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Photo Cred: Arstechnica

In what Arstechnica is calling “Mega-Merger Mania”, the wireless industry has been a hot topic in the news for the past week.  AT&T announced on March 20th their agreement with Deutsche Telekom to acquire T-Mobile USA for $39 billion.  Though the acquisition still faces the hurdle of the government’s anti-trust review, which could take a year to complete, there has been much debate about the possible consequences of the plan going through, and many have taken a stand against it, including (not surprisingly) Sprint, who said it “will fight this attempt by AT&T to undo the progress of the past 25 years and create a new Ma Bell duopoly.”

The acquisition will result in a wireless market dominated by Verizon and AT&T, with Sprint as a struggling third competitor, and it wouldn’t be shocking for Sprint to be completely knocked out of the national game by its rivals.  According to the Benton Foundation’s weekly round-up from March 19-25, “if regulators let the deal go through, AT&T (42 percent) and Verizon (31 percent) would control 73 percent of the nation’s cell phone market.  Sprint, which lost $3.5 billion last year, would be a distant third place with about 16 percent.”

Though AT&T tried to appease concerns over competition in its press release about the acquisition, there is no doubt that the deal will hurt competition while driving prices up and choices down.  T-Mobile is known for low rates, and the potential acquisition would decrease the pressure to offer low-cost services.  Everything from the number/type of handsets available to the number of competitors in any given market to the affordability of access to spectrum will decline.  Moreover, during this process of decreased competition, AT&T will do everything it can to “grow APRU” (average revenue per user), “reduce churn” (steady-state level of customers), and “expand margins”.  Arstechnica put it wonderfully in writing that these benefits for AT&T “could be recast as ‘you’ll pay us more money each month, you won’t leave, and we’ll make more profit on each dollar you pay.’”

According to AT&T’s press release, “with this transaction, AT&T commits to a significant expansion of robust 4G LTE (Long Term Evolution) deployment to 95 percent of the U.S. population to reach an additional 46.5 million Americans beyond current plans – including rural communities and small towns.”  This statement essentially confirms that AT&T has no plans to build its infrastructure out to areas that are not densely populated, so the T-Mobile acquisition is the only way for citizens of rural areas to tap into this powerful nationwide network.

On another note, it will be interesting to see how the deal may affect network neutrality.  The FCC’s net neutrality order from December 2010 (discussed in this blog post) left wireless broadband out of some of the key points, so this acquisition may actually bring wireless net neutrality back into the light.

The Federal Communications Commission and the Department of Justice will need to approve the acquisition, and if AT&T’s lobbyists succeed, it will go through.  But not without conditions.  The implementation of net neutrality principles and a better deal on data roaming are at the top of my personal wish list.  An article from NationalJournal outlines the arguments for and against data roaming, which would allow subscribers to use their phones even outside their service area.  AT&T and Verizon oppose it and T-Mobile, Sprint, and many other small carriers support it.  The split along what seems to be dominant versus niche service providers speaks for itself: AT&T and Verizon are doing whatever they can to stomp out their competition, and the T-Mobile acquisition is just one stepping stone on their path to a duopoly.

The benefits for AT&T are obvious, but I can’t see any arguments that support the fruition of this acquisition.  It will hurt competition, it will drive monthly wireless bills up, and it will not dramatically increase wireless coverage across the country.

At the 2011 state of the union, Obama began to hint at his plan to “win the future”, which is being called the Wireless Innovations Infrastructure Initiative.  Revealing his plan in more detail at Northern Michigan University on February 10^th, the president’s aim is to build out the nation’s high-speed wireless network.

What is it? The plan has three main goals:

• Expand “4G” wireless coverage to 98% of Americans within the next 5 years
• Reduce the US deficit* by nearly $10 billion over the next decade through the sale of 500MHz of federal wireless spectrum, doubling the amount of spectrum available for mobile broadband
• Invest in the nationwide public safety network for increased efficiency and security

*The White House press release says it will reduce the deficit by $10 billion, but the math does not add up.  The government is projecting that the spectrum auction will generate $28 billion of revenue over an unspecified period of time.  Of that amount, $3 billion will be spent on the Wireless Innovation Fund, $5 billion will be spent on the Universal Service Fund, and $10 billion will be spent on a public safety network, totaling $18 billion.  That leaves $10 billion of revenue, which the press release indicates will reduce the deficit by $10 billion.  This can be read two ways, either the deficit will be reduced by $10 billion each year for the next ten years, or the deficit will be reduced by $10 billion by the end of the next ten years, which implies a steady, consistent decline in the deficit each year.  This seems to be grossly overstating the effect on the national debt, which will actually only decrease by $10 billion.

In a White House White Board video released on February 11^th, Austan Goolsbee, the chairman of the Council of Economic Advisers, explains how this plan will accomplish the goals laid out above.  Investment incentives will encourage the private sector to build the network out on its own, and $3 billion of the proceeds of the spectrum auction will go to the Wireless Innovation Fund, providing seed money to fund scientists who will find ways to make our network “faster, more secure, and a better business platform”.  In addition, there will be a one-time investment of $5 billion that the FCC will use to reform the Universal Service Fund and $10 billion will be allocated for a nationwide wireless broadband network for public safety agencies.

