Netflix announced Tuesday that it had agreed to pay AT&T for a direct “peering” connection to AT&T’s network. The two companies arranged the deal this past May and have been working since then to connect their respective networks.
AT&T had been pressing Netflix to pay for an upgraded connection between their networks since at least March when Netflix asked for a free peering arrangement.
“We reached an interconnect agreement with Netflix in May and since then have been working together to provision additional interconnect capacity to improve the viewing experience for our mutual subscribers,” an AT&T spokeswoman said in a statement.
“We’re now beginning to turn up the connections, a process that should be complete in the coming days,” Netflix spokeswoman Anne Marie Squeo said.
AT&T and other broadband ISPs believe that Netflix should bear the cost for the recent surge in video traffic. Netflix replied that broadband providers should be responsible for making sure that their subscribers get the content they are viewing online in a reliable and consistent manner.
Netflix, as well as Google’s YouTube, provides a regularly updated video quality report that ranks the speed of ISPs. AT&T’s services have typically ranked low on Netflix’s list, although Verizon’s services haven’t fared much better since it signed a peering agreement with Netflix.
[Internet traffic flows between different networks generally in one of two ways, through transit, in which a smaller network passes its traffic through a larger one to connect to the broader Internet; and peering, in which large networks connect with each other. Traditionally, smaller networks paid larger ones for transit services, but peering didn’t require any kind of payment from one company to another. Instead, both networks are responsible for their own costs of interconnecting.]
When there was still some notion of network neutrality, interconnection deals between content and network providers/ISPs were free. But now, broadband providers require fees paid to them. Some fear that moves like this could have a serious problem on startup content provider (which may not be able to pay those fees), especially if the content they provide is used by many over the Internet. That negates the concept of network neutrality.
Netflix has protested the move to these so-called “paid peering” arrangements. The company has noted that it is sending to ISPs’ customers only the data they are demanding in the form of streamed movies. Furthermore, it has argued that the only reason ISPs can demand to be paid for peering is because of the limited competition for broadband access.
Despite its protests, Netflix has now announced three paid peering relationships. Earlier this year, it inked deals with both Verizon and Comcast. If AT&T were to block or throttle Netflix, many of its customers would have no other place to turn for Internet access. The company has called on the FCC to ban paid peering arrangements as part of a broader move to curb ISP practices as part of a new, stronger net neutrality policy.
Net neutrality advocacy groups are pushing the FCC to intervene in these situations and stop broadband providers from asking for interconnection fees. Yet the FCC has done nothing and hasn’t even finalized its new rules for net neutrality.
“The principle that all bits traversing the network should be treated equally was a key feature of the internet’s original design. It was also one of the reasons why the internet became such an enabler of disruptive innovation. Net neutrality meant that the bits generated by a smart but unknown programmer’s application, for instance the web, file-sharing, Skype and Facebook, would be treated the same as bit streams emanating from a giant corporation. Neutrality kept the barrier to entry low.”
Slowing down or “throttling” Internet traffic has been another contentious issue for the FCC. In a July 25th letter to Verizon CEO Dan Mead, FCC Chairman Tom Wheeler voiced his objections to plans Verizon announced last week to begin throttling LTE customers on unlimited plans that use an exorbitant amount of data. Verizon said the change will only affect about 5 percent of its users and it is being done in the name of network management.
Chairman Wheeler took issue with how Verizon described the issue, stating that he believes Verizon may be misinterpreting the FCC’s rules on network management.
“Reasonable network management concerns the technical management of your network; it is not a loophole designed to enhance your revenue streams,” Wheeler wrote, saying that it is “disturbing to me that Verizon Wireless would base its network management on distinctions among its customers’ data plans, rather than on network architecture or technology.”
Wheeler noted that legitimate network management purposes could include:
“Ensuring network security and integrity, including by addressing traffic that is harmful to the network; addressing traffic that is unwanted by end users (including by premise operators), such as by providing services or capabilities consistent with an end user’s choices regarding parental controls or security capabilities; and reducing or mitigating the effects of congestion on the network.”
We wonder what enforcement power the FCC has to stop wireless (or wire-line) carriers from throttling users data throughput. If a subscriber has a unlimited data plan, why aren’t they notified about throttling before they sign up and once they are coming close to exceeding their monthly limit of bytes streamed or downloaded from the Internet?
It seems the Wheeler-led FCC is prepared to let the industry settle these contentious issues and play a very passive role. That’s not what communications regulator should, IMHO!
The moments of life blur together as the years speed by faster and faster. Travel tends to accelerate the blur, as the towns and conferences seem to melt into a collage of images and seem to be part of another life. The moments that standout are when those different paths intersect, like they did last week at The Independent Show in San Diego, when my kids literally got a close-up of my friends and colleagues from around the country. It was better than that, as my kids were active participants in bringing ViodiTV to the hotel channel of the conference.
Thanks boys for the great work and thanks ACA and NCTC for your support in making it happen and to AXS TV and Viamedia for the advertising on this extremely local channel.
Slices of last week’s Indy Show with soundbites from several of the speakers are found in this video. Outdated rules, regulatory uncertainty and the burdens of regulations were on the minds of many of the speakers and attendees, as reflected by comments from Ross Lieberman of ACA, Shirley Bloomfield of NTCA and Matt Polka of ACA. At the same time, there was a sense of optimism around broadband.
Stay tuned, as Viodi will be releasing the complete video interviews of the aforementioned industry experts, as well as others who participated in the 2013 Independent Show.
Retransmission consent reform was a hot topic at this week’s Indy Show. In this interview, Mike Grebb, Executive Editor of CableFAX provides an overview of some of the discussions heard on this topic, including thoughts on the retransmission consent flare-up between CBS and Time-Warner, comments from Insight founder Michael Wilner on being careful what you wish for regarding legislative or regulatory relief and the potential for Aereo to disrupt retransmission rules.
Many years ago, a wise marketer suggested that the value from cross-promoting different parts of his triple play would, by itself, justify ad insertion in his channel line-up. His challenge was that there were higher priorities for his company’s staff and ad insertion was way down the list of priorities for his IPTV network. Fast-forward almost a decade later and his words echoed in my head as I spoke to Becky Jones, VP Marketing and Research for Viamedia, at The Independent Show.
Thanks Viamedia for advertising with ViodiTV on the hotel channel at The Independent Show.
In 1993, Arash Afrakhteh immigrated to the U.S. from Iran to work at Microsoft. He initially felt like “a kid in a candy store,” as a result of the stimulating intellectual environment, bright people, and excellent software tools at the software giant. In 2001, Arash became an entrepreneur when he co-founded Cariden Technologies, Inc. without taking any money from VC’s or angel investors!
