Transcript CMRS - Ohio University

Wireless
(based on latest FCC report, January 2009)
• In the year ending December 2007
– Mobile telephony subscribership was 263
million (86% penetration rate)
– Average minutes of use was 769 per month
– Text messaging 48.1 billion messages per
month in December 2007
– Revenue per minute was $0.06 during 2007
(down from $0.07 in 2006)
Comparisons
• In 2007 US mobile penetration rate
surpassed Japan for the first time
• US mobile subscribers lead the world in
average voice usage
• Mobile calls in the US are less expensive
per minutes than in Western Europe
($0.20) and Japan ($0.26)
Wireline-wireless
• During second half of 2007, 14.5% of US
adults lived in households with only
wireless phones (up from 11.8% in second
half of 2006).
• During second half of 2007, 31% of adults
aged 18-24 lived in households with only
wireless phones and 34.5% of adults aged
25-29 lived in wireless-only households.
Wireless Services
• How regulated?
– FCC has authority to issue licenses
– Communication Act expressly prohibits private
ownership of radio spectrum—government to
maintain control—gives FCC close to absolute
authority over the structure of the industry,
geographic markets to be served, and the services to
be provided
– Traditionally classified under two categories
• Private land mobile and public mobile service
– Private land mobile did not interconnect with the PSTN and so
was not common carriage; public mobile service did connect
and so is common carriage
CMRS
• New Categories in 1993: Congress (in Omnibus Budget
Reconciliation Act) created two newly defined
categories: Commercial mobile radio service (CMRS)
and private mobile radio service (PMRS)—to promote
consistent regulation of mobile services.
– 47 CFR Section 20.3: Commercial mobile radio service is a
mobile service that is (1) provided for profit, (2) an
interconnected service, and (3) available to the public
– Congress allowed FCC to forbear from provisions of Title II of
the Communication Act—FCC has practiced forbearance on
tariff obligations and on any market entry or exit restrictions
• Mobile Telephony includes cellular, PCS, Specialized
Mobile Radio (SMR)—and now data and Internet access
services as well
Price regulation
• Till 1993 states had authority to regulate intrastate
wireless services (mostly cellular at that time)
– 26 states regulated cellular services (average price for regulated
MSA’s was $98.10 per month in 1994)
– 25 states did not regulate cellular services (average price of
unregulated MSA’s was $70.59 per month in 1994)
• 1993 Congress:
– Preempted the states from regulating entry of CMRS or PMRS
providers
– Preempted the states from regulating rates, though did allow
states to petition FCC to regulate or continue regulating rates.
• Eight states petitioned unsuccessfully ( Connecticut, Ohio,
Louisiana, Arizona, Hawaii, New York, California). By 1995 all
regulation of wireless prices ended
Remaining state authority
• Placement of towers, cell sites and other
facilities
– Can’t discriminate among providers, or prohibit
provision of service, and all decisions subject to
appeal
• Telecom Act does provide that a state may once
again regulate CMRS to ensure provision of
universal service if it is a substitute for landline
service for a substantial portion of the
communications within the state (hasn’t
happened yet)
Licensing
• Under section 301, licensees are granted
spectrum rights for a fixed period of time with no
vested interest in renewal.
– Before 1993, common carrier licenses were 10 year,
and private licenses were 5 year; in 1993 Congress
made it uniform so licenses are now all 10 year
– De facto property rights have been established—FCC
and courts have found a “renewal expectancy”—pro
forma process of renewal
• “Build out” requirements—five years for cellular
and broadband PCS
Zoning and Dezoning
• Zoning
– FCC has broad authority to zone wireless
licenses for specific uses
– FCC has traditionally restricted use of
spectrum to specific services and has
prohibited radio licensees from slicing up
spectrum into either geographic or frequency
sub-bands
• Movement toward dezoning
Dezoning and spectrum allocation
• FCC initially authorized up to 8 mobile licenses (2 cellular and 6
PCS) plus SMR licenses
• Many licensees hold more than one license in a particular market
• Spectrum cap: entities could not control more than 45 MHz of
cellular, PCS, and SMR spectrum in an MSA or more than 55 MHz
in an RSA; in November of 2001 FCC raised the cap to 55 MHz in
all markets and eliminated the cap effective January 2003.
