Convergence Will Complicate Regulation, Definition of '4G,' State Regulators Told

WASHINGTON, February 14, 2009 – With $7.2 billion in stimulus funds soon to be available for broadband service – and with the transition to digital television freeing huge swaths of spectrum – wireless communication could be poised for some technological advances.

Wireless providers are engaged in a rush to deploy next-generation mobile networks as more Americans “cut the cord” from their wired phone and internet services, posing unique challenges for state regulators.

For state regulatory commissioners gathered for the National Association of Regulatory Utility Commissions winter meeting, defining and regulating the so-called “4G” networks will pose unique challenges.

The convergence of mobile devices and the Internet has made the definition of 4G services “nebulous at best,” Fierce Markets strategic advisor Carl Ford told the group during a presentation on Saturday morning. Showing a slide of a Wikipedia definition of 4G, Ford took issue with the common assumption that the term is simply an extension of current wireless technology.

Internet protocol-based applications and services will dominate the next generation of wireless, regardless of the frequencies or underlying technology used, Ford said.

The “Long Term Evolution” technology touted by Verizon Communications and AT&T, for example, will probably achieve “total dominance” by 2015, Ford said. Clearwire’s WiMax technology will end up being an “island by itself” in the evolution of wireless networks, he said. But whether either service constitutes 4G service is debatable, he said, since “the Internet is coming to wireless.”

WiMax is “viable and has its own purpose,” said Ford. He said LTE is more of a continuation of the current cellular business model. Fixed WiMax has the potential to provide backhaul capacity to remote areas, he said. And while telecommunications industry observers say that LTE will eventually be king, Ford made it clear that “the battle has yet to be won.”

The marketplace is far from a two-horse race, Ford said. Though the FCC has not yet finalized rules on usage, Ford predicted that so-called “white space” devices – which transmit on frequencies occupying the vacant spaces between television channels – have the potential to service “a bunch of end points.”

Even Femtocells, small cellular receivers like Sprint Nextel’s AirRave and Verizon’s Extender, will be “reach extenders” for next generation networks, he said.

But as wireless becomes the choice for increasing numbers of consumers, many of the old rules governing telephone service and other utilities are starting to come back, Ford said. Providing services for the public good isn’t easy.

Internet protocol networks are nothing new to telecommunications services, Ford said. All telephone calls are transmitted over internet protocol at some point, he said. “Why shouldn’t the Internet impact wireless in the same way?”

But at the end of the day, Ford said that consumers “simply want the mobility that [next-generation services] will provide.” He predicted future devices will be able to provide all the services of the current mobile networks, but on IP-based networks. Whether or not the networks — “dumb pipes” — provide new opportunities is up to the initiative of application developers, he said.

Even now, the Internet is the “killer platform” driving current 3G devices and services, he said. And as the next generation of devices is unveiled, he said, prices for equipment will drop. “We will all have them,” he said.

And as devices become commonplace, more music, video, and payment services content – features that have been available in other countries for years – will be common features of the American wireless networks.

Regulators should beware of localities imposing taxes on these new services, he said, pointing to some California municipalities’ tax on Vonage phone service as an example of bad policymaking.

The broadband stimulus bill will certainly lead to more jobs and more access, Ford said. He cautioned the group of state regulators to be wary of interposing themselves between these new services and the market. Instead, Ford suggested that state regulatory commissions should be more concerned with ensuring consumer protection than regulating quality of service issues.

The federal government’s national broadband strategy gave Ford “high expectations” for future programs.