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LTE-Unlicensed: How the Wireless Industry Plans to Conquer Your (and the Cable Industry’s) Home Wi-Fi Hotspot

special reportWith billions of dollars in new revenue and royalties to be made, Qualcomm and some members of the wireless industry are pushing regulators to quickly approve a new version of LTE wireless technology that will share many of the same frequencies used by home and business Wi-Fi networks, creating the potential for speed-killing interference.

Wireless operators believe LTE-Unlicensed (LTE-U) could be used to offload much of the growing wireless data traffic off traditional 4G LTE wireless data networks. With the cost of securing more wireless spectrum from regulators growing, LTE-U technology would allow operators like AT&T, Verizon, Sprint and T-Mobile to use the U-NII-1 (5150-5250MHz) and U-NII-3 (5725-5850MHz) unlicensed bands currently used for Wi-Fi to deliver high-speed wireless broadband traffic to their customers.

Qualcomm and Ericsson, behind the newest iteration of LTE, have a vested interest promoting it as the ideal choice for metrocell, indoor enterprise, and residential small cell applications. Every manufacturer incorporating LTE-U technology into everything from carrier-owned microcells to smartphones will owe royalty payments to both companies. With billions at stake, Qualcomm is doing everything possible to tamp down fears LTE-U signals will create harmful interference to Wi-Fi signals.

qualcomm lte-u

[flv]http://www.phillipdampier.com/video/CES2015 Qualcomm Demonstrates LTE-U 1-2015.mp4[/flv]

At the Consumer Electronics Show in Las Vegas held in January, a Qualcomm representative went as far as suggesting LTE-U will improve home Wi-Fi service. (5:42)

RCRWireless News:

[Qualcomm] set up a screened room with eight pairs of access points occupying the same channel and added Wi-Fi access-point terminals in one room and LTE-U terminals in another. The results show the average throughput of 3.3Mbps with Wi-Fi alone more than doubled to 6.7Mbps when the LTE-U access point was introduced.

In another test to show that LTE-U is a better neighbor to Wi-Fi than Wi-Fi itself, they took eight Wi-Fi nodes and replaced four of them with LTE-U nodes, the result of which showed a 1.9Mbps increase in average Wi-Fi throughput. In almost every test, the LTE-U enhanced network outperformed traditional Wi-Fi.

Burstein

Burstein

Industry observer Dave Burstein is concerned advocates of LTE-U are trying to rush approval of the technology without verifying Qualcomm’s non-interference claims.

“The telcos are considering 40 and 80MHz channels that could easily swallow half of more of the Wi-Fi spectrum,” Burstein writes in response to an EE Times article about the technology. “If Wi-Fi is important, that’s a mistake to allow. Advocates are trying to rush it through even though there is not a single independent test or field trial.”

Qualcomm dismisses the interference complaints pointing to its own research showing the two standards can co-exist adequately. But multi-billion dollar wireless companies with nationwide Wi-Fi networks at stake are far less confident. In fact, LTE-U has already divided the two largest wireless carriers in the United States. Verizon Wireless is an original proponent of LTE-U while AT&T has expressed “concern,” a polite way of saying it isn’t happy. What separates AT&T and Verizon Wireless? AT&T has invested in a nationwide network of more than 34,000 Wi-Fi hotspots. Verizon offers just over 5,000, most for FiOS customers or those in especially high traffic venues.

A Stanford University professor with no ties to Qualcomm or the wireless industry privately shared his belief allowing 5GHz Wi-Fi signals to commingle with LTE-U is going to cause problems.

lte-u-unlicensed-spectrum-v3The development of “Wild West” Wi-Fi has always tracked differently than the licensed cellular/wireless business. Over more than a decade, evolving Wi-Fi standards have come to expect interference from other nearby Wi-Fi signals. In a densely packed city, more than two dozen Wi-Fi signals can easily be found all competing for their own space across the old 2.4GHz and newer 5GHz unlicensed bands.

