U.S. Regulator’s Finding Could Aid T-Mobile–Sprint Merger

The Federal Communications Commission (FCC), the U.S. regulatory agency, voted to approve a report that stated that there is “effective competition” in the U.S. mobile market for the first time since 2009, according to a news report. The finding is a strong indication that the FCC will be favorable to the proposed merger between the third and fourth ranking mobile operators in the U.S., T-Mobile and Sprint, which are said to be close to an agreement.
 
The commissioners, however, were not unanimous in their opinion; the vote was 3–2. The agency’s chairman, Ajit Pai, was in favor, stating, “Most reasonable people see a fiercely competitive marketplace. This is strong, incontrovertible evidence.” On the other hand, one of the Commissioners, Jessica Rosenworcel, said, “While this report celebrates the presence of four nationwide wireless providers, let’s be mindful that a transaction may soon be announced that seeks to combine two of these four. For my part, any transaction before us will require someone to explain how consumers will benefit, how prices will not rise, and how innovation will not dissipate in the face of so much more industry concentration.”
 
And the other dissenting voice came from Commissioner Mignon Clyburn, who stated that the report at hand “takes a decidedly myopic view of the ecosystem, and instead focuses only on ‘competition in the provision of mobile wireless services.’ This is like a doctor looking at one organ and pronouncing a patient fit as a fiddle.”
 
While it is outside the scope of these remarks to assess the rights and wrongs of the competition report that came before the FCC, we can cite the FCC itself to state that the four major U.S. operators control 98.8 percent of the market. The current number of operators represents a significant reduction from the seven that divided the market between them 10 years ago, so the question of what the market would be like if it were consolidated to three is obviously a pressing one.
 
In finding the mobile landscape to be more than adequately competitive, one of the facts that the report and the approving commissioners stressed is that prices have gone down over the past six years, despite the investment of $200 billion made by the operators in their networks.
 
However, one could argue that one of the major reasons for the downward trend in prices has been the massive disruptive “Un-carrier” strategy pursued by T-Mobile, which is firmly based on undercutting the competition on price. If the merger were to go ahead, would the resulting third operator continue to pursue such a strategy, in order to vanquish AT&T and Verizon? Or would it become more complacent? Presumably, with T-Mobile the senior partner in the deal, the new entity’s goals would be more those of T-Mobile than of Sprint, as currently constituted.
 
In any case, whether a merger would be good or bad for the U.S. mobile market, the FCC’s stance on competition makes it seem likely that it will give its blessing to the union. That represents a turnaround since 2014, the last time T-Mobile and Sprint announced merger talks. At that time, the Obama-era FCC and Justice department said that they would not give the green light to a merger and the deal was dropped.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. 

To learn more about Tarifica, please visit www.tarifica.com 

U.S. Regulator’s Finding Could Aid T-Mobile–Sprint Merger

The Federal Communications Commission (FCC), the U.S. regulatory agency, voted to approve a report that stated that there is “effective competition” in the U.S. mobile market for the first time since 2009, according to a news report. The finding is a strong indication that the FCC will be favorable to the proposed merger between the third and fourth ranking mobile operators in the U.S., T-Mobile and Sprint, which are said to be close to an agreement.
 The commissioners, however, were not unanimous in their opinion; the vote was 3–2. The agency’s chairman, Ajit Pai, was in favor, stating, “Most reasonable people see a fiercely competitive marketplace. This is strong, incontrovertible evidence.” On the other hand, one of the Commissioners, Jessica Rosenworcel, said, “While this report celebrates the presence of four nationwide wireless providers, let’s be mindful that a transaction may soon be announced that seeks to combine two of these four. For my part, any transaction before us will require someone to explain how consumers will benefit, how prices will not rise, and how innovation will not dissipate in the face of so much more industry concentration.”
 
And the other dissenting voice came from Commissioner Mignon Clyburn, who stated that the report at hand “takes a decidedly myopic view of the ecosystem, and instead focuses only on ‘competition in the provision of mobile wireless services.’ This is like a doctor looking at one organ and pronouncing a patient fit as a fiddle.”
 
