The Real Answer to Closed Carrier Networks Is More Competition

So no question a little strong arming from the FCC chairman went a long way to persuade AT&T (T) to unban some of the applications from its network. While I think an argument can be made to limit access by some applications such as Slingbox, VOIP is much more limited in terms of bandwidth consumption. Just a couple reactions to this decision and some of the trends coming out of the FCC:

• The trend towards pricing wireless services as one big combined data/voice pipe continues. We've talked about that for a while here, and I think particularly if new spectrum is "found", we'll see more competition and more one plan/one charge type pricing by the carriers.
• It's been a long time since I've liked a chairman of the FCC, but the current Chairman seems awfully intelligent. So far, he seems to be pursuing a relatively consistent agenda around fostering innovation as well as using soft power to try and persuade carriers to loosen up the wireless chastity belt (i.e. making networks applications agnostic).
• While I like some of the use of the FCC's soft power to persuade carriers to open their networks, I think the real answer is more competition. What does that mean? That means we need at least 2 new national wireless network providers. If current spectrum is being warehoused, the FCC needs to get that into the hands of people that will use it. If Verizon (VZ) says it's holding on to a bunch of spectrum just to keep out competition, that means less innovation and less real competition. Someone, somewhere, needs to "pry it out of their cold dead hands".
• I would love to see a national broadband plan for rural markets and a computer in every home. That's a stimulus plan that brings all our citizens into the 21st century and has benefits in areas like education and productivity.
• In the past I've been supportive of FCC moves to ban practices to slow or limit high bandwidth applications. However, if we get some real competition the FCC won't need to play bad cop. Frankly, I think if the FCC becomes too aggressive about policing bandwidth policies the carriers will take it to court and likely win. If the FCC really wants more innovation, the best path is less mergers and more new entrants into the space, not excessive regulation.
• Lots of noise around "running out of capacity" as wireless broadband grows, I think this continues a bullish trend in wireless data on the hardware side as well as the pipes to back up growth.
• LTE rollouts in the Unites States next year will give us some real
  glimpses into any scarcity issues and how they can best be addressed.

Comments

[John Conor:]

One would think that "VOIP is much more limited in terms of bandwidth consumption", but one would be right only part of the time. Unhosted voice apps, like and particularly, Skype can easily consume as much as 1Mbps per consumer (although 128 kbps during a live session is typical, and about 4kbps when idle). It is quite commonplace for consumers to blow through a monthly 1GB limit/cap in a few days using Skype.

Oct 08 07:55 AM

[fanfare:]

Here is something to consider: streaming from (for example) Netflix uses up to 2.5 Gig per hour. My local cable company has a bandwidth (transfer) cap of 50 Gig per month. That allows users to watch less than 40 minutes of streaming video per day.

Broadband has the capability to generate a new and vast market that would generate new industries and as such new jobs. A real-time network will play a vital part in a prosperous and viable economy in ways we can only imagine at this juncture. NSP's and ISP's dragging their feet on the basis of: "our network just can't support this kind of use" is a crock. ULH network services are at an all time low. Cable infrastructure is an inexpensive edge alternative. These companies can offer bandwidth without raising their costs to any significant degree, but they want to continue to "milk" consumers by demanding more $$ for less service. We witnessed the same thing with RBOC's in the late 90's. Cable companies certainly don't want people getting their content online; not when they already charge them an additional $40-60 a month on top of their internet charges.

Oct 08 11:51 AM

[Aryamehr:]

Sprint's foray into Wimax (4G) will definitely change the wireless landscape and open up the industry to more competition. ATT & VZ have been up in arms to hinder the growth of Wimax, however Sprint's Wimax is here and on a glide path to cover the US within a year. The consortium that supports Sprint in this initiative includes Intel, Google, Comcast, Time Warner, Samsung, etc. It will be interesting to see how well LTE's closed system dominated by the large Telcos, ATT and VZ, competes against Sprint and company who are advocating Wimax. By the end of this year Sprint's Wimax will be in at least 25 cities while the competition will be in the same cities paying their Spin Masters to do what ever they can to promulgate misinformation about Sprint and Wimax. Regardless of the proclivity of these Spin Masters from ATT & VZ, Wimax will have far more subscribers in the future than LTE, an alternative standard pursued by the two large telcos. Wimax is far more cost effective, especially if you don't have an existing 3G platform, and we all know this is true in most of the developing world, which is expected to see unprecedented Wireless growth in the coming years.

Oct 08 12:31 PM

[c smith:]

Someone, somewhere, needs to "pry it out of their cold dead hands".

Uh, since VZ paid a fair price for the spectrum at auction, just how is "prying it out of their hands" constitutional?

How about offering to buy it back? No one seems to realize that telecom networks DON'T BUILD THEMSELVES!

Oct 08 01:34 PM