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Whom Do We Regulate when the Phone Monopolies Are Gone?

Once upon a time in a universe not very long ago phone service in the US was provided by regulated monopolies. AT&T was the big one and there were (and are) hundreds of small ILECs (Independent Local Exchange Carriers) around the country. These monopolies were regulated both at the federal and state level. Then we began on the long road toward competition and deregulation. The result has been a splendid wave of innovation and a decline in communication costs so great that whole new industries have sprung up – the Internet, for example, cellular service, smart phones. Our culture has permanently changed and evolves at breakneck speed; even politicians' peccadillos have moved online.

So far, so good. However, we still have plain old landline telephone service (POTS) and the former monopolies still pretty much have a lock on providing copper-based POTS in their regions of influence. The opportunity –and problem – is that POTS is no longer the only way for people to talk to each other beyond shouting range. Almost all of us use mobile telephony to some extent instead of fixed POTS; many of us have completely abandoned POTS in favor of more convenient cellular service and/or cheaper voice over IP (VoIP). Cable companies provide voice service on their networks which compete with the phone service sold by the old phone monopolies. Companies which don't own networks at all, like Skype and Vonage, provide voice services over the networks of whatever Internet service providers (ISPs) the caller and callee are using – these are called "over the top" phone services.

Voice is no longer a monopoly business. Even though the old monopolies are still regulated at the state and federal level, their competitors are regulated lightly or not at all. Cellular service providers need to get radio spectrum from the FCC; their use of public spectrum provides leverage for the Federal Communications Commission (FCC) to regulate them. Local regulation of cellular operators, however, is explicitly preempted by the feds. There is an ongoing debate over whether states can regulate the "phone" services provided by cable operators. These services are not regulated at the federal level. The FCC has asserted some jurisdiction over services like Vonage which connect to the regulated POTS network. However, services like Skype have successfully stayed immune from regulation – so far – by claiming not to be a substitute phone service. ISPs are not regulated. Period. But ISP networks are used to provide VoIP calls. The quality of these calls depends on the quality of the underlying network.

So, you ask, where's the problem? We used to have monopolies; they had to be regulated because they weren't controlled by markets. Now people have a competitive choice – many choices – for ways to talk to each other at a distance. We don't need the regulations anymore. Let's stop regulating phone service completely and retrain the regulators to do something else. It's not quite that simple, however.

Some regulation has to do with whether phone services provide the proper connections and information to 911. Cellular operators are regulated in this respect. Operators like Vonage have chosen to follow the standards for 911 capabilities so that they can represent themselves as a replacement for primary phones and to avoid liability. Operators like Skype have simply made clear that they are not meant to be used for 911 calls. Proponents of continued regulation worry that, in the absence of all regulation, voice providers might simply decide not to support 911 anymore – after all, it costs money to do so. If all the voice providers in a particular area decided not to support 911, there would be a severe problem in that area.

Marketplace proponents argue that consumers will choose to have at least one service which supports 911 so that there will always be providers who elect to meet that market need. Moreover, since anyone who has an adequate broadband connection can buy "over the top" service from any provider located anywhere, there shouldn't be geographic holes in 911 coverage. Given that we need to assure that there is either broadband or cellular service available everywhere that POTS currently serves before POTS disappears and that cellular providers are required to support 911 in their networks anyway, there isn't a need for any further regulation mandating 911 support.

I trust the marketplace on this one with three caveats: 1) there needs to be enforceable truth-in-labeling on what "911 support" means and doesn't mean (already lawyers have effectively used the threat of extensive damages to discourage shoddy 911 support); 2) to the extent we subsidize a "lifeline" service for the indigent in the future, only services which do support 911 should be eligible for subsidy; 3) people who deliberately don't buy a service that supports 911 should not be protected from the consequences of their stupidity by the rest of us.

But suppose you disagree and think that there should be a law or regulation which says that every voice provider has to provide 911 support, on whom would you enforce this law or regulation now that the old monopolies are on the way out? Does every online video game which provides voice need to also provide 911 support? Does Skype? Does Webex? What authority does government have or should government have to regulate how applications function. What if I buy my over-the-top VoIP service from an Estonian provider? How do we enforce US law on that provider?

When voice was a monopoly service, regulation was necessary. Now that voice is just another application on the Internet and is provided by a number of companies using many different technologies and operating globally, regulation is not only undesirable but also not possible.