 
While it is outside the scope of these remarks to assess the rights and wrongs of the competition report that came before the FCC, we can cite the FCC itself to state that the four major U.S. operators control 98.8 percent of the market. The current number of operators represents a significant reduction from the seven that divided the market between them 10 years ago, so the question of what the market would be like if it were consolidated to three is obviously a pressing one.
 
In finding the mobile landscape to be more than adequately competitive, one of the facts that the report and the approving commissioners stressed is that prices have gone down over the past six years, despite the investment of $200 billion made by the operators in their networks.
 
However, one could argue that one of the major reasons for the downward trend in prices has been the massive disruptive “Un-carrier” strategy pursued by T-Mobile, which is firmly based on undercutting the competition on price. If the merger were to go ahead, would the resulting third operator continue to pursue such a strategy, in order to vanquish AT&T and Verizon? Or would it become more complacent? Presumably, with T-Mobile the senior partner in the deal, the new entity’s goals would be more those of T-Mobile than of Sprint, as currently constituted.
 
In any case, whether a merger would be good or bad for the U.S. mobile market, the FCC’s stance on competition makes it seem likely that it will give its blessing to the union. That represents a turnaround since 2014, the last time T-Mobile and Sprint announced merger talks. At that time, the Obama-era FCC and Justice department said that they would not give the green light to a merger and the deal was dropped.


Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. 

To learn more about Tarifica, please visit www.tarifica.com 

U.S. Congress to Get Rid of Internet Privacy Protections

Last Thursday the U.S. Senate voted 50 to 48 to dismantle rules enforcing internet privacy protections, an outcome that is expected to be repeated (and therefore made into law) when the House of Representatives votes this week. The existing rules were created at the end of President Obama’s second term, in October 2016, under former FCC (Federal Communications Commission, the main regulatory agency) chairman Tom Wheeler, and were scheduled to go into effect at the end of 2017.

Under the new rules, operators will not have to ask users’ permission to track their browsing habits, and will be allowed to share and sell data about consumers to retail companies and mobile and web advertising providers. They will also be freed from the mandate to take “reasonable measures” to guard consumer data against hacking, as they would have been required to do under the Wheeler rules.

These regulatory changes, which are almost certain to go through, are in line with the Trump administration’s aggressive anti-regulation approach, as spearheaded by the new chairman of the FCC, Ajit Pai, a Trump appointee. Pai has argued that the existing rules are unfair to operators, which would be regulated while internet companies such as Google and Facebook would not. The new rules would level the playing field. Operators would benefit by monetizing customer data and metadata, deriving revenue directly from selling it to commercial entities.

While this will be good news to operators, a note of caution should be sounded. Consumer advocate and privacy groups have decried the new rules, and operators should be aware of the need to balance revenue opportunities and business freedoms with customer satisfaction. It has been shown that customers may not mind having at least some of their data or metadata shared, as long as there is transparency about it. On the other hand, if customers feel that something secretive is going on, they will be much less receptive. Taking the new regulatory climate as carte blanche to disregard customer sensibilities would be a big mistake. 

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.

To learn more about Tarifica, please visit www.tarifica.com 

USTelecom Files Appeal Against FCC Net Neutrality Rules

Industry association USTelecom has filed a review petition with the U.S. Court of Appeals for the District of Columbia as a preliminary move to challenging the FCC's new net neutrality rules. The group said that its appeal will focus on the FCC's decision to reclassify broadband internet access as a public utility service and thereby allow stricter regulation of ISPs. USTelecom said it otherwise supports the net neutrality rules and that the new rules prohibiting ISPs from blocking or throttling specific internet traffic will not be the focus of its appeal. The group said the FCC could have implemented these rules relying on other, existing, legislation.  Considering the impact that the FCC's public-utility stance could have on operators' and other ISPs' ability to charge different rates to different content providers, it was inevitable that those entities would challenge the new rules. However, the legal action may be premature and subject to being tossed out for reasons of timing alone. In any case, the process of challenging any aspect of the net neutrality rules will be a lengthy one, and pursuing it under the umbrella of an industry group is likely a wise strategic move, in that no one industry player will become a lightning rod or give regulators an opening to dismiss the appeal on narrow grounds. Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. Tarifica is a division of T3i Group, a diversified telecom information provider. To learn more about Tarifica, please visit www.tarifica.com.

