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Spectrum

Small Carriers Make the Case for Low Band

Today, close to 70% of all mobile subscribers in the US access mobile services through an account with AT&T or Verizon Wireless. Even more alarming, 84% of wireless industry EBITDA is generated by these two companies.

If those numbers stay the same, or worse, trend upward, the "wireless duopoly" will have a lot more influence over the vast array of new products and services offered as part of the burgeoning Internet of Things.

Exaggeration? Not at all. If AT&T Inc. (NYSE: T) and Verizon Wireless continue this consolidation, there may come a time, one day soon, when they'll have more say over the next generation of consumer technology products and services than any of us would like. With more than 220 million subscribers, Verizon and AT&T provide mobile service for the vast majority of American consumers. Do we really want two companies to have that much market dominance over a platform that consumers have come to rely on so heavily?

But there is a solution to the looming specter of stifled innovation: the Federal Communications Commission (FCC) 's upcoming 600 MHz spectrum auction. Scheduled for early 2016, the FCC will begin a first-of-its-kind incentive auction -- encouraging TV broadcasters to sell their valuable, highly sought after spectrum to commercial carriers for mobile broadband use.

Competitive carriers are particularly hungry for this "low-band spectrum" because it is much more cost effective to build out in rural areas, and it provides more robust service for consumers, including in buildings. The FCC's spectrum reserve is a novel idea to foster a competitive framework for the future.

In short, for a competitive carrier to stay in the game, access to this spectrum is crucial. If structured properly, this auction will unleash "beachfront" spectrum that will foster greater consumer choice, innovative services such as 4G LTE -- and eventually 5G -- and continued economic growth.

If the more than 100 competitive carriers in the US -- that is all of those that compete with Verizon and AT&T -- get a fair shot at bidding on and winning a piece of this critical spectrum, they can build their businesses and continue to provide alternatives to the growing duopoly for access to the mobile Internet. And for app and device developers, having 100 service provider partners offering wireless service to consumers is not only preferable to having just two that can determine prices and quality, but necessary to prevent these two from dictating whether and how people can access third-party products and services.

Innovators and consumers deserve choice, not market domination. Competitive carriers are some of the most innovative companies out there and must have the opportunity to stay in the game to keep challenging the duopoly. These scrappy competitors have real potential to work with fast-moving startups on new, inventive services and technologies.

It's hard these days to remember life without smartphones, but not too long ago access to these innovative technologies and devices was in fact limited to two choices -- AT&T or Verizon. If you wanted one of the first iPhones, your only option was service from AT&T. At the same time, many BlackBerry touch screen models were only available with Verizon Wireless service. While this duopoly control was comfortable for AT&T and Verizon, competitive carriers sought a different future.

As a result, a consortium of 34 technology, device and competitive carrier organizations came together to form the Open Handset Alliance. These forward-thinking competitors pushed for what has led to today's Android devices, running on the most-popular mobile operating system in the world. Not only did Android grow directly out of that movement, but the increased competition broke exclusivity with iPhones and BlackBerry as well.

Today, competitive carriers call on our friends in the tech industry to support our efforts to make sure all carriers, both large and small, have meaningful opportunities to participate and win in the upcoming incentive auction. No one industry knows better how competition can incubate the most promising ideas. Join us as we fight the duopoly and advocate for the innovation economy.

