|Sunday, 02 May 2010 22:57|
Ivan Seidenberg and Randall Stephenson should have been on their knees kissing Julius' ring when the Broadband Plan came out. Dozens of their million-dollar lobbyists had been running around D.C. for a year screaming "more spectrum." Blair came through promising 300-500 megahertz, taking on the broadcast lobby. AT&T and Verizon have been bitterly battling to throttle the $15B/year USF/ICC program and Blair intends to cut it in half. The Bells are expecting $billions to reach their bottom line. The plan went further, to the point of absurdity, with what looks likes $billions in subsidies for the Bells, among the most profitable companies in the world, because they haven't built out broadband. Verizon or AT&T stand to collect $billions more because the plan insists public safety should buy services from the carriers rather than building a separate network.
Ivan shocked D.C. saying more spectrum isn't really needed for at least five years and probably longer. Ivan of course is right; the three big U.S. mobile carriers have already planned the next five years and they don't intend to invest enough to use all the spectrum they have. Julius should have read my article, Absolutely No Wireless Spectrum Shortage in 2010. Merrill Lynch was the primary source, confirmed by AT&T's CTO, the early plan details, and more.
The limits on competitors are capital and customers to earn back that capital. Blair Levin in the plan was clear spectrum problems were unlikely for at least five years, Before ten years, problems are certainly possible but Ivan believes more efficient use of the big carriers' likely demand. The iPhone and other problems are due to AT&T cutting capex, not demand that can't be handled.
Verizon doesn't want more competition, a simple explanation why Ivan turned around. The word on Wall Street is that Ivan, soon to retire, has declared detente with the cablecos.
Ivan told me years ago "We have to get cable out of the home" but cable and especially DOCSIS 3.0 destroyed those plans. With only a year or so left, Ivan instead wants a separate peace, what Wall Street calls "rational competition." CFO John Killian is virtually begging the cablecos to raise prices another 5-10%. One worldsize cableco explained how this works" "We've gotten so good at signaling each other we don't have to meet in airport motels any more to set prices."
Problems like this are appearing in most countries that have fewer than 5-7 competitors, including Japan. But unless you're a policy wonk, skip this issue if the U.S. isn't your interest. U.S. policy is making broadband less affordable, not more. The broadband plan analysis devastated the $7.2B stimulus, officially acknowledging they have failed miserably on the primary goal, reaching the unserved.