So where does that leave the issue of quality? Universal access? Handicapped access? Law enforcement access for wiretapping (CALEA)? What will substitute for regulation? Continued at Whom Do We Regulate when the Phone Monopolies Are Gone? – Universal Access.

 

Related posts:

The Ugly End of the Phone Network

Planning for the Ugly End of the Phone Network

States Should Deregulate ALL Phone Services – Not Regulate New Ones

Whom Do We Regulate when the Phone Monopolies Are Gone? – Universal Access

Keeping a Moving Boatload of Devices Online

Problem: How can Americans stay online for three weeks on a canal boat in Southern France?

One answer: MiFi from Xcom Global.

I usually spend much too much of my travel time trying to stay connected. WiFi boosters with monster antennas do let you sign onto distant hotspots – but they're a constant tinkering-when-you-should-be sightseeing opportunity if there ever was one. My Verizon MiFi hotspot and Mary's iPhone will work internationally – but the communication cost for staying online would be more than our airfare.

You can buy local USB modems in the countries you've traveled to along with prepaid usage on a cellular data network. If you do that and don't speak the native language, you should make sure the device is activated and working before you leave the phone store where you bought it. Trouble with the USB modem is that it only works with computers and only connects one of them at a time. Once I get connected, everyone else wants to use my computer. We're lined up for a keyboard when we should be in museums.

So this time I ordered a Mifi hotspot from XCOM Global. It costs $14.95 each travel day for "unlimited" access and is available currently for 40 countries. Like all MiFi devices, it uses a local cellular data network to get connectivity and is accessible from your devices via WiFi. There are good coverage maps linked from the XCOM site to let you know what to expect in the exact areas where you're going. If only EDGE (about dialup speed) is available; it's not worth doing; you want 3G. Coverage in France is provided by Orange, which is why I put "unlimited" in quotes. Orange has a fair use policy (FUP) and will slow you down if you use too much of your "unlimited" data. Not a problem unless you do huge downloads or watch movies.

They ship it to you a couple of days before you say you're leaving and send you a prepaid mailer to send it immediately back. You don't start paying until you leave the country; and, so long as you do send it right back, you don't pay for the days after you return.

Five devices at once can connect. That turned out to be really useful but none of the devices except mine were a computer. We rotated boat guests and had two Blackberries, five iPhones, my droid, and two iPads connected at different times. Skype was unusable on the computer. I didn't try it again but that was a disappointment. Skype on my droid said it wouldn't work since I wasn't connected to Verizon (NOT what I wanted to do). There are many other VoIP apps for the droid but I didn't test any of them since I didn't really need to make many calls.

The first night we were in a hotel with WiFi only in the lobby. No problem for me since I had my MiFi. The next day we were on a TGV; the MiFi worked pretty well but seemed to have trouble switching from one tower to another. Maybe it's not designed for traveling twice as fast as a car. Works fine at the 8km/hour speed of the canal boat.

$14.95/day is not cheap – about what you pay in a hotel that doesn't have free WiFi. Of course, it's much, much cheaper than data roaming on a US cellular account. Prices should come down. Also I'd expect that boat rental places will offer connectivity as an option just as hotels do.

So it worked. I didn't spend all my time trying to get online – just spent too much time online watching the relentless rise of Lake Champlain. The only time I went to a computer/phone store was when I fried my Toshiba power supply (didn't check to see if it could handle 220 volt European power) and had to get a replacement. And guests were as connected as they wanted to be.

Related Posts:

They're Phone Adapters; They're Toast; WiFi Did It

Why did Mary's AT&T iPhone Ask To Use Verizon?

States Should Deregulate ALL Phone Services – Not Regulate New Ones

The Vermont Public Service Department is urging the Vermont Public Service Board (PSB) to regulate Voice over IP (VoIP) services offered by Comcast as it does POTS – Plain Old Phone Service. According to James Porter, telecommunications director for the Public Service Department as quoted on Vermont Public Radio, "from a regulatory perspective, as more and more consumers use the service, it becomes more and more important that their rights are guaranteed for that service." Comcast now provides the equivalent of more than 100,000 phone lines over its cable network in Vermont and trails only FairPoint in number of voice customers served in the state. FairPoint's competing service IS currently regulated by the PSB.

