Just how much has mobile broadband — and mobile devices like smartphones and tablets — changed the computing landscape in a short amount of time? Enough that one of the world’s leading PC makers is getting out of the business. As PC Pro’s Nicole Kobie reports:
Dell no longer sees its business as making and selling PCs, focusing instead on enterprise IT.
The claim follows Dell posting full-year results showing growth in enterprise, but a struggle in consumer sales.
Broadcasting & Cable’s John Eggerton reporting on a speech made by FCC Commissioner Robert McDowell yesterday at the Mobile World Congress event in Barcelona:
McDowell was not opposed to Congress limiting the FCC’s ability to condition the auction. He has long complained of the conditions on the FCC’s 2008 auction of the first tranche of broadcast spectrum reclaimed in the DTV transition. Those are widely believed to have discouraged bidders and reduced revenue from the auction.
“The lesson learned from that auction and others is that when governments attempt to conduct social and economic engineering by foisting unnecessarily complicated mandates on the use of spectrum, their efforts frequently backfire,” McDowell said. He said he thought the FCC could get it right this time.
Over at CNet, Larry Downes has a must-read article on America’s looming spectrum crisis and the challenges ahead:
Short- and medium-solutions to the spectrum crisis are possible, but won’t come easily. Avoiding disaster in the mobile ecosystem requires a combination of smart technology investments, innovative business practices, and policy reforms likely to offend vested interests.
Each is valuable on its own, but coordination will be crucial if we are to improve spectral efficiency enough to keep mobile users going while we wait for the incentive auctions to run their course.
Even if we get through the next few years, it’s clear that staving off future crises will require radical changes to spectrum management. The patchwork quilt woven by 85 years of quixotic and often political decision-making has left U.S. airwaves dangerously inflexible and unnecessarily fractured. The accelerating pace of technological innovation is on a collision course with command-and-control assignment of spectrum. Something has to give.
Today’s final article in David Goldman’s series on the spectrum crunch for CNN Money shows that he gets it — there is no “catch-all fix.” It is promising, though, that wireless carriers are actively seeking solutions to the spectrum shortage that will enable continued innovation in the industry and allow them to better serve their customers. These users’ quality of service on their iPhones, Androids, BlackBerries and tablets will significantly improve when wireless carriers, as pointed out by Goldman’s piece, bid on spectrum at auction and kick the build-out of networks into high gear.
Yet another benefit: this investment by wireless companies means more U.S. jobs. Wireless companies winning spectrum is a win for American consumers and the American economy — the FCC should act quickly to set these open incentive spectrum auctions in motion.
Yesterday, our Honorary Chairman Rick Boucher participated in a spectrum event hosted by TechAmerica. The National Journal‘s Juliana Gruenwald was there, and offers a report:
“This is a continual process,” said Boucher, who headed the House Energy and Commerce Communications and Technology Subcommittee before losing re-election in 2010…. “Next on the block for auction to the wireless carriers will probably be re-purposed government spectrum. Don’t know how quickly that will come but to meet the kinds of demands that we see with these predictions from the FCC for mobile data use, we’re clearly going to need more spectrum.”
At CNN Money, David Goldman has launched a week-long series examining America’s wireless capacity crunch. It’s well worth the read, as it identifies important issues currently facing the FCC and wireless companies. But I would add that whether you are a big user of smart phones or don’t use one at all, providing spectrum to expand wireless networks is good for all of us because it will create jobs and adds billions of dollars in private sector investment to the economy.
Clearly the carriers expect to make money. No return, no investment. But over the past decade that system has led to massive improvements in consumer choices, investment, innovation and falling prices per megabit, per message and per minute. From e-health to e-learning to e-gov to the App economy, spectrum is the oxygen for this incredibly vibrant and competitive market.
Anyone whose smart phone has dropped a call has seen evidence that wireless data use is surging in the US, so much that we are rapidly running out of spectrum, the bandwidth necessary to support our mobile needs.