Wi-Fi proponents credit its robustness to its “politeness protocol.” Before a wireless router or home hotspot fires up its Wi-Fi signal, it performs several tests to check for other users and constantly adjusts performance by backing off when it discovers interference from other signals. That is why a user can receive strong Wi-Fi signals but still endure reduced performance, as the hotspot accommodates nearby hotspots and other traffic.

It works reasonably well, according to Rupert Baines, a consultant at Real Wireless.

“But [Wi-Fi signals] are delicate, and they rely on implicit assumptions that there aren’t other things there (or aren’t too many),” Baines told EE Times. “In effect, they behave as though the unlicensed band were not technology neutral but were Wi-Fi only.”

The intrusion of LTE-U changes everything.

[flv]http://www.phillipdampier.com/video/Wireless Week Tuesdays with Roger LTE-Us Gain is Wi-Fis Loss 3-24-15.flv[/flv]

On the March 24, 2015 episode of Tuesdays with Roger, Recon Analytics’ founder Roger Entner talks with Wireless Week about the questions raised as major carriers, including T-Mobile and Verizon Wireless, plan to launch LTE into unlicensed territory. Concerns abound, particularly for consumers and companies who rely on Wi-Fi and don’t want licensed use in unlicensed bands to interrupt that service. (7:31)

Change in and of itself is not necessarily a bad thing, especially if LTE-U is superior to Wi-Fi, and some proponents suggest it is. Jag Bolaria, an analyst at The Linley Group, argues LTE better manages data/call handoff better than Wi-Fi access points can. LTE is also a more efficient spectrum user than Wi-Fi.

Last week, South Korea’s LG U+ demonstrated LTE-U was capable of 600Mbps speed, eight times faster than traditional LTE. But to accomplish that level of speed, LG U+ had to occupy 60MHz of bandwidth in the 5.8GHz band and allocate an extra 20MHz from its traditional LTE service. The company plans to further expand its use of South Korea’s 5.8GHz unlicensed band by occupying 80MHz of it to further boost speeds to 750Mbps. But the company did not say how the tests affected others sharing the same frequencies.

If LTE-U is superior, then why not gradually move every user towards the technology and away from Wi-Fi?

Aptilo Networks AB CEO Torbjorn Ward answers LTE-U is a solution in search of a problem.

“I think LTE on unlicensed sounds like a good idea if it wasn’t for the fact that there are four billion devices on Wi-Fi out there,” he told Light Reading, noting that 802.11ac can already run at 100Mbps, so there’s little need for the LTE boost. “I think when it comes to unlicensed, you can do a longer range with LTE, but I don’t see the full benefit.”

That does not seem to matter to LTE-U’s developers or cell phone companies that lack robust Wi-Fi networks of their own.

as-is

In the original Qualcomm/Ericsson proposal, both companies promote the fact they could launch LTE-U in the unlicensed Wi-Fi bands “as-is.” That is a big problem for AT&T and other Wi-Fi users because LTE-U evidently employs few, if any protection protocols in its initial specifications for other traffic. Verizon Wireless is reportedly lobbying against the development of interference protection protocols and has publicly asserted its interest in deploying LTE-U regardless of other users.

“In [the] USA, there are no requirements for unlicensed deployment that require changes to LTE air interface,” Verizon stated in its proposal: “New Band for LTE deployment as Supplemental Downlink in unlicensed 5.8GHz in USA.”

LTE-Unlicensed has been characterized as "rude" for not avoiding interference to other users.

LTE-Unlicensed has been characterized as “rude” for not avoiding interference to other users.

Clint W. Brown, business development director of mobility wireless connectivity at Broadcom, and a vice-chairman of the Wi-Fi Alliance counters it is premature to approve LTE-U in the unlicensed Wi-Fi band without more testing and information about its interference protocols.