What Porter is ignoring in the statement above is that the customers for those 100,000 access lines chose Comcast's unregulated service over regulated alternatives from FairPoint and other smaller providers. Other customers have chosen cell service (which the state isn't allowed to regulate) as their only voice connection. Still others have chosen so-called nomadic VoIP providers like Vonage, which states are also forbidden to regulate as traditional carriers. The legal questions involved in whether or not states can regulate a non-nomadic (you can't carry it from place to place) service like that provided by Comcast are complex; the public policy question is much simpler: customers who chose a non-regulated service over a regulated one don't need and may not want regulatory protection. Regulation makes a service both more expensive and less innovative. Even if the state is allowed to regulate Comcast's voice service, it can't regulate cellular or nomadic VoIP; so there will be those who depend on voice service which is not regulated no matter what the PSB does re Comcast.

Porter also says: "fundamentally, the department believes that it's [Comcast's] the same service that's provided by FairPoint for point-to-point telephone service." Here, he has a point. Technically there's actually a huge difference in how the services work; but, from a customer PoV, they're pretty much the same thing. So, is it fair that FairPoint and other POTS providers in Vermont are regulated while Comcast is not? Does this regulation make public policy sense?

No. FairPoint and the other local carriers in Vermont should be deregulated everywhere that there is a competitive alternative to their service available. Existing regulation is based on a presumption of monopoly which is no longer a fact in most cases. The switch to Comcast is evidence of that. It should be public policy to make sure that broadband and/or cellular services do enable competitive voice service everywhere in Vermont in the next three years (universal broadband and cellular coverage in 2013 are already state goals). Other states which are considering regulating some VoIP should instead concentrate on doing away with monopoly situations which make regulation necessary.

There should be truth in labeling with government enforcement at some level so that consumers will know what kind of service they are buying. For example, Skype says it doesn't support 911; Vonage says it doesn't. Class action lawyers keep an eager eye out for infractions. All cellular providers are required by federal regulation to support 911.

It's my belief that POTS as we know it will be gone in a few years because of consumer choice. But POTS providers deserve an unregulated chance to prove their detractors wrong. The competition between traditional and non-traditional voice providers has already dramatically reduced the cost of voice calling. We all benefit from it.

Full disclosure: I founded a VoIP company in 1997 and was employed in the industry through 2004. I was also Policy Director of the VON Coalition which opposes the proposed action by the PSB. I no longer have any financial interest in the VoIP industry nor am I associated with VON. I am also a Board member of the Vermont Telecommunications Authority (VTA) but am writing only for myself.

Related posts:

The Ugly End of the Phone Network

Planning for the Ugly End of the Phone Network

Planning for the Ugly End of the Phone Network

Consumers are who have a choice are quickly deciding they don't need the old copper-based phone network, often known as POTS for Plain Old Telephone Service. We use our cellphones for talking even when we're not mobile. The cell phones have built in phone directories, easy ways to return calls, the ability to call a number on a web page; and we don't share them with our parents or children. For those who prefer the traditional form factor, adapters allow ordinary home phones to be used for VoIP at substantially lower prices than what the plain old telephone company charges. It's a good year for traditional phone companies when they don't lose more than 10% of their POTS lines.

Once enough consumers have made the switch, the infrastructure which supports POTS will no longer be economically viable. The problem is that there will still be people who are dependent on that infrastructure because they live (or work) in places where neither broadband nor cellular service is available. Predictably, there will be calls for subsidies to the POTS providers because they can't provide service at a loss; but their customers won't even be able to call 911 let alone their congress people if service is cut off. The fuss over cutting off analog TV will seem like nothing compared to the fear of people who really might lose their phone service. The pain will be concentrated in rural areas where phone service is already subsidized and Internet and cell service are least likely to be available.

If we do nothing, the subsidies required to support rural remnants of POTs will become huge. The current base for those subsidies - all users of phone service - is shrinking; so new sources of subsidy will eventually have to be found. As a country, we made a decision a long time ago that everyone should have access to phone service except those who choose to live off the grid. Not only do our emergency responses depend on being able to call 911; but almost every aspect of our daily lives depends on being in touch either by phone or Internet. We're not suddenly going to leave people without communication.