According to Goolsbee, the US isn’t in the top 5 countries with the fastest and widest 3G coverage, so the Obama Administration wants to concentrate on upgrading to 4G coverage for 98% of Americans.

But this plan can be looked at from another perspective.  Essentially what this plan is doing is taking the bandwidth that was used for free access to information (analog television, for example) and licensing it to companies who will make us pay astronomical prices for it.  The service providers use the prices they pay for spectrum licenses to justify their high service price points.  The only entity this plan really seems to be helping is the service providers, while customers will get stuck paying for internet that isn’t getting faster or cheaper.

What does 4G even mean?

Chiehyu Li and James Losey from the New America Foundation’s Open Technologies Initiative wrote an excellent op-ed recently about 3G, 4G, and the speeds of America’s wireless networks. In it, they explain that the ITU (International Telecommunications Union) has set LTE Advanced as the standard 4G technology.  This isn’t expected to be deployed in the US until 2012 at the earliest.  The article goes on to explain that current technologies being used in America would better be defined as 3.5G.

This leads me to think that just because you can call it 4G, doesn’t mean it is 4G, especially when the wireless speeds in other countries using 4G are so much faster.  The following table shows comparisons provided in the article.

Another flaw in the discourse of 4G vs. 3G is that whether or not a certain type of technology is being used does not always mean that the speed will be maximized.  Especially in the US, technologies are capable of offering higher speeds, but services don’t always provide the speeds that their equipment is capable of handling.

Smartphones are not the answer to the digital divide

Goolsbee points out that by 2010 there had been 12 billion apps downloaded.  Sure, that’s a lot of apps, but he seems to think that dominating the mobile apps market is the key to “winning the future”.  I have to disagree.  Though mobile devices are handy and apps provide us with many useful and fun services, I find it to be an incredible cop-out to try to pass smartphones as a sufficient alternative to desktop and laptop computers.

When is the last time anyone wrote a paper, article, or blog entry on his or her smartphone?  Or created a resume?  Or applied for a job?  What about people that do more advanced things with their computers, like edit movies, record music, or create graphics and animations?  Without a keyboard, a reasonably sized screen, a mouse/track pad or the ability to multitask, smartphones have limitations that make fully equipped computers necessary for many work-related tasks.

My main concern is that pushing those on the disconnected side of the digital divide toward smartphones pushes them toward apps such as Angry Birds or Facebook.  The way that smartphones are set up limit the amount of control the user has over their device and what programs they can use on it.  I foresee this limiting their knowledge and application of technology.  A person who has never or very rarely used a computer and is only introduced to smartphones will be at a disadvantage when it comes to the complexities of desktop and laptop computers.

Is wireless really any cheaper than fixed-line internet?

One of the main arguments behind this plan is that wireless internet fuels mobile connectivity, which they frame as universally accessible.  The main flaw in this argument is that there are several expenses involved in gaining access to a data plan for a mobile device.  You need to buy a device, which can cost hundreds of dollars.  Just last year it cost $700 for a 32 GB iPhone 3GS without a contract.  Currently, if you start a new contract, the iPhone 4 is $300.  Your chances of getting an Android phone for free or less than $100 increase dramatically with a contract, but if you do not want to change carriers or start a new contract, your options start to dwindle.

Of course, in order to have service on your smartphone, you’ll need a contract with a wireless service provider.  Let’s take the iPhone on the Verizon network as an example. The monthly bill will include not only your data package ($30-50/month), but also your messaging plan ($5-20/month) and voice plan ($40-70/month).  And you can’t forget the $35 activation fee!

As a comparison, T-Mobile offers an Android phone for free after discounts with a new contract, but their plans range from $40/month for just 500 minutes and no messaging or data to $100/month for unlimited voice, text and data.

Another argument is that in the same way that people are electing to cut out their landlines and exclusively use cell phones for voice service, people might be able to cut out the ISP bill every month and move entirely to a data plan with their wireless provider.  This is only a benefit for those that currently have a contract with an ISP because the money they spend on data plans can be reallocated to their wireless provider and they’ll presumably get better service out of the deal.

I must continue to ask, however, what about those that cannot afford either?  If it’s a question of paying the rent or having a high-tech cell phone, the wireless bill will have to take a back seat.

Why did the government only award $400 million to wireless projects out of the $7.2 billion allocated for broadband expansion in the stimulus package?

My final point is that I think it’s strange that out of the $7.2 billion the government spent on broadband in the stimulus package, only $400 million of it went toward wireless projects.  The rest was mostly allocated to fiber optics.  Though many wireless access points depend on something in the ground, wireless mesh networks are a popular way of creating a reliable and redundant network.