“We’ve heard about the tests they’ve done, but it’s not factual,” Brown told EE Times. We haven’t seen the data and we don’t know how the tests were set up. First, I’d like to see if [LTE-U] can detect low-level signals. Second, I want to make sure it features a ‘Listen before Talk’ decision process so that LTE-U will wait for an opening rather than barging into the conversation already taking place in the unlicensed spectrum. Third, there should be a back-off mechanism, when it sees a collision. “We aren’t aware of any publicly available documents explicitly stating those attributes.”

The Federal Communications Commission has also now taken an interest and issued a public notice asking stakeholders and consumers to share their thoughts on LTE-U and a companion technology known as Licensed Assisted Access (LAA) that would hand off data sessions between a wireless carrier’s traditional 4G LTE network and LTE-U.

The makes the discussion political as well as technical. The FCC traditionally permits industry groups to define standards, but Republican Commissioner Mike O’Rielly now worries the FCC might butt into that process.

“The decision to jump into this space rather casually causes me great concern,” O’Rielly said. “In particular, any step that could insert the commission into the standards work for LTE-U comes with great risk. I will be vigilant in ensuring that the commission’s involvement does not result in taking sides with various stakeholders, hindering technological innovation, or having any say about what technologies should or should not be deployed.”

monopolyFor the moment, O’Rielly’s concerns about the FCC are premature as long as a division exists over LTE-U among many of the industry players:

  • Companies FOR LTE-U: Verizon, China Mobile, Qualcomm, Ericsson, NTT DoCoMo, T-Mobile USA, Deutsche Telekom, TeliaSonera, and China Unicom.  Equipment manufacturers also in support: Nokia, NSN, Alcatel-Lucent, LG, Huawei, ZTE, Hitachi, Panasonic, and others;
  • Companies AGAINST LTE-U (as now defined): Orange, Telefónica, Vodafone, AT&T, Sprint, SouthernLINC, US Cellular, DISH and a handful of vendors.

Burstein also uncovered evidence the wireless industry may be stacking the deck against increased competition and consumers. He found 11 of the world’s largest wireless companies (including AT&T, T-Mobile, and Sprint) quietly colluding on a proposal that would block anyone other than currently licensed LTE users from being able to use LTE-U on a standalone basis. The opaquely-titled proposal, “Precluding standalone access of LTE on unlicensed carriers,” is at least frank about its reasoning: “Standalone deployment in unlicensed spectrum implies drastically different business models from nowadays and might impact the value chain.”

In other words, if consumers are able to get savings from LTE-U using a new generation of non-traditional providers like Republic Wireless or Cablevision’s Freewheel that do not depend primarily on cellular networks, it could cost those 11 traditional wireless companies billions in lost revenue. To stop that, the companies propose requiring a special LAA “guard signal” to stop standalone access of LTE-U. Since only licensed cell phone companies have access to those frequencies, it automatically locks out new upstarts that lack mobile spectrum of their own.

Sneaky insertions like that may be exactly why the Obama Administration’s FCC is being more activist about monitoring the wireless industry, potentially cutting off anti-competitive proposals before they can become adopted as part of a formal technical standard.

[flv]http://www.phillipdampier.com/video/Fairness to Wi-Fi and LTE unlicensed 5-8-2015.mp4[/flv]

RCRWireless News gets deep into the development of LTE-Unlicensed and how it will impact cellular infrastructure, Wi-Fi and small cells. (25:39)

Google, Cablevision Challenge Traditional Cell Phone Plans, Wireless Usage Caps With Cheap Alternatives

Phillip Dampier January 26, 2015 Cablevision (see Altice USA), Competition, Consumer News, Data Caps, FreedomPop, Google Fiber & Wireless, Wireless Broadband Comments Off on Google, Cablevision Challenge Traditional Cell Phone Plans, Wireless Usage Caps With Cheap Alternatives

freewheelLuxurious wireless industry profits of up to 50 percent earned from selling some of the world’s most expensive cellular services may soon be a thing of the past as Google and Cablevision prepare to disrupt the market with cheap competition.

