For a very long time, detractors of UTOPIA have pointed to the wireless market as a shining example of how the private sector provides superior competitive choice and great consumer benefit. Now we’re watching as that example starts to look a whole lot like the wireline business, locked up in relatively few choices with little product differentiation between them. Once AT&T completes its purchase of T-Mobile (and nobody seriously expects the deal to fall through), two companies will control over 65% of wireless lines in the United States, both of which are nasty players in the wireline duopoly business. This is just the beginning.
Today, it was announced that AT&T plans to buy up T-Mobile for a cool $39B. This would combine both nationwide GSM providers into the single largest wireless company in the country and bump us down to three such companies. A lot of fiber naysayers like to point to wireless as an example of robust telecommunications competition in the country, but, ignoring the wide gulf of differences between wireless and wireline telecommunications, how can we have a competitive market with just three nationwide carriers?
I’d argue that we can’t. Sprint will continue to be a bit player in the space since they don’t have much in the way of wireline assets and Clear is a boat anchor around their neck. Smaller and largely regional cell providers like Cricket and US Cellular don’t get the hot devices people want and often get chained down in pre-paid pricing plans. The MVNOs live and die by the terms set by larger carriers. The big companies sit on a mountain of unused spectrum which prevents new entrants to the market from even taking hold.
In short, we’re witnessing the wireless space do the exact same things that make us hate the wireline space. This merger will mean higher prices, less consumer choice, and more regulatory capture than ever. Sadly, I expect the same thing to happen that always does when a bad deal is put before the regulators: the state PUCs and PSCs will hand-wring and sign off on what they know is a bad deal using conditions that they know either won’t be met or would have been anyway, and the FCC will just rubber-stamp the decision with minimal oversight or review. And the whole time, we’ll be told that it’s a good deal for consumers.
Sorry about the late post, folks. I had family in town over the weekend and, well, you know how that goes.
Cable’s been trying to make some waves with online video announcements as The Pirate Bay continues to dominate the prosecution in their trial. There’s also allegations that the US might be #1 in broadband, but it depends on which metrics you use or give weight to. I’ve also got a bunch of stories on online services and home media extenders. All that and more in this week’s Broadband Bytes!
Verizon will allow you to stream music, pictures, and (soon) video from your PC to any FIOS STB in your house. FIOS MediaManager is available to all double-play video/Internet customers for free and while the initial interface is a bit on the clunky side, it’s that kind of innovative product that keeps customers. Providers can also extend this to offer media streaming outside of the home. If you don’t have to mess around with a HTPC or setup your own streaming solution, why would you? Verizon is also letting subscribers remotely schedule DVR recordings.
What’s 400MB, written by John Carmack, and totally changes online gaming? Quake III in a browser, that’s what. Quake Live launched to queues of over 55,000 players waiting to get their hands on what is likely to be the most popular free-to-play non-casual browser game. This isn’t your typical small casual flash game and it’s likely to draw a big crowd. With a success like this, will you be ready for browser-based games pushing gigabytes of data? If you need an upgrade in a screen, there are tons of the best gaming monitor reviews to read on the internet, it’s good to spend sometime knowing what will be the most bang for your buck.
The first Blu-Ray quality movies for purchase on an STB come from VUDU, not a big-name MSO or media store like iTunes. At between $14 and $24 per title, that’s a considerable discount over Blu-Ray discs, though you do sacrifice some portability.
Netflix plans to launch a streaming-only plan this year or next. The powerhouse in mail-order DVDs has seen most of its subscriber growth centered around the 12,000-title strong Watch It Now feature and its availability on everything from PCs to XBox360s to TV sets. The company has proved itself savvy enough to be ahead of what consumers want, a lesson that others could learn from.
T-Mobile is rolling out unlimited voice plans for long-time customers at a mere $50 per month. Customers will also be able to tack on data and SMS/MMS for just $35 per month more. With competitive pricing like this, you have to give customers a reason to keep a landline around.
