On behalf of CTIA’s members -- who are the Nation’s commercial mobile radio service providers and their suppliers -- I want to thank the Commission for the invitation to be on this panel.
As we heard yesterday, wireless communications offered by Commercial Mobile Radio Service providers over licensed spectrum and fixed wireless services like WiFi and WiMax provide broadband connectivity to the Internet, along with wireline carriers, cable companies, satellite providers, and others.
As this slide demonstrates, wireless broadband services compete with cable modem and DSL service. There is no “duopoly” – instead there is an alphabet soup of wireless services that are comparable to cable modem and DSL service. I apologize for the acronyms, but unfortunately, these technologies have been named by engineers. They do illustrate, however, the competitive choices consumers can chose among and rebut those who claim the broadband market is a cable/telco “duopoly” unaffected by the wireless “oligopoly”. In fact, wireless broadband technologies offer competitive speeds and capabilities. The slide also shows the rapid pace of innovation that characterizes the wireless industry.
For those of you who are not familiar with the terms “3G” and “4G”, they are used in the wireless industry to describe broadband technologies. The first generation was analog – which the FCC mandated for cellular carriers – insuring that carriers could not compete on technological innovation since all carriers had to provide the same service. Second generation services were the first digital technologies – TDMA, GSM, iDEN, and CDMA -- and their introduction represents the beginning of rapid technological innovation and product differentiation in the wireless industry. The third and fourth generation services are identified on this slide. While some critics of the wireless industry express a preference for a single “standardized” air interface – much like the FCC’s approach to the analog cellular standard of 25 years ago, technological innovation is a major driver of competition – new wireless technologies enable new services; they drive down costs through more efficient use of spectrum; and they allow carriers to introduce features and services that differentiate service offerings in a competitive market. Cellular carriers are still required to support the AMPs standard – and it is no more spectrally efficient than it was in 1982, and AMPs still doesn’t support text messages or pictures – just like you can’t get messages or pictures over wireline telephones that connect to the LEC network through the RJ-11 standardized interface.
This next slide demonstrates the wide variety of broadband devices that are available at your local Best Buy or Circuit City store. It also illustrates the wide range in screen size, keyboards, memory, features and functions that consumers can chose among. www.phonescoop.com lists more than 800 handsets and wireless-enabled devices available in the U.S. Carriers and aggregators must work together and with third-party content developers to ensure interoperability, a quality user experience across the wide range of these devices, and to block objectionable content such as spam and malware.
In an oligopoly, one would expect stable or rising prices and a lack of innovation. But that is precisely what is not happening in wireless. Go to CTIA’s website, or the FCC’s annual CMRS competition report, or your own experience as one of the Nation’s 230 million wireless subscribers, for proof that prices are falling, the number of subscribers are growing, and consumers are using wireless for more and more of their communications needs – including voice, Internet browsing, text messaging and other data services. This slide is taken from the FCC’s 11th Annual Report on CMRS Competition and it illustrates the roll-out of 3-G technology by county throughout the United States.
This next slide provides a snapshot description of the 3G services deployed by the Nation’s five largest wireless carriers. Unlike an oligopoly, we are seeing new entry and ramped up investment and build out. Last summer, the FCC conducted the Advanced Wireless Spectrum auctions and awarded 1,087 new licenses to 104 bidders. The number one winner in this auction, T-Mobile, essentially doubled its spectrum holdings across the country – enabling it to impact the status quo significantly. T-Mobile has announced plans to spend $2.7 billion by 2008 building a 3G HSDPA network using this spectrum, enabling it to offer more and faster services to its customers. The third largest winner of licenses was a new entrant – the SpectrumCo cable consortium (Comcast, Time Warner, Brighthouse) – which was the highest bidder on licenses totaling 267 million pops. This enables the cable companies to explore mobile or wireless options, and threatens to disrupt any postulated equilibrium. Two wireless carriers which have been using alternative business models – MetroPCS and Leap Wireless – were also winners in the AWS auction. MetroPCS was the fourth largest bidder in the AWS auction, winning licenses covering 144.5 million pops. Leap Wireless was the sixth and seventh largest bidder in the AWS auction (through two entities – Cricket and Denali Wireless). Cricket won 99 licenses covering 117.8 million pops, and Denali one license covering 58 million pops. Once the AWS licenses are issued, Leap will have licenses in 36 of the top 50 markets in the U.S. Leap and Metro PCS, who are among the fastest growing wireless companies, demonstrate that not all wireless carriers have the same business model. In addition, the wireless industry includes carriers with a significant regional presence, such as Alltel, US Cellular, Dobson, and SunComm, and we have seen the emergence successful “MVNO’s” which stands for Mobile Virtual Network Operators. The most successful of these MVNO’s have designed their service offerings to meet the needs of specialized markets by providing exclusive content and wireless devices tailored to their customers’ needs. While perhaps anathema to traditional principles of common carrier obligations, consumers benefit from this type of product differentiation. For example, Earthlink’s Helio MVNO promotes its exclusive Drift handset and its self-proclaimed “one of a kind” Buddy Beacon for location-based social networking and mobile MySpace service. While Helio advertises in WIRED magazine, an MVNO named Jitterbug is advertised in the AARP Bulletin. I bought one for my 82 year old Mom because Jitterbug service was developed to meet the needs of older persons – the handset features large buttons and easy to read text, there is live operator service, and there’s even a dial tone to confirm service. There are dozens of MVNO’s offering differentiated services to all types of users and demographic groups: Virgin Mobile’s “Txt Tones” which is based on an exclusive deal with a major record label and is available only on Virgin’s Cyclops phone; MVNOs with a Hispanic orientation where users press 1 for Spanish and 2 for English; Disney Mobile’s MVNO service is designed to meet the needs of families and is uniquely Disney from end-to-end with exclusive handsets and family-friendly service features; And MVNO’s like Amp’d who offer content and handsets geared to the “young and hip” -- which most definitely rules me out.