With more than 80 percent of all wireless data traffic now moving over Wi-Fi, prices for wireless data services should be in decline, but the reverse has been true. AT&T and Verizon Wireless have banked future profits by dumping unlimited data plans and monetizing wireless usage, predicting a dependable spike in revenue from growing data consumption. Instead of charging customers a flat $30 for unlimited data, carriers like Verizon have switched to plans with voice, texting, and just 1GB of wireless usage at around $60 a month, with each additional gigabyte priced at $15 a month.

With the majority of cell phone customers in the U.S. signed up with AT&T or Verizon’s nearly identical plans, their revenue has soared. Sprint and T-Mobile have modestly challenged the two industry leaders offering cheaper plans, some with unlimited data, but their smaller cellular networks and more limited coverage areas have left many customers wary about switching.

Google intends to remind Americans that the majority of data usage occurs over Wi-Fi networks that don’t require an expensive data plan or enormous 4G network. The search engine giant will launch its own wireless service that depends on Wi-Fi at home and work and combines the networks of Sprint and T-Mobile while on the go, switching automatically to the provider with the best signal and performance.

googleCablevision’s offer, in contrast, will rely entirely on Wi-Fi to power its mobile calling, texting, and data services. Dubbed “Freewheel,” non-Cablevision customers can sign up starting in February for $29.95 a month. Current Cablevision broadband customers get a price break — $9.95 a month.

Cablevision’s dense service area in parts of New York City, Long Island, northern New Jersey and Connecticut offers ample access to Wi-Fi. Cablevision chief operating officer Kristin Dolan said its new service would work best in Wi-Fi dense areas such as college campuses, business districts, and multi-dwelling units.

New York City is working towards its own ubiquitous Wi-Fi network, which could theoretically blanket the city with enough hotspots to make Cablevision’s service area seamless. But the biggest deterrent to dumping your current cell phone provider is likely to be available coverage areas. Google’s answer to that problem is combining the networks of both Sprint and T-Mobile, offering customers access to the best-performing carrier in any particular area. While that isn’t likely to solve coverage issues in states like West Virginia and the Mountain West, where only AT&T and Verizon Wireless offer serious coverage, it will likely be sustainable in large and medium-sized cities where at least one of the two smaller carriers has a solid network of cell towers.

Comparing the Wireless Alternative Providers

  • Google Wireless will offer seamless access to Wi-Fi, Sprint and T-Mobile voice, SMS, and mobile data at an undetermined price. Likely to arrive by the summer of 2015;
  • Cablevision Freewheel depends entirely on Wi-Fi to power unlimited voice, SMS, and data. Launches in February for $29.95/mo ($9.95/mo for Cablevision broadband customers);
  • FreedomPop Wi-Fi ($5/mo) offers an Android app-based “key” to open unlimited Wi-Fi access to 10 million AT&T, Google, and cable industry hotspots nationwide for calling, texting, and mobile data;
  • Republic Wireless developed its own protocol to properly hand off phone calls between different networks without dropping it. Calling plans range from $5-40 a month. Less expensive plans are Wi-Fi only, pricier plans include access to Sprint’s network;
  • Scratch Wireless charges once for its device – a Motorola Photon Q ($99) and everything else is free, as long as you have access to Wi-Fi. Cell-based texting is also free, as a courtesy. If you need voice calling or wireless data when outside the range of a hotspot, you can buy “access passes” to Sprint’s network at prices ranging from $1.99 a day each for voice and data access to $24.99 a month for unlimited data and $14.99 a month for unlimited voice.
Scratch Wireless

Scratch Wireless

Google is pushing the FCC to open new unlicensed spectrum for expanded Wi-Fi to accommodate the growing number of wireless hotspots that are facing co-interference issues.