The evidence is everywhere that America’s mobile economy desperately needs an influx of this valuable, limited resource. Start with the new Cisco report, which estimates North American mobile Internet traffic will increase from 119 terabytes/month in 2011 to 493 in 2013 and 1,964 in 2016 (see chart below).
Cisco is hardly alone in documenting our rapid mobile migration. Last July, a global analysis found that mobile networks in North America are filled to 80 percent capacity.
The same study found that nearly 40 percent of individual mobile base stations already face capacity issues. In laymen’s terms, that’s when your call fails or your smartphone’s Pandora stream suddenly stops because the cell tower’s radio transmitter can’t process all the data from nearby subscribers.
Against this flood of evidence about our swelling mobile data demands, spectrum auctions have been mired in legislative procedure. Thankfully, Congress recognized the urgency of the issue and included language in the payroll-tax extension bill that ensured critical spectrum auctions would be conducted in an open process by not allowing the Federal Communications Commission to exclude some wireless providers from participating — perhaps even those who would be willing to pay the most for spectrum.
Almost 20 years ago, the FCC set aside certain spectrum auctions for “designated entities” as part of its 1996 auctions. All other companies were barred.
The result: More than half of the 493 licenses from that auction were later returned to the government for non-payment.
Given that auction proceeds go to the U.S. Treasury (in other words, taxpayers), Congress has delivered a win for consumers. Not to mention economic growth, innovation, and broadband deployment. The legislation means a true level playing field — all auctions open to all qualified companies — and in the end, that’s the best course we can take to keep our wireless economy vibrant and growing.
Yesterday, it was announced Congress had reached an agreement to extend the payroll tax cut. Included was legislation on spectrum auctions. Our thoughts (and applause for Congress) about the spectrum legislation are here. Meanwhile, over at The Hill, Brendan Sasso reports on President Obama’s comments following the announcement:
“[The legislation] includes a critical element in the plan I outlined in the State of the Union to out-innovate the rest of the world by unleashing mobile broadband, investing in innovation, and building a nationwide public safety network,” Obama said. “It will mean a stronger economy and hundreds of thousands of new jobs.”
Via Edward Wyatt of the New York Times, the long LightSqaured saga appears to be nearing its end:
A proposed wireless broadband network that would provide voice and Internet service using airwaves once reserved for satellite-telephone transmissions should be shelved because it interferes with GPS technology, the Federal Communications Commission said Tuesday.
The F.C.C. statement revokes the conditional approval for the network given last year. It comes after an opinion by the National Telecommunications and Information Administration, which said that “there is no practical way to mitigate the potential interference at this time” with GPS devices. The telecommunications and information agency oversees telecommunications policy at the Commerce Department.
Here is the FCC statement on LightSquared:
LightSquared’s proposal to provide ground-based mobile service offered the potential to unleash new spectrum for mobile broadband and enhance competition. The Commission clearly stated from the outset that harmful interference to GPS would not be permitted. This is why the Conditional Waiver Order issued by the Commission’s International Bureau prohibited LightSquared from beginning commercial operations unless harmful interference issues were resolved.
NTIA, the federal agency that coordinates spectrum uses for the military and other federal government entities, has now concluded that there is no practical way to mitigate potential interference at this time. Consequently, the Commission will not lift the prohibition on LightSquared. The International Bureau of the Commission is proposing to (1) vacate the Conditional Waiver Order, and (2) suspend indefinitely LightSquared’s Ancillary Terrestrial Component authority to an extent consistent with the NTIA letter. A Public Notice seeking comment on NTIA’s conclusions and on these proposals will be released tomorrow.
The House and Senate appear to have reached a deal on extending the payroll tax cut, and as The Hill‘s Brendan Sasso reports, spectrum auctions are included:
The spectrum legislation would authorize the Federal Communications Commission (FCC) to auction airwaves that currently belong to television broadcasters, splitting some of the revenue with the stations that choose to participate.
