Elephant in Room

New Wireless Regulation Threatens Industry Growth, Stephenson Says

March 24, 2010 by Howard Buskirk and Yu-Ting Wang|Top News

LAS VEGAS -- While lead off speakers at the CTIA convention praised the FCC for proposing in the National Broadband Plan that 500 MHz of additional spectrum be allocated to wireless broadband over the next 10 years, the prospect that wireless carriers will face new net neutrality requirements also loomed large as the conference began Tuesday. AT&T CEO Randall Stephenson said imposing new regulation on carriers could chill investment at what otherwise is a time of record growth for the industry.

"There’s something fundamental to the success story that we've created,” Stephenson said in a keynote speech. “That’s been our ability to consistently attract capital in this industry -- capital for networks, capital for R&D, new apps and devices, and completely new business models. Capital is the lifeblood of business.”

The potentially offered super fast wireless networks don’t guarantee that capital will flow to industry if carriers are also encumbered by growing regulation, Stephenson said. “We have seen time and time again in this industry, we've seen it over many years, that private investment does not necessarily flow to fund infrastructure and innovation when our industry is encumbered with what is well intended but generally stifling regulation,” he said. “Historically, there has been a very light regulatory touch on the Internet and the wireless industry and as a result private sector investment has poured into this industry and has poured to the tune of $340 billion over the last five years.”

That the U.S. will continue to lead the rest of the world isn’t a “birthright,” Stephenson said. “We've seen America lose its lead in fields that we once dominated, these are fields like manufacturing, steel and automotive.” The stakes are high, he said. “As a country we can’t afford to mess this up at this stage,” he said. “We can’t stand for actions that would discourage the extremely high level of investment that we've grown accustomed to.”

Stephenson said he’s encouraged by the FCC’s commitment to make more spectrum available for wireless broadband. “Limited spectrum simply means limited bandwidth and limited growth,” he said. “This is a very clear recognition that spectrum is the backbone for this industry. … In one way or another, issues like overregulation and spectrum allocation and traffic management impact all of us by creating disincentives for capital investment."

FCC Chairman Julius Genachowski, who testifies before Congress this week on the broadband plan, didn’t make the trip to Las Vegas. In brief video remarks, he highlighted the plan’s recommendations in favor of putting more spectrum in play for wireless broadband. “The plan represents the culmination of many months of hard work and provides a blueprint for unleashing the power of broadband to create jobs and economic growth, spur new waves of innovation and investment, and improve education, health care, energy efficiency, public safety and the vibrancy or our democracy,” he said. “No area of the broadband ecosystem holds more promise for transformational innovation than mobile."

Spectrum efficiency was also a key topic in Tuesday’s presentations. The move to LTE will make wireless networks more efficient, but carriers need to make their systems more efficient even with the 500 MHz of new spectrum the FCC hopes to provide over the 10 years, AT&T Mobility CEO Ralph de la Vega said in a second keynote address.

"As FCC Chairman Genachowski said, the looming spectrum crisis represents the greatest threat to broadband in this country,” de la Vega said. “In its report to the FCC, CTIA said that we need 800 MHz of additional spectrum to meet projected demand. The good news is the FCC has already taken steps to address this.” De la Vega said AT&T is pleased that the FCC has committed to bringing online 500 MHz of additional spectrum, though the process of making it available will take years, “even if the FCC moves at a record pace.” Meanwhile, “consumer demand is not going to wait,” he said.

Carriers need to do more to make their systems more efficient, de la Vega said. “LTE is an inherently more efficient technology, 2.5 times the efficiency of HSPA when deployed in 20 MHz of spectrum,” he said. “The ability to transfer more bytes per hertz is crucial.” Because of the FCC’s 2008 700 MHz auction, AT&T can move faster to deploy LTE, he said. “But even with 4G technologies it’s still not enough to keep pace with rising consumer demand for mobile broadband,” he said. “We also need to take greater advantage of Wi-Fi, femtocells, and other complimentary technologies that boost mobile broadband capacity.”