Wi-Fi-based wireless providers are likely to grow once coverage concerns are eased and there is reliable service as customers hop from hotspot to hotspot. The cable industry has aggressively deployed Wi-Fi access with a potential to introduce wireless service. Comcast is already providing broadband customers with network gateways that offer built-in guest access to other Comcast customers, with the potential of using a crowdsourced network of customers to power Wi-Fi coverage across its service areas. FreedomPop will eventually seek customers to volunteer access to their home or business networks for fellow users as well.

AT&T and Verizon are banking on their robust networks and coverage areas to protect their customer base. Verizon Wireless, in particular, has refused to engage in price wars with competitors, claiming Verizon customers are willing to pay more to access the company’s huge wireless coverage area. AT&T told the Wall Street Journal its customers want seamless access to its network to stay connected wherever they go.

Verizon’s chief financial officer Fran Shammo appeared unfazed by the recent developments. On last week’s conference call with investors, Shammo dismissed Google’s entry as simply another reseller of Sprint’s network. He added Google has no idea about the challenges it will face dealing directly with customers in a service and support capacity. While Google’s approach to combine the coverage of T-Mobile and Sprint together is a novel idea, Shammo thinks there isn’t much to see.

“Resellers, or people leasing the network from carriers, have been around for 15 years,” Shammo said. “It’s a complex issue.”

Investors are taking a cautious wait-and-see approach to the recent developments. Google’s new offering is likely to offer plans that are philosophically compatible with Google’s larger business agenda. Challenging the traditional business models of AT&T and Verizon that have implemented usage caps and usage pricing may be at the top of Google’s list. The new offering could give large data allowances at a low-cost and/or unlimited wireless data for a flat price. Such plans may actually steal price-sensitive customers away from Sprint and T-Mobile, at least initially. Sprint is clearly worried about that, so it has a built-in escape clause that allows a termination of its network agreement with Google almost at will.

[flv]http://www.phillipdampier.com/video/WSJ Google Cablevision Challenge Wireless Industry 1-26-15.flv[/flv]

The Wall Street Journal talks about the trend towards Wi-Fi based mobile calling networks. (1:59)

Channeling Pinnochio, NCTA Cable Lobby Launches “The Infinite Internet” (They Want to Usage Cap)

Phillip Dampier January 20, 2015 Astroturf, Competition, Consumer News, Data Caps, Editorial & Site News, Net Neutrality, Online Video, Public Policy & Gov't, Video, Wireless Broadband Comments Off on Channeling Pinnochio, NCTA Cable Lobby Launches “The Infinite Internet” (They Want to Usage Cap)

pinnocThe National Cable & Telecommunications Association (NCTA), the nation’s largest cable lobbying group, has outdone itself with a brand new fact-challenged video truth-seekers will quickly discover is little more than industry propaganda.

“For nearly 20 years, cable has been building Internet networks that are empowering everyone from innovators and entrepreneurs to kids in the garage,” says the NCTA in its introduction of its new video “The Infinite Internet.” “The Internet propels business, education, entertainment – whatever we want. It’s a platform of possibilities and the fast growing technology in history. Cable is proud of the part we’ve played in advancing America’s future and we’ll continue to make it faster and more accessible.”

Except many NCTA member companies want to introduce usage caps and consumption billing that limit those possibilities on an already absurdly profitable service. The same broadband duopoly of cable and phone companies also holds America’s broadband rankings back, and has demonstrated its real priority is to charge more money for less service.

We’ve reviewed the video and found credibility problems with almost every claim:

Claim: “America’s ISPs have invested trillions of dollars and laid 400,000 miles of fiber optics.”

Our finding: FIB Even industry mouthpieces like the Progressive Policy Institute and NCTA members themselves have a problem with “trillions.” The chief executives of AT&T, Bright House Networks, Cablevision, CenturyLink, Charter, Comcast, Cox, Frontier, Suddenlink, Time Warner Cable, 15 other companies, and industry groups such as the National Cable & Telecommunications Association itself, the Telecommunications Industry Association, and the CTIA Wireless Association claimed in the spring of 2014 that the entire telecommunications industry (not cable alone) spent a combined $1.2 trillion on communications infrastructure. A considerable percentage of that investment was to build out cellular networks, first for mobile phone calls and only later for wireless data. The cable industry spent far less than $1 trillion on its own infrastructure and at the time of its most rapid growth, it was intended primarily to deliver cable television, not broadband.