AT&T has launched a very tangible piece of its Project Velocity IP (VIP) in Nevada and California, introducing a faster U-verse broadband tier that delivers theoretical download speeds of up to 45 M bits/sec and upstream speeds of 6 M bits/sec. The new broadband tier, called U-verse High Speed Internet Power, will cost $50 a month as a promotional price to consumers who bundle it with TV and voice services on a two-year deal, after which the tier will cost $76 a month, AT&T said.
“Attaboy,” is a quote from Chris Trembley that I will remember for a long time. Trembley and Dan Berg are safety experts from the Minnesota Telecom Association who train operator employees within Minnesota as well as other states, such as Iowa. In this video interview, they emphasize the importance of creating a culture of safety within an organization. They suggest that safety starts with and has to be a priority of the company leaders. Other good things will result, when safety is put first.
Dan Berg points out that safety doesn’t end at the workplace and that, “Slips, Trips and Falls are horrible on the job and off the job.” Of course, safety and driving go hand in hand. An important part of driving is parking and Trembley confirmed that backing in a parking spot is the safe way to park (better visibility when one leaves). Hopefully, Trembley’s comments will finally put to bed the decades long debate in the Pyle household as to the best way to park a car. Thanks Chris and Dan for your insight!
AT&T has launched a very tangible piece of its Project Velocity IP (VIP) in Nevada and California, introducing a faster U-verse broadband tier that delivers theoretical download speeds of up to 45 M bits/sec and upstream speeds of 6 M bits/sec.
The new broadband tier, called U-verse High Speed Internet Power, will cost $50 a month as a promotional price to consumers who bundle it with TV and voice services on a two-year deal, after which the tier will cost $76 a month, AT&T said.
The U-verse speed increase was expected. Last week during AT&T’s second quarter earnings call, company SVP and CFO John Stephens said the telco would unleash the 45 Mbps service “in the next few months, noting that U-verse will eventually ramp up downstream speeds to 75 Mbps and 100 Mbps “in the near future.”
AT&T has not announced when it will make the new U-verse Power tier available elsewhere, but the telco “expects to roll it out in other U-verse markets on an ongoing basis,” the spokeswoman noted.
“This is our next step in our Project VIP investment plan, and we’re proud to bring customers faster speeds, for a great value,” said Mel Coker, chief marketing officer of AT&T Home Solutions, in a statement. “The vast majority of our customers bundle U-verse Internet and TV because it gives them a better experience, with faster speeds that fit their needs, at an affordable price. We look forward to bringing wired IP services and faster speeds to more customers in the future.”
At the June 12, 2013 IEEE ComSocSCV meeting, AT&T’s Shiyama Clunie presented the highlights and progress of AT&Ts Project Velocity IP. It’s a major effort to expand AT&T’s wireless and wireline broadband network. Under this initiative, which is underway now, AT&T expects to bring fiber to 1 million additional business customer locations, and its wireline IP network is expected to cover 57 million customer locations, by year-end 2015. These locations will have either U-Verse (video, Internet and voice) or U-Verse IP-DSLAM (high speed Internet and voice). AT&T also expects that its 4G LTE wireless network will cover 300 million people nationally by the end of 2014, and 99 percent of customer locations in AT&T’s wireline service area are expected to have high-speed Internet access through either IP wireline and/or 4G LTE wireless by year-end 2015.
During its earnings call, AT&T reported on U-Verse progress:
“Total U-verse subs reached 9.4 million, while video subs topped 5 million customers for the first time. Total U-verse revenues grew better than 30%, and U-verse now represents more than 50% of consumer revenues. And even with little help from the economy, business wireline showed sequential revenue improvement and strategic business services grew by more than 15%. All this resulted in improved revenue growth, continued EPS gains and strong free cash flow even while investing more in our customers and in our Project VIP.”
“It’s time to take another look at your wireless network. AT&T not only has the nation’s fastest 4G LTE network, but now also has the most reliable 4G LTE network. According to independent third-party data, AT&T has the highest success rate for delivering mobile content across nationwide 4G LTE networks.”
“More than 225 million people – in cities large and small – now have access to the nation’s fastest and most reliable 4G LTE network, and we want customers to know we’re setting the new standard for wireless performance,” said John Donovan, senior executive vice president for AT&T Technology and Network Operations.
Comment & Analysis:
AT&T’s new ads, which claim it has the “most reliable” 4G network, are based on “independent third-party data,” the company says. AT&T claims it has the top success rate for delivering mobile content to its 4G network users, but hasn’t identified how that’s been proven or justified. See what Verizon has to say about that in the next section of this article.
Why it matters: The dual claim to being both the fastest and most reliable is of prime concern to heavy mobile users, particularly those that watch streaming video or engage in video chats or other real time video conferencing on their mobile devices. It’s also of concern to mobile cloud computing users, that access cloud resident apps on their smart phones or tablets.
Verizon Wireless Responds:
Verizon Wireless (VZW)– the joint venture between Verizon and Vodafone- has built its brand and reputation based on the superb reliability of its wireless broadband network. VZW’s advertising for years touted the “most reliable” 3G wireless network. In 2009, AT&T and VZW battled in court over advertising claims. The marketing battle has now shifted to 4G-LTE networks.
A VZW Executive has just challenged AT&T’s bold claim: “They have misled the public in the past,” said Mike Haberman, head of network solutions for Verizon Wireless, when asked about his initial reaction to AT&T’s ad. “I thought, ‘Here we go again.'”
Haberman said AT&T’s claim was backed by data that the company hasn’t disclosed. As a result, there’s no way to see how the tests were conducted and whether it reflected the true customer experience. “If that’s how they want to make their claim, that’s fine,” he said in an interview with CNET on July 23rd.
Haberman touted a study by Root Metrics that found Verizon’s data and overall service to be superior in a majority of its markets in the United States. Haberman said he preferred Root Metrics because the firm attempts to replicate the customer experience. AT&T also cites Root Metrics as one of the studies that names it the nation’s fastest carrier.
“We have the most reliable network, and the public data supports us,” Haberman said. He also noted AT&T hypocrisy flip-flop on its stance over HSPA+ as a 4G network. When T-Mobile began calling its HSPA+ network a 4G service, AT&T criticized the move. Three months later, it too adopted the same terminology.
Opinion: HSPA+ as 4G is a total stretch! Many telcos, such as Verizon, have been steadfast against that designation. For years, the ITU-R categorized both HSPA+ and LTE as 3G+ technologies, with LTE Advanced (not yet deployed) the only true “4G.” So how can AT&T now come off and say that their HSPA+, with lower speeds than LTE, is a “4G” network? Especially after it criticized T-Mobile for doing the same thing!
Independent Analyst Opinion:
“It’s getting harder and harder to say what the ‘best network’ really means,” Craig Moffett, an analyst at Moffett Nathanson Research, told IBD.
“For coverage, Verizon wins hands down. For speed, T-Mobile may actually have the best network. For capacity, Clearwire spectrum will give Sprint’s network the advantage. And AT&T will be positioned as being pretty good on all dimensions, even if they’re best-in-class at none.”