FCC Approves New Net Neutrality Rules

The U.S. Federal Communications Commission (FCC) has approved new net neutrality rules for internet service providers. After its previous rules were struck down twice, the regulator proposed new, tougher rules, drawing on the existing regulation of fixed telephony and backing from U.S. President Barack Obama. The new order reclassifies internet access as a telecommunications service, as defined under Title II of the Telecommunications Act. This gives the FCC greater authority to regulate internet providers. The new rules also ban paid prioritization, in which a service provider can pay the network operator for preferred access to end users. They also prohibit the blocking of lawful content and throttling of services. These rules will also apply to internet services over mobile networks. The FCC’s authority is extended to interconnection agreements between network and content providers, allowing it to hear complaints and settle disputes.

The announcement by the FCC also prompted statements from a wide range of industry players, most of which were opposed to the plan for stricter regulation of internet services. While operators such as Verizon say the rules will create uncertainty about network investments and innovation in the industry, others like Netflix were more supportive, saying that the approval of the rules is a “clear win for consumers.”

Customers in the U.S. have made it clear, in the form of nearly four million public comments, that they will not tolerate ISPs having control over their free access to content. Even before the ruling, ISPs, including MNOs, already realized that a lack of transparency about plan features and pricing would alienate subscribers and hurt retention. Throttling, too, has had a negative impact on public perception of network operators, although many operators continued the practice. Now that the FCC has imposed these stricter rules, ISPs will need to find ways to compensate for the revenue that they formerly brought in by charging content providers for internet “fast lanes.” We believe the message is clear: They should focus on generating revenue by building out their mobile and fixed networks and making them as strong and fast as possible. Giving the American public access to the best—and fairest—service is the way to generate revenue in an era of net neutrality.

“While the U.S. has moved decisively toward true net neutrality, the European Union remains agnostic on the subject. The compromise on roaming and net neutrality reached this week between EU member states, which still must be approved by the European Parliament, forbids blocking and slowing down of content but allows internet service providers to offer different levels of service quality to different content providers. Operators won this concession by consistent application of pressure. So the climate in Europe remains—at least for now—more pleasant for ISPs than that on the other side of the Atlantic.    

John Dorfman, 

Editor-in-Chief, The Tarifica Alert

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about Tarifica: http://www.tarifica.com/contactus.aspx   

U.S. FCC Expected to Enforce Net Neutrality

After months of debate, lobbying, and public comments, it appears that the U.S. Senate will approve the net neutrality proposal of the Federal Communications Commission (FCC), a key regulatory agency. Senate Republicans, who have opposed the policies of FCC Chairman Tom Wheeler, stated on Tuesday that they would not stand in the way of Democrats, who have lined up behind President Barack Obama in support of the FCC. When the FCC votes on 26 February to treat the internet as a public good, as expected, the Senate will likely not seek to overturn it. That would mean that internet service providers, including mobile network operators, will henceforth not be allowed to charge content providers for faster speeds or to prioritize any content for any reason. Blocking of content would be forbidden, as would throttling of data speeds. The proposal also calls for greater transparency on the part of ISPs, with regard to how they represent the nature of their services and pricing to customers. U.S. lawmakers seem finally to be responding to the outpouring of public opinion on the subject of net neutrality. Content providers have also lobbied intensely in favor of net neutrality, but more importantly in terms of political impact, customers have made it clear, in the form of nearly four million public comments, that they will not tolerate ISPs having control over their free access to content. ISPs, including MNOs, have already had to accept certain other provisions of the FCC’s proposal, even though they were not yet mandatory. They already realize that a lack of transparency about plan features and pricing will alienate subscribers and hurt retention, and even though throttling continues to be in place in many plans, the operators are aware that it is unpopular. In light of the very likely outcome of this week’s vote, ISPs will need to find ways to compensate for the revenue that they will no longer be able to generate by charging content providers for higher speeds. Building out the best networks possible, whether mobile or fixed line, and providing the best service to all and for all, will have to be the engine driving revenue in this market in the future. The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about Tarifica or The Story of The Week: http://www.tarifica.com/contactus.aspx     and   Follow Tarifica on LinkedIn.

