Investment: Compared to What?

Posted by: AT&T Blog Team on June 24, 2010 at 11:32 am

Authored By Jeanine Poltronieri, AT&T Assistant Vice President-Federal Regulatory

In the FCC’s 14th Annual Wireless Competition Report, the Commission spends a lot of time discussing investment. It also delves into profits. Now, before your eyes glaze over, stick with me on this. I’ll try to be brief.

The Commission analyzes capital investment and concludes that it is “robust” but “declining relative to industry size.” An analysis of either of these areas may be helpful. But why link them together?

The idea of comparing investment to industry size was proposed last year in comments filed by certain interest groups. They specifically focused on the capex and revenues of AT&T and Verizon and concluded that there was a decline in investment compared to profits. This decline, they said, is “a strong sign that providers are not competing on non-price factors such as investment.” In its report, the FCC adopted this idea but broadened the capex/revenues comparison to include the whole industry, rather than just AT&T and Verizon.

The notion that this comparison is a cause of concern, let alone the idea that this comparison demonstrates increased levels of concentration or declining competition , is simply untrue. AT&T made these points in our comments, but they bear repeating here.

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The Fallacy of the 1 GHz Line

Posted by: Joan Marsh on June 4, 2010 at 12:14 pm

One of the many things that caught my eye in the FCC’s most recent Wireless Competition Report is a detailed analysis of carrier spectrum holdings.  Not surprising – spectrum has been called the lifeblood of the industry.

In the report, the Commission takes an in-depth look at who holds what and where. But they draw a line at 1 GHz, giving spectrum holdings below this level its own set of stats.  As a wise man once said, “Statistics are like a bikini. What they reveal is suggestive, but what they conceal is vital.”

So let’s look first at what the 1 GHz analysis reveals.  The Commission concludes that lower frequency bands, such as the 700 MHz and Cellular, “possess more favorable intrinsic spectrum propagation characteristics than spectrum in high bands.”  True, but not particularly vital.    From a historical perspective, the introduction of 120 MHz of PCS spectrum at 1.9 GHz revolutionized the industry, clearly demonstrating that higher-band spectrum can and has played a significant role in fostering competition.

Backing the notion of “favorable” low band propagation characteristics, the report cites a propagation model developed to estimate coverage requirements in different bands.  The model concludes that lower frequency spectrum requires fewer sites.  We agree.  But while such models have abstract validity, they say little about the capacity-centric deployments that network providers are designing today to support 3G and 4G services. 

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Sleeping Beauty or Lost?

Posted by: Carl Povelites on May 27, 2010 at 2:13 pm

I have now been in the wireless industry for more than 20 years.  With the release of the FCC’s 14th Annual Wireless Competition Report, I’ve begun to wonder whether I have been sleeping the last couple of years or whether I am on the show Lost (maybe living in an alternative universe?).   For those who know me, I am no beauty and I certainly don’t get enough sleep (although I do enjoy my naps), I have come to conclude that it is the latter and the smoke monster is very disconcerting.

Having been around awhile, I lived through the early days when the states and the FCC were grappling with how they were going to regulate this thing called wireless (actually, we called it cellular then – yes, I’m that old).  Remember, the wireless sector was conceived as competitive with two licenses being awarded in each market.  In these early days, we were busy running from state to state, filing Certificates of Public Convenience and Necessity (CPCNs) in order to get approval to build facilities and start offering services to customers.  In many states, we filed tariffs and even had to file tariff changes 30 days in advance for any promotion that we wanted to offer (this made it so much simpler to find out what your competitor was up to ahead of time –  now all we have are rumors in the blogosphere).   Eventually, the industry was deregulated in many states.

With the passage of the Omnibus Budget Reconciliation Act in 1993, Congress authorized spectrum auctions and set forth a National Framework for the regulation of wireless, preempting states on entry and rate regulation.  It also set forth the requirement for the FCC to produce its annual competition report.   With the PCS spectrum auctions, competition and the competitive nature of wireless were cemented. 

