March 2011

Is the proposed purchase of T-Mobile by AT&T legal? Probably not. News of the proposed merger was immediately met with concerns that it violates antitrust laws that are supposed to prevent monopolies from leaving consumers with raw deals. Industry insiders told Politico that even if the deal is approved by the Federal Communications Commission and the Department of Justice, it will likely be met with a “laundry list of conditions” that could include: net neutrality guarantees, lower early termination and text messaging fees, and improved service for low-income communities. Yet what some analysts seemed even more disturbed by is the company’s apparent disregard for the sins of its founders. David Lazarus reminded us on Monday at the Los Angeles Times that when the Bell telephone system — i.e., AT&T — was broken up back in 1984, the general consensus was that it was a good move that could increase competition in a market that, until then, had only truly known one national carrier. And then everything changed.

What does the deal mean for users of color? In December, after months of intense scrutiny, the FCC passed a set of lukewarm rules that were supposed to keep the Internet’s playing field equal. Those rules, known as net neutrality provisions, prevented carriers from playing favorites and charging users extra fees for Internet fast lanes on home-based broadband networks. But the mandate was noticeably missing any mention of how mobile carriers can conduct their business. Mobile broadband is fast becoming the future of the Internet, and it’s already an important way in which communities of color are helping to close the digital divide. A Pew study released last year found that blacks and Latinos are among the biggest users of mobile technology, and in many cases, it’s the primary way that they surf the Web.

The cellphone has been more than a cellphone for years, but soon it could take on an entirely new role — standing in for all of the credit and debit cards crammed into wallets. Instead of swiping a plastic card at the checkout counter, consumers would merely wave their phones. There’s just one hitch: While the technology is already being installed in millions of phones — and is used overseas — wide adoption of the so-called mobile wallets is being slowed by a major behind-the-scenes battle among corporate giants. Mobile phone carriers, banks, credit card issuers, payment networks and technology companies are all vying to control these wallets. But first, they need to sort out what role each will play and how each will get paid. The stakes are enormous because small, hidden fees that are generated every time consumers swipe their cards add up to tens of billions of dollars annually in the United States alone.

We’re beginning to see hints that mobile-device makers may be prepared to start weaning themselves off carriers handouts and pricing their products based on what they actually cost. What’s less clear is whether everyone -- not just Apple -- can be truly competitive and make enough money in the market without those juicy subsidies.

So now, as challengers get ready to try and dent Apple’s runaway lead, do they need to accept heavy subsidies on 3G and 4G products in order to compete? The real question is what type of gross margin are those competitors willing to accept as they acknowledge that the amazing mobile growth of the past several years simply would not have happened without generous carrier subsidies that reduced the opening price of their wares, not to mention the heavy promotion as those carriers went about recouping their investment.

A Q&A with the Department of Agriculture's Rural Utilities Services Administrator Jonathan Adelstein.

RUS recently announced they’re hoping to make $700 million available for broadband projects through the agency’s Farm Bill Broadband Program. While not as substantial as the BIP program, nevertheless this is a sizeable enough payload to make a big difference in a fair number of communities. However, the actual money hasn't been appropriated yet, so RUS is doing a Notice of Solicitations of Applications (NOSA). NOSA = send us an application to hold your place in the queue so you get money when we get money. This is strictly a loan program, no grants involved. Big plus – it’s open to everyone including communities and public private partnerships. Other good news is that the baseline for what constitutes broadband is 5 Mbps symmetrical for wireline networks, and 3 Mbps symmetrical for wireless.