Network Coverage, 4G-LTE Data Traffic and CAPEX:
VZW’s 4G network reaches 500 markets in the U.S. that is says can be accessed by some 300 million people. AT&T says its 4G network has been deployed in 328 markets covering more than 225 million people.
VZW has 94.3 million postpaid subscribers. These are the higher-spending customers who sign service contracts, as opposed to prepaid users who buy minutes as they go along. Verizon leads in U.S. postpaid users. About 31 million of those subscribers used Verizon’s 4G LTE network via smartphones, tablets and laptop computers as of June 30. That’s up from 12% of its postpaid subscribers a year ago.
On Verizon’s quarterly earnings call, CFO Fran Shammo said that 59% of VZW’s total data traffic is running over its 4G network, though just a third of its customers have 4G enabled smart phones. Shammo said Verizon users are buying wireless data plans with lots more megabytes as they connect more LTE enabled devices to the company’s 4G-LTE network.
“Based on our trajectory of data usage, especially with where we see video going, we (expect) that the uptake in shared (data) plans will continue,” he said. Verizon is hiking capital spending so it can meet demand, the CFO said. “The incremental investment will more than pay for itself on top-line (revenue) growth from what I see,” he said. “And we are going to maintain our lead as the most reliable, consistent 4G LTE network. That’s what is driving the increase in capex.”
Nation’s Fastest and Most Reliable 4G LTE Network Driving Subscriber and Usage Growth:
551,000 wireless postpaid net adds, best second-quarter postpaid net adds in four years
35 percent of postpaid smartphone base LTE capable
Smartphone data usage per device up 50 percent year over year
LTE network expected to cover nearly 270 million POPs in 400 markets by year-end
LTE network build expected to be substantially complete by summer 2014
Strong Wireless Revenue Growth, Record Second-Quarter Smartphone Sales:
Wireless revenues up 5.7 percent, service revenues up 4.1 percent versus the year-ago quarter
Wireless data revenues up 19.8 percent versus the year-earlier period
Wireless operating income margin of 27.1 percent; wireless EBITDA service margin of 42.4 percent reflecting record second-quarter smartphone sales of 6.8 million, including record Android sales
Added 1.2 million new smartphone subscribers; smartphones 88 percent of postpaid phone sales
Total postpaid ARPU up 1.8 percent; phone-only ARPU up 3.0 percent
Comment & Analysis:
AT&T’s strong wireless growth comes at a cost, because the company has to pay hefty mobile device subsidies (especially to Apple for iPhones and iPADs) for each new wireless customer it adds to its network. Those subsidies reduce net profits and profit margins. AT&T expects 2013 wireless profit margins to be better than in 2012, due to “a longer phone upgrade limit for customers who sign a two-year contract as well as a new device upgrade plan where consumers pay full cost for their phone.”
AT&T also faced additional competitive pressure in the quarter as smaller rival T-Mobile US started selling Apple’s iPhone, a top seller for AT&T.
Note: We’ll report comments from other analysts related to AT&T’s wireless service revenues and profits in the Comment box below this article.
Shedding light on the unique stories of the rural carriers and their impact on the heartland has been one of the most rewarding aspects of the Viodi View and ViodiTV. This month marks 10 years since the Viodi View’s inaugural issue. The articles that seem to resonate the most are those about the people of the industry. Hopefully, in some small way, we are preserving the memories those people make and the lives they touch.
Kevin Larson, of CTC in rural northern Minnesota, suggests that communities may need to form their own broadband networks, much like cooperatives were formed decades ago to bring telephone service to rural areas. In the final segment of this 4-part interview, Larson suggests that this could be an opportunity for existing telecom operators to lend management and operational experience that would help these communities in their quest for broadband. Click here to view.
Congratulations to Diane Kruse of NEO fiber for her appointment as the chairperson for the 2013 Broadband Communities Summit. In this interview, filmed at the 2010 Broadband Communities Summit, Kruse discusses the federal government stimulus and the fears some had surrounding the stimulus. She also discusses the Google fiber project which, at that point, was still a contest to see which community would be the winner. It truly is amazing that only two years later the first Google fiber customers are being activated, as this type of outside plant project often gets way-laid by non-technological considerations. Click here to read more and to view.
Alan Norman, Principal of Google’s Access Strategy group, presented the company’s plans for wireless broadband using white spaces at a Nov 2nd Wireless Symposium sponsored by Joint Venture Silicon Valley. Google wants to demonstrate that over-the- air TV and wireless broadband using white spaces can co-exist with licensed spectrum. In this article, a summary of Google’s efforts in this are given, including its trial in Capetown, South Africa, its proposal to share infrastructure among carriers and its muni-WiFi effort in Kansas City (where they are also deploying fiber to the home). Click here to read more.
In the most significant announcement since SBC acquired the old AT&T and became “the new” AT&T, the telco giant announced it will spend $14B over the next three years to expand its wireline and wireless networks under its newly coined “Project Velocity” initiative. The company wants to move to an all IP network platform, which means they’ll be phasing out TDM transmission and the PSTN. Click here to read Weissberger’s unique take and the ensuing comments on this well publicized announcement.
From multi-screen and over-the-top video to media consolidation, the technological and business landscapes have changed significantly since retransmission and must-carry rules were created by Congress almost 20 years ago. Retransmission consent and must-carry rules have remained among the most contentious and challenging for operators offering video services.
It is an honor to be moderating a webinar panel on this topic in two weeks with Chris Cinnamon of Cinnamon-Mueller, John Hane of Pillsbury Winthrop Shaw Pittman LLP and Matt Polka of the American Cable Association. Email me with any questions you would like asked of these esteemed panelists. Click here for registration information.
I know this story is anecdotal at this point, but this could be significant for smart phone users and wireless carriers if a link is established between cancer and where a cell phone is carried on a person’s body.
As was alluded to in this earlier article, Olympusat announced a strategic partnership with Kit digital and Akamai,to offer Content Delivery Network (CDN), Enhanced Storage Capabilities, video transcoding and digital media players to its customers for multi-screen applications.
We all make a difference. This thought comes to mind with the unexpected and untimely passing of Warren Lee from stroke at age 50. The former CEO of NeoNova, Lee and his team spun off the DSL service from Nortel. This team had developed the multi-megabit modem service; allowing independent telcos to offer DSL services for the first time. NeoNova continued to be a pioneer in that space, becoming a managed services provider for telcos throughout the country.
Click here to read this brief memorial and associated comments about Warren and the many people he touched in the rural telecom industry.
In the most significant announcement since SBC acquired the old AT&T and became “the new” AT&T, the telco giant announced it will spend $14B over the next three years to expand its wireline and wireless networks under its newly coined “Project Velocity” initiative. The company wants to move to an all IP network platform, which means they’ll be phasing out TDM transmission and the PSTN.
