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Expert Opinion: Why the FCC should deny the AT&T / T-Mobile Merger

In order for the Federal Communications Commission to approve the mega-merger between AT&T and T-Mobile, AT&T has to make a showing that the merger is in the public interest. Despite AT&T’s declaration that this merger is the most pro-consumer, pro-innovation and pro-investment solution to America’s wireless problems, a mega-merger like this can only hurt the broadband market, both for innovators and consumers alike.

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In order for the Federal Communications Commission to approve the mega-merger between AT&T and T-Mobile, AT&T has to make a showing that the merger is in the public interest. Despite AT&T’s declaration that this merger is the most pro-consumer, pro-innovation and pro-investment solution to America’s wireless problems, a mega-merger like this can only hurt the broadband market, both for innovators and consumers alike.

Basic Facts

The basic facts are that post-merger, AT&T will control nearly 40 percent of the wireless market, and together with Verizon Wireless will create a duopoly that is approaching 80 percent market share in the wireless industry.  To put this in perspective, the market power of the top two companies in the wireless market post-merger will amount to 76.1 percent – more than double the market share of the top two companies in the Oil (24.0 percent), Airline (30.7 percent), Banking (20.2 percent), and Auto (35.3 percent) industries.

New Media Rights recently filed a detailed petition to deny the merger citing its negative affect on innovation, access to the internet, customer service quality, prices, service availability, and consumer privacy. We’ve also asked the California Public Utilities Commission to review the merger. Below is a discussion of just one of the areas that we think justify close scrutiny of this merger, the effect of the merger on Internet gatekeeping.

How AT&T uses its gatekeeping role to stifle innovations in voice telephony and control the way consumers access the internet

The current “gatekeeper” model of wireless internet access, where access providers like AT&T and service providers like Apple can control the services we can access, will only become more rigid should this merger be allowed. In the past few years AT&T has shown that it will work with other gatekeepers, such as Apple, in order to keep competitive products, such as Google Voice, out of its markets. In 2009, AT&T was called to explain its role in Apple’s decision to block Google Voice from the App Store, an app which would have introduced direct competition to AT&T’s voice services. During those proceedings it was revealed that Apple and AT&T had agreed not to approve Voice over Internet Protocol (VoIP) services for use over the 3G network because the service is in direct competition to voice plans used on the phone. Initial approval for VoIP apps was limited to those that would only work when the phone was hooked up to a local wireless network rather than AT&T’s data network.

Skype, another VoIP application for the iPhone, was similarly blocked in 2009 for use on AT&T’s network. Both Skype and Google Voice would have allowed consumers to move to cheaper voice plans, as well as have access to more affordable international calling.

The fewer wireless internet access providers available to internet users, the greater the ability of gatekeepers at all layers of the communications marketplace to affect how we use the internet and what services we access.

Apple’s gatekeeping power would also be enhanced by this merger, affecting the version of internet individuals have access to over wireless broadband.  Software developers and start-up businesses who rely on the benevolence of gatekeepers for distribution of their product can suffer though imposition of fees and unfavorable terms of service, especially when their products are perceived to compete with the gatekeeper’s. For example, a recent change in Apple’s policies for software developers and in-app sales appear to have forced at least one e-book reader out of business.

As further evidence of the need for competition at the various layers of the wireless internet marketplace, Apple has also demonstrated an ability and willingness to censor and block apps that it deems “offensive.” Two apps critical of President George W. Bush were blocked from sale in the app store, because Apple decided that they were in violation of the Terms of Service, namely, either a provision against criticizing a public figure, or one restricting views deemed to be offensive to a large part of Apples customers. Other apps have been labelled obscene and censored by Apple before being released to the public.

Apple and AT&T are two separate companies, but as demonstrated directly with the Skype and Google Voice apps, they have worked together to shape the “Internet” that is available to consumers to use through AT&T’s network.

The Commission chose in late 2010 not to engage in basic net neutrality regulation in the wireless space to ensure service providers do not abuse their gatekeeper powers, limiting regulations to ensure an open and free internet to the wireline space. The Commission, by avoiding basic regulation in the wireless space, made a choice to rely on competition as the only force to ensure an open and free Internet for consumers in the already highly concentrated wireless marketplace.

With a major competitor eliminated from the market through the potential merger, AT&T would have the ability to write new chapters in its history of anti-innovation behavior.