U.S. Spectrum Auction Breaks Record

Bids in the auction of broadband spectrum being held by the Federal Communications Commission (FCC), the U.S. regulator, had reached US $34 billion by the end of last week, more than tripling the reserve price of US $10.5 billion. (Since the bidding process is ongoing, the total this time is yet to be determined.) This auction, known as Auction 97, began on 13 November and represents the first time the FCC has offered formerly available blocks of spectrum in six years. The previous auction record, set in 2008, was $18.9 billion. The 65 MHz of spectrum being offered, known as AWS-3, includes two blocks in the 1695-1710 MHz band and two pairs of frequencies in the 1755–1780 MHz and 2155–2180 MHz bands. These frequencies are currently taken up by government agencies, including the military, and will not be immediately available for use by the winning bidders. Over 70 entities are participating in Auction 97, including AT&T, Verizon Wireless, T-Mobile US, Puerto Rico Telephone Company, DoCoMo Pacific, Teleguam Holdings and Dish Network.

The stratospheric sums being bid in this auction—for example, US $1.96 billion for a block of paired frequencies covering the greater New York City area—testify eloquently to the intensity of the demand for mobile broadband in the U.S. In order to accommodate this exponentially increasing demand, providers must acquire new spectrum. To make that spectrum available, the FCC had to persuade government agencies to give up some of theirs and release it for private-sector use. The fact that the frequencies being offered are at the high end has not dissuaded the bidders, despite the fact that high-frequency electromagnetic waves are less effective at penetrating buildings than lower-frequency waves. The higher frequencies’ ability to carry large amounts of data would appear to offset that disadvantage, at least to some extent. Even the fact that the winning bidders will have to wait an indefinite period of time before being able to develop their spectrum blocks failed to put a damper on the auction. “Years of hard work paved the way” for the auction, “and ongoing bidding appears to signal considerable commercial interest in this spectrum,” said FCC chairman Tom Wheeler, and assistant secretary of commerce Lawrence E. Strickling, in a joint statement.

The auction takes place at a time when President Obama is urging that strong net neutrality rules be implemented and applied to mobile operators. Concerns over such restrictions and their possible impact on revenue have also failed to tamp down the enthusiasm for purchasing spectrum. The reason, it is clear by now, is that nothing but more and more spectrum will enable providers to keep up with consumers’ demand for high-speed data and increasingly sophisticated services and content.

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week or to contact the Tarifica Research department:  http://www.tarifica.com/contactus.aspx

Cellcom, Golan Telecom Seek to Submit Joint 4G Spectrum Bid

Israeli mobile operators Cellcom and Golan Telecom have asked the country’s minister of communications (MOC) and minister of finance for approval to jointly bid in the country’s spectrum auction, which should occur in early December. The operators are protesting terms of the auction that require them to bid separately, saying that their existing network-sharing agreement is justification for the joint bid. Both MNOs have stated that the auction’s requirement that they each hold 20 MHz of spectrum will force each of them to pay much more for spectrum separately. The joint bid reportedly has been rejected by the MOC, which has also agreed not to set a time frame on when each operator must have its 4G network deployed.

While Israel’s first 4G spectrum auction is said to be set for this upcoming December (there has been talk of such an auction occurring since 2007), the country’s mobile operators were provided temporary access to 4G LTE frequency bands in July. At the time, each provider was able to request two 5 MHz blocks of spectrum. In the auction, a total of 65 MHz of spectrum in the 1800 MHz band can be bid on by the operators in blocks of 5 MHz each, at a starting price of ILS 10 million (US $2.8 million) per block. Israel’s largest and second-largest operators, Cellcom and Partner, can obtain up to two blocks, while the smaller operators can win up to four.