But there's an alternative to mushrooming subsidies for obsolete service; make sure that everyone has the Internet and/or cellular service as an alternative to POTS before POTS becomes even more of an economic basket case than it already is. Everybody means everybody who today has access to the phone network. Everybody, not just 95%.

This isn't rocket science. Obviously, if there is phone service to a residence, there are power or telephone poles already existing to get to that residence. It was very expensive to build those poles during electrification and the roll out of the national phone network. Now most poles and conduits can be reused to carry fiber close enough to all subscribers so that they can get high quality broadband over the remaining short runs of copper or over radio or even by direct fiber connection. The proliferation of fiber also makes it much cheaper to provide cellular service in places which are still unserved.

If we wait long enough, a free market will invest in and pay for the deployment of "middle mile" fiber and for rural cellular towers; it will happen. The problem is in the timing. The subsidies for POTS will grow enormous while we wait for the free market to replace it with Internet and cell service. Moreover, subsidized POTS will be competing for communication dollars with whomever is trying to rollout a 21st century alternative. Copper wire will hog space on poles that could be used for fiber. Systems like 911 will need to keep supporting obsolete POTS as well as modern digital communication.

We are much better off investing some of the dollars that would otherwise have gone to subsidize POTS in a one-time build out of enough fiber and enough cellular towers to reach everyone who has phone service today with either broadband or cell service. Yes, this is a government subsidy – but it's the lesser of two possible subsidies. It's a subsidy to speed the future rather than preserve an obsolete past. It's a subsidy than can have a goal and an end date.

Yes, this fiber will compete with what private enterprise will eventually do anyway and already is willing to do if the price is right. But the "right" price today in the most remote areas is too high to make service practical. And, long before "eventually" comes, the same carriers who don't want government competition will be demanding an increased government subsidy to keep their POTS customers connected.

We ought to set a target – say four years from now – and say that, after that date, all existing subsidies for POTS will end. The very poor will still need a communications subsidy, but the subsidy will to less with modern technology – and they'll get better service than they do today with POTS. We need to make sure that, by the target date, everyone has either a cellular or broadband alternative to POTS. That'll require that government pay to build some middle mile fiber and cell towers – which should both, of course, be open access. The government doesn't have to and shouldn't become a service provider, just a provider of capacity as it is with highways (tolls tbd).

The incremental investment will be not be large given current stimulus grants and money some states have already allocated for broadband. In Vermont, for example, recently passed budgets, existing revenue bond authority, and stimulus grants awarded should be enough to make sure that everyone has an alternative to POTS before POTS is kaput. The investment in a POTS alternative will be much, much cheaper and much better spent than increasing subsidies to keep POTS alive.

Related posts:

The Ugly End of the Phone Network

AT&T and Verizon Wireless: Opposite Strategies to Win Landline Business

Fiber to the Neighborhood

What Does Verizon Selling Northern New England Landlines Mean?

Stowe Electric Brings Fiber to the Mountain

The Nose on top of Mt. Mansfield bristles with communication towers (don't worry; it's still beautiful). Television stations reach much of the state from its highest mountain. Emergency services depend on transmission facilities there. Keeping reliable power flowing to this subarctic (really) environment is difficult but vital. So it shouldn't be any surprise that Stowe Electric, our local municipal utility, is upgrading an existing line, which lies on the ground, and putting it in a low-impact trench.

But, as a newly elected Board member of the utility, I was overjoyed to learn that Stowe Electric is also planning on putting fiber in the trench. In fact fiber has been part of the plan from the beginning several years ago. The demand for data transport to the top of the mountain is increasing rapidly and will probably skyrocket.

With digital broadcasting and high def TV, the over-the-air stations need much more bandwidth than they did before. Each now has four channels available where they just had one before. Emergency services transmit from the antenna farm.

Even more interesting for the future of broadband in Vermont, Wireless ISP (WISP) GlobalNet has started providing high speed Internet access by radio from an antenna they have placed on an existing tower on top of the mountain. They have packages which range from 29.95/month for 1.5 megabits per second to $44.95 for 7 meg; I'm using the latter and so far it is performing as advertised. They able to offer access at least as far as Stowe to any structure which can see the Nose and say they will extend the service with relays from those with a good line of sight to those whose view is blocked.

