T-Mobile US merger with Sprint one step closer after FCC sign-off

Having secured a bunch of 5G network commitments, the US telecoms regulator has given its seal of approval to the merger of TMUS and Sprint.

The FCC had to make the usual judgment call when it comes to telecoms mergers of weighing up the reduction in competition with the increased investment power of the combined entity. As with apparently everything else in the US, the FCC is politicised and tribal. The three Republican Commissioners voted in favour, while the two republicans voted against.

To the winners go the spoils and the resulting announcement was heavy on the national benefits promised by ability of the combined entity to do a better job of rolling out a 5G network than the sum of its parts. The FCC (or at least the majority of it) is saying ‘the transaction will close the digital divide and promote the wide deployment of 5G services’. Let’s see.

“Specifically, T-Mobile and Sprint have committed within three years to deploy 5G service to cover 97% of the American people, and within six years to reach 99% of all Americans,” said the FCC announcement. “This commitment includes deploying 5G service to cover 85% of rural Americans within three years and 90% of rural Americans within six years.

“The parties also pledged that within six years, 90% of Americans would have access to mobile service with speeds of at least 100 Mbps and 99% of Americans would have access to speeds of at least 50 Mbps. This includes two-thirds of rural Americans having access to mobile service with speeds of at least 100 Mbps, and 90% of rural Americans having access to speeds of at least 50 Mbps.

“Compliance with these commitments will be verified by rigorous drive-testing, overseen by an independent third party and subject to Commission oversight, to ensure that the service Americans receive will be what the parties have promised. And in order to ensure that these commitments are met, the parties will be required to make payments that could reach over two billion dollars if they do not meet their commitments within six years. Moreover, the parties will be required to make additional payments until they have fulfilled their commitments.”

In their lengthy dissenting letter the two Democrat Commissioners stressed how little reassurance they take from these commitments. “The vague promise of 5G does not change what was true when this deal was first proposed and what remains true today—the benefits of this merger, if any, simply do not outweigh the harms,” wrote Commissioner Starks.

This still isn’t a done deal, however. It is the last of the federal obstacles but some individual states are pushing back and, by amazing coincidence, everyone involved seems to be of the Democrat persuasion. This is just how things work over there and the two companies will presumably need to dip further into the pork barrel to win those states over.

Having secured a bunch of 5G network commitments, the US telecoms regulator has given its seal of approval to the merger of TMUS and Sprint.

The FCC had to make the usual judgment call when it comes to telecoms mergers of weighing up the reduction in competition with the increased investment power of the combined entity. As with apparently everything else in the US, the FCC is politicised and tribal. The three Republican Commissioners voted in favour, while the two republicans voted against.

To the winners go the spoils and the resulting announcement was heavy on the national benefits promised by ability of the combined entity to do a better job of rolling out a 5G network than the sum of its parts. The FCC (or at least the majority of it) is saying ‘the transaction will close the digital divide and promote the wide deployment of 5G services’. Let’s see.

“Specifically, T-Mobile and Sprint have committed within three years to deploy 5G service to cover 97% of the American people, and within six years to reach 99% of all Americans,” said the FCC announcement. “This commitment includes deploying 5G service to cover 85% of rural Americans within three years and 90% of rural Americans within six years.

“The parties also pledged that within six years, 90% of Americans would have access to mobile service with speeds of at least 100 Mbps and 99% of Americans would have access to speeds of at least 50 Mbps. This includes two-thirds of rural Americans having access to mobile service with speeds of at least 100 Mbps, and 90% of rural Americans having access to speeds of at least 50 Mbps.

“Compliance with these commitments will be verified by rigorous drive-testing, overseen by an independent third party and subject to Commission oversight, to ensure that the service Americans receive will be what the parties have promised. And in order to ensure that these commitments are met, the parties will be required to make payments that could reach over two billion dollars if they do not meet their commitments within six years. Moreover, the parties will be required to make additional payments until they have fulfilled their commitments.”

In their lengthy dissenting letter the two Democrat Commissioners stressed how little reassurance they take from these commitments. “The vague promise of 5G does not change what was true when this deal was first proposed and what remains true today—the benefits of this merger, if any, simply do not outweigh the harms,” wrote Commissioner Starks.

This still isn’t a done deal, however. It is the last of the federal obstacles but some individual states are pushing back and, by amazing coincidence, everyone involved seems to be of the Democrat persuasion. This is just how things work over there and the two companies will presumably need to dip further into the pork barrel to win those states over. It’s a marathon, not a sprint.

Sharing, selling and standardizing – the great spectrum conundrum

With the World Radiocommunication Conference currently underway in Egypt, it’s timely to discuss some of the spectrum issues facing the industry today.