Israel was one of the first countries to offer 3G service in 2000; however its adoption and deployment of 4G has not been nearly as rapid. According to a statement by the MOC, Israel does not have enough 4G frequency bands to support all of the country’s operators, and due to the high cost of developing frequencies, it will allow MNOs to share networks. Conversely, the MOC will not agree to joint spectrum bids because it fears this would set a precedent and open the way to a joint bid by Hot Mobile and Partner, Israel’s other major operators. Additionally, the MOC would like to use the auction to bring new players into the market, and it fears joint bids may prevent that from happening.

While it would appear that the MOC has denied the request as a way to ensure fairer competition for smaller new players, its actions may actually bring about the opposite result. If claims made by Cellcom and Golan Telecom are correct, the MOC’s rejection of their request will result in some providers having more than 20 MHz of spectrum, of which the overage will need to be returned and rebid on. The ensuing prices will then be higher, due to the smaller number of frequencies available.

Decreasing competition through joint spectrum bids has been of concern in other global regions, as well. In the U.S., it has been reported that the regulator, the Federal Communications Commision (FCC) circulated a proposal in August that would bar mobile operators Sprint and T-Mobile from creating a joint venture to bid for spectrum in the 2015 auction of the 600 MHz broadcast TV spectrum. According to FCC wireless bureau chief Roger Sherman, the change to these rules, which were written in the 1990s, will ban national carriers from bidding together, although smaller wireless providers can continue to do so.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

Notable Regional Developments in Telecommunications

Asia/Pacific

New Zealand mobile operator 2degrees is fostering competition in trans-Tasman roaming rates by offering a new plan to all its Pay Monthly and Business customers who are roaming in Australia. Customers who activate the operator’s 10/10/10 tariff will be charged AUD 0.10 (US $0.09) per minute for calls from Australia to New Zealand, AUD 0.10 per SMS and AUD 0.10 per MB of data. In addition, later this month 2degrees will be launching Australian 7-day data roaming packs for all 2degrees customers. Packs include 300 MB of data at a cost of AUD 10.00 (US $9.40) and 500 MB of data at a cost of AUD 15.00 (US $14.10).

Europe

Customers of the Dutch utilities group Essent can now use WhatsApp to contact the utility company’s customer service department. While this is a pilot program, Essent is the first large business in the Netherlands to use the popular messaging service. According to a recent report, WhatsApp has 9.5 million users in the Netherlands, and this exploratory program may be seen as another area in which OTT services will be used to facilitate communication.

Latin America

Android phone users with NFC-enabled phones can use their devices to recharge Single Ticket contactless smartcards used to pay fares on São Paulo, Brazil’s SPTrans transportation system. Users can put all types of credits—monthly, student, Valley Transportation and Common—on the Single Ticket option. Passengers need to download the Single Ticket mobile phone app and place their mobile phones near their smartcards to top up or check the balances on their smartcards. This mobile payment method should reduce congestion at physical recharge points, especially during peak periods.

Middle East/Africa

Namibian operator MTC is partnering with the University of Namibia (Unam) to enable students enrolled at Unam campuses across the country to access the internet via Wi-Fi. Students will be charged an annual fee of NAD 500.00 (US $46.77) for a SIM card with an internet access code. The unlimited service is available to students for 24 months and can be accessed from their homes as well as college campuses. The country’s Minister of Information and Communication Technology, Joel Kaapanda, says this partnership is to be commended for meeting the government’s objective of promoting e-learning in institutions of higher learning.

North America

The CEOs of several major America companies, including Adobe, Facebook, Intuit, Wells Fargo and Dropbox, have sent a letter to the Federal Communications Commission (FCC) in support of its chairman, Tom Wheeler’s proposal for E-rate modernization. The letter’s contents is also supported by the EducationSuperHighway (a non-profit organization that is working to enable high-speed internet access in every classroom across America), bipartisan groups of politicians including governors, senators, congressmen and mayors and education technology innovators. E-rate modernization is a movement calling for upgrades to outdated broadband systems in schools across the country with high-speed connectivity, and the proposal will be voted on at the FCC’s 11 July meeting.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx