Wireless Telecommunications

[Commentary] Sprint needs a deal. With a market value roughly equal to its $33 billion in net debt, a tie up may be the only way for Sprint to get the resources to invest enough in its network to remain competitive. A deal with cable would be bad for Sprint’s wireless competitors because it would reduce the likelihood of industry consolidation through the hoped-for merger of Sprint and T-Mobile . It also would lower the cost of offering wireless service for the two cable companies, further exacerbating wireless competition. The optimistic view is that Sprint is talking to the cable guys to get T-Mobile and its majority owner Deutsche Telekom to agree to a deal on more favorable terms.

A $130 billion to $150 billion fiber infrastructure investment is required in the US to unleash innovation, close the digital divide, and fully prepare the country for 5G, according to a report from management consulting firm Deloitte. The report says the investment is needed over the next five to seven years to enable ‘deep fiber,’ or fiber infrastructure closer to the end user.

Much of the premise behind the report focuses on 5G, which requires a dense fiber network for backhaul and fronthaul. But it also stresses the discrepancy between rural and urban broadband options. Deloitte is calling on regulators and the broadband carrier community to address this issue, or risk losing leadership for the global digital economy opportunity. The report says the US currently lacks the fiber infrastructure necessary to take advantage of 5G. Many tier one carriers, including Verizon, have expressed their plans to ramp up fiber investments. Deloitte seems to suggest it’s not enough.

Apparently, Sprint has entered into exclusive talks with Charter Communications and Comcast as the cable companies explore a deal that could bolster their plans to offer wireless service, according to people familiar with the matter. Sprint Chairman Masayoshi Son and the cable firms have entered into a two-month, exclusive agreement for discussions through late July, putting merger talks with T-Mobile US on hold. One arrangement that has been considered is for Charter and Comcast to invest in improving Sprint’s network in exchange for favorable terms to offer wireless service using the carrier’s network. Such a deal could involve the companies taking an equity stake in Sprint. The cable companies already have such a network-resale agreement with Verizon Communications, but the Sprint deal could provide much better terms. While thought to be the much less likely scenario, the talks also include the possibility for the cable companies to jointly acquire Sprint. Sprint has a market value of $32 billion and $32.6 billion of net debt.

In what they concede on the surface is a surprising alliance, major Internet service providers have aligned with the Federal Trade Commission and the Federal Communications Commission against AT&T Mobility over the issue of the FTC's ability to enforce edge provider privacy. That came in an amicus brief to the US Court of Appeals for the Ninth Circuit.

"At first glance, amici’s position might seem surprising—four leading corporations are arguing in favor of restoring the FTC’s authority to regulate their non-common carriage activities," they said. "On closer inspection, however, this position aligns with the companies’ desire to reinstate a predictable, uniform, and technology-neutral regulatory framework that will best serve consumers and businesses alike." Signing on to that brief were Charter, Comcast, Cox, and Verizon.

As you may have heard, within the United States we've been working actively to build upon the experience of WRC-15 and towards the decisions to be made at WRC-19. We've recently completed the world's first voluntary incentive auction, making the 600 MHz frequency band available for mobile broadband use, while still ensuring a vibrant broadcasting community.

Together with our neighbors in Canada and Mexico, we have worked to facilitate the success of both the TV and wireless bands and ensured a seamless transition at our shared borders. We applaud the leadership of our counterparts in Mexico and Canada at the ITU and encourage other administrations to consider 600 MHz as they seek additional spectrum for wide-area mobile broadband deployments.

The United States is ahead of the global curve when it comes to delivering “broadband for all.” But we too face challenges. First, a quick snapshot: 93% of Americans have access to fixed broadband with a speed of at least 25 Mbps down. An estimated 73% of Americans subscribe to fixed broadband at home. And approximately 80% of Americans use smartphones. When you dig deeper into those numbers, however, you begin to see some real divides. In urban areas, 98% of Americans have access to high-speed fixed service. In rural areas, it’s only 72%. 93% of Americans earning more than $75,000 have home broadband service, compared to only 53% of those making less than $30,000. Too many identify with the lines in One of Us, in which ABBA sang: “One of us is lonely / One of us is only / Waiting for a call.”