Spectrum is and will probably remain a hot-topic for the industry due to its critical importance. The success of a telco is partly defined by the spectrum licences it is able to horde, and depending on where you are in the world, the scarcity of these assets varies. That said, to describe anywhere as having an abundance would be foolish to say the least.

Starting with the idea of selling spectrum, this is a topic which is under constant debate, review and criticism.

“When you talk about spectrum, the price you have to pay always has an impact on the rollout strategy,” said Jasper Mikkelsen, Director of Public and Regulatory Affairs for the Telenor Group, during a panel session this week.

This is where the balancing act is at its finest. The regulators will argue they need to charge for access to spectrum for several reasons, but the price of spectrum is often the centre of criticism in various markets. Mikkelsen pointed out during the auctions in Thailand earlier this year, many of the spectrum assets went unsold due to the reserve prices assigned to the lots.

However, according to Donald Stockdale of the FCC, the complaints from telcos might have some merit. If spectrum is unsold at the end of the auction, this is most likely due to the auction being badly designed. Perhaps not enough was released, the channels hadn’t been cleared effectively, the reserve price was too high, or the obligations attached to the winning assets were deemed unreasonable by the telcos.

Telcos will always complain and point to markets where spectrum is effectively given away for free, however there are cases where they have a point. If such a valuable asset is remaining unsold, despite the pleas of telcos to free-up more spectrum, there is perhaps something wrong with the product itself.

What is worth noting is that the auction process is not perfect. There will always be complaints and criticism, though it is currently the least worst option. It is certainly better than the ‘beauty contest’ concept, which leaves the door wide open to corruption.

How to design and manage spectrum auctions is more of a ‘trial and error’ process, which will come as little comfort to those shelling out the investments, however the idea of standardising is something which should certainly be given more traction.

This will of course be a topic of conversation for at the World Radiocommunication Conference, especially concerning the higher frequency airwaves, though there is still a lot of work to do on the spectrum licenses which are already a hotch-potch of complexity.

While there is work being done to standardise spectrum across various different regions, this is a lot more complicated than just simply creating new rules. Bureaucrats have to deal with the dreading concept of legacy.

As Michael Sharpe, Director of Spectrum and Equipment Regulation at ETSI, pointed out there are 48 countries in Europe, all of which have been assigning spectrum to different usecases, products and services over the last few decades. Harmonisation is a topic of conversation now but unravelling the maze of red-tape which already exists in each of these nations is a very complex task.

First and foremost, there are some very attractive benefits from standardisation. In a region like Europe, the risk of interference is present, driving the case, while there are also be benefits driven through interoperability or economy of scale, however there will always be a downside.

Looking at Europe once again, the congestion of certain bands will vary depending on the demands of the nation, while the cost assigned to clearing these costs will certain vary quite considerably. Then you have to look at the idea of flexibility.

Politicians generally don’t like being told what to do, and they like it even less when it comes from bureaucrats over which they have very little influence. In designing a harmonised approach to spectrum allocation and usage, flexibility will need to be built into the process to ensure each nation can address the specific needs of dominant industries and the nuances of societal variance.

This is of course very difficult to judge the right balance, but it is a critical element not only to ensure economic prosperity in each of the nations, but to make sure the rules are adopted by the Governments in question. If it is too much of a hinderance or costs too much to clear the bands, who is to say these suggestions are not just simply ignored, these are sovereign states after all.

The final area which is attracting some attention out of the US is a spectrum sharing initiative out of the FCC.

Focusing specifically on the valuable 3.5 GHz spectrum band which is being championed in Europe to deliver the first 5G services, the FCC is trialling a dynamic spectrum sharing project. Known unofficially as the ‘Innovation Band’, it offers a palatable compromise between high-speed data transmission and extended coverage. However, the US has found itself in a bit of a pickle as the current incumbent on this spectrum band is the Navy.

The spectrum is currently utilised by the Navy in offshore radar operations, however it is not being used all the time, such is the nature of naval operations. For such valuable spectrum, this is largely viewed as a waste.

Stockdale highlighted the team has created a three-tier, demand-orientated system, where spectrum is utilised dependent on the presence of those in the tier above. The Navy has the right to use the band first and foremost, though when it become unutilised, mobile service providers can purchase licenses to gain access for the second tier. Should the Navy or the telcos not be making use of the spectrum, it can be assigned for general use for those approved in the third-tier.

Although this is only a trial for the moment, it demonstrates the point made above. Flexibility needs to be built into spectrum harmonisation initiatives, as it is unrealistic to repurpose this band in the US. The cost and effort are unlikely to be justifiable when you consider the size of the US Navy.