• FCC forbids an entity to have cross-interests in cellular licenses on
both cellular block A and cellular block B within an RSA.
• PCS, cellular, and SMR licensees may with FCC approval
disaggregate (divide spectrum) or partition (divide into smaller
geographical areas) their licenses and lease them to other carriers
• “Private commons” arrangements
Licensing methods
• Comparative hearings (beauty contests)
– First used to allocate A block cellular licenses
• Very time consuming—2 years to do 30 licenses
• Lottery
– Used for most of the cellular licenses
• Auctions
– Used for PCS, SMR, and 3G licenses
– Currently preferred method by the FCC
Interconnection
• Local landline networks
– Major issue has always been no discrimination in
favor of affiliated wireless companies
– Early connections were based on idea of wireless
company being a customer of LEC rather than a cocarrier—Type 1 rather than Type 2 connections
– FCC had to step in with a policy statement resolving
disputes—greatly contentious issue
– Series of disputes regarding “mutual compensation,”
cleared up by the Telecom Act of 1996
Interconnection
• With Long Distance networks
– Between 1984-1996, Greene court kept requiring
equal access by Bell affiliated wireless carriers; and
Greene court kept dealing with the difference in
wireless license boundaries and LATA boundaries
– Telecom Act provides that CMRS providers are not
required to provide equal access for toll services
• Wireless to wireless
– FCC has not set up explicit requirements
– Under Telecom Act, CMRS are telecommunications
carriers so subject to basic interconnection
requirements; not defined as LECs so not held to
those standards
Mobile Telephone Services
• Cellular telephone service
– In the US began in Chicago in late 1983 and in Los
Angeles during 1984 Olympics
– Question about whether license would go to RBOCs
or to AT&T at Divestiture
– FCC licensing took from 1982 till 1991
– 734 cellular market areas, including 305 Metropolitan
Statistical Areas (MSA’s), 428 Rural Service Areas
(RSA’s) and a market for the Gulf of Mexico
– Began as analog service, now virtually all digital
Cellular continued
• Service duopoly:
– FCC allocated 50 megahertz of spectrum in the 800
MHz frequency band; two competing systems in each
market each got 25 MHz
– B block for the wireline telephone company; A block
competitively awarded
– First 30 MSA’s awarded through a beauty contest—
took two years
– Rest of MSA’s and the RSA’s awarded through a
lottery by 1991; in 1997 FCC auctioned cellular
spectrum in areas unbuilt by original licensees; in
2002 FCC auctioned three RSA licenses where initial
lottery winner had been disqualified.
PCS (auctioned 1995-2001)
• Narrow band
– Three megahertz in the 900 MHz band
• Advanced voice paging, two-way acknowledgement paging,
data messaging, electronic mail and fax—services that
require no more than 50 kilohertz per licensee
• Broadband
– 120 megahertz in the 1850-1990 MHz band
• Three bands of 30 MHz (blocks A, B, and C) and three bands
of 10 MHz (blocks D, E, and F)
• Unlicensed
– 30 megahertz – used for terminal devices, very low
power so spectrum could be reused many times
Geographic coverage of PCS
• Narrowband
– 11 channels nationwide, 6 channels for each of 5
large regional subdivisions, 7 channels each for 51
MTA’s (Major Trading Areas), 2 channels each for
492 local BTA’s (Basic Trading Areas)
• Broadband (auctions raised $20 billion)
– Two 30 MHz blocks (A & B) in each of the 51 MTA’s,
the third block (C) and the three 10 MHz blocks (D,
E, & F) in each of the 493 BTA’s.
SMR
• Began as dispatch services—expanding to
include paging, mobile voice, mobile data, fax,
etc. So interconnects in some cases, does not
in others.