As GlobalNet adds customers and possible competitors also provide broadband from the mountain and as the data speeds offered get faster and faster, a bigger and bigger data path to the mountain for backhaul (wholesale broadband) will be required. The fiber Stowe Electric is wisely including in their project will meet this need. Municipally-owned Stowe Electric is serving its customers and owners in three ways with this project: the mountain top transmitters of all varieties will get the reliable power they need; businesses and residences in Stowe will have another very competitive broadband option; and the extra revenue from both the power sales and backhaul will help keep Stowe electric rates down. Although the environmental impact of this project is de minimus, it still makes sense to use the same small trench to meet both power and data needs.

Good planning by Stowe Electric.

The Ugly End of the Phone Network

I was a little early. "By the end of President Obama's first term, there won't be any more copper landlines left in the country, I blogged just after Obama had been elected. Before that I'd prophesized the end of POTS (Plain Old Telephone Service) by 2010. Nevertheless, the end is nigh. And it's gonna be ugly without some planning.

The problem is more social and economic than technical. A whole web of subsidies and special services assured that everyone had access to the PSTN (Public Switched Telephone Network), which is still a regulated service. The cost of the subsidies – the universal service fund (USF) subsidy for rural service, for example - is spread over the whole customer base for traditional telephony, which used to be pretty much everybody. Regulated carriers are required to provide special equipment and services for the hearing impaired and others. Lifeline (basic) service is subsidized by more affluent telephone customers for those who are less affluent. Telephone customers pay for 911 service through their monthly bills. Regulated carriers are required to report significant outages and state public utility commissions regulate their quality of service.

However more and more people are getting their telecommunications from unregulated providers. Cellular service is somewhat regulated on a national basis but not at all at the state level. Cellular providers contribute less to the subsidies than landline providers because cell phones were initially considered an addition to rather than a substitute for landline service. Some VoIP providers contribute nothing to the subsidy pools, especially when they are not charging their customers for calls within their network (Skype, for example). Other VoIP providers like Vonage have agreed that they are essentially a PSTN replacement and, because they interconnect with the PSTN for almost every call, they do collect from their customers to support the various subsidies. The FCC has asserted jurisdiction over services which interconnect with the PSTN. States are considering how much jurisdiction they have over nonPSTN providers connected to the PSTN.

But what happens when there is no PSTN with which to interconnect? What basis is there for regulation? Whom do fees for subsidies get collected from? What if there's a major outage? Who has jurisdiction? That day is coming so these questions can't be avoided and they're tough. Should people who use services like Skype to make free calls have to pay a subsidy so that people who don't or can't use Skype can afford to make paid calls? Even if we wanted to require this in the US, what's to stop a new Estonian networking company from providing call connection services to US users via the Internet, especially if it's not charging for the service? Who is responsible for poor call quality during an emergency: Vonage which doesn't control the physical network or the ISP who doesn't control the Vonage servers or the end user software?

The problem of rural areas is particularly acute. The telephone network, like the electric grid, came later in rural areas than in the areas where the economics were more compelling. The electrical and phone network would have taken even more time than they did to reach rural America were it not for government-enforced cross-subsidies and a requirement that regulated monopoly carriers serve everyone in their area regardless of cost of service. This requirement wasn't a problem for the monopolies because they knew that they could charge well-above actual cost in urban areas and use that surplus for the more expensive areas. Regulators encouraged this socialization of cost; it's a lot like what the Post Office does. You can make a strong argument that universal access to service makes a whole nation strong – as good roads do – so that cross-subsidies are perfectly proper.

But we demonopolized, imperfectly and unevenly and incompletely; but we did. The result was a flood of innovation including cellular services (the old companies had to buy their way back into cellular) and the Internet. The result is much, much cheaper communication of all kinds. But we have a problem, Houston.

Without regulated geographic monopolies there's no good way to get the cheap-to-serve areas to subsidize service in the expensive areas. Verizon, for example, sold off its landline business in northern New England to FairPoint so Verizon could concentrate its capital on more lucrative fiber service in more populated areas. Not long after, FairPoint went bankrupt as landline defections increased and capital needs proved greater than anticipated. Even now that it has emerged from bankruptcy without the burden of the debt it took on to buy the assets from Verizon, it's still not clear that there's a path to profitability as landline losses to cellular, cable, and VoIP continue to mount. Verizon's earnings from fiber and cell service are no longer available to subsidize our landline services in Vermont.