Surprising most analysts, AT&T said $6B of that $14B will be spent on wireline upgrades. In particular:
1. Residential Broadband via U-Verse, IP-DSLAM and (in some rural areas) LTE:
Traditional U-Verse (TV, high-speed Internet, VoIP) as well as U-Verse IP-DSLAM (high-speed Internet, VoIP, but NO TV service) will be available in many more areas with Internet access speeds of 75M b/sec for most customers, with many achieving speeds of up to 100 M b/sec (downstream).
Currently, 32% of AT&Ts customers are covered by (triple play) U-Verse, which will increase by one-third to 8.5M additional customers and 43% coverage by the end of 2015. U-Verse revenues are running at a $9B annual rate and increasing at a 38.6% annual rate. AT&T is making “customer retention improvements in all areas.” (Presumably to avoid losing U-Verse customers to triple play MSO services, e.g Comcast/Xfinity which runs commercials enticing U-Verse customers to come back to Comcast for better high speed Internet and TV service).
AT&Ts wired IP broadband network will expand to 75 percent of residential customer locations in AT&T’s 22-state wireline service area by year-end 2015. Not all of those potential customers will be able to get U-Verse TV service. Rather, they will be connected to IP DSLAMs to achieve higher speed Internet access. (This means AT&T will be jettisoning its ATM over ADSL network in favor of IP/Ethernet transport to/from customer premises to its initial point of presence where the DSLAM resides. Customers currently using ATM over ADSL will have to be retrofitted with new CPE to access U-Verse IP DSLAM or traditional U-Verse).
The higher Internet access speeds (over last mile copper) for U-Verse and IP DSLAM will be achieved by VDSL pair bonding, “small form electronics,” and VDSL vectoring.
Status Report: Currently about 9% of AT&T landline customers cannot get broadband, while 32% have the U-Verse triple play available to them, 32% have U-Verse IP DSLAM available and 27% are served via legacy broadband (i.e. non-IP DSL).
By the end of 2015, AT&T said 99% of customers in its 22 state service area will have broadband available to them via either via wireline or LTE option. The breakdown is as follows: 43% of customers will have access to the U-verse triple play, 32% will have access to the U-verse IP DSLAM and the remaining 25% will need to rely on LTE, which will be available to 99% of AT&T’s customer base.
Other key points related to residential broadband are as follows:
Much higher speed wireline Internet, via either U-Verse triple play or U-Verse IP DSLAM (double play) will be available to 57M AT&T customer locations by 2015. The IP DSLAM double play offering of broadband Internet and VoIP will be available to 24 million customer locations by year-end 2013. Those customers will be offered a triple play bundle based on IP DSLAM and satellite video service from Dish network.
Customers in rural or remote locations (presumably the 25% who won’t get wireline broadband access) will be able to get LTE wireless access, as AT&T plans to extend its 4G LTE build out to cover 300M POPs by end of 2014.
High speed IP connectivity will be available to 99% of wireline service?area customers (via either U-Verse, IP-DSLAM or LTE) by 2015.
Summing up, AT&T’s firmly believes that:
Wireline IP broadband is structurally attractive in dense population areas
IP broadband is the most important product in the triple or quad-play bundle
AT&T IP broadband will meet customers’ growing speed requirements
Significant synergies exist between wireless and wireline assets
2. Fiber to the Building deployment:
AT&T will light fiber to reach 1 million additional business customer locations, covering 50 percent of multi-tenant office buildings in AT&T’s wireline service area by year-end 2015. 50% of those multi-tenant office buildings in AT&Ts wireline service area will be fiber connected. (That’s up from about 15% nationwide today).
3. Strategic Business services:
IP VPN, Carrier Ethernet, (Web server) hosting and vaious managed business services generated $6.4B in revenues last year and is growing at 14.5% annually. Wireline data and managed IT services for enterprise customers are growing at a rate in excess of 6%.
Cloud computing and security are seen as the next big growth opportunities as AT&T transitions to managed services for its enterprise customers. In particular, AT&T plans to partner with cloud service providers as well as providing cloud services over their own managed IP network that leverages performance, reliability and security. During the Analyst Day webcast, AT&T said, “Virtualization and mobilization are driving the need for a ubiquitous, dense wireline footprint solutions that bundle cloud with connectivity (AKA Cloud Networking), symmetrical bandwidth, and security through active network management.”
Century Link/Savvis and Verizon/Terremark are recognized cloud leaders each having very solid cloud computing with managed IP VPNs for delivery of cloud services. They will now have much more competition from AT&T in the cloud space.
Additional information on U-Verse:
As indicated in the graph below, AT&Ts broadband market share is growing in areas where U-Verse is available to residential customers.
U-Verse has delivered 5 years of top line growth for AT&T:
$9.5B revenues, which are growing 38% Year over Year
7.1M IP broadband subscribers, with 2.5M added in last 12 months
4.3M IPTV subscribers, 760K gained in last 12 months
18% U-verse video penetration; 23% U-verse broadband penetration
~$170 ARPU for U-verse triple-play service bundle
Synergies between AT&Ts wireline and wireless networks:
At a Wells Fargo investment conference on November 8th, AT&Ts VP & CFO John Stephens said that AT&T evaluated commercial buildings with six tenants or more to determine whether they should get fiber connected. Considerations included: distance from AT&Ts central office (CO), cost efficiency and build-out cost.
A huge side benefit for AT&T is that once the fiber to the building is installed and AT&T owns the right of way, the company will install Distributed Antenna Systems (DAS) along the fiber route to provide increased 3G/LTE wireless coverage. The DAS’s would use fiber backhaul to AT&Ts CO. Mr. Stephens hinted that DAS’s (deployed along the fiber-to-the-building route) might also be used for broadband wireless offload, but did not disclose any details how that might work or be configured.
[Infonetics analyst Stéphane Téral recently said in an email, “The majority of operators are still using distributed antennas (DAS) in their mobile networks for coverage, and despite all the talk about using small cells to boost capacity in large venues, operators we interviewed believe DAS will remain a fundamental tool for malls, airports, stadiums and the like.”]
Mr. Stephens was both enthusiastic and confident during his presentation. He said, “AT&T is investing in tried and true things we know. We are moving away from PSTN and torward an all IP network platform for delivery of all telecom services including voice.”
During its November 7th Analyst Day webcast, AT&T CEO Randall Stephenson echoed Mr. Stephens confidence, “These are things we’ve done before – logical extensions of proven technologies and already successful businesses. We are very confident in our ability to execute this plan.”
AT&T, the largest US telecommunications carrier, reported net profit of $3.64bn in the third quarter or $0.63 per diluted share of common stock. That compares with $3.62bn, or $0.61 per diluted share, in the year-earlier quarter. Strong wireless revenue gains coupled with continued growth in its U-verse video and strategic business services units helped AT&T report solid third-quarter 2012 earnings. Consolidated revenues of $31.5bn were flat year year-over-year, but up 2.6 per cent when adjusted for the advertising solutions sale.