It should be consumers driving the future of the mobile Internet, picking the winning and losing services and applications at different layers of the market through individual choice. Instead, this merger will allow AT&T and Apple the kind of vertical market power that, instead of promoting competition, permits preemptive elimination of services and applications that are perceived to be competing.  Innovation and consumer choice will be what suffers.

To read more of our comments on the negative affect of this merger on innovation, access to the internet, customer service quality, prices, service availability, and consumer privacy, you can read our recently filed petition to deny the merger here.

Art Neill is Director of New Media Rights, a San Diego based digital rights and advocacy organization, and is an adjunct professor at California Western School of Law.

 

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Dianne Crocker: Recession Fears Have Real Estate Market Forecasters Hitting the Reset Button

Growing fears of recession trigger pullback on previous rosy forecasts.

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The author of this Expert Opinion is Dianne Crocker, Principal Analyst for LightBox

The lyrics to “Same As It Ever Was” by the Talking Heads certainly don’t apply to how 2022 is playing out in the commercial real estate market. Two quarters of negative economic growth has put a damper on market sentiment and triggered fears that the U.S. economy is heading for a recession. By midyear, market analysts were taking a good, hard look at their rosy forecasts from the start of the New Year and redrawing the lines.

Once upon a time…

At the start of 2022, forecasters were bullishly predicting that commercial real estate investment and lending levels would be nearly as good as 2021. This was significant, considering that 2021 set new records for deal-making and lending volume as the debt and equity capital amassed during the pandemic while looking for a home in U.S. commercial real estate.

What a difference a few quarters have made. Virtually, all the predictions that started the New Year were obsolete by mid-summer. The abrupt shift in market conditions is palpable and surprised just about everyone. Now, markets are reaching an inflection point that is in sharp contrast with the strong rebound of last year.

The two I’s: Inflation and interest rates

At the core of the recent upset in market sentiment is the persistence of high inflation, which seems to be ignoring all attempts by the Federal Reserve to raise interest rates and bring prices down. Higher inflation is having a ripple effect throughout the economy, pushing up the costs of construction materials, energy, and consumer goods. Among the notable economic indicators showing stress at mid-year was the GDP, which fell for the second consecutive quarter, and the Consumer Price Index, which jumped 9.1% year-over-year in June – the highest increase in about four decades.

In July, the CPI fell to 8.5%, an encouraging sign that inflation was beginning to stabilize. By the latest August report from LightBox, however, hopes were dashed when the CPI showed little improvement, holding firm at a still high of 8.3%.

The market is responding to a higher cost of capital as lenders tap the brakes. As the cost of capital rises with each interest rate hike and concerns of a recession intensify, many large U.S. financial institutions are pulling back on their loan originations for the rest of 2022 and into 2023. This change in tenor is a significant shift, given that 2021 was a record-breaking year for commercial real estate lending. Many lenders have already shifted to a more defensive underwriting position as they look to mitigate risks.

The Mortgage Bankers Association, which had previously predicted that lending levels in 2022 would break the $1 trillion mark for the first time revised their forecast downward in mid-July. By year-end, the MBA now expects volume to be a significant 18% below 2021 levels—and one-third lower than the bullish forecast made in February. Now, investment activity is cooling as higher borrowing costs drive some buyers from the market.

In the investment world, transactions were down by 29% at midyear due to a thinning buyer pool as higher rates impact access to debt capital. Market volatility is causing investors, lenders, and owners to rethink strategies, reconsider assumptions, and prepare for possible disruption.

Looking ahead to year-end and 2023

The rapid and diverse shifts in the market make for an uncertain forecast and certainly a more cautious investment environment. The battle between inflation and interest rates will continue over the near term. As LightBox’s investor, lender, valuation, and environmental due diligence clients move toward the 4th quarter—typically the busiest quarter of the year–unprecedented volatility is driving them to recalibrate and reforecast given recent market developments.

Continued softness in transaction volume is likely to continue as rates and valuations establish a new equilibrium. If property prices begin to level out, there will be more pressure on buyers to consider how to improve a property to get their return on investment. The next chapter of the commercial real estate market will be defined by how long inflation sticks around, how high interest rates go, and whether the economy slips into a recession (and how deeply). The greatest areas of opportunity will be found in asset classes like office and retail that are evolving away from traditional uses and morphing to meet the needs of today’s market. Until barometers stabilize, it’s important to rethink assumptions, watch developments, and recalibrate as necessary.