I’m not trying to say that one or the other is better.  In fact, I’d argue that a combination of above and below ground technologies is probably the best option, but it doesn’t sit right with me that almost a year after the stimulus funds were awarded, Obama is calling wireless technologies America’s best bet to “win the future”.  Why was fiber optics favored so heavily a year ago, when wireless is apparently the key to the future?

At Least They’re Doing Something

I do take some comfort in the fact that the government is making an effort to address the connectivity issues across the nation, regardless of the concerns I have about the plan.  The new Wireless Initiative combined with the stimulus broadband grants should increase connectivity across the nation over the next few years, but the real benefit will come when these telecommunications networks make it easier and more feasible for us to build our infrastructure out to everyone and provide faster and more affordable broadband in the future.

The role of the internet and social networking websites in the recent uprisings in Tunisia and Egypt is extraordinary.  Despite governmental efforts to shut down communication in both countries, people were able to get the word out about their bloody struggles for democratic leadership, leading to a whole new understanding of the value of websites like Facebook.

The Tunisian revolution was set off by the suicide of a university-educated and unemployed man on December 17^th.  The man set himself on fire in protest of the confiscation of his food and produce cart due to improper permits.

Following this public suicide, people all over the nation began protesting, and first-hand accounts began appearing on Facebook.  The first few weeks of protests went virtually unnoticed by the international media, and in a country where free speech is unheard of and dissent is forbidden, the local media was forced to ignore the events.  Even YouTube has been banned in the country for years.

According to an article by Ben Kerson, who lived in Tunisia for 2 years, “over the past three years, social networking has become the premier way to receive unsanctioned information in Tunisia.”  The protestors used Facebook to instantly spread information, which in turn fueled the revolutionary fire.

I am lucky enough to have several Tunisian friends that I’m connected with on Facebook, and as they began posting videos, pictures, and status updates about the violence and protests, I started to search for information in the media.  Yet it wasn’t until just before their former president, Ben Ali, was ousted on January 14^th that I finally started finding articles from sources like Al Jazeera and the New York Times.  If it wasn’t for social media, many believe that this revolution would not have been possible.

While the Tunisians used Facebook to organize themselves and their uprising in December and mid-January, the Egyptians followed suit at the end of January.  Street demonstrations that were organized using social media terrified the Mubarak regime, which instructed most of the phone and internet service providers to cut their services on January 28^th, an unprecedented loss of
connectivity for Egypt or any country.

According to the New York Times, “the shutdown caused a 90 percent drop in data traffic to and from Egypt, crippling an important communications tool used by antigovernment protesters and their supporters to organize and to spread their message.”  This move, which lasted five days, is sure to have a dire impact on the Egyptian economy.  The Organization for Economic Cooperation and Development (OECD) estimates the direct costs to be at least $90 million for the 5-day shutdown.

Though the uprisings in Tunisia and Egypt seem to have had a great deal of success, it must be noted that they are not over, and their situations will need to be carefully handled until stable democratic governments can be established.

Still, these two revolutions mark a turning point in political power.  It is clear that social networking provides political amateurs with power they’ve never before had, and leadership must be ready to cooperate with this shifted dynamic, or face the consequences.

Pope Benedict catches up on the news with media outlet the "newspaper" in newfangled "airplane".

Anyone who has been holding out on joining the social network craze until the Church gave their official approval can now proceed in a “respectful”, “honest”, and “responsible” manner. In his Message for the 45th World Day of Social Communications, Pope Benedict XVI wrote of the “emergence of the internet as a network for communication” and its role in the “cultural transformation” that humanity is currently experiencing.

The Day of Social Communications was created to provide the Church with an opportunity to disperse an annual message to its followers. This year’s message is part of the Church’s response to the issues shaped by globalization and ICTs (information and communication technologies). The term “social communications” was coined by the Church to refer to media such as newspapers and television.

Social networks are becoming central to the transfer of information on the internet, which, as the pope points out, places that information within a social context. Citing the benefits of social networks for education, communication, and relationships, the pope is encouraging Christians to join them, but insists that “…there exists a Christian way of being present in the digital world.”

In the Pope’s vision for Christians on the web, he asks believers to spread the Gospel by putting “expressly religious content into different media platforms” without making a spectacle of it. By anchoring Christian messages on the net to the real world, the pope sees the opportunity to spread faith. His goal is not to be popular, but to be informative and truthful.

Though the benefits and uses of new technologies were highlighted, the pope did warn of the threats that ICTs may pose. He advised against misrepresenting oneself and expressed the need to avoid “excessive exposure” to virtual social networks because they “cannot and must not take the place of direct human contact.”

It was slightly impressive to find the presence of issues like net neutrality and internet privacy in the message, albeit briefly. The pope wrote of the “profound convictions” it takes to “prevent the web from becoming an instrument which depersonalizes people, attempts to manipulate them or allows those who are powerful to monopolize the opinions of others.”

It seems that the Vatican is trying to get more involved in the virtual world, with their own official website, The Holy See, and the Pope to You website, which serves as a portal to their Facebook app, iPhone app and the Vatican YouTube. However, according to the Huffington Post, it’s unclear whether or not the pope has ever been on Facebook.