Stop the Cap! also found the NCTA cheating in its claims of increasing investment in broadband. The trade group was citing cumulative spending, not actual year-to-year spending. A careful review shows broadband investments are generally flat or in decline and are nowhere near comparable to the investments the industry made in the late 1990s.

Although it may be true the cable industry has deployed 400,000 miles of fiber optics, the overwhelming majority of cable customers cannot directly access any of it. Virtually all the cable industry’s fiber is deployed between the company’s headquarters and individual communities where it is connected to the same coaxial cable platform that has been around since the 1960s. Most of the rest is laid for commercial purposes, notably providing backhaul connectivity for cell towers. Time Warner Cable alone deployed fiber to its 10,000th cell tower back in 2013. It’s a lucrative business, earning that cable company more than $61 million a quarter.

BroadbandNow found no cable company appearing on the list of top fiber broadband providers. In fact, as of 2012 only 23% of Americans have access to fiber broadband ranking the United States 14th among western countries in fiber optic penetration according to the OECD.

Claim: “High speed connections reach nearly every home with blazing fast speeds that power our lives.”

Our finding: HIGHLY MISLEADING The NCTA fails to define its terms here. What exactly constitutes a “high-speed connection.” The FCC currently defines broadband as providing speeds of 4Mbps or better. Is that “blazing fast?” The FCC is currently considering redefining broadband to mean speeds of at least 25Mbps, well below many cable company entry-level broadband tiers. The NCTA also likes to claim that 99% of households have access to high-speed Internet, but they include wireless technology at any speed in those figures. If you can get one bar from AT&T’s 3G wireless Internet network, you’ve got high-speed broadband in their eyes.

In fact, when it comes to stingy coverage areas, cable is notoriously not available outside of the biggest cities and suburbs, as the government’s own National Broadband Map depicts:

Map showing cable companies offering at least DOCSIS 3.0 cable broadband service.

Map showing cable companies offering at least DOCSIS 3.0 cable broadband service.

Claim: “ISP’s want access for everyone.”

Our finding: TRUE, WITH MISSING FINE PRINT What company would not want to offer its products and services to everyone. The real question is whether they plan on doing that or simply wishing they had. The cable industry has no intention of implementing sweeping changes to the Return On Investment (ROI) formula that determines whether your home gets access to cable or not. Some companies like Time Warner Cable and Frontier Communications are expanding their cable and DSL networks, but only when the government steps in with broadband deployment grant funding.

Assuming service is available, the next hurdle is cost. BBC News reported in 2013 home broadband in the U.S. costs far more than elsewhere. At high speeds, it costs nearly three times as much as in the UK and France, and more than five times as much as in South Korea. Today it costs even more when you count the growing number of providers charging modem rental fees as high as $10 a month and often cap usage or force customers into usage-based billing schemes.

Claim: “With over 300,000 public Wi-Fi hotspots, the Internet of Things is emerging.”

Cox Cable sells their customers on accessing over 300,000 Wi-Fi hotspots, with a prominent asterisk.

Cox Cable sells their customers on accessing over 300,000 Wi-Fi hotspots, with a prominent asterisk. Access is only available for free if you are a current cable broadband customer.

Our finding: MISLEADING The NCTA is referring to collaboration between Bright House Networks, Cox Communications, Optimum, Time Warner Cable and XFINITY that allow each other’s high-speed Internet customers to use to each company’s Wi-Fi hotspots. They key word is “customers.” The hotspots may be technically reachable by the public, but unless you are a current cable broadband subscriber, using them typically requires the purchase of a daily use pass.

