AT&T Statement on Markup of
Senate Tax Extenders Package

Posted by: AT&T Blog Team on April 3, 2014 at 1:41 pm

AT&T Chairman and CEO Randall Stephenson issued the following statement after the Senate Finance Committee markup of the EXPIRE Act:

“We applaud the markup of this important piece of legislation. The bill’s two-year commitment to these crucial tax-extenders is a bridge to meaningful comprehensive tax reform that provides the certainty needed to drive investment and job creation in the United States.

“The successful markup of this bipartisan bill, which, importantly, includes the extension of accelerated bonus depreciation, gives us the confidence to begin moving forward with the deployment of fiber to additional U.S. cities. This decision is based on our belief that the Wyden-Hatch measure stands a very good chance of becoming law this year. Obviously, our investment in major fiber deployments to additional U.S. cities will create jobs and provide a significant boost to local economies. We expect the bill will spur similar investment decisions by other U.S. companies.

“We support Chairman Wyden and Ranking Member Hatch in this effort, and look forward to working with the full Senate and U.S. House of Representatives toward passage of this legislation.”

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More on Auction Limits

Posted by: Joan Marsh on April 2, 2014 at 12:04 pm

The word out of the FCC is that we can expect a 600 MHz auction framework item in the May timeframe.  This has set the auction restrictions drums beating (again).  Calls for large-carrier limitations and even strategic set asides are growing ever louder.

In all the rhetoric, some fundamental facts are getting lost.  So, let’s ground this debate.

Fact No. 1:  It will take a lot of revenue for the incentive auction to be successful.  Chairman Wheeler recently observed that a successful auction here will likely mirror prior auctions, which have generally offered somewhere between 50 and 90 MHz for sale.   Most observers believe this auction would be deemed wildly successful if it yielded 70 MHz of paired spectrum, which will require that 84 MHz (at a minimum) be cleared.

The question is then how much it will cost the Commission to attract sufficient broadcaster interest to clear 84 MHz.  I don’t purport to know much about broadcaster price expectations, but let’s use as a rough proxy the prices paid for the 700 MHz B block in Auction 73.  If you impute those prices against the type of station clearing we believe will be needed in major markets to achieve 84 MHz cleared, you quickly get to a clearing price tag well north of $20 billion – a sum that by itself exceeds the revenues obtained by the FCC in any prior auction.

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AT&T Statement on the FCC’s
AWS-3 Report and Order

Posted by: AT&T Blog Team on March 31, 2014 at 2:02 pm

The following may be attributed to Joan Marsh, AT&T Vice President of Federal Regulatory:

“One of the greatest benefits of LTE-Advanced is the ability to do carrier aggregation or CA, which permits network operators to aggregate spectrum bands fragmented by legacy allocations into broader bands that enable faster data rates.  Initial CA launches are well underway, and aggregation of two 10×10 MHz carriers can enable peak data rates of 150 Mbps.  Qualcomm is developing technology that will aggregate two 20×20 carriers for 300 Mbps peaks.  The LTE future is all about broader and broader bands.

“AT&T is deploying CA with its 700 MHz and AWS allocations.  Sprint plans to deploy CA across portions of its Spark network to aggregate 2.5 GHz carriers with PCS or 800 MHz carriers, adding a third channel to its two-channel configuration next year to boost theoretical download speeds to 180Mbps.  And broad bands are possible without CA.  T-Mobile has deployed 20+20 in Dallas (which means it has 20 MHz paired blocks contiguous) and will bring its 40MHz LTE network to 90% of the top 25 markets by the end of 2015.

“In the AWS-3 order adopted today, the FCC chose a contrary approach.  It instead pursued carrier disaggregation, dividing one proposed 10×10 block of spectrum into two 5×5 blocks.

“As we previously argued, the AWS-1 auction results demonstrated clearly that both auction demand and auction revenue flows first and most freely to larger blocks with larger license sizes.  For this reason, we supported the band plan as originally proposed by FCC Staff.

“The disaggregated blocks will still draw significant interest at auction, I’m sure.  Spectrum after all remains a scarce resource, and this order represents important progress in bringing this valuable spectrum to market.  Any fragmentation driven by the auction design will no doubt be fixed in the secondary market – history shows us that this is inevitable (see AWS-1).  But secondary market fixes means money was left on the table.  And where revenue is essential to pay for relocation costs and to meet other U.S. priorities, that should matter.”

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Who Should Pay for Netflix?

Posted by: Jim Cicconi on March 21, 2014 at 4:08 pm

I saw Reed Hastings’ blog yesterday from Netflix asserting in rather dramatic fashion (with diagrams) that ISPs should build facilities (he said provide, but those facilities have to be built) to accept all of Netflix’s content – indeed all of the content on the Internet – without charge.  Failure to do so, according to Mr. Hastings, was a violation of “strong net neutrality rules” and bad public policy.  I thought it might be helpful to unpack those assertions so we could get right down to the core of Netflix’s rather radical proposition — that people who don’t subscribe to Netflix should nonetheless pay for Netflix. Here are some undisputed facts upon which everyone should agree.

First, let’s all accept the fact that the advent of streaming video is driving bandwidth consumption by consumers to record levels.  Increased bandwidth consumption and faster broadband networks like our Gigapower service in Austin, Texas (and soon Dallas) are requiring all service providers to drive more fiber into their networks to create the capacity necessary to deliver those services to consumers, whether the service providers are delivering a wireless or a wireline product.  This phenomenon was at the heart of our Project VIP investment announcement in November 2012 and it is true of companies like Cogent, Level 3 and CDNs like Netflix as well.

Second, we should accept that companies must build additional capacity to handle this traffic.  If Netflix was delivering, for example, 10 Terabytes of data in 2012 and increased demand causes them to deliver 20 Terabytes of data in 2013, they will have to build, or hire someone to build, the capacity necessary to handle that increased volume of traffic.  That increase in traffic from Netflix is, by the way, not only the result of a likely increase in online viewing by existing subscribers, but also due to an increase in Netflix’s customer base (it announced a 33% increase in subscribers from 2012 to 2013 – good for Netflix).

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Right on in AWS-3

Posted by: Joan Marsh on March 17, 2014 at 3:59 pm

A draft order for the AWS-3 auction is circulating for a vote at the FCC, and while I have not seen the item, early reports of its recommendations suggest to me that the Commission staff has got this one exactly right.

Why?

The item proposes a band plan that includes two 10 x 2 MHz EA blocks and one 5 x 2 MHz CMA block.  Incorporation of the large block and license sizes will not only ensure that the FCC drives the greatest efficiencies out of this spectrum, but also that it attracts the most revenue at auction.  A quick study of the AWS-1 auction is instructive on these points.

Take yourself back to 2006 – the iPhone has not yet been introduced and most of us were sporting Blackberries and pushing maybe 70 MBs of data a month, mostly doing email but little else.  No Facebook postings, no Twitter feeds, no app stores chock full of data-hungry apps.  Carriers generally entered Auction 66 with very little awareness of the data tsunami headed their way.

Yet the bidding activity even back then clearly favored the larger license sizes and the larger blocks — both from an activity ratio perspective and from revenue received.

Let’s look first at the bidding activity ratios — a figure that attempts to capture first round bidding (or demand) against MHz offered (or supply).   For example, if you are selling 100 units and have opening demand for only 100 units your activity ratio is flat at 1 and bidding competition is virtually non-existent.  On the other hand, if opening bids are for 700 units against your same 100 units available, your activity ratio is 7 – which demonstrates high interest in the units and corresponding high bidding competition.

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