“We had another impressive quarter with strong earnings growth, record cash flows and solid returns to shareholders through dividends and share buybacks,” said Randall Stephenson, AT&T chief executive. “Our strong performance allows us to increase our free cash flow guidance to $18bn or higher this year, exceeding our previous outlook by $2bn.”
AT&T now expects capital expenditures for the year to come in at the low end of $19bn-$20bn while its rollout of a new “4G” wireless network based on LTE technology is ahead of schedule (but still way behind LTE leader Verizon Wireless).
AT&T Mobility added a net 678,000 subscribers during the quarter, sold 6.1 million smartphones, including 4.7 million Apple iPhones, and reported record sales of Android and Windows smartphones. However AT&T ‘s wireless unit only added 151,000 monthly contract customers, less than half of what most analysts had expected. Total wireless revenues, which include equipment sales, were up 6.6 per cent year on year to $16.6bn. Wireless service revenues increased 4.5 per cent to $14.9bn while wireless data revenues – driven by mobile internet use, access to applications, messaging and related services – increased 18.3 per cent to $6.6bn.
AT&T Mobility Highlights:
Wireless revenues up 6.6 percent; wireless service revenues up 4.5 percent
Strongest postpaid wireless subscriber ARPU (average monthly revenues per subscriber) growth in six quarters, up 2.4 percent to $65.20; phone-only ARPU up almost 3 percent
Strong smartphone sales of 6.1 million; postpaid smartphone customer base now 44.5 million, up 1.4 million from second quarter 2012
4.7 million iPhones activated; record sales quarter for Android and Windows smartphones
Best-ever third-quarter postpaid churn
678,000 net increase in total wireless subscribers, including gains in every customer category
Wireless operating income margin of 26.2 percent; EBITDA service margin of 40.8 percent with strong smartphone sales
The number of subscribers on usage-based cellular data plans continues to increase. Usage-based plans include tiered data plans and the recently introduced Mobile Share plans. About 64 percent, or 28.5 million of all smartphone subscribers are on usage-based data plans. This compares to 50 percent, or 18.0 million a year ago. About three-quarters of customers on tiered data plans have chosen the higher-priced plans. Early results from sales of Mobile Share plans have been positive. Nearly 2 million subscribers signed up for Mobile Share plans in the first five weeks they were available, with take rates on the higher-data plans stronger than expected. More than a third of Mobile Share subscribers are taking plans of 10 gigabits or higher. Overall, AT&T’s postpaid wireless subscribers on data plans increased by 11 percent over the past year.
Churn (customers switching to another cellular network provider) fell to 1.08 percent, compared to 1.15 percent in the year-ago third quarter and 0.97 percent in the second quarter of 2012. Total churn was 1.34 percent versus 1.28 percent in the third quarter of 2011 and 1.18 percent in the second quarter of 2012.
AT&T’s third-quarter wireline results were led by strong U-verse TV and high speed Internet gains and accelerating wireline consumer revenue growth. Subscribers to the U-verse TV and high-speed internet service reached 7.4m in the third quarter. Broadband internet added a net 613,000 subscribers to reach 7.1m in total, helping offset losses from the digital subscriber line (DSL) service.
Total business revenues declined 2.6 per cent to $9.1bn. But declines in legacy products were largely offset by continued growth in strategic business services. Revenues from these services – the new-generation capabilities that lead AT&T’s most advanced business including Ethernet, virtual private networks (VPNs), hosting, IP conferencing and application services – grew 11.4 per cent year on year.
U-verse Subscribers Continue Strong Growth. Total AT&T U-verse subscribers (TV and high speed Internet) reached 7.4 million in the third quarter. AT&T U-verse TV added 198,000 subscribers to reach 4.3 million in service. AT&T U-verse High Speed Internet delivered a third-quarter net gain of 613,000 subscribers to reach a total of 7.1 million, helping offset losses from DSL. Overall, AT&T wireline broadband connections decreased 42,000. However, total broadband ARPU was up almost 10 percent year over year.
A majority of U-verse broadband subscribers have a plan delivering speeds up to 12 Mbps or higher — 54 percent, up from 43 percent in the year-ago quarter. About 90 percent of new U-verse TV customers took AT&T U-verse High Speed Internet in the third quarter. About three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T. ARPU for U-verse triple-play customers was more than $170, up slightly year over year. U-verse TV penetration of eligible living units continues to grow and was at 18.0 percent at the end of the third quarter.
Closing Comment & Analysis:
In light of its failed takeover of T-Mobile, we wonder how AT&T will respond to all the mergers and acquisitions in the wireless telco space. In particular, T-Mobile and MetroPCS along with Softbank and Sprint (especially now that Sprint owns over 50% of votes on Clearwire’s Board of Directors).
In 2011, federal regulators blocked AT&T’s bid for T-Mobile, resulting in a loss of $6 billion for AT&T — the $4 billion it was required to pay T-Mobile over the failed acquisition, plus the estimated value of the broadband licenses it was required to grant T-Mobile.
T-Mobile (with MetroPCS) and Sprint (with the huge Softbank investment and control of Clearwire’s Board) are financially stronger and attempting to get much bigger. Softbank’s proposed 70% ownership of Sprint (over $21B) would be the largest acquisition of a US company by a Japanese buyer. Sprint CEO Dan Hesse recently commented on his company’s deal with Softbank:
“This is pro-competition and pro-consumer because it creates a stronger number three to compete with AT&T Wireless and Verizon. Over the longer term I think we will see consolidation in the US industry and what this does is give Sprint the balance sheet and financial flexibility to play a larger role in consolidation in the future.”
AT&T issued a statement that noted Sprint’s control over Clearwire would convey to SoftBank “control of significantly more U.S. wireless spectrum than any other company.” AT&T said it expected “that fact and others” to be considered in the federal review of the SoftBank bid for Sprint. However, it looks likely to this author that the regulators and U.S. Justice Dept will approve the transaction.
The cellular deal frenzy would reach a fever pitch if (the soon to be financially stronger) Sprint makes a bid for T-Mobile, as was reported several weeks ago. Such a merger would give the combined telco approximately as many wireless customers (monthly and pre-paid subscribers) as either Verizon or AT&T. It would also mean that just three carriers (AT&T, VZW and Sprint/ T-Mobile/ MetroPCS) would control almost the entire market. That would be very bad for consumers who would then have less choice of provider and would likely pay more with diminished competition.