This is an excellent example of innovation when looking at spectrum, and regulators around the world should be paying attention to the lessons learned through this experiment. The idea of dynamic spectrum sharing could be huge if the fundamentals are validated here, such is the demand for this valuable and increasingly scarce resource.

This is of course not the only example of spectrum being repurposed in regions where it is not being utilised. In the UK, Ofcom has introduced rules which dictate unused spectrum must be released, assuming there is demand.

Vodafone recently announced it entered into a three-year agreement with StrattoOpencell to share the use of it 2.6 GHz spectrum assets to deliver connectivity in Devon. The spectrum licences are being used in highly-urbanised areas, but not in the countryside, therefore it is inefficient use of the asset without these rules from the regulator.

Although spectrum is a topic which has been the centre of many debates, it does appear it will be an ever-lasting ebb and flow. The World Radiocommunication Conference will likely free-up some more spectrum, but the TMT industry is very good at finding ways to use it. Scarcity is most likely going to persist, though there are some interesting conversations evolving to improve this niche of the mobile segment.

FCC wants to use state muscle to ban Huawei and ZTE even more

What little presence Chinese vendors still have in US networks will be further eroded by a new initiative from the US regulator.

Federal Communications Commission Chairman Ajit Pai (pictured) announced at the World Radiocommunication Conference that the FCC will soon vote on a move to deny federal funds to any company that does business with any company that poses a national security threat.

Right now US operators get some state wonga from something called the Universal Service Fund, which is positioned as a pot of cash to ensure everyone in the US is connected. Any time a company is dependent on the state for funds, however, that leaves it vulnerable to state intervention in its business and that seems to be what Pai has in mind. Suddenly universal service is secondary to geopolitics.

With the usual preamble about how Chinese companies are compelled to assist their government in its spying operations, Pai said he thinks even more needs to be done to counter that threat to US national security.

Recognizing this risk, today, I’m circulating an order that would prohibit the use of Universal Service Fund dollars to purchase equipment or services from any company—like Huawei—that poses a national security threat,” said Pai. “Going forward, we simply can’t take a risk when it comes our networks and hope for the best.”

In the process of examining this issue, I also determined that the FCC needs to take a look back, so to speak. That’s because some rural wireless carriers that receive USF funds have already installed Chinese equipment.  So, I’m proposing that the Commission initiate a process to remove and replace such equipment from USF-funded communications networks.

“My plan calls first for an assessment to find out exactly how much equipment from Huawei and another Chinese company, ZTE, is in these networks, followed by financial assistance to these carriers to help them transition to more trusted vendors. We’ll seek public input on how big this “rip and replace” program needs to be and how best to finance it.  I hope that my colleagues will join me in voting for these important steps to protect our national security at our November 19 meeting.”

Public funds are a two-way street, you see. They can be taken away if you’re bad, but increased it you’re good. We don’t know how substantial the USF is, but operators could always just forgo that cash if they really felt like using Chinese gear, we suppose. However they would then find themselves on a governmental naughty list and presumably face all sorts of other state sanctions, so will probably decide discretion is the better part of valour when it comes to doing what they’re told in this case.

Another petition appears to delay T-Mobile/Sprint merger

Nine organizations have come together to petition the FCC to delay any permissions to approve the T-Mobile US and Sprint merger until a fraud investigation has been completed.

The petition is focused on a Sprint probe, relating to alleged Lifeline fraud. The under-fire telco has been accused of collecting subsidies from the FCC even though many of the subscribers through the initiative were inactive and not using the service.

“Specifically, the public interest, rural wireless, and labor organizations ask the Commission to pause its review of the merger while important issues related to Sprint’s apparent Lifeline fraud are more fully investigated by the Commission, and also urge the Commission to seek public comment on the DISH waiver requests, the July 26 Dish commitments to the Commission, and related developments, including the DOJ Consent Decree,” the petition states.

The petition has been filed by the Rural Wireless Association, the Communications Workers of America union, Consumer Reports, The Greenlining Institute, the Institute for Local Self-Reliance, New America’s Open-technology Institute, The Rural Broadband Association, the Open Markets Institute and Public Knowledge.

Should the FCC agree with the petitioners, the completion of the merger would be paused until the end of the investigation.

Although T-Mobile US and Sprint have been making progress towards completing the merger, there are still numerous hurdles which will have to be negotiated. The FCC and Department of Justice have green-lit the deal, with concessions to be fulfilled, though that does not mean the law suits will disappear.