Dianne Crocker is the Principal Analyst for LightBox, delivering strategic analytics, best practices in risk management, market intelligence reports, educational seminars, and customized research for stakeholders in commercial real estate deals. She is a highly respected expert on commercial real estate market trends. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Jeff Pulver and Noah Rafalko: A Humble Request to the FCC on Robocalls

Blocking bad actors requires a whole new way of thinking, the authors say in this ExpertOp exclusive to Broadband Breakfast.

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The authors of this Expert Opinion are Jeff Pulver (left), innovator in VoIP and Noah Rafalko, is a pioneer in TNID

Should the Federal Communications Commission seek out alternative platforms to solve their 2022 spam, scam and robocall issues? Yes! Does Blockchain offer valuable solutions? Yes! We would like to ask the FCC to increase the width of their lens when it comes to deploying solutions to solve their growing number of systemic challenges.

Any action to stop robocall insanity and tech-driven scams would be welcome. While Americans deal with the linger pandemic, mass shootings, an uncertain economy and war in Europe, the constant annoyance from scammers and 4.1 billion robocalls a month is just too much. Most people have responded by literally giving up voice communications all together.

Recently implemented legislation called STIR/SHAKEN is a step in the right direction, but it is not a long-term solution. The FCC  is simply taking old standards and applying them to new technologies. New thinking is needed; the next generation of technology must be explored. And the most promising of the new tools to protect our telecommunications system from fraudulent players lies in blockchain.

The key to stopping these nefarious acts lies in a digital identity solution powered by blockchain – a shard database or ledger. An identity solution enables customers to be confident that the communication is truly from enterprises they know and trust.

With blockchain, only authorized and verified messages get through. Spam and robocalls are virtually eliminated in one shot. All that’s required is a slight change in how we approach communications.

In a world where consumers are already doing whatever they can to self-manage their identity, it isn’t a large leap of faith to imagine adding a certified, digital ID to our telephone numbers.

Consumers freely use their telephone numbers to attest and manage their identity – even more than they use their Social Security numbers, birthdays, mother’s maiden name and secret questions. In our current digital universe, consumers use their phone numbers to register for store discounts, receive health and safety alerts and even transfer money to others.

And in their effort to stop spam and robocalls, consumers willingly add apps such as Hiya, paying over $300 million a year to these intermediaries.

The FCC needs to evolve and embrace the technology that allows consumers and mobile carriers who have a shared stake in attesting their identities. They need to recognize that blockchain technology offers an elegant, all-encompassing solution to the $40 billion in fraud that consumers fall victim to every year.

It’s time we leveraged a solution that’s already being used in other countries such as India, where blockchain technology helps protect over 600 million citizens from spam and robocalls.

Back in 2004, when the future of telecommunications was being written, the FCC was challenged with laying down rules governing Voice over Internet Protocol (VoIP). At that time, we hosted brown-bag lunches for Congress, and held open demonstration days at the FCC as well as a mini-trade show on the Hill in our effort to inform and educate Congress, staffers and other government employees on the latest and greatest innovations in Internet communications technology.

The FCC would be wise to revisit this practice of show and tell where they hear from the innovators of new game-changing technologies that can solve their biggest concerns. It certainly is wiser than simply taking advice handed down from lobbyists and relying on legislation that’s severely limited and unenforceable.

When the FCC uses its influence to investigate and embrace new and innovative technologies, they can finally make significant headway in restoring trust in the quality of service associated with our communications.

Jeff Pulver is an innovator in the field of Voice over Internet Protocol (VoIP). He was instrumental in changing how the FCC classified VoIP in 2004, paving the way for the development of video and voice internet communications. The co-founder of Vonage, Jeff has invested in over 400 start-ups. 

Noah Rafalko is a pioneer in TNID (Telephone Number ID), a blockchain solution that restores trust in communications. Noah is founder and CEO of TSG Global, Inc. which provides voice, messaging and identity management services for SaaS companies and large enterprises. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Jay Anderson: Is Texas the New Home for Robust Internet Access?

Cost of doing business is driving companies into markets with favorable tax rates and fewer regulations. Here’s how they’re prioritizing.