– Initially allocated 14 MHz of spectrum, divided into
280 channels of 50 kHz each) in the 800 MHz band;
in 1986 added 200 channel pairs in the 900 MHz
band; 1990 added 150 more channels in the 800 MHz
band
– Relicensing through auction
• 900 MHz band, 20 ten-channel blocks (five MHz) at the MTA
level; 800 MHz blocks also relicensed at the EA (Economic
Area) level—created 200 channel blocks—Nextel dominated
the 800 MHz auction process
Providers
• Four nationwide providers—each cover at least 235
million people
–
–
–
–
AT&T
Sprint Nextel
Verizon Wireless
T-Mobile (wholly owned subsidiary of Deutsche Telekom)
• Several regional players—Alltel (covers 79 million
people, but is being purchased by Verizon), Leap
Wireless (48 million), US Cellular (41 million)
Building footprints
• FCC, and departments responsible for anti-trust,
allowed more and more mergers
– Combinations
• For example, Alltel purchased wireless properties of Century
Telephone and now Verizon is purchasing Alltel
– Joint Ventures
• AT&T and Verizon share networks in California, Nevada and
New York
– Affiliations—large network providers affiliate with
smaller carriers –forming families of companies for
roaming purposes
Reclaimed licenses
• FCC’s designated entities plan
– The C and F blocks in each market—only companies
with revenues less than $125 million and less than
$500 million in assets could bid
– Licensees began to default—FCC re-auctioned some
of the licenses and gave other licensees four options
• Resume payments in full; give back half of spectrum and get
a credit for them; surrender all of licenses; prepay selected
licenses and give rest back
NextWave case
•
•
•
•
•
In 1996 NextWave won 63 C-block licenses for $4.7 billion
NextWave declared bankruptcy in June 1998; bankruptcy court said it would
only have to pay $1 billion; district court affirmed this decision
On appeal, U.S. Circuit Court of appeals reversed saying bankruptcy court
could not interfere with FCC’s spectrum allocation; FCC cancelled
NextWave’s licenses and reauctioned them
NextWave went to court and the D.C. Circuit reversed the FCC; in January
2003, Supreme Court upheld the D.C. Circuit, saying that the FCC could not
interfere with bankruptcy court—NextWave gets to keep the licenses,
instead of the three winning bidders at the reauction (Alaska Native
Wireless, Verizon Wireless, and VoiceStream)
Now questions were—NextWave’s status, NextWave’s ability to pay for the
licenses, etc.
– NextWave has transferred some spectrum to Cingular, returned some spectrum
to the FCC, is keeping some and has recently sold some to Verizon.
3G
• Third generation mobile services
– Circuit and packet data at 144 kilobits/second for vehicular
traffic; 384 kilobits/second for pedestrian traffic; 2
Megabits/second or higher for indoor traffic
– Spectrum for advanced mobile wireless services started with the
World Administrative Radio Conference of the ITU in 1992;
further delineated at the World Radiocommunication Conference
of the ITU in 2000.
3G in the US
•
The problem was the quest for bandwidth
– US used the bandwidth recommended by the ITU for other purposes, including
military
– FCC estimated a need for 300 to 420 MHz of spectrum
•
FCC deals with domestic use of spectrum; NTIA deals with government use
– The NTIA examined 1710-1755 MHz band for possibility of freeing up bandwidth
used by government without harming defense
– The FCC examined 2110-2170 MHz band for possibility of freeing up bandwidth
used by private entities
•
•
Issues—what happens to the users that are displaced? Who pays to move
them
Seventh Report and Order (ET Docket No. 00-258 and WT Docket No. 028), October 14, 2004: cleared spectrum in the 1.7GHz band by relocating
Federal operations to 2025-2110 MHz and 2360-2395 MHz bands
3G auction in the US
• Auction of Advanced Wireless Services
– August 9, 2006—September 18, 2006
– 104 bidders won 1087 licenses
– Bids totaled $13.7 Billion
– T-Mobile won 120 licenses ($4.2B)
– Comcast, Time Warner, and Cox, plus Sprint
won 137 licenses ($2.4B)
– Cingular won 48 licenses ($1.3B)
– Verizon won 13 licenses ($2.8B)
700 MHz
• Spectrum freed up by HDTV conversion
• January-March 2008
– 101 bidders won 1090 licenses that amounted
to $19 Billion for A, B, C, and E blocks
• Verizon spent $9.6 Billion; AT&T spent $6.6 Billion
• Open network requirements
– D block (public safety network) didn’t meet the
reserve price of $1.3 billion
• FCC wants a public/private partnership
– September 2008 FCC adopted a NPRM to determine whether
to have one nationwide licensee or several regional licensees