Tag Archives: mobile broadband

California cell site free-for-all bill shredded in senate analysis

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By wdwd (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
Deconstructing the text.

A much different assessment of senate bill 649 has been posted as it heads toward a hearing tomorrow in the senate’s governance and finance committee. That’s the bill that would largely eliminate local control in California over cell sites in the public right of way and commercial and industrial zones, and give mobile carriers the right to attach their gear to publicly owned light poles and other vertical assets at will for $20 a year.

SB 649 is being carried by senator Ben Hueso (D – San Diego), who chairs the energy, utilities and communications committee. The legislative analysis offered by his staff read like it was written by AT&T and Verizon, whose lobbyists flanked Hueso when he presented it to his colleagues a couple of weeks ago.

A new analysis done for the governance and finance committee takes a much different tack, among other things noting that SB 649 amounts to a gift of taxpayer money to mobile carriers…

Local officials’ first duty is to protect the interests of their constituents. They have broad authority to regulate activities to preserve the public welfare, and they have developed processes in accordance with that duty for permitting wireless telecommunications facilities. Some jurisdictions impose more conditions than others due to specific local circumstances, and the FCC has recognized this need. SB 649 goes well beyond federal law to strip local governments of this authority. By making small cells permitted uses, SB 649 extends by-right development to small cells, and it stops local governments from establishing discretionary permitting processes—even in historic districts if they allow any kind of commercial or industrial uses…And SB 649 goes even further than other by-right proposals because it require local governments to offer up their vertical infrastructure for use by other entities and removes their ability to charge fair rent by capping lease fees for vertical infrastructure to an amount that is a small fraction of the rates in current agreements between carriers and local governments. SB 649 sets a concerning precedent that reappropriates taxpayer funded infrastructure for private benefit.

Hueso got a unanimous yes vote in his own committee, but that was clearly on the basis of the customary courtesy afforded chairmen and not on the merits of the bill. Committee members, including the governance and finance chair, senator Mike McGuire (D – Healdsburg), made it clear that they would eventually vote against it if the language remained as is.

He’ll have a chance to make good on that promise tomorrow.

T-Mobile leads 600 MHz auction, DISH slips easily in behind

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T-Mobile is the big winner, or at least the big spender, in the Federal Communication Commission’s $20 billion incentive auction, walking away with more than half the 600 MHz band licenses up for grabs – 1,525 licenses, 55% of the total. Second place went to DISH, which paid $6.2 billion for 486 licenses, 18% of the total.

Who came in third depends on how you’re figuring it. Comcast bid the third most money – $1.7 billion – but ended up with only 73 licenses, a mere 3%. U.S. Cellular – the distant number five mobile carrier in the U.S. – was number three in the license race, paying $329 million for 188 licenses (7% of the total, but not prime real estate).

AT&T plunked down nearly a gigabuck – $910 million – for 23 licenses, a 1% share. Verizon, on the other hand, was shut out, winning zero licenses but, on the other hand, paying zero dollars.

Sprint didn’t participate, or at least not under its own flag. There will certainly be further wheeling and dealing. Many of the winning bidders appear to be have transaction motives rather than action plans.

DISH is top of that list. Chairman Charlie Ergen made the leap from millionaire to billionaire after placing a low cost, high return bet on direct broadband satellite slots back in the 80s, and has been playing the spectrum sweepstakes ever since. He’ll light up frequencies himself when there’s an open field – as there was with DBS once it got going in 90s – but otherwise manages his licenses as an investment portfolio.

Don’t expect anything revolutionary from anyone in the near term. It’ll take a few years to move TV stations off of the frequencies they’re giving up in exchange for $10 billion. And which they, or at least the original license holders, paid exactly zilch to acquire.

Cell site free-for-all approved in raucous California senate hearing

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Cities and counties will be forced to hand over control of light poles they own to wireless companies for a nominal fee, under a bill unanimously approved yesterday by a California senate committee during a hearing that descended at times into chaos and low comedy. Drafted by mobile carriers and pushed by the chairman of the committee, senator Ben Hueso (D – San Diego), senate bill 649 would also allow wireless companies to install “small” cells (which, as defined, could be sizeable) pretty much at will, anywhere in the public right of way in California, including residential areas.