Every American who wants to participate in our digital economy should be able to do so. Access to online opportunity shouldn’t depend on who you are or where you’re from. I’m pleased to say that since my first days as Chairman, the Federal Communications Commission has taken significant actions to make that a reality.

A planned municipal broadband sale of BVU Optinet is in jeopardy, thanks to a disagreement regarding wireless tower assets. One of the early pioneers in municipal broadband, Bristol (VA) based BVU Optinet was put up for sale back in February 2016 for $50 million to Sunset Digital Communications. That deal may now be in trouble.

A government oversight board, the Virginia Coalfield Coalition (VCC) approved the sale of BVU Optinet to Sunset Digital, but with conditions that Sunset now objects to. The board wants operational control of the wireless tower network currently operated by BVU Optinet transferred to a different service provider, Scott County Telephone Cooperative. BVU operates 22 wireless towers throughout the region, and is valued at $14 million. There is a difference of opinion between the VCC and Sunset as to whether the tower network was a part of the original $50 million deal. Sunset Digital is calling foul, and says that condition could kill the deal. “Those are conditions that we [previously] said were not acceptable,” said Jeff Mitchell, an attorney for Sunset Digital.

The Citizens Broadband Radio Service (CBRS) has not even been born yet, but already major industry players want to change its basic character. CBRS, as its name implies, was conceived and approved by the Federal Communications Commission a couple of years ago as a broadband service for locally-focused businesses. The regulatory paradigm included both a large swathe of generally authorized access (also termed “licensed by rule”) channels that would be made available opportunistically to any entity and licensed channels made available on a census-tract basis for generally non-renewable three year terms. This generated quite a bit of opposition from larger carriers who insisted that the small license areas and short, non-renewable terms would make the band unsuitable for significant investment.

Yet the FCC stuck to its vision for this “citizen”-oriented service and adopted rules which are now effective, though users cannot be up and operating until the spectrum managers begin administering access to the spectrum.

Federal Communications Commission Chairman Ajit Pai says he did not discuss his proposal to roll back Title II classification of Internet service providers at a meeting at the White House but did talk about the building blocks of a wireless future—spectrum and infrastructure. Asked about the meeting by a reporter following the FCC's public meeting—particularly given Chairman Pai's criticism of what he thought as too close ties between the White House and Tom Wheeler on that issue—the chairman said they had an "excellent conversation" with tech and telecom leaders and his input was sought on the rollout of 5G and the Internet of Things.He called it a "very fruitful" conversation about spectrum and infrastructure and the like and that he looked forward to working with all interested parties.

As to FCC independence, he said the FCC was still an independent agency, but there were ways to collaborate with others in the Administration, before launching into a string of nautical references to make his point. He said he wanted to make sure "we are steering in the right direction," calling them "all sailors in the same boat" and saying that it was an "all hands on deck effort" to make sure wireless innovators have the necessary tools.

[Commentary] The week of June 12, the European Union Directorate-General for Competition released a report on the effects of zero-rating practices on competition in broadband markets, commissioned from consultants DotEcon, Aetha, and Oswald & Vahida. The report reviewed both the theoretical arguments regarding zero-rating and competition (including work by myself and Roslyn Layton) and actual experiences with the practice from European Union countries.

The report’s findings are extremely informative, given the extent to which the purported harms from zero-rating alarmed a large number of United States advocates in the past. Notably, this resulted in the February 2015 Open Internet Order requiring case-by-case analysis of alleged breaches of a zero-rating general conduct standard in agreements between broadband internet access service operators and end consumers.

[Bronwyn Howell is a faculty member at the School of Management, Victoria University of Wellington, New Zealand.]