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FCC’s About Face on Roaming

Posted by: Bob Quinn on April 21, 2010 at 12:33 pm

AT&T has been a big supporter of the FCC’s National Broadband Plan.  That Plan recognized and highlighted the need for significant reforms in areas like universal service, intercarrrier compensation, a renewed vigor and focus on adoption, and the identification of spectrum to fuel the public’s insatiable demand for wireless broadband. The Plan also recognized that massive private investment – by its own estimate $350 Billion – was necessary to build the broadband networks of tomorrow. At the time the Plan was published, we cautioned that regulatory policies must first and foremost continue to support that investment, lest those policies become an impediment to achieving the goals contained in the Plan. Today, in my opinion, the FCC took a significant step backwards.

In the Plan, the FCC clearly recognized the vital role that spectrum plays in the wireless industry and acknowledged that spectrum is a scarce and valuable resource. Indeed, in the leadup to the Plan, Chairman Genachowski referred more than once to a looming “spectrum crisis.”  But today, in one of its first actions following the release of the plan, the Commission has removed a key incentive for a company to invest in, and build out, long-held spectrum licenses in less-populated, rural areas of the country.

Let me back up a bit and explain the concept of roaming in the context of the wireless industry. Roaming is the process by which one wireless carrier avails itself of another carrier’s network when its customer travels out of a specific coverage area but still wants to make wireless calls. All wireless providers, including AT&T, roam on other carriers networks. For the past 20 years, roaming arrangements have been worked out between carriers on a business-to-business basis.

In 2007, the FCC decided that there should be an “automatic roaming” provision to allow any carrier to have the right to roam on another carrier’s network, and that the failure to allow for roaming under reasonable terms and conditions would be considered a violation of the Communications Act. Go forth and roam if you want to.

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Comments by AT&T Chairman and CEO Randall Stephenson on the FCC’s National Broadband Plan

Posted by: Margaret Boles on March 15, 2010 at 2:58 pm

After over a year of debate, discussion, comment, hard work, and planning by the FCC, tomorrow the National Broadband Plan will be released to the public and delivered to Congress.

While we’ve not yet seen the details, the FCC, led by Chairman Genachowski, has conducted a thorough process, welcoming public input and participation, and we thank them for their efforts.

We’re pleased that the Plan apparently addresses a number of important issues on which the FCC can make significant contributions to the success of broadband and its increasingly important role in our daily lives, our economy, and our government.

Rightfully, universal service and intercarrier compensation reform are critical components of the National Broadband Plan.  Reforming universal service and ensuring affordable broadband for all Americans are the two most critical components of achieving universal broadband.  At the same time, they are also the most difficult and perplexing issues the FCC has struggled with over the last fifteen years.  But we cannot shy away from addressing the hard issues if we are serious about achieving universal broadband deployment and adoption, and we commend the FCC Broadband Team for taking the first steps in this long but crucial journey.

Along with this, we have noted, as have many others, that taking full advantage of the broadband revolution will require new spectrum, and we are very pleased that the FCC has been working to identify 500 MHz of new spectrum for wireless broadband.  Without it, the currently available spectrum simply cannot support new usage, new applications, and innovation – in areas from education to health to jobs.

Finally, as the plan rightly recognizes, we cannot realize its ambitious goal of major new broadband deployments without continued, massive private sector investment.  Even in the midst of this painful recession, AT&T invested $17 billion in 2009 – and we intend to increase our investments this year by as much as $2 billion.   Investments at this high level are rare for any company and should not be taken for granted.  Policymakers should keep this in mind as the debate moves forward.  Regulatory policies must continue to support such investment lest they undercut the core objectives of the FCC’s National Broadband Plan.  It’s as simple as that.  That’s why we’re pleased that the FCC’s plan recognizes the indispensable role of private investment, and why we remain hopeful the FCC will maintain a regulatory atmosphere favorable to that investment.

Randall StephensonOnce again, I commend the Congress for requesting this Plan and the FCC for its hard work in preparing it.  While we may not agree with every recommendation in the Plan, and may even oppose certain ideas, all of us at AT&T look forward to rolling up our sleeves to do our part to achieve this important national objective of 100% broadband availability and adoption.  With everyone working together, and by continuing an atmosphere conducive to private investment, this ambitious goal is within our reach.

Randall Stephenson,  AT&T Chairman and CEO

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