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The FCC 180 day clock is officially known as “Informal Timeline for Consideration of Applications for Transfers or Assignments of Licenses or Authorizations Relating to Complex Mergers.” It is intended to identify generally what tasks the FCC needs to accomplish in order to complete its review in cases involving complex or difficult issues, the normal order in which these tasks can be most efficiently performed, and the time normally needed to complete them. The timeline represents the Commission’s goal of completing action on assignment and transfer of control applications (i.e., granting, designating for hearing, or denying) within 180 days of public notice. Routine applications should be decided well within the 180-day mark. More complex applications may take longer.
It is the Commission’s policy to decide all applications, regardless of whether they are highlighted on the web page, as expeditiously as possible consistent with the Commission’s regulatory responsibilities. Although the Commission will endeavor to meet its 180-day goal in all cases, several factors could cause the Commission’s review of a particular application to exceed 180 days. Delay in action beyond the 180-day goal in a particular case is not indicative of how the Commission ultimately will resolve an application. The timeline is intended to promote transparency and predictability in the Commission’s process.
The FCC had stopped the 180 day countdown on July 21st, saying that AT&T had indicated that it had revised its models to support the merger’s approval. But today, the FCCs Rick Kaplan writes that the Commission has “received AT&T’s answers to our specific questions as well as AT&T’s confirmation that it believes our record is complete with respect to its economic models (for LTE deployment). Our understanding is that, unless specifically prompted by a request from the Commission or the Department of Justice, AT&T will not be submitting any further revisions to the models.” Hence, the FCC has restarted the 180 day clock from day 83, which means there are 97 days remaining before the FCCs final decision on the merger/acquisition.
“We are pleased that the FCC has restarted the clock, and we are confident that the Commission will move expeditiously to complete its review of our merger with T-Mobile,” Bob Quinn, AT&T’s senior vice president for federal regulatory issues, said in a statement.
What the AT&T/T-Mobile Deal is Really About
The central issue in the proposed $39 billion acquisition is whether the combined company would benefit consumers enough to overcome concerns that the deal could limit wireless competition. AT&T, the nation’s second-largest wireless carrier after Verizon Wireless (VZW), announced a deal to acquire fourth-largest carrier, T-Mobile this past March.
AT&T has claimed that it’s goal in acquiring T-Mobile was to expand it’s 4G-LTE network to cover rural areas in the U.S., which otherwise could not be economically justified. In particular, they say that with T-Mobile’s real estate and cell towers, the company can extend its LTE footprint from 80% to 97% of the U.S. population. “The rural wireless buildout is the biggest political benefit AT&T is proposing from this merger,” said Paul Gallant, a telecom analyst at MF Global Holdings Ltd.’s Washington Research Group. Making high-speed Internet service to all Americans (especially in unserved/ under-served rural areas) has been a top priority of FCC Chairman Julius Genachowski. Extending wireless broadband to rural areas would enable Americans outside of big cities to experience video downloads, streaming video, and other data-heavy applications and services on their AT&T smartphones, tablets or notebook PCs.
“We look forward to providing the commission with this additional information, which will further confirm that we would not be able to deliver 4G LTE to 55 million more Americans without our merger with T-Mobile,” an AT&T spokeperson said.
However, public interest groups and Sprint have argued that the real reason for the acquisition is to stifle wireless competition, which would give consumers fewer choices (and possibly higher monthly bills). There seems to be substantial evidence to corroborate their position.
Free Press, an advocacy group working for media reform, last week sent a letter to select members of Congress saying they had been misled earlier this summer “by AT&T’s false claim” that it needed to acquire T-Mobile so it could deliver wireless broadband to 97 percent of the nation’s population. That letter, references a now redacted August 8th letter filed by AT&T with the FCC, in which the company said it would require an estimated $3.8 billion in capital expense to expand LTE coverage from 80 percent to 97 percent of the U.S. population, one-tenth the amount needed to acquire T-Mobile. The redacted AT&T letter originally appeared on the FCC’s web site but was removed at AT&Ts request. AT&T spokesman, Michael Balmoris, said the redactions were intended to keep its confidential information from public view.
Calling the benefits of the acquisition as described by AT&T “little more than smoke and mirrors,” Free Press’ letter cites the redacted document from AT&T to the FCC as proof that the “new Ma Bell” can deliver 97 percent mobile broadband coverage without the acquisition of T-Mobile and its spectrum. Free Press asked the Congressmen to review the information contained in the document and revise their recommendation of the acquisition to the Department of Justice and the FCC.
In particular, an August 4th teleconference between AT&T’s legal team and FCC staff states that AT&T management initially had rejected additional spending to expand LTE service coverage of the U.S. population from 80 percent to 97 percent. In January, AT&T executives concluded there was “no viable business case for the proposed (LTE network) expansion.” The August 8th redacted letter provides the specific details for that decision: AT&T had considered and rejected plans to expand its LTE network on its own to cover 97% of the U.S. at a cost of $3.8 billion, which was deemed to be prohibitively expensive. Yet that’s less than a tenth of the cost of the proposed T-Mobile acquisition!
Continuing, the August 8th letter says that the acquisition of T-Mobile “changes the calculus of LTE deployment” and makes it more acceptable for AT&T to “absorb the increased capital investment and lower returns” resulting from deployment to more than 97 percent of the U.S. population.
And that seems to be the rationale for AT&Ts acquiring T-Mobile —to cover an additional 17% of the U.S. population (from 80% on its own to 97% with T-Mo added) with an LTE network from the combined companies. It’s interesting to note that neither company has yet to deploy an LTE network, but clearly AT&T wants T-Mobile’s cell towers, spectrum, and equipment to expand its LTE network footprint.
The WSJ has reproduced a copy of AT&Ts redacted August 8th letter:
Free Press rejects the AT&T claim about justifying the T-Mobile merger based on an expanded LTE footprint. In its letter to Congress, Free Press states that the acquisition is more about doing away with competition than affordable LTE deployment. “In spite of all the evidence to the contrary, AT&T continues to assert that its $39 billion purchase of T-Mobile is necessary for the company to bring high-speed mobile broadband service to 97 percent of the country. The numbers don’t add up. It’s clear that AT&T is willing to pay a hefty premium to kill the competition,” the letter said.
An Even More Unusual Twist and Turn by the FCC in this case [Editor’s note: this section added on 8/26]
In their Aug 24th letter the FCC wrote, “Specifically, we understand that AT&T’s senior management concluded the transaction would improve the likely return on the additional LTE deployment to create a business case for this deployment where one would not exist absent the transaction. At our August meeting, Commission staff requested any documents related to this statement, including any estimates of transaction-related changes in cost, revenue, andlor profitability associated with additional LTE deployment. Although AT&T has stated that it has not quantified the transaction-related changes in the business case for extending its LTE footprint, we ask that you supplement your filing with any documents or analyses explaining why the changes in cost, revenue, and/or profitability are likely to be large enough to change the overall business case for the additional deployment.”