— Steven K. Berry, President & CEO, Competitive Carriers Association

Phil_Britt 6/4/2015 | 5:08:32 PM
More Competition Welcome I would love to see more competition in telecom as well as in other industries. With two few competitors, the power always goes to the sellers in terms of setting price and quality of service.
SteveBerryCCA 6/4/2015 | 4:59:47 PM
Helping competitive carriers to compete It's true that smaller nationwide, regional and rural carriers have been facing competitive challenges in the past few years in particular those you mention -- access to devices, roaming and spectrum.  But there's good news.  CCA has been actively working to ensure competitive carriers have solutions to challenges like roaming and have been working with our members to create an eco-system that will allow small carriers to get to the next generation of services.  With the leadership of our carrier members and commitment by one of our largest members, Sprint, we have created the CCA Data Services Hub.  The Hub is a "one connection to many" concept allowing participating carriers to access one another's networks, essentially creating a nationwide footprint.  We also have created a CCA Device Hub to help bring scale and device access to the smaller carriers.  Additionally, Sprint has partnered with 27 competitive carriers through its Rural Roaming Preferred Provider program, which gives smaller carriers a clear path forward to high speed mobile broadband solutions.  The FCC has a few tools at its disposal to help to tackle the challenges you raise and CCA will continue to urge policymakers to ensure a competitive mobile ecosystem. 

 

If you'd like to learn more about these and any other programs for competitive carriers, I encourage you to visit our website and attend our shows in person.  There's no better way to learn what CCA is doing on behalf of competitive carriers and consumers!
DHagar 6/4/2015 | 2:26:42 PM
Re: Competition rgbreetz, got it.  Sounds like not too much will change then.  Too bad; maybe it will take technology disruption to change the picture.
rgbreetz 6/4/2015 | 12:19:27 PM
Re: Competition The deck is entirely stacked against them.  Who is the last regional or even local carrier that has started and stayed in business in the last five years or the last three years or two years?

Roaming will kill any carrier except those who live in a very remote area and whose customer base roams very very very little.  However, once they do, the costs of roaming are such that the ecomonic model will fail.  

Having said that, some will buy in and hope that they can flip the spectrum to the larger carriers or someone and make a buck.  

 
rgbreetz 6/4/2015 | 12:15:10 PM
Re: Competition Good question and one I do not have all of the answer to.  But primarily, they are able to eek out a living on the spread between wholesale rates and retail rates.  They have no infrastructure of their own so only have to support their marketing expenses.  The better the wholesale rate, the better their chance of success and economic viability. 

 
DHagar 6/4/2015 | 12:14:36 PM
Re: Competition rgbreetz, so you are saying the deck is still stacked against them?  If so, you are right, they won't buy into it if the business model doesn't work.
brooks7 6/4/2015 | 12:11:53 PM
Re: Competition So how do the MVNOs do it?

seven

 
rgbreetz 6/4/2015 | 11:08:47 AM
Competition Making wireless sprectrum is just the tip of the iceburg.  The ability to buy spectrum at outrageous prices will not help.  

 

The imbalance of incollect expenses versus outcollect revenues all but guarantee that any new entrant will fail.  This has been proven over and over for the past many years.  Funny that all the Judge Green dismantled is almost back together.  

There is really no way to compete in the marketplace of today because of the following:

1.  No roaming revenues but heavy roaming expenses which are largely unmanagable.

2.  Handset acquisition is challenging and can not fairly compete with the "big boys"

3.  Hardware to run the system is built for the large carriers - there is no economically viable system on the market today I am aware of which would work for a small carrier. 

 
SteveBerryCCA 6/4/2015 | 10:10:39 AM
Re: Small Carriers - Case for Low Band Auction Thanks for your comments!  Yes, broadcaster participation is absolutely critical to the success of the auction.  The recent AWS-3 spectrum auction has certainly heightened interest from broadcasters and I appreciate the FCC's ongoing outreach to provide broadcasters with the information they need to evaluate their options.  Wireless carriers cannot buy what is not available at auction, so every stakeholder has a say – and the consumer will ultimately benefit!
DHagar 6/3/2015 | 5:20:02 PM
Re: Small Carriers - Case for Low Band Auction Steven, great information and absolutely, the market needs to remain open and more competitive; those numbers are amazing!

We need to all remain vigilent and support/push for an effective auction.  Is this the same model that Europe just used in auctioning off some of its capacity?  Also, do the broadcasters have a position on this and/or will they carry much weight or will it be the FCC?
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