Wireless Telecommunications

Federal Communications Commission Chairman Ajit Pai has put the 20th Wireless Competition Report on the agenda for the FCC’s September Open Meeting. Technically, the Wireless Competition Report is a non-rulemaking agency report to Congress, similar to the many reports the FCC does on everything from the prices paid for cable services to the state of the Satellite industry. But the Wireless Competition Report has become something of a big deal in recent years, owing to the refusal of the FCC since 2010 to find whether or not there is “effective competition” in the wireless industry.

Chairman Pai is now putting it back at the Commission level and the Report is once again finding that we have “effective competition” — whatever that means. So it seems like a good time to run through the Wireless Competition Report, what it is, what it means, what it doesn’t mean, and how it gets used and/or abused. And, of course, how it relates to network neutrality, since everything in the world relates to net neutrality these days.

Today, we find ourselves nearing another possible hinge moment. We’ve seen remarkable progress, but it feels like we’re still waiting for another huge breakthrough. Well, 5G could well be what we’re waiting for.

Going from 2G to 3G was the mobile equivalent of switching from dial-up to broadband. Similarly, the transition from 4G to 5G promises to be more than just incremental change— we could see dramatic improvements in network speed, capacity, and responsiveness that will make the impossible possible. One analysis by CTIA suggests that 5G could create three million jobs and over $500 billion in additional GDP growth over seven years in the United States.

The US leads most of the world in both hardware and networks, according to new research the GSMA wireless industry group released. In what GSMA calls “North America” (U.S. and Canada, but dominated by the U.S.), 78% of people with phones own smartphones. (Which begs the question: Who are all those people with flip models?) The region closest to North America is Europe, with just 60% smartphone ownership. And 266 million Americans had at least one mobile service subscription—in a country with a total population—including children—of 326 million.

The US tops the planet in fast wireless: From 2011 to 2012, 4G coverage jumped from reaching 35% to 90% of the US population. (Apple’s first 4G-capable phone, the iPhone 5, came out in September 2012.) Today, 99% of Americans can access 4G, according to the report (although I know plenty of backroads where they can’t); and 63% of people with phones have 4G/LTE service. 5G is expected to take off just as quickly. With widespread launch in 2019 (led by AT&T and Verizon), 39% of U.S. customers will be able to get 5G service; by 2025, it will be 82%.

Federal Communications Commission officials conducted a webinar explaining how proposed Connect America Fund (CAF) II auction rules would work. The auction will award funding to help cover the cost of deploying broadband in unserved rural areas. It is expected to take place in 2018, officials said. The rules discussed were proposed in a public notice adopted in Aug. Interested parties have until September 17 to comment on the public notice, with reply comments due October 17.

The CAF II auction is a reverse auction, meaning that funding, in general, is designed to go to the service provider that offers to provide service at the lowest level of support (with some caveats). The maximum amount of support that any service provider will receive in the CAF II auction, also known as the “reserve price,” is the amount of support that was previously rejected by the incumbent price cap carrier. Collectively, the price cap carriers accepted the majority of funding offered, but up to nearly $2 billion (up to $200 million annually for 10 years) remains to be awarded for parts of 20 states. The FCC previously established weighting factors for the auction, designed to incentivize service providers to deliver higher-speed service with low latency.

For the first time since 2009, the Federal Communications Commission has concluded there is “effective competition” in the US wireless market.

The agency is required by law to conduct an economic analysis of the sector. Starting in 2010, after years of major consolidation among wireless carriers, the FCC declined to say whether it believed the industry was competitive. While the FCC had stopped short of declaring the industry noncompetitive, many industry observers still took it to mean the agency thought the nation’s largest carriers, AT&T and Verizon Communications, were too powerful. In 2011, the government blocked AT&T’s attempted buyout of T-Mobile US. Since then, T-Mobile and Sprint Corp. have been resurgent, stealing subscribers and transforming the industry by doing away with two-year contracts and bringing back unlimited data plans. AT&T and Verizon have lost customers and wireless prices have fallen by the largest margins on record, according to government data.

The FCC’s finding could have antitrust implications. If the wireless market is competitive, regulators may believe it could withstand another large merger. The nation’s smaller players, Sprint and T-Mobile, have been in talks about combining, people familiar with the matter have said. “A finding of effective competition certainly helps rhetorically for those trying to consolidate or trying to deregulate,” Harold Feld, a senior vice president at Public Knowledge.

A pair of senators want to make sure the public that relies increasingly on mobile devices for can access government websites. Sens Maggie Hassan (D-NH) and Cory Gardner (R-CO) introduced the Connected Government Act to the Senate last week. The bill would mandate all new federal websites be mobile-friendly, and would also call upon the General Services Administration to report agency compliance to Congress within 18 months of enactment. The bill is the Senate companion to House legislation introduced in May by Rep Robin Kelly (D-IL) and co-sponsor Rep Frank Pallone (D-NJ). The House Oversight and Government Reform Committee is scheduled to consider the House version on Sept 13.

[Commentary] Federal Communications Commission Chairman Ajit Pai is planning to make some major overhauls at the FCC. Eight months into his term, Pai is preparing to “modernize [the FCC’s] rules to match the realities of today’s marketplace.” At 2017’s National Broadcast Association’s Radio Show, Pai announced he would present to his fellow FCC Commissioners at least one Notice of Proposed Rulemaking (NPRM) every month, starting in September. These monthly NPRMs are intended to address concerns that Chairman Pai has assessed are part of those "outdated or unnecessary media regulations that should be eliminated or modified.”

Pai’s statements at NAB focused on broadcasting, while his statements via a blog post go into more detail on what’s ahead outside of the broadcast industry. With the tentative agenda for the Commission’s upcoming September meeting posted, it’s shaping up to be a busy time at the FCC for the foreseeable future

Household internet access via a mobile-only connection increased from 8.86% in 2011 to 20.00% in 2015. This paper uses national data to model the propensity of a mobile-only connection via logistic regressions. An inter-temporal non-linear Blinder-Oaxaca decomposition is then used to determine the driving factors behind this trend. The results show that while changing characteristics over time account for less than 1% of the trend, behavioral relationships changed dramatically as specific groups were much more likely to be adopters of mobile-only in 2015. The primary behavioral relationships leading to increased mobile-only connections are those associated with age (50.55%), race/ethnic background (4.75%), and non-metro status (1.88%). The finding that these demographic groups are becoming more willing to adopt the internet via the mobile-only connection can have important implications for future broadband policy.

T-Moble and Verizon Wireless were the two big winners of the 2017 U.S. Market Report by Ookla, which measures broadband performance for wireless networks. Overall, Ookla’s data found that U.S. mobile broadband download speeds have increased by 19% during the past year to reach 22.69 Mbps. Rural mobile broadband speeds lag the national average. The speed scores assess performance for both upload and download speeds. Average upload speeds increased slightly to 8.51 Mbps, a 4% improvement.

Percentage improvements in both download and upload speeds were smaller than in previous years. U.S. global rankings slipped as a result, with the U.S. now ranked 44th globally, down from 42nd for Q1-Q2 2017. Ookla found an average rural mobile broadband speeds of 17.93 Mbps, which is 20.9% slower than the national average. This translates into an ASR of 69.6% in rural service areas (RSAs) compared to a national ASR average of 74.9%. Metropolitan service areas had an ASR of 76.2%.

Since becoming Chairman, I have consistently emphasized the need for the Commission’s regulations to match realities of the current marketplace. Our rules must reflect today’s technological and economic conditions, not those of yesterday. And at this month’s open meeting, we will advance this objective by focusing on whether to update or scrap outdated rules. That’s why we’re dubbing September .