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Wireless Wholesale May Open Window of Opportunity
26 Nov, 2007
Wholesaling wireless spectrum may be on the horizon, thanks to the upcoming 700 Mhz spectrum auction. While virtually absent from the wireless industry, wholesaling bandwidth is commonplace everywhere else in telecom. One could argue that MVNO arrangements are examples of wireless wholesale, but the MVNO reality looks more like a sales and marketing resale arrangement, than true wholesaling. The rules set up by the FCC for auction 73 may bring the reality of true wireless wholesale to the marketplace. If that reality indeed comes true, the competitive landscape could be altered, especially in smaller and underserved markets.
One of the primary reasons that smaller regional carriers can’t match their larger carrier brethren (i.e. Verizon, AT&T) with attractive wireless options is the high cost of spectrum. Additionally, past wireless auctions rules have favored larger carriers because the geographic regions for auction are very large. Auction 73 is attempting to remedy these challenges by encouraging true wholesale players to participate in the D block spectrum band auction. If a viable wholesaler wins the D block auction, they would in turn have the ability to lease spectrum to a variety of service providers who lacked the financial ability to gain 700 Mhz spectrum themselves. Conceivably, there would now be hundreds of service providers anxious to use this leased spectrum to provide wireless service of their own, which more than likely will compete with established services from AT&T, Verizon, Sprint, and others. Companies like Frontline Wireless are leading this wholesale option effort. There are a variety of factors tied to the wholesale rules, including making spectrum available for public safety purposes. But before we get ahead of ourselves, favorable wholesale rules don’t automatically translate into viable wholesale options. Potential wholesalers will have tremendous financial and operational challenges to overcome before they can hang the “We’re Open” sign in the front window. Like anything else, this issue has a variety of concerns unique to special interests. It's certainly not perfect. All things considered though, wholesaling wireless spectrum is a good thing, providing a method for service providers who normally would not have the means to participate in the wireless spectrum auction process, the ability to launch competitive wireless services.
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Telecompetitor is a leading industry blog covering the telecom competitive landscape. We provide insight, analysis, and commentary on the issues and implications of the evolving telecom competitive landscape.
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Should Telephone Service be Free?
12 Oct, 2008
Comcast announced a new promotion last week that offers 12 months of free basic cable service for new customers who also sign up for an additional service. Customers who don’t want an additional service can get Comcast’s basic service of about 20 -30 channels for $10/month. The promotion is tied to the digital TV transition of February 2009 and entices potential customers to avoid the transition “hassle” by getting “free” cable service. “The simple fact is that basic cable is the easiest path through the digital transition and now consumers can get it for free,” said Derek Harrar, General Manager and Senior Vice President, Video Services for Comcast in a company statement. This move is similar to strategies pursued by other video service providers, who are hoping to leverage the digital TV transition for new subscriber additions.
But is this strategy a leading indicator for the future? Should basic core services like basic cable and basic telephone service be offered for free, used as a “carrot” to entice customers to buy “more important” services like broadband? Maybe a very basic phone service, with no LD, access to landline 911, and maybe outgoing service only (to avoid telemarketers) should be a free component of a bundled offering. Such a wireline service may appeal to a customer who previously cut the cord for wireless only, but also needs broadband. There is a growing portion of the population who find the value of traditional wireline phone service elsewhere – either through wireless or broadband/IP services. But, if they could get the security of landline 911, and an extra dial tone in their home as a free value add for subscribing to broadband (or video from a telco’s perspective), maybe a telco’s bundled offering may look more attractive than a comparable cable offering. I realize this idea is not appealing to the hundreds of ILECs who are a part of the current access/settlement system (in fact, it couldn’t work in the context of today’s regulatory structure), but I wonder whether it’s inevitable. In this possible future scenario, the current settlement system adapts to broadband as the underlying service, as opposed to voice.
This scenario cuts both ways. From a cable company’s perspective, a growing portion of the population is turning to the Internet as a source for their video content, and no longer see value in paying for a broad package of video as a part of a traditional subscription pay-TV service. But, if they could receive basic TV (which includes local broadcast affiliates) as a free value add for buying broadband, maybe the cable bundle is more attractive. In a true IP/broadband world, very basic phone and video service is relatively easy to deliver, and has little impact on bandwidth and network performance. Maybe the digital transition is opening the door to a future where free basic services are a regular component of a bundled offering. Thoughts?