AT&Ts reply to that Aug 24th FCC letter was not publicly disclosed or described in Rick Kaplan’s previously referenced Aug 26th letter restarting the 180 day clock.
Might that be a lack of FCC transparency or simply potecting highly confidential information provided by AT&T? And whatever info AT&T did provide on its economic models, its even more incredible that the FCC could evaluate same in only one day (Aug 25th), as the 180 day clock was restarted the morning of Aug 26th!
AT&Ts Santa Cruz Customer Are Not Happy Campers
The San Jose Mercury News writes that AT&Ts T-Mobile acquisition would bring LTE to Santa Cruz County, CA residents. Santa Cruz County represents topographical challenges because it’s on the Pacific coast and is mountainous. AT&T claims their antennas have a limited capacity, which results in dropped calls during busy times. Using T-Mobile’s existing cell towers will help alleviate that problem and provide the basis for LTE deployment in the county, according to the article:
The Merc reports that for some Santa Cruz customers, the promised improvements are too little, too late. They have left AT&T for a competitor.
“I have great coverage in Santa Cruz and while driving over (Highway) 17,” said Steven Kozak, who switched to Sprint.
“If AT&T acquired T-Mobile, I will be forced to find a new provider,” said Bruce Reiss, who went to T-Mobile after experiencing bad service with AT&T from 2003 to 2007.
Santa Cruz resident Stephen Hauskins is among the unhappy AT&T customers. “Most of my calls get dropped or I can’t even get a connection,” said Hauskins, who lives on Western Drive. However, he has no problems making calls when he’s at UC Santa Cruz or on the lower Westside.
Jerry Granger, an AT&T customer on 36th Avenue in Mid-County, said he deals with dropped calls, missed calls and poor reception.
We leave it to the reader to decide whether AT&Ts buyout of T-Mobile is really intended to extend it’s LTE footprint to rural or sparsely populated areas. Again, AT&Ts claim is that it will bring LTE from 80% to 97% of the US population. Public interest groups say that’s a smelly smokescreen and that the real reason for the deal is to knock out Sprint and lower tiered wireless competitiors, leaving only AT&T and VZW as dominant duopolies of the U.S. wireless world.
This is the 2nd of 3 articles that explore new telco markets and opportunities. Much of the information gathered for these articles comes from the 2011 Connections conference in Santa Clara, CA. The 1st article, New Telco Services Enable the Connected Home, described different versions of a “connected home,” including consumer electronics for home entertainment, home energy monitoring & control, and security/ surveillance systems. This article examines emerging devices (that have or will soon have embedded wireless communications capability) and M2M communications capabilities that enable those devices to connect to telco networks.
While cell phones, media tablets and netbook/notebooks are generating the overwhelming majority of data traffic on wireless networks, there are a growing number of non-traditional devices which are gaining market traction. These are known as emerging devices, embedded devices, or “the Internet of Things (or IoTs).” They may be stand alone devices connected wirelessly to the Internet (e.g. digital signage on a billboard or a vending machine), tracking devices, eReaders, camcorders, on-line game players, or any device installed at home, in a vehicle, ship, or in an enterprise that has direct Internet connectivity (which is not necessarily broadband). These new devices will be described from AT&Ts perspective in this article.
On the network side, new telco platforms for Machine to Machine (M2M) communications are being built to support a very diverse, large and increasing installed based of connected machines and devices. We’ll examine Sprint’s M2M initiatives and enablement activities later in this article.
Note that this article does not discuss any of the consumer electronic, home energy monitoring or security gear in the “connected home,” which was the subject of Part 1 of this three part article series.
Glen Lurie’s Emerging Devices talk at 2011 Connections Conference
During a keynote session at the 2011 Connections conference, Glen Lurie – president of AT&T Emerging Devices, Resale & Partnerships- described the AT&T Emerging Devices Organization and its key intiatives. He noted the stupendous growth in both connected devices and wireless data traffic and predicted even more explosive growth in the years ahead.
The AT&T Emerging Devices Organization was formed in 2008 to leverage the tremendous growth in the demand for wireless data and build the “next big thing” in the communications industry. It was created to bring wireless connectivity to a host of new devices (not just smart phones, netbooks & notebooks) and applications in the consumer marketplace. One objective was to build strong partnerships (with AT&T) to launch innovative products in new connected consumer market segments. Recently announced partner relationships include: Ford Electric Vehicles, Sony Vita, Amazon Kindle eReader, BMW Telematics, and with multiple Tablet makers.
The U.S. wireless penetration in 1995 was 13%, in 2010 it grew to 96%, and by 2013 it’s expected to reach 107%. But that latter projection evidently doesn’t included M2M or Device to Device (D2D) connectivity, which would make the penetration rate much higher (more on this later in the article).
According to Mr. Lurie, the U.S. leads the world in mobile broadband and AT&T leads the U.S. in that category. AT&T mobile data traffic increased 8,000% in the last four years. Glen expects mobile data traffic volumes to be 8 to 10 X greater by 2015 The composition of that mobile data has changed significantly over the last few years with the availability of 3G/4G networks, smart phones and media tablets. For years, the majority of mobile data consisted of email and SMS messages. But now, it’s shifted to mobile apps, on line games, web surfing, video and audio streaming content and even content creation (still pictures and video) upload from the mobile devices. As a result of this shift in traffic types, total mobile data traffic has gone from 1/2PB per month in 2007 to 12PB per month in 2010 and is expected to reach 150PB per month in 2015.
AT&Ts wireless emerging device business is growing very rapidly. Here are a few AT&T 1Q11 highlights:
Added 1.6 M emerging devices in
1Q11, 9 M in 2 years
21.3% YOY quarterly growth in devices added
Looking ahead, Mr. Lurie referenced the forecasted phenomenal growth of “Connected Devices.” Here are a few predictions made by IT industry leaders:
“Our vision is that by 2020, we will have 50 billion connected devices” – Ericsson CEO, Mar 2010
“There will be 1 trillion devices connected to the Internet by 2013” – Cisco CTO, Mar 2010
“Shipments of connected CE (consumer electronic) devices are forecasted to grow at a rate of 65.2% (CAGR) to reach 271 million in 2015” – Berg Insights, Feb 2011
“Machine-to-Machine (M2M) traffic will increase 40-fold between 2010 and 2015” – Cisco VNI Mobile Forecast, Feb 2011
Areas of emerging device growth are expected to be the connected car, home health, home automation, unified media and unified communications. These are all expected to sync our personal settings to the appropriate environment. A major challenge is to blend these business ecosystems into a unified business model with a single bill for users. That single bill model was pioneered by the Amazon Kindle- AT&T arrangement, where the Kindle user pays only to dowload an eBook from Amazon, which then pays AT&T a share of that for 3G access.