It's easy to envision a future -it's almost here – when nobody is using copper landlines for plain old voice services except those rural pockets where both the erecting of poles and the original provision of telephone service was subsidized and where telephone service is still being subsidized today. People in these areas are stuck using POTS for the same reason that they needed a subsidy to get POTS in the first place: it isn't economical to provide cable or cellular or broadband services where the population is thin. The early money goes into areas with a better payoff (reasonably). Not only is there no cross-subsidy to assure buildout of broadband or cellular alternatives to POTS in rural areas; there is also a huge threat to the existing subsidies for rural POTs. These subsidies are collected from other users of POTS; if we country people are the only remaining users of POTS, where's the subsidy going to come from? We can't move forward to the brave new telecommunication world and we can't stay where we are!

But it's not all as bleak as it seems. Some answers at Planning for the Ugly End of the Phone Network.

Related post: 

Planning for the Ugly End of the Phone Network

No More Landlines – Comm Forecast #1

LTE Insufficient from the Start – Boingo IPO Propitious

The trouble with planning way ahead is that the world changes before you execute. The major wireless carriers have been planning their 4th generation LTE (Long Term Evolution) rollouts for a long time – that's how they do things. Now, even as Verizon Wireless is doing an aggressive rollout of LTE, it's becoming clear that LTE networks will not be able to slake the data thirst of a world full of smart phones and tablets. Whoops.

According to Gizmodo, early tests of lightly loaded LTE sites are showing blazing data rates over 10mbps, certainly fast enough for streaming video to a small screen and satisfactory even for larger streams. But, the better it is, the more it'll get used. It's very unlikely that urban sites will be able to handle the number of smart phone and tablet equipped video-streaming customers who will want to use them simultaneously once LTE devices are widespread, Phil Leigh explains part of the problem on insidedigitalmdedia.com:

"…the iPad's screen is seven times larger than that of the iPhone. Thus it is much more likely to be used for streaming video and other rich media applications. Simultaneously its owners will require higher resolution images in order to get a satisfactory viewing experience. Similarly, the iPhone-4's FaceTime video calling feature is expected to be so popular that AT&T Wireless banned it from the company's cellular network."

Since adjacent sites need to avoid stepping on each other's frequencies, you can't just deploy more and more sites, even if the economics were favorable, in order to solve the too-many-customers problem. Penalizing customers for using the data service you just sold them is not a very good long term solution for carriers either. Phil Leigh again:

"AT&T Wireless' decision to impose usage sensitive pricing on iPhones and iPads portends turmoil in The Wireless Internet. Consumers dislike metered pricing and are much less likely to increase usage of services that require it."

So what's the answer? Will we be in a hell of slow downloads and constantly-pausing videos? Will we rarely be able to hear anyone anywhere because of network congestion?

No, those bad things won't happen; it's likely that WiFi will save us. We already see the carriers encouraging us to connect our phones via WiFi or even our home broadband connections. Rumored reasons for AT&T's plan to buy T-Mobile include not only being able to obtain more radio spectrum but also to get control of T-Mobile's vast WiFi network and create more places where AT&T devices can connect automatically without using capacity on the cellular network.

You can deploy a very dense network of WiFi hotspots and make it more and more dense as it gets more users. WiFi hubs are designed to compete constructively with adjacent hubs; WiFi uses radio bandwidth much more efficiently than cellular technologies because WiFi grew up in the wild west of unregulated spectrum, not in the neatly (over)engineered garden of the licensed spectrum, where each company owns its own radio space. WiFi is used mainly at low broadcast power, which turns out to be a good thing when you want to crowd in more transmitters – think lots of little circles with less users in each circle than the big circles with lots of competing users around a cell tower. And WiFi devices being consumer devices are cheap, cheap, cheap so cost is not an obstacle to deploying many of them. As we need more bandwidth for WiFi, it will easily move into the newly freed TV white space because this is also free-for-all unlicensed spectrum.

While the use of WiFi instead of cellular radios gives the big carriers a way around the inadequate capacity of their coming 4G networks, it also diminishes the value of those networks and the expensive spectrum licenses that the carriers already bought. A Telco 2.0 executive briefing asks "Public Wifi: Destroying LTE/Mobile Value?" and answers "By building or acquiring Public WiFi networks for tens of $Ms, highly innovative fixed players in the UK are stealthily removing $Bns of value from 3G and 4G mobile spectrum as smartphone and other data devices become increasingly carrier agnostic."