Claim: “Cable will continue to invest, building this platform of possibilities, if we preserve the freedom that created the Internet.”

Our finding: EMPTY CLAIMS The NCTA’s commitment that the cable industry will continue to invest is fulfilled if one cable operator spends just $1 on their network infrastructure. Notice the NCTA does not commit its members to stopping the ongoing decline in broadband investment, much less move to increase it. It also has no explanation for the annual rate increases and new fees and surcharges customers are paying, as the gap between broadband pricing abroad and at home grows even larger. 

“Preserve the freedom” is code language for maintaining the deregulation that the industry has used to its advantage to raise prices in a broadband market most Americans will find is either a monopoly or duopoly. Although the NCTA implies it, the cable industry did not create the Internet. It was a government project (gasp!) initially developed through contracts with the Department of Defense and soon broadened to include educational institutions. The first significant commercial ISPs emerged only in the late 1980s. Cable industry broadband finally showed up around a decade after that. The industry’s claims are akin to boasting Lewis and Clark discovered Kansas City… in 1966.

If the cable industry gets some oversight of its broadband service and enforced protection of Net Neutrality, does that mean investment will flee? First, providers are already spending a lower percentage of capital on broadband expansion in the current deregulatory environment. Second, as broadband becomes the cable industry’s top earner, it provides an endless supply of revenue without the headaches of negotiating programming contracts, dealing with cable television network rate increases, and the growing phenomenon of cord-cutting. In other words, without significant new competition, it remains a license to print money.

[flv]http://www.phillipdampier.com/video/NCTA The Infinite Internet 1-20-15.mp4[/flv]

The NCTA is trying to make hay with its new video, “The Infinite Internet” which purports to share how Big Cable’s vision of the Internet is making new things possible. They don’t mention many of their member companies want to place a usage cap on that innovation, even as they continue to raise prices way out of proportion of the cost of delivering the service. It’s classic cable industry propaganda. (1:08)

AT&T Out of In-Flight 4G LTE Air-to-Ground Wireless Data Business; Will Focus on Overseas Acquisitions

Phillip Dampier November 10, 2014 AT&T, Competition, Consumer News, Wireless Broadband Comments Off on AT&T Out of In-Flight 4G LTE Air-to-Ground Wireless Data Business; Will Focus on Overseas Acquisitions

att_logoAT&T has decided it is too risky to get into the in-flight connectivity business and has pulled the plug on a plan to launch 4G LTE air-to-ground wireless data service in the United States.

“As AT&T explores opportunities for future growth and diversification, expanding our international presence has remained an area of interest,” an AT&T spokesperson told Runway Girl Network, an air transport intelligence news service. “On Friday we announced our intent to acquire Mexico wireless company Iusacell. After a thorough review of our investment portfolio, the company decided to no longer pursue entry into the Inflight Connectivity industry.  We are focusing our capital on transformative investments, such as international and video.”

The sudden cancellation of the project came as a surprise, because AT&T had been planning an extensive network that would offer Wi-Fi to in-flight passengers and was discussing partnerships with vendors and airlines in late September.

AT&T bought Iusacell instead, for $2.5 billion. The Mexican cell carrier serves 8.6 million subscribers across 70% of Mexico. AT&T could eventually rebrand the venture as “AT&T” and market it as America’s first “North American Mobile Service,” covering over 400 million consumers and businesses in Mexico and the United States without roaming charges for AT&T customers who often travel to Mexico.

Iusacell’s network is fully compatible with AT&T’s GSM network, but lacks 4G LTE data service.