Flanked by lobbyists from AT&T, Verizon and CTIA, the mobile industry’s lobbying front, and occasionally wagging his pen at colleagues who questioned the wisdom of his approach, Hueso defended the bill and offered a rainbows and unicorns vision of a world where wireless carriers selflessly work with cities for the greater good of all. Which is the only reason they would: Hueso had difficulty articulating what actual authority would be left to local governments if SB 649 is approved as is.

There was opposition, of a sort. The initial time allotted for opponents was hijacked by a couple of storm troopers from the Tin Foil Hat Brigade, but a representative from a city planners’ association was granted a couple of extra minutes by an exasperated acting chair to make a coherent argument against the bill.

The committee members had problems with the bill as written too. At the top of the list was language that would have forced cities and counties to lease light poles to cell companies on demand, for the flat fee of $20 a year. When asked if he would accept amendments, Hueso dug in his heels, saying “it looks like I have my votes”. And he did. After threatening to vote against the bill if it makes it to the senate floor in its current form, every committee member voted aye, and sent it on to its next stop, the senate’s governance and finance committee.

It’ll face a tougher audience there.

Bill to gut local review of cell sites gets California senate hearing today

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Stripping local governments of most of their discretion over where wireless equipment can be installed – including on property they own – is just one of the provisions of a bill that is scheduled to get its first hearing today in the California legislature. Senate bill 649 will go before the senate energy, utilities and communications committee later this morning, and is likely to receive a warm welcome. The principal backer is senator Ben Hueso (D – San Diego), who is also the chairman of the committee. He is carrying the bill at the behest of CTIA, a lobbying front for mobile carriers, in particular the four big ones: AT&T, Sprint, T-Mobile and Verizon. As expected, the bill is getting friendlier to the big dogs as it moves along.

The first analysis of the bill was posted yesterday. It was nominally prepared by the committee’s staff, who reports to Hueso, but much of it reads like it was written by lobbyists for cell phone companies. What is clear from the summary is that if a mobile carrier rocks up with a cell site that meets the criteria for a “small cell” – which might not actually be all that small – then cities and counties will have little to say about where it can be installed, including on poles and other property that belongs to them. According to the staff analysis, among other things, SB 649…

Establishes that a small cell is a permitted use not subject to a city or county discretionary permit if it [is]…located in i) the public right-of-way in any zone or ii) in any zone that includes a commercial or industrial use…

Prohibits a city or county from precluding the leasing or licensing of its vertical infrastructure located in public right-of-way or public utility easements, and requires the fees are cost-based, based on the FCC’s formula.

The analysis recommends that some changes be made to clarify how California Public Utilities Commission rules interact with the bill’s provisions. It also notes that Hueso has committed to work with cable lobbyists to make sure their needs are met, a promise that hasn’t been extended to the long list of cities and other organisations that oppose it (although the list of supporters, including many who take money from telecoms companies and lobbyists for just such a purpose, is longer). The bill will get a second hearing, though, in front of the senate’s governance and finance committee, which does pay attention to the details of local land use policy and other municipal concerns.

Two California lawmakers want to declare cell sites not a municipal affair

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The new legislative year is bringing with it a new effort to further preempt local government authority regarding where and how cell sites can be built. Senate bill 649 was introduced last week by senator Ben Hueso (D – San Diego County), the chair of the senate energy, utilities and communications committee, and co-authored by assemblyman Bill Quirk (D – Hayward), who has been a good friend to mobile carriers in general, and AT&T in particular. Depending on what the final language looks like, it potentially will exempt tens, or perhaps hundreds, of thousands of future cell site installations from local permit reviews.

As it currently reads, SB 649 creates a new category of cell sites – small cells – and puts it in the same, statutory preemption bucket as collocation facilities, which are additional antennae and such that are tacked onto existing towers. In other words, small cells will “have a significant economic impact in California and are not a municipal affair”.

What’s a small cell? SB 649 defines it by reference to a federal standard, which says, in effect, that it’s a wireless facility with no single antenna greater than three cubic feet in volume, and total antenna volume no greater than six cubic feet. “Associated equipment”, such as transmitters and power supplies, can add up to another 35 cubic feet. If you’re trying to picture it, think of a pole with a couple of oversized carryon suitcases at the top and a coffin bolted on below.