Which brings us to the Boingo IPO scheduled for this Wednesday; their ticker symbol on NASDAQ will be WIFI. According to Ryan Kim writing on GigaOm, the company operates 325,000 hotspots in more than 100 countries.

"The goal is for Boingo to help carriers offload their data needs on to Boingo's network, helping them stay ahead of the crushing demand for wireless broadband. Even with the rollout of 4G services, Boingo is a good position to participate in the growing consumer appetite for wireless connectivity. The company believes its scalable and global network will provide a reliable way in which to increase capacity for operators."

I haven't done enough research to recommend for or against buying, but it's an interesting proposition. Also ironic that companies like Boingo may prosper by selling the use of free unregulated spectrum to the very companies that own huge, expensive swaths of the regulated space.

Related posts:

Why did Mary's AT&T iPhone Ask To Use Verizon?

AT&T "Freeloading" on ISP Pipes

Go White Space, Young Person, Go White Space

Why did Mary’s AT&T iPhone Ask To Use Verizon?

"My iPhone wants to use Verzion," Mary said. As old telco hands, we both know that is impossible. AT&T uses GSM technology on its network; Verizon Wireless (VZW) uses CDMA. The technologies are incompatible. But she was right. Can you figure out what was going on?

Hint1: We were in the car.

Hint2: I was using my computer.

Hint3: I was checking my email.

Did you figure it out yet?

Answer: In order to get a connection in the car, I had my VZW MiFi hotspot turned on. The device uses the VZW network to get backhaul and provides WiFi service for up to five devices; that's how my computer was able to do email while driving.

Mary's iPhone is configured to use WiFi when available. It saw the MiFi hotspot which is named "Verizon AC30 5D47" (yeah, I never changed the default). Because this was a new network for the iPhone, it had to ask permission to use it. Mary saw her iPhone asking to use Verizon. If she'd given permission, she would have been able to make and receive calls on her AT&T phone on VZW's network. Could be useful if we were in a place where AT&T doesn't have coverage [but would have to use Skype or a similar app – not AT&T's native calling – pointed out by commenter GR on Facebook].

Is it possible that carrier wireless technologies like CDMA, GSM, and now-being-deployed LTE will actually end up being submerged beneath WiFi? Food for thought.

Related posts:

AT&T and Verizon Wireless: Opposite Strategies to Win Landline Business

Verizon Wireless Aims Salvo at Residential Landline Market

AT&T "Freeloading" on ISP Pipes

AT&T and Verizon Wireless: Opposite Strategies to Win Landline Business

Both AT&T Wireless and Verizon Wireless (VZW) charge $19.99 (plus the usual extras) for unlimited US calling from residences. Both plans are clearly aimed at winning business away from the legacy landline carriers in those areas where the big dogs themselves are not the landline providers. Both services are competitive with VoIP offers from companies like Vonage, although slightly more expensive. However, the two giants have taken diametrically opposed approaches to both customer experience and use of their networks.

VZW, obviously confident in both the reach and capacity of the can-you-hear-me-now network, uses that wireless network to connect existing home phones for ingoing and outgoing calls (their offer is fully described here). AT&T insists that customers use their mobile phones but translates the signal to IP so that it is carried to and from their homes on the customers' existing broadband connections rather than relying on AT&T's less extensive and over-burdened wireless network (more on the AT&T offer here). In fact AT&T pitches the service as a way to improve cellular reception at home and only incidentally sells the extra-cost unlimited calling plan; saving money on phone calls is the whole thrust of the VZW marketing plan.

Both services will help to hasten the demise of small rural carriers whose landline business is already disappearing rapidly and will make it more difficult for VoIP only providers to succeed. AT&T will get more revenue from its existing customers by seizing the home-calling minutes but is depending on the willingness of customers to give up the home phone instruments. They will probably also stem defections from those who are frustrated by a poor signal in their own homes even though they may prefer AT&T at work. VZW, on the other hand, should gain new subscribers among those who still use their home phones extensively and may not even have broadband service. This is the only remaining demographic with low cellular penetration and is price sensitive but technophobic; those who still don't use cell phones will like being able to keep their home phones, although they will also be put off by the process of installing the VZW interface device.