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The author of this Expert Opinion is Jay Anderson, chief technology officer, FiberLight

It is hard to ignore how the COVID-19 pandemic has impacted our lives––namely, how we work and live. Many people emerged from the pandemic with a request to employers: Continue to allow flexible work arrangements. Thanks to digital transformations across industries, Americans are embracing flexible work arrangements, and they want more of it.

In fact, according to McKinsey’s American Opportunity Survey, 58 percent of U.S. job holders—equivalent to 92 million people—report that their employers are still offering the option to work from home for all or part of the week. The survey also showed that when given the opportunity to work flexibly, 87 percent of workers embrace it.

Because of the shift toward remote work, people are relocating to cities that better suit their needs. New data by Upwork reports that 2.4 percent of Americans–– about 5 million people––have relocated since 2020. And, 9.3 percent of Americans––around 20 million people––are planning to relocate.

Companies also are considering relocation. According to FiberLight’s 2022 Business Relocation Expansion Survey, 70 percent of IT and corporate decision makers say they are considering relocating their business or adding more locations within the next 3-5 years. Executives cited market saturation and availability, followed by the expense of doing business in major metropolitan areas, and expanding their operations, as factors driving the change.

Notably, of these respondents, 78 percent said they are considering relocating their business to Texas. Why Texas? Texas offers several advantages including a lower cost of living, favorable tax rates, and fewer regulations. Ranking high on the list of Texas cities decision makers are considering for relocation include: Dallas / Ft. Worth, Austin, and San Antonio, in that order. Decision makers also are considering a host of more rural Texas markets including El Paso, Arlington, Corpus Christi, Plano, Lubbock, Irving, Laredo, Frisco, Garland, Brownsville, Amarillo, McKinney, and others.

Yet businesses will need faster, more robust connectivity in order to execute their business strategies.

Executives surveyed said that they are planning, primarily, for Hybrid and Cloud infrastructure models. Their biggest priorities for connectivity upgrades include 1) Speed / Low Latency, 2) Security, and Diverse Connections.

Executives also said that they are prioritizing the following local infrastructure needs:

Data center access (29% of respondents): What today’s data center requires

The new data center requires an infrastructure that can provide rapid, secure data transmission through reliable, scalable, high-capacity bandwidth that meets the processing demands of next-generation technologies like blockchain systems. Many blockchain data centers are cropping up in rural areas of Texas; however, sourcing reliable connectivity to the internet can be challenging.

Public sector (22% of respondents): A broadband for all advocate for rural America

Public sector teams are critically important to finding solutions that deliver next-generation technology to underserved rural areas. By raising awareness of the need for broadband for all, connecting communities to funds and resources, and establishing partnerships, public sector teams can help municipalities, schools, and businesses access the networks that will help them to grow and scale into the future.

Cloud migration (20% of respondents): Key factors to consider

For enterprises choosing to migrate operations and workloads to the cloud, robust and secure fiber connectivity within a mission-critical colocation facility is a must. Choosing the right data center with the best connection to the cloud is half the battle. Organizations must also ensure there is fiber network infrastructure that’s scalable and reliable providing interconnectivity between their locations and their chosen data centers.

Dedicated internet access (15% of respondents): The path to increased uptime, speed, and reliability

Enterprises of all sizes can benefit from choosing Dedicated Internet Access (DIA)––a private or fully dedicated connection between the internet and the customer. Enterprises, data centers, government institutions, and many more businesses today require a fully dedicated connection allowing large amounts of data to be transferred at faster speeds in order to keep pace with their business needs.

Dark fiber (12% of respondents): A cost effective network strategy to future-proof businesses

Dark fiber holds a lot of potential to rejuvenate the capabilities of businesses across many key vertical industries, including healthcare, finance, education, and beyond. This network strategy effectively future-proofs businesses, empowering them with the ability to cost effectively meet the growing needs of their end-users with bolstered bandwidth, reduced latency, and more.

Post-pandemic relocations are igniting digital transformation and highlighting the core infrastructure requirements to support business expansion. It will be exciting to see how rural areas around our country will begin to flourish as a result.

Jay Anderson is chief technology officer of FiberLight, a fiber infrastructure provider with more than 20 years of experience building and operating mission-critical, high-bandwidth networks. As CTO, he is responsible for evolving FiberLight’s infrastructure and technical capabilities to ensure the company can respond quickly to the changing digital ecosystem needs of its customers. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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