The bill that’s in the hopper now doesn’t actually say that small cells will not be “subject to a city or county discretionary permit”, as collocation facilities are currently privileged to be. But it does set the table for adding that exemption as SB 649 moves through the legislative sausage machine – there would be little point to the bill otherwise. AT&T-backed bills, for example, are infamous for beginning life as something fairly innocuous, but eventually turning into something more pathological as amendments are made.

Verizon could close a big competitive gap with Charter’s fiber

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Verizon needs to build more than 100,000 new cell sites and add more fiber connectivity to close a capacity gap with its U.S. competitors, according to a report from New Street Research. And, the report concludes, buying Charter Communications – as rumors say it might – could help solve some of Verizon’s problems. It wouldn’t be much benefit to Charter, though.

The report estimates that when the number of cell sites and the amount of spectrum used is taken into consideration, Verizon has a bit more than half of the capacity per subscriber that AT&T and T-Mobile have. In order to catch up, Verizon would have to build 69,000 new macro – traditional, big – cell sites, or 138,000 or more small cell sites. New Street estimates that if small cells are properly located to reach high concentrations of subscribers, it would only take two to replace a big cell site. To fully cover the same geographic area, though, the ratio is more like ten to one.

Those sites would all need back haul, of course, which is where Charter comes in. Verizon still has some wireline assets of its own, but Charter’s footprint is much bigger and U.S. cable companies have more fiber – and more easily accessed fiber – than telcos. “Cable has much greater fiber density than their wireline competitors”, the report says. “To put this in perspective, the Cable industry has 320,000 nodes today, the vast majority of which are fed with fiber. By contrast, telecom carriers have 23,000 fiber fed central offices”.

So a cable acquisition would be an advantage for Verizon. From Charter’s perspective, the benefits aren’t clear. New Street discounts speculation that a cable-mobile merger would reduce churn, concluding that Verizon’s is a low as it can go and there’s no hard evidence that it would have much more than a marginal impact on Charter’s.

The report makes several other good points about the cable and mobile sectors, and telecoms in general, and is worth reading. New Street’s top line conclusion is that an acquisition is less likely than originally thought, and “our working hypothesis is that it will be very tough for Verizon to structure a deal that Charter will find compelling”.

Mobile carriers buy 70MHz UHF slice for $20 billion

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The auction is over and mobile broadband carriers gained 70 MHz of spectrum in the 600 MHz band, at a cost just under $20 billion. After four cycles of downward bidding by television companies willing to sell their channel assignments followed by upward bidding by wireless companies wanting to buy them, the Federal Communications Commission’s incentive auction ended on Friday.

The downward, selling price auction ended last month, with TV stations willing to accept $10 billion in return for giving up 84 MHz of UHF spectrum. After setting aside 14 MHz for unlicensed use and guard bands, the FCC opened the bidding for the remaining 70 MHz. The final buying price was $19.6 billion, just a bit less than wireless companies were willing to pay for the 80 MHz slice on offer in the third round.

The FCC produced a tidy profit of about $7 billion for the federal treasury, money that’s assumed to be going toward upgrading public safety communications networks. It’ll cost about $2 billion to “re-pack” remaining UHF television channels, in order to produce contiguous mobile broadband frequency assignments. The balance goes towards administrative overhead.

The final bid total was significantly less than hoped. Original estimates were that carriers would pay somewhere in the $30 billion to $40 billion range for 100 MHz. Broadcasters had their eyes on an even bigger payday, starting with a $86 million selling price in the first round, $57 billion in the second and $40 billion in the third – with the amount of spectrum cut each time – before collapsing to $10 billion on the fourth and final try. Carriers, on the other hand, were pretty consistent, bidding a total of $23 billion for 100 MHz initially and walking it back about a billion at a time until the end came on Friday.

The wrangling isn’t over – the next step is to figure out which exactly frequencies TV stations will surrender and which will go to the winning bidders, whose identities haven’t been released yet.

TV-to-mobile spectrum transfer heads to fourth auction round

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Less equals less, when it comes to spectrum auctions. That seems to be the lesson the Federal Communications Commission is learning as it ends its third stage of reverse-and-forward auctions for frequencies currently used by television broadcasters and coveted by mobile carriers.

But not coveted as much as broadcasters think, apparently. The FCC opened the bidding from mobile carriers and closed it couple hours later when it became clear that the price they are willing to pay isn’t anywhere near what broadcasters want in exchange for giving it up.