If you’re being hit by black hat hackers, it could be personal, not business. About a quarter of malicious activity in 2008 was aimed at making a statement rather than the traditional ID theft or malware planting. I’m sure that’s not much comfort to Time Warner as they ride out a DDoS attack on their DNS servers.
Headlines this last week have been dominated by the DTV switch, The Pirate Bay’s trial, and a finalization of the broadband stimulus amount. There were also announcements on 4G wireless from AT&T and Verizon as well as more movement towards online video (and a big step back for Hulu). All this and more in this week’s Broadband Bytes!
The broadband stimulus number has firmed up at $7.2B in total spending and BPL looks like an unexpected back-from-the-dead winner. IBM plans to apply for stimulus funds to roll out BPL service to over 200k rural customers. The challenge is determining just which areas are considered underserved or unserved. Public Knowledge slammed Connected Nation, a broadband mapping group, as nothing more than a front for big ISPs and accused them of making up bogus broadband maps to serve their interests. It’s entirely possible that Connected Nation could score the lion’s share of the $350M in funds for mapping, a scary proposition if the accusations are true. After all, this isn’t the end of federal broadband efforts.
There’s a new attempt in Congress to force ISPs and hotspot owners to keep 2 years worth of access and subscriber logs to assist law enforcement. The justification, as usual, is that retaining the data will help catch people dealing in child porn. Unfortunately, keeping and managing two years worth of access logs is a huge undertaking, especially for wifi hotspots and home owners who choose to share their connection. Such efforts have typically died in committee despite previous pushes from both sides of the aisle.
In what I can only hope is the start of a trend, Linksys will be selling a router with integrated Internet security software. It’s only going to block malicious or suspicious websites for the time being, but future models could integrate anti-spyware and anti-virus. If someone offered such a device, I would definitely buy one. It beats installing resource-hogging security software on every PC.
Recession-influenced special pricing continues as operators struggle to hold on to cash-strapped customers. Sprint rolled out a new “Simply Everything” plan that adds laptop data (but not phone-as-modem) for another $50 a month. T-Mobile is also rumored to be looking at unlimited options of it’s own including a $50/mo unlimited voice plan as well as a $85/mo unlimited mobile voice and data plan. Verizon, though, takes the cake for considering a $5/mo inbound-only landline. Utah, though, is taking a step back. The legislature approved a move to upcap phone service rates for incumbents like Qwest and it is largely expected to be signed off on by the governor.
Comcast is looking at sneaking in data rate increases after all. Their plan is to upgrade various tiers of service to higher speeds with accompanying higher rates. If you want to downgrade to a lower-priced package, tough noogies: speeds under 12Mbps will be gone except for a 768Kbps “value” tier. Competing providers should be able to snap up a lot of customers by offering a slower and cheaper tier between the two. T-Mobile is also raising rates on data packages, but with a 10GB monthly cap and terrible ping times, few are likely to use it for primary access.
Telcos are hurting but cable could stick around for a while as coax offers a good chunk of bandwidth. They do, however, feel the pinch from the massive amount of bandwidth eaten up by video services. Even as SDV and DTA boxes ease some of that up, the demand for higher-quality signals to all of these shiny new HDTV sets will eat up a lot of the gains as cable operators are forced to move from 480p to 720p and 1080p signals. Competing providers will need to move quickly to offer true HD signals with low compression and superior data rates while the cable companies perform system-wide upgrades over the next 18-24 months. There’s something said for being first to market.
It also appears that DTA boxes could be a sticky subject. CableONE asked the FCC for a waiver for a HD-capable DTA box with integrated security. This could shut out CableCARD (and possibly Tru2way) as well as a number of third-party devices like TiVo DVRs. Manufacturers are already pushing these boxes which could very well kill the Carterphone of video before it gets off the ground. Competitive operators will see the opportunity to be fully interoperable with CableCARD and Tru2way and ensure that customer DVRs will work on their systems.
Local programming is in high demand, but there are some chinks in the incumbents’ armor. Since local programming options like high school sports, General Conference and rebroadcasts of local news are so popular, competing operators should mimic what Comcast is doing and look into an old-school public access channel.