From an industry PoV, VZW is increasing the use of its network and adding to the economic justification for each new tower and each new radio. The pricing of their voice offer makes it more affordable to use VZW for all the voice and data needs of even moderate data users who can hear them now; this proposition will get even better in terms of speed as VZW proceeds with its next generation LTE rollout. The AT&T plans seems like a way for them to defer the expense of network buildout and cedes ground to landline-based broadband providers.

Related posts:

Verizon Wireless Aims Salvo at Residential Landline Market

AT&T "Freeloading" on ISP Pipes

AT&T “Freeloading” on ISP Pipes

AT&T, on whose network Mary's iPhone usually runs, just gave us a free microcell so that we can take cellular traffic off their network and put that same traffic on the network of our local ISP, while still paying AT&T for voice minutes and data bytes. This is an enormous irony considering the q and a below with ex-AT&T Chair Ed Whitacre (when he was CEO of SBC which was about to swallow the old AT&T):

Q: "How concerned are you about Internet upstarts like Google, MSN, Vonage, and others?"

A: "How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?

"The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!"

Now who's freeloading?

It's our ISP which invested in the "broadband pipe" to our home. It's AT&T which wants to use that pipe without compensation (by them) to the ISP because its own network is expensive, under-deployed in rural areas, and overwhelmed by smartphone traffic. The broadband worm seems to have turned.

Actually, this isn't freeloading despite what Whitacre said. We pay for the broadband connection to our home; our monthly rent on our broadband connection pays for a share of our ISP's backhaul costs. We should and do have the right to use it for any activity we want. But the irony is delicious, nevertheless.

And Now for the Product Review

We didn't ask AT&T for the "AT&T 3G MicroCell", which is made by Cisco. We have pretty good AT&T coverage at our house and hadn't complained. But they sent Mary a letter urging her to go down to the AT&T store and pick one up free. She knew I'd want to blog about it so she did.

What this microcell does is act as a minitower in your house for your AT&T phone and up to nine other (AT&T) phones if you choose to authorize them. This is particularly useful if don't have a good signal where you live because you don't even need to have a tower within range to use your AT&T phone so long as the microcell is nearby. The microcell has an Ethernet port through which you connect it to your router. The voice or data from your phone then travels to and from AT&T 's switching center over the Internet. You do have to put the microcell somewhere where you can reach it with a cable from your router since it doesn't support WiFi.

If you leave the house and are still on a call, the call won't drop (according to AT&T) if an actual tower is close enough for you to connect to it. However, if you start a call on a tower, it won't switch to the microcell even if the tower is not reachable from inside your house.

Setup was easy and straightforward even though I ignored the ridiculous instruction that I power down my DSL modem and router as part of the process. We don't do that around here except in emergencies.

As part of online setup, you're asked for your address so that this can be given to emergency services if you make a 911 call using the microcell. In order to avoid you moving the microcell to some other house and not updating the 911 address, the unit has a GPS so it knows where it is. I haven't experimented yet to see what it does when it discovers it's been moved.

The outside of the box says in big print "Unlimited wireless calling at home.**". But it pays to follow the asterisks. The fine print says "Post paid wireless plan from AT&T required. Unlimited talk option available for additional monthly charge." Translation: If you pay an extra $19.99 per month you'll have unlimited voice calling for calls made through the microcell – in other words, unlimited calling when you're at home. Clearly a benefit if you've got a home business and/or you want to get rid of your land line phone AND do the bulk of your calling at home.

You don't get any extra data usage by paying the $19.99, though. Even though the data is traveling through your connection, you still pay AT&T full freight for it. You only get "free" data if you connect your phone via your WiFi connection (different topic).

Even though we got our microcell free without asking for it, the AT&T site just directs you to a store and doesn't give a price. According to Gizmodo, it normally costs $150 with various rebates available. I have no idea why we were offered ours free. I suspect it is either because the AT&T network is overburdened in our area or that AT&T, which doesn't provide landline service in Vermont, wants to use this as a wedge to replace local landline providers. Maybe it's just a market test.

Related posts:

Don't Buy DSL From This Man (If You Can Help It)

AT&T Bids to Shut Down Mobile Competition

Verizon Wireless Aims Salvo at Residential Landline Market

AT&T and Verizon Wireless: Opposite Strategies to Win Landline Business

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