Carriers must also work with handset makers and application developers to make both more efficient use of spectrum, de la Vega said. “In much the same way that car makers are trying to be more fuel efficient, we need to take that same efficient approach in how we use the spectrum,” he said. AT&T tested network consumption of various e-mail providers and found that some used eight times more spectrum than others, he said. A recent study found that a leading device maker with its newest web browsing technology used a third of the bandwidth of an older device.

CTIA President Steve Largent called the broadband plan “a good step in the right direction,” during brief comments. The group released new figures Tuesday showing strong growth in data and the number of smartphones deployed. Wireless data service revenue increased 26 percent from the last half of 2008 to reach more than $22 billion for the last half of 2009, CTIA said, based on a survey. Wireless data revenue made up 28 percent of all wireless service revenue in that period. CTIA also said there are now more than 257 million data-capable devices in consumers’ hands, compared to 228 million at the end of 2008. Almost a quarter, 50 million, are smartphones or wireless-enabled PDAs and nearly 12 million are wireless-enabled laptops, notebooks or aircards.

CTIA Notebook

Skype Mobile for nine Verizon Wireless 3G BlackBerry and Android smartphones will go live Thursday, Verizon Wireless and Skype executives said at the CTIA show Tuesday. Customers can make and receive unlimited Skype-to-Skype voice calls to any Skype contact; send and receive unlimited instant messages with other Skype users; manage the Skype contact list directly from the mobile application; and call international phone numbers at Skype calling rates, said John Harrobin, a Verizon Wireless senior vice president, during a conference call. The service will use the Verizon Wireless voice network for the wireless connection of the Skype-to-Skype calls, he said. The application will run in the background, meaning customers can use the smartphone as a full-time Skype device. When asked about opening the service to other features like video, the companies declined to comment, saying they're focused on voice for now. Skype Mobile for Verizon is just the beginning of the Skype-Verizon relationship, Harrobin said.

Clearwire will expand its WiMAX network into Cincinnati, Cleveland, Los Angeles, Miami, Pittsburgh, Salt Lake City and St. Louis, the company said at the CTIA show Tuesday. The company will launch service in Houston in the coming weeks and the majority of the new 4G markets will launch toward the end of the year. Meanwhile, the company will launch the Dell Inspiron Mini 10 netbook with embedded 4G technology April 1. Additionally, Apple iPad users with a Clear Spot wireless router will be able to connect to Clearwire 4G network while on the go, the company said. The company will expand its cell site capacities by doubling the number of transmitters and receivers per site, thereby boosting potential end user speeds by about 20-30 percent. Upgrades will be made on a rolling basis across Clearwire’s 4G network and have already been completed in some of the existing markets, including Seattle, Honolulu and Maui,Hawaii. Ongoing improvements to Clearwire’s backhaul network are expected to increase total backhaul capacity by at least 250 percent, with long-term capability to support gigabit per second speeds in high-density, high-traffic areas, it said. Clearwire also has begun trials in Chicago of its first “green” base station cabinets.

CTIA said it began a Latin America common short code (CSC) initiative that will create a centralized CSC registry process. CSCs are five or six-digit numeric codes that wireless consumers can use to send and receive text messages across all participating carriers. Instead of negotiating with and coordinating this process among multiple carriers, companies and advertisers can now obtain a single short code capable of running a unified campaign across all of Latin America. The program will initially offer six-digit codes. CSC applications include sweepstakes, tele-voting campaigns and mobile coupons, as well as a wide range of interactive wireless services. The Latin America CSC program will be operational in Argentina, Belize, Bolivia, Brazil, Chile, Columbia, Costa Rica, Dominican Republic, Ecuador, El Salvador, French Guiana, Guatemala, Guyana, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Suriname, Uruguay and Venezuela.

The wireless industry continues to hype unrealistic data speeds for LTE and WiMAX networks, said consultant Andrew Seybold at his Wireless University at CTIA. Instead of the publicized speeds of 50 Mbps, it’s expected LTE will offer 15-20 Mbps download speeds on a per cell sector basis, he said. Seybold also predicted Palm Pre would continue struggling to get consumer interest because of the decision to go with Sprint, which only has around 11 percent of the market, instead of Verizon, which has 32.5 percent of the market and more money to promote devices.