This next slide describes Sprint’s announced plans to deploy a 4G network using mobile WiMAX technology with cable modem-like data rates of 2 to 4 Mbps.
Finally, if you are looking for empirical evidence that wireless broadband access service has really been deployed, and that consumers find great value in these services, the FCC just released their High Speed Services report for the first 6 months of 2006. According to the Report, while total high speed access lines grew 26 percent during the 1st half of the year, 59 percent of all new adds were mobile wireless broadband access customers – in other words, wireless carriers added more new customers than cable and telco combined! Based on this record of competition and innovation, wireless should not be subject to any net neutrality rules. Policymakers should allow the market to continue to work and regulate only in the event of a market failure.
CTIA-The Wireless Association® Broad-based Broadband Competition: The Role of Wireless February 2007
Multiple broadband providers and technologies access the Internet cloud The Internet Fixed Wireless Mobile Wireless Cable Providers CLECs and Traditional Telcos Broadband over Power Line Satellite ADSL SDSL Fiber
Maximum Theoretical Broadband Download Speeds Multiple Sources: Webopedia, bandwidthplace.com, PC Magazine, service providers, ISPs, Phonescoop.com, etc.
Applications on Mobile Broadband Networks Pre-3G Devices 3G+ Devices Make and Receive Voice Calls Capture and Transmit video and still pictures Text-based Messaging Listen to Music Files Download and Play Games Personalize with Content Access Office Systems Browse the Web GPS Watch Television Stream Radio Advanced Gaming
Source: QUALCOMM Globally, more than 200 Mobile Broadband Devices have been Introduced
High-Speed Wireless Technology Coverage Snapshot <ul><li>According to the FCC, by the start of 2006: </li></ul><ul><li>CDMA 1xRTT and/or 1xEV-DO had been launched in at least some portion of counties containing 283 million people, or roughly 99 percent of the U.S. population. </li></ul><ul><li>GPRS, EDGE, and/or WCDMA/HSDPA had been launched in at least some portion of counties containing 269 million people, or about 94 percent of the U.S. population. </li></ul><ul><li>Higher speed technologies, EV-DO and WCDMA/HSDPA, were available in counties containing 63 percent and 20 percent of the U.S. population. </li></ul>Next Generation Network Rollout by County Source: FCC 11 th CMRS Competition Report
Wireless “3G” Network Deployment <ul><li>Alltel: Axcess SM Broadband service (EVDO) offers speeds of 400-700 kbps (more than 100 cities, 44 million pops). </li></ul><ul><li>Cingular/AT&T Wireless: BroadbandConnect (HSDPA) service offers speeds of 400-700 kbps (165 cities, including 73 of the top 100 markets). </li></ul><ul><li>Sprint Nextel: EVDO service offers speeds of 400-700 kbps (covers more than 200 million pops now, rising to 280 million by YE2008). EVDO Rev A network now covers more than 95 million people, and expansion of network upgrade continues. Rev A offers upload speeds of 350-500 kbps, and download speeds up to 600 kbps-1.4 Mbps. </li></ul><ul><li>T-Mobile USA: Offers mobile Internet access through its GPRS/EDGE network, with a typical EDGE download speed of 100 kbps, and operates a network of more than 8,000 wireless hotspots; T-Mobile's HSDPA network is currently in deployment. </li></ul><ul><li>Verizon Wireless: EVDO-based broadband service offers speeds of 400-700 kbps (242 cities, 200 million pops). Verizon is upgrading to EVDO Rev. A. </li></ul>
Wireless licensees are deploying “4G” networks <ul><li>Sprint Nextel will deploy a 4G broadband network, using mobile WiMAX technology with data rates of 2 to 4 Mbps. </li></ul><ul><li>Sprint Nextel intends to launch a mobile WiMAX broadband service capable of serving 100 million people by year-end 2008, using the 2.5 GHz band. Trial markets to be launched later this year include Washington, DC, Baltimore and Chicago. </li></ul>
High-Speed Line Growth <ul><li>In 1H06, total high-speed lines grew 26%, from 51.2 million to 64.6 million lines, and 59% of all adds were mobile wireless subscriptions. </li></ul><ul><li>From June 2005 to June 2006: </li></ul><ul><ul><li>ADSL’s share of total broadband lines fell from 38% to 35%, </li></ul></ul><ul><ul><li>Cable modem’s share fell from 56% to 44%. </li></ul></ul><ul><ul><li>Mobile wireless’ share of total broadband lines rose from 1% to 17% of total broadband lines. </li></ul></ul><ul><ul><li>The share of “other” forms of broadband (including fixed wireless, satellite, fiber, and broadband over power line) remained at 4% of total broadband lines – although their total line count grew 39%. </li></ul></ul>Sources: FCC Report on “High-Speed Services for Internet Access,” Jan. 2007. High Speed Net Adds by Type, Dec. 2005 – June 2006
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