Half of AT&T’s Customers Are Paying $100 for 10GB Data; Unlimited Customers Still Throttled After 3-5GB

Phillip Dampier October 23, 2014 AT&T, Broadband "Shortage", Broadband Speed, Competition, Consumer News, Data Caps, Public Policy & Gov't, Wireless Broadband Comments Off on Half of AT&T’s Customers Are Paying $100 for 10GB Data; Unlimited Customers Still Throttled After 3-5GB
Speed bump

Speed bump

More than half of AT&T’s wireless customers are paying at least $100 a month for 10GB or more of wireless data on AT&T’s Mobile Share Plans at the same time AT&T continues to throttle its legacy unlimited data customers who use more than 3GB of data on its 3G network or 5GB of data on its 4G LTE network.

AT&T claimed in 2012 it implemented its “fair usage policy” for unlimited customers to assure all could receive reasonable service during peak usage times when cell towers become congested.

AT&T also blames “a serious wireless spectrum crunch” for the speed throttling, implying access to more spectrum could help ease the problem. But there is a much faster way to overcome AT&T’s “spectrum crunch:” agree to pay them more money by ditching that $30 unlimited plan for a tiered plan.

John Stephens, AT&T’s chief financial officer, told investors Wednesday that nothing boosts revenue more than pushing customers into usage-cappped data plans that customers are regularly forced to upgrade.

“On the ARPU (average revenue per user/customer) story, I think the biggest issue with the improvement is people buying the bigger [data] buckets and buying – upping plans,” said Stephens. “We had over 50% of the customer base at the 10GB or bigger plans.”

Stephens added that AT&T benefited from customers upgrading to 4G LTE devices that are handled more efficiently by AT&T’s mobile data network.

Increased usage and upgraded data plans delivered a 20% increase in data billings over the last quarter.

Since 2012 AT&T has paid out more than $50 billion to shareholders through dividends and share buybacks. The company benefited from nearly $20 billion a year in free cash flow and asset sales over the last two years and is expected to repeat those numbers this year. Consolidated revenue at AT&T grew to $33 billion, up $800 million since the same time last year.

Miraculously, despite the “alarming spectrum crunch,” AT&T found more than enough spectrum to award its best customers with a “double data” promotion that turns a 15GB data plan into a 30GB plan, a 20GB plan to 40GB, a 30GB plan to 60GB, a 40GB plan to 80GB, or a 50GB plan to 100GB. Importantly, AT&T boasts its double data promotion won’t “explode” — their language for “expire” — on customers until their contract ends.

Lowering the bar on "unlimited use" customers.

Lowering the bar on “unlimited use” customers.

“Those exploding offers — customers hate those offers,” said AT&T Mobility CEO Ralph de la Vega at a recent investor conference. “Unless they change their mind, we won’t offer those kinds of promotions.”

But de la Vega doesn’t mind leaving the company’s most loyal legacy customers in the penalty box if they cling to their grandfathered unlimited data plans. The throttles stay and the allowances have remained unchanged since first announced, despite the bountiful spectrum obviously ready and available to serve AT&T’s deluxe customers. Unlimited customers are regularly reminded they can easily avoid the throttle — just abandon that unlimited data plan. According to Stephens, more than 80% of AT&T’s customers already have.

The excuses for wireless speed throttles and killing off unlimited data plans at AT&T and Verizon Wireless don’t seem to wash with FCC chairman Thomas Wheeler, who demanded Verizon offer the “rationale for treating customers differently based on the type of data plan to which they subscribe, rather than network architecture or technological factors,” after it announced it was planning speed throttles for its remaining unlimited data plan customers. Verizon canceled the plan after Wheeler began scrutinizing it, but the throttles are still in place at AT&T.

AT&T’s 10GB Mobile Share Plan starts with a $100 data plan. Customers also pay:

  • $10 a month for each auto-based smart-locator;
  • $10 a month for each tablet, camera or game device;
  • $15 a month for each basic phone;
  • $20 a month for each wireless home phone replacement;
  • $20 a month for each connected Internet device;
  • $40 a month for each connected smartphone.

A family of four with four smartphones, a tablet, and AT&T’s wireless home phone replacement would be billed $290 a month before at least $39 in taxes, fees, and surcharges — well north of $300 a month for most.

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