The spectrum is potentially worth billions of dollars to wireless carriers, which are struggling to meet the growing data demands of smartphones and tablet computers.
There’s no word yet on specifics in the spectrum auction proposal.
Calls for humbler government are as old as the republic. In this era of frenzied media coverage and hyperpartisan dialogue, few would apply the humble label to anything related to the federal government. It’s time for at least one agency to heed the call.
As it writes rules for the availability of additional spectrum through incentive auctions, the Federal Communications Commission should apply a light touch — a truly humble approach — to the wireless sector, which is a major contributor to our national economic recovery.
Via Ryan Kim of GigaOm, a new study from Forrester Research reveals just how mobile our lives will soon be:
• 1 billion consumers will own smartphones by 2016 with U.S. users owning 257 million smartphones and 126 million tablets. By 2016, 350 million employees will use smartphones, with 200 million of them bringing their own.
• Mobile spending will reach $1.3 trillion by 2016 or 35 percent of the technology economy with the app market generating $56 billion by 2015.
• Apple, Google and Microsoft are expected to control 91 percent of the U.S. smartphone market and 98 percent of the U.S. tablet market by 2016.
• Businesses are expected to double their spending on mobile projects by 2015.
That’s a lot of data flying through the air. Hopefully our networks will have the spectrum necessary to keep up.
In a letter yesterday to 20 congressional leaders, a group of wireless providers led by Sprint and T-Mobile essentially called on Congress to grant the Federal Communications Commission (FCC) power to pick winners and losers in the wireless market. From the letter:
Congress’ challenge today is to authorize the FCC to conduct inventive auctions to bring additional spectrum to market while preserving the FCC’s ability to manage auction eligibility and structure to promote the benefits of vibrant wireless competition for consumers and the economy.
To this end, the letter argues the FCC should be able to take into account the amount of spectrum carriers have when it comes to crafting spectrum auction rules – in other words, not an open, competitive auction at all.
Given the unprecedented adoption of mobile broadband, the upcoming spectrum auctions are simply too important to limit the involvement of any bidder, be they large or small. The development of next-generation wireless services, and the ability of all carriers to obtain the necessary spectrum to improve service and keep up with customer demand, is critical not just for the health of the wireless industry, but for America’s economy.
While it’s not surprising that Sprint, T-Mobile, and other wireless providers would want to inhibit the nation’s two largest carriers from participating in full in spectrum auctions, doing so would severely limit the amount of revenue the government would receive in return for spectrum sold. Contrary to claims in the letter to Congress, the current House Bill (H.R. 3630) regarding spectrum auctions will ensure a level playing field continues to exist. It will also maximize auction proceeds, bringing American taxpayers the full benefit from the sale of one of our most vital public resources.
History has shown that when the FCC has tried to pick winners and losers in the wireless market, American consumers have lost. Past attempts by the Commission to favor certain bidders and/or impose rigid regulations on auction winners have drastically diminished auction proceeds, left major blocks of spectrum unused, and led to what FCC Chairman Julius Genachowski himself has labeled “America’s looming spectrum crisis.”
The simple truth is America’s wireless industry continues to be fiercely competitive (in fact, when it comes to spectrum holdings, letter signee Sprint is in arguably the best position due to its partnership with Clearwire). Allowing the FCC to impose conditions on spectrum auctions will not make the industry more competitive. And the spectrum critically needed by all providers to keep up with increasing demand will not be put to its full use, leading to spectrum shortages, reduced investment and innovation, and higher prices for consumers.
Only through truly competitive, open spectrum auctions will America’s wireless industry continue to thrive. After all, the best way to ensure competition is to encourage everyone to compete.
A new study from policy group TechNet sheds some light on just how important the mobile app economy — and mobile broadband — are to America’s economy. The full study, titled “Where the Jobs Are: The App Economy,” is available here (PDF), but some of the highlights include:
• The App Economy is now responsible for over 466,000 jobs in the U.S., which is pretty amazing when you take into account the fact that it was only in 2007 and the release of the iPhone that the industry started.