Table 1. Trends in Emerging Devices by Category (Source: AT&T)
Purchase content anywhere
Share content across devices
Optimize reading experience
Share memories as they happen
Manage control remotely
Dosage reminders – text or voice
Family alerts to ensure adherence
Track adherence over time
Track what’s important
Monitor vital stats
Use geofence parameters
Extending connectivity to the car via “Tethered Solutions”
Leverage content & apps from smartphone
Streaming audio & video
Access to web, cloud for entertainment
Embedded Solutions in the car
Engine, system diagnostics
Auto crash notification
Stolen vehicle assistance
Navigation, local search
Emergency voice calls
Remote Unlock, Remote Start
Real-time traffic, weather, parking
State of charge & pre-conditioning for Electric Vehicles
Moisture Sensing, Water Shut Off
WiFi Touch Pad
Synching it all up with devices in the connected home…
The home becomes the hub of personal data
Access via any web-enabled device
Share content across all connected devices
Transition experiences between devices
To handle the explosive growth in mobile data traffic and the huge increase in connected devices, AT&T claims they are building the nation’s most advanced wireless network. Mr. Lurie cited a sustained investment of $19B which is committed to build out AT&T networks in 2011. LTE deployment has been accelerated and is planned to be largely complete by the end of 2013. Mr. Lurie said AT&T’s proposed merger with T- Mobile would bring integrated tower grids with compatible technology to drive efficiency and add capacity. With that merger, AT&T can commit to cover 97% of all Americans with LTE. [Editor’s note: one source estimates that this represents approximately 50% of the U.S. landmass].
According to Mr. Lurie, several factors are coming together in this space of non-traditional connected wireless devices: Demand is exploding, Innovation is soaring, Connected Devices provide the platforms, and Consumers will benefit as a result.
Mr Lurie concluded by saying, “Rethink is possible. AT&T is dedicated to the relentless pursuit of innovation and our Emerging Devices Organization is committed to accelerating next-generation wireless device development and speed-to-market on the nation’s fastest mobile broadband network.”
For more information, please visit: http://www.att.com/edo/
AT&T Emerging Device Innovation Center & Development Ecosystem
To help companies design, develop and finalize specifications for the many new emerging devices, AT&T has created a development community. This community consists of start-ups, device makers, application developers, and AT&T network personnel. It helps with IP and implementation plans, but also business models, business process development, and schedules for deployment. AT&T Emerging Devices CTO John Donovan is overseeing this ED Innovation Center. Read more about this new developer resource at: http://www.att.com/edo/launch-your-device/finalize-specifications/
Sprint’s M2M Enablement and M2M Collaboration Center
Mike Finegan, Manager of M2M Solutions Engineering for Sprint’s Emerging Solutions Group has talked about Sprint’s M2M platform and initiatives at an IEEE ComSocSCV workshop and a seminar/ tour of Sprint’s Advanced Development Center earlier this year. We believe that Sprint is the leader in M2M communication platforms and has a very impressive M2M Collaboration Center in Burlingame, CA.
Mr. Finegan described Sprint’s network as being reliable and secure IP transport with nationwide mobile broadband (3G, mobile WiMAX-4G) coverage. They claim they offer the broadest network choice and are a leader in Location Based Services (LBS). Hundreds of non-Sprint devices have been certified and millions of non-Sprint devices are on their network. Sprint is currently very focused on support of many different types of M2M devices and applications.
Sprint has developed a M2M web services based platform to handle the many new and different devices that are and will be connected to their network. The platform handles provisioning, IP address assignment, operations management, billing and other functions (see quote below).
Please refer to Figure 1. for a functional block diagram of a typical M2M application.
Sprint’s goal is to spur innovation by enabling the ecosystem and to that end they have a very impressive M2M collaboration center where device makers and application developers can work with Sprint to test their products over Sprint’s 3G and 4G network. This M2M center includes both public and private labs with:
Test equipment and RF chambers
Cabled and native wireless access
Solution design and engineering resources
Innovation and collaboration rooms
Solutions showcase and demonstrations
Access to leading partners
Mr. Finegan concluded by saying,
“The Sprint M2M Command Center is a purpose-built infrastructure that provides billing activation, billing suspension, automated API activation, private 5YY ESN assignment, IP addressing, billing plan pooling, utilization alerts and notification. This self-service portal allows customers to have command of the provisioning, activation, and billing process effectively giving them control and allowing them to be their own carrier.”
It isn’t often that a former boss and mentor’s son makes the news. My first professional awareness of André Vrignaud was last September when I read an announcement that he had moved from one Seattle internet giant to another Seattle internet giant. So, it was a bit surprising to see him making headlines for a different reason. That is, he is the Seattle customer who Comcast cast off for accessing too much Internet.
The best source of his saga is his blog. In short, he exceeded Comcast’s 250 Gbyte/month cap and they cut him off from their service for a year. He suspects the reason he exceeded the cap was that he just signed up for online back-up service Carbonite and Amazon’s Cloud Drive service. Thanks to his uncompressed audio collection and thousands of high quality photos, he has terabytes of data which could account for why he exceeded the cap. He isn’t the first to exceed his cap due to an online back-up service, as indicated by this post from David Martin.
Vrignaud argues that,
“The ability to access broadband internet is a right, and should be defined as an essential utility.”
“Everyone in the United States today should have access to broadband services supporting a basic set of applications that include sending and receiving e-mail, downloading Web pages, photos and video, and using simple video conferencing.”
Although the NBP suggests a 4/1 Mbs download/upload speed as today’s minimum definition of broadband, it does not seem to bound the amount of “access”. In the case of their minimum definition, assuming an aggregate access rate of 5 Mbs (download plus upload), bandwidth usage would be approximately 625 kbytes per second or 1.62 Tbytes per month or more than 6x the Comcast cap and 10x the AT&T limit.
Granted, Vrignaud is at the extreme in terms of today’s bandwidth consumption. However, as the demand for bandwidth increases more of us will be bumping into these caps. As pointed out by network engineer and IT specialist, Andrew Froehlich, caps could have a chilling effect on internet applications and cloud services. For instance, based on what I saw happen to Vrignaud, I am going to be much more cautious about using a given cloud application.
Vrignaud asks some very good questions that ISPs should have a cogent response to, if they are going to be able to justify caps to policy makers and to their customers.
Is your bandwidth data cap designed to protect your television distribution business? If not, why do you insist on completely cutting off data instead of using other more consumer-friendly options such as charging for overages or slowing internet use?
What ISP-offered services are excluded from the cap? Specifically, are your voice telephony and video programming services excluded? If so, why doesn’t your data cap apply to data consumed when watching television or making a phone call?
How are your data caps set? What data informed that decision? Why do different ISPs have different data caps when using similar networks and distribution technology?
How are your data caps evaluated on an ongoing basis? What customer input do you seek? What are the conditions under which those caps could be raised and/or eliminated?
Do you practice selective enforcement of data caps? (Many ISP users report being over their supposed limits for months in a row without action.)”