to meet their terms on higher compensation in return for permission to carry those signals on the cable or satellite lineup.

Nelson

In reviewing disclosures released by the clerk of the House of Representatives obtained by Stop the Cap!, Time Warner Cable will benefit from Washington’s revolving door, using lobbyists that either used to work inside offices of members of Congress or have been directly involved in writing or influencing legislation for paying clients:

Valerie Nelson, a senior managing director at Dentons, served as director of Member Services for Majority Leader Eric Cantor (R-Va.) in the U.S. House of Representatives.

Todd Bertoson, also a senior managing director at Dentons, spent nearly six years on the U.S. Senate Committee on Commerce, Science, and Transportation, working on all aspects of the committee’s agenda, including issues involving the Federal Communications Commission (FCC).

Bertoson

Seth A. Davidson, a lobbyist from Edwards Wildman Palmer, has played an active role, including drafting legislation and witness testimony, in most legislative matters affecting the communications industry over the past three decades, including the 1984 and 1992 Cable Acts, the Digital Performance Right in Sound Recordings Act of 1995, the 1996 Telecommunications Act, the Digital Millennium Copyright Act, and the Satellite Home Viewer Act of 1989 and each of its subsequent renewals. His involvement in legislative matters of interest to his clients is so pervasive, he was singled out by the chairman of the Senate Judiciary Committee in 2004 for his contributions (on behalf of his clients) in the drafting of the Satellite Home Viewer Extension and Reauthorization Act.

The Legal Times notes Time Warner Cable has spent $3.8 million on federal lobbying during the first half of this year, according to congressional records. For its advocacy efforts, the company used its own staffers, as well as lobbyists from firms that included Capitol Tax Partners; Fierce, Isakowitz & Blalock; and The Raben Group.

A new research report issued by Time Warner Cable concludes cell phone companies like AT&T and Verizon Wireless cannot meet the future data demands of customers over their 4G LTE wireless networks without punitive usage caps and high fees to deter usage, even with new spectrum becoming available for the wireless industry’s use.

The report, authored by Michael Calabrese of the New America Foundation, finds an answer to this problem in Wi-Fi, which can offload wireless traffic and deliver wireless service customers already prefer:

There is simply not enough exclusively licensed spectrum to meet the rapidly rising demand for wireless data, to sustain a competitive market, and to keep prices at an affordable level.

Major mobile carriers are increasingly coming to grips with this reality. The Wireless Broadband Alliance, a global industry group, reports that Wi-Fi offloading has become an industry standard as “18 of the world’s top 20 largest telcos by revenue have now publicly committed to investing in deploying their own Wi-Fi Hotspot networks.” The industry is shifting steadily toward what it calls heterogeneous networks (HetNets)—i.e., a combination of licensed and unlicensed infrastructure—in order to meet their customers’ insatiable demand for data while keeping costs down.

Alcatel-Lucent forecasts an increase of “87 times [the current] daily traffic on wireless networks” over the next five years, with 50 percent of that traffic on cellular networks “while the remaining 50 percent will be offloaded to Wi-Fi.”

Cisco’s own studies back Calabrese’s findings on consumer preference towards Wi-Fi.

“Given a choice, more than 80 percent of tablet, laptop, and eReader owners would either prefer Wi-Fi to mobile access, or have no preference,” Cisco concluded. “And, just over half of smartphone owners would prefer to use Wi-Fi, or are ambivalent about the two access networks.”

The Cisco surveys found users are choosing Wi-Fi over mobile connectivity for reasons of cost, “because it doesn’t impose data-usage caps or reduce their mobile data plan quotas.” But the primary reason for choosing Wi-Fi “is that respondents find it much faster than mobile networks.” And since Wi-Fi traffic travels over increasingly upgraded wireline networks, that speed differential may only increase as more and more homes, businesses and retail outlets upgrade to fiber optic or other high-speed connections of 100Mbps or more.

America’s largest wireless carriers have fallen far behind offering Wi-Fi services to customers compared to their overseas colleagues:

• AT&T: More than 32,000 Wi-Fi hotspots are available at partnered retail businesses, restaurants, and high-traffic areas like stadiums and major tourist destinations;
• Verizon Wireless: Verizon has an insignificant Wi-Fi presence, with a small number of unadvertised hotspots in selected venues like airports and convention centers;
• Japan’s NTT DOCOMO: Up to 150,000 hotspots, up from only 8,400 in 2o12.
• China Mobile: More than 2 million hotspots are up and running carrying 70 percent of the company’s data traffic.
• France’s Free Mobile: More than 4 million residential hotspots are available through Free’s parent – Iliad.

Comcast could soon be the nation’s largest Wi-Fi hotspot provider.

Calabrese argues it is important for the United States to set aside significant spectrum for unlicensed wireless networks like Wi-Fi to meet future wireless demands. Currently, some Republican members of Congress are opposed to significant spectrum set asides they feel could best be monetized for private use through the spectrum auction process.

It is no coincidence that Calabrese’s findings would be released by Time Warner Cable which itself is growing a Wi-Fi presence in certain cities where it provides cable service.

The wireless carriers’ collective lack of interest in an aggressive nationwide Wi-Fi deployment may have provided a strategic opening for cable operators to fill that gap with Wi-Fi networks of their own. Cable operators consider them a useful tool to retain customer loyalty — access is typically free and unlimited for current customers.

This summer, Comcast announced a “neighborhood hotspot initiative” that will turn millions of customer cable Internet connections into shared Wi-Fi hotspots using a dual-use wireless home gateway. The equipment will offer two separate Wi-Fi signals — one intended for the customer and the other open for use by any Comcast customers in the neighborhood. The cable company will provision extra bandwidth for the open Wi-Fi network to ease concerns that guest users could theoretically slow down a customer’s own Wi-Fi channel. In a relatively short period, Comcast could become the nation’s biggest Wi-Fi network offering more than 20 million hotspots hosted by the company’s own broadband customers.

Calabrese points to the future of seamless transitions between wired, wireless 4G and Wi-Fi network access without dropping calls or data connections. Many customers won’t even know the difference.

The author recommends the FCC think about reserving space for new unlicensed “citizens band” frequencies dedicated for public and private Wi-Fi networks:

• The FCC should reorganize the UHF TV band to ensure the availability of at least 30 to 40MHz of unlicensed spectrum in every media market, perhaps including Channel 37 (now reserved for radio astronomy) and eliminating two dedicated channels reserved for wireless microphones;
• Open the grossly underutilized 3.5–3.7GHz federal band for unlicensed small cell antennas delivering a ‘Citizens Broadband Service.’ This band is now mostly used for offshore naval radar, allowing both services to co-exist without mutual interference;
• Expand unlicensed access to the 5GHz band by allocating the 5.35–5.47 and 5.85–5.925GHz bands providing contiguous, very wide channels useful for the 802.11ac Wi-Fi standard that can support very high-speed wireless services.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/XFINITY Wireless Gateway Powers Connected Home Summer 2013.flv[/flv]

Comcast talks about their new X3 Wireless Gateway which is capable of providing two separate Wi-Fi networks, one for the customer and another for the neighborhood. (2 minutes)