• In December of 2011, Apple’s App store had over half a million active apps, which were uploaded by over 100,000 publishers.
• California, New York, and Washington State lead the charge in the App Economy, but more states are joining the part every day.
At the Wall Street Journal, columnist L. Gordon Crovitz breaks down the current spectrum debate in Washington and calls on the FCC not to pick winners and losers:
A House bill would require the FCC to allow all telecommunications companies to participate in the auction, without regulators picking winners and losers before the bidding even begins. The worry is that the FCC is reverting to its old practice of handpicking preferred owners of broadband, a form of industrial policy that’s bad on principle, and would also reduce the fees going to the Treasury by limiting bidders.
The FCC is lobbying against this provision, even though an agency spokesperson assured me in a phone interview that “the FCC has no intention of keeping either AT&T or Verizon from participating in the auction.” That’s good, but the market-leading firms might still be forced to sell back some of their bandwidth to meet regulatory views about antitrust.
The FCC is trying to manage competition among telecommunications providers using 1970s-era antitrust theories. Almost every American can choose among four or five telecommunications providers, not just Verizon or AT&T.
You can read our own Bruce Mehlman’s take on the FCC and spectrum auctions here.
Via Steve Walsh and Michael Shepard of Bloomberg, House Subcommittee on Communications and Technology Chairman Rep. Greg Walden wants to get to the bottom of the ongoing regulatory saga being faced by mobile broadband startup LightSquared:
The high-speed wireless venture backed by hedge fund billionaire Philip Falcone won preliminary approval from the FCC a year ago. It remains without final clearance as the agency and other federal regulators weigh test results that show LightSquared disrupts global-positioning system equipment used on autos, tractors, boats and aircraft.
“How did that process fail?” Walden said in a briefing with reporters in Washington. “Because you’ve got a lot of people spending a lot of money trying to sort this out now, and it would seem to me somebody would have sorted it out before they made the licenses available.”
Over at Maximum Entropy, industry analyst Bret Swanson (who is also one of our Broadband Ambassadors) echoes the concerns of AT&T’s Bob Quinn earlier this week that the FCC’s “digital roaming” order and other regulations risk discouraging investment from wireless providers:
We warned here and here that turning competitive broadband infrastructure into a “common carrier” could discourage all players in the market from building more capacity and covering wider geographies. If company A can piggyback on company B’s network at below market rates, why would it build its own expensive network? And if company B’s network capacity is going to company A’s customers, instead of its own customers, do we think company B is likely to build yet more cell sites and purchase more spectrum?
With 37 million iPhones and 15million iPads sold last quarter, we need more spectrum, more cell towers, more capacity. This isn’t the way to get it. And what we are seeing with Sprint’s decision to roam instead of build in Oklahoma and Kansas may be the tip of this anti-investment iceberg.
Yesterday, Apple released its quarterly earnings, and in yet another example of the power of technology — not to mention the importance of mobile broadband for America’s economy — the iPhone maker shattered expectations, announcing quarterly revenue of $46.33 billion and net profits of $13.06 billion.
As David Goldman of CNN Money points out, Apple is now worth over $400 billion, making it worth more than Greece. Wow.
In an op-ed for The Hill‘s Congress Blog, Mobile Future chairman Jonathan Spalter argues it’s critical to free up more spectrum for mobile broadband to keep up with growing demand:
To provide maximum benefits both for American consumers and the American treasury, any reasonable solution must encourage the open participation by the greatest number of stakeholders, including those who need additional spectrum to meet the growing demands of the 300 million mobile consumers in the U.S.
Now is the time for leadership. Policymakers on Capitol Hill, at the FCC and in the Administration must work together to chart a clear and sustainable path to address the nation’s immediate spectrum needs as quickly as possible. Mobile innovation, economic growth and hundreds of millions of mobile consumers can’t afford to wait.
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