In the reverse auction phase of the third stage, broadcasters lowered their price to $40 billion (including the FCC’s cut) for 108 MHz of spectrum in the 600 MHz UHF band. The FCC then turned around and put 80 MHz on the block, reserving the remaining 28 MHz for guard bands and unlicensed use. However, the most that mobile carriers were willing to bid yesterday was $20 billion, half the asking price.

In the first stage, the reverse auction produced a selling price of $86 billion but mobile operators were only willing to pay $23 billion for the 100 MHz on offer. In the second stage, the available spectrum was cut to 90 MHz and the price dropped to $57 billion. But with less on the table, carriers offered less money, $22 billion that time. And now the third stage has produced the same result – less spectrum means both a lower asking price and a lower willingness to spend.

So now it’s on to a fourth try. The FCC anticipates “that bidding in Stage 4 of the reverse auction will begin Tuesday, December 13, 2016”. No spectrum target has been announced yet, but the assumption is that it’ll decrease by another 10 MHz to 70 MHz (plus guard and unlicensed bands). Earlier predictions that broadcasters and mobile carriers would eventually meet somewhere around $30 billion now seem too optimistic – mobile carriers appear to have a firm value in mind and it drops along with the amount of spectrum on offer.

Forward mobile spectrum auction goes into reverse

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Maybe it’s just a Rockford?

Well, that didn’t take long. Two hours after the Federal Communications Commission starting taking bids from mobile carriers (and, perhaps, would-be mobile carriers) for 90 MHz of television spectrum, it shut the auction down. Instead of stretching out for several bidding sessions over many days, or even weeks, the second stage of the incentive auction ended fast, and on a down note.

Mobile carriers were willing to pay $21.5 billion for the 90 MHz that was on offer. Unfortunately for them, though the minimum price set was $56.5 million. That’s about a billion dollars less than the carriers were willing to pay in the first stage of the auction, when 100 MHz was up for grabs. On the other hand, the gap is closing, sorta: in that first stage, broadcasters were asking $35 billion more than they did in this second one.

There are two schools of though as to what will happen when the FCC launches subsequent rounds of reverse-and-forward bidding, with progressively lower amounts of spectrum on the table. It could be that as the supply tightens, the value to buyers – the demand – will increase and mobile carriers will start putting more money on the table. There are a number of forecasters who talk about a final meeting price somewhere in the $30 billion range, for maybe two-thirds of the current amount of bandwidth that’s up for sale.

But there’s also the possibility that wireless carriers will simply say less spectrum is worth less money and keep their bids heading in a southerly direction. For the process to be a success, broadcasters would have to drop their asking prices at an even faster rate. In this case, success equals more spectrum for mobile broadband – where bandwidth demand continues to outstrip supply – and less for television broadcasting, where allocations made decades ago in ancient analog times are far too lavish in the digital age.

The FCC will announce the third stage schedule later this week.

Shifting spectrum from TV to mobile broadband still looks expensive

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Broadcasters have reduced their selling price by $32 billion in the second round of the Federal Communications Commission’s incentive auction, which ended yesterday. Even so, there’s still a big gap between that and what mobile broadband carriers were willing to pay in the first round.

The auction is aimed at moving legacy TV stations off of prime UHF real estate so mobile broadband companies can use the bandwidth instead.

The second, reverse round of the auction began last month, with 90 MHz of prime mobile broadband spectrum on the line (and another 24 MHz for unlicensed uses and guard band duty). TV station owners bid their selling price for that spectrum down from the $88 billion they wanted for 100 MHz in the first round to the current $56 billion ask for 90 MHz.

The problem is that mobile companies only bid $23 billion to buy 100 MHz the last time around. Looked at one way, broadcasters met mobile carriers more or less halfway: the $66 billion gap is now $32 billion and change. If mobile companies were holding back to a significant degree the first time, they might be willing to pay more this time. On the other hand, $23 billion might be the max given their expected return on the investment and chopping out 10% of the available spectrum could mean they’re not interested in paying as much as in the previous round.

It gets more complicated. It’s not enough to just match the selling and buying prices. Congress is expecting the FCC to raise extra money to pay for digital upgrades to public safety networks.

Although there’s always been the hope of a fast and lucrative finish to the incentive auction, the base assumption has been that several rounds will be needed. The FCC will launch the second half of the second round – the forward, buyer’s auction – next week.