Aside from this petition, 16 State-level Attorney Generals have banded together to file a lawsuit against the merger. Led by the ambitious New York Attorney General Letitia James, the lawsuit questions the validity of the merger on the ground of competition. James has argued that with the presence of four MNOs, tariffs are becoming less expensive and coverage is improving; connectivity is getting better for the consumer with the status quo, so why should this be changed?

The nine organizations filing this petition to the FCC are demanding the merger be delaying which the fraud investigation into Sprint is on-going.

The Lifeline Program is designed to offer subsidies to telcos to enable free tariffs for low-income consumers across the country. Participants receive $9.25 a month on average, though Sprint is accused of collecting the pay-out for 885,000 inactive Lifeline customers. This number represents 30% of the Lifeline subscribers Sprint supports.

“It’s outrageous that a company would claim millions of taxpayer dollars for doing nothing,” FCC Chairman Ajit Pai said at the time. “This shows a careless disregard for program rules and American taxpayers. I have asked our Enforcement Bureau to investigate this matter to determine the full extent of the problem and to propose an appropriate remedy.”

Under the rules of the programme, providers of the service may only be reimbursed for a Lifeline subscriber if that subscriber has used the service at least once in the past 30 days. The onus is placed on the telcos to de-enroll inactive subscribers, though it does appear something went very wrong at Sprint.

Considering the investigation is being powered by the FCC, the petitioners might find some joy with this latest effort to de-rail the merger. It might be nothing more than a pause on developments, but it does afford more opportunity for other opponents to gather momentum.

FCC moves to kill off all exposure to Huawei in rural networks

FCC Commissioner Geoffrey Starks has stuck the knife into Huawei at an industry conference, suggesting rural telcos will be given financial assistance to cleanse their networks of the vendor.

Speaking at the Competitive Carriers Association annual conference, Starks targeted the Chinese telecommunications industry on the whole, and Huawei in particular. Not only is the FCC exploring ideas on how to ban the purchase of Huawei equipment entirely, but also the introduction of an initiative which would offer federal dollars to search for, and remove, legacy Huawei equipment which might be in the network.

“Huawei is one of the biggest telecom equipment manufacturers in the world, and although its share of the U.S. telecom market is relatively small, some wireless carriers have purchased Huawei equipment for their networks,” Starks said.

“These carriers bought this equipment, often a decade or more ago, because it was far less expensive than other options, and because Huawei was willing to work with them to create customized networks.

“The Commission is currently examining whether to ban the use of federal support dollars for the purchase of such equipment, but we can’t ignore the problem of the equipment that’s already here.”

Starks is the FCC frontman for a new programme which has been known as ‘Find it, Fix it, Fund it’. The initiative will provide funding to telcos to self-assess networks and identify what would be deemed as ‘suspect equipment’. Currently it is voluntarily, though it does appear there are regulatory changes on the horizon to make the initiative a compliance issue.

In the short-term, the equipment might be allowed to stay in the network, though it would be quarantined. Long-term, Starks is suggesting every piece of equipment would have to be ripped and replaced.

The financial support from the FCC is an interesting element, and it does seem to have been working with the private sector to advance its ambitions.

“Nokia and Ericsson have said that they are willing to create products and financing options geared toward smaller carriers that need to replace Chinese equipment,” Starks said. “They also claim that they have had handled similar replacement efforts with minimal customer disruption.”

The challenge which many of these rural telcos are facing. Financially these companies are under strain. Connectivity is an expensive business and the rural players cannot experience the same economy of scale benefits the national players can. Ripping and replacing prior investments would be a kick in the teeth for already financially tense environments.

This is the reason Huawei has been successful in engaging rural and regional connectivity providers in the US. Not only does it offer a broader range of products, some of which are much more financially attractive, but it has been much more open to customisable deployments than rivals. The US is an incredibly varied geography, there is not a one-size-fits-all opportunity here.

A lack of competition and the removal of the cheapest network infrastructure provider is a massive concern for the rural and regional telcos. However, with the help of federal funding and new business offerings from Ericsson and Nokia, the financial burden of rip and replace regulations might be lessened. This does not mean networks will be better or cheaper in the long-term, but it is a nod from the FCC to the immediate concerns.

Aside from this conference speech from Starks, further evidence of Chinese aggression has emerged from the US.

Senators Chuck Schumer and Tom Cotton have called for a ban for China Telecom and China Unicom to use US networks. China Mobile has already been facing difficulties in obtaining a licence to operate in the US, though this further expands the scrutiny which is being placed on Chinese companies.

In a letter to the FCC, Schumer and Cotton have suggested the two telcos, both of which have direct links to the Chinese Government, could use networks to target US communications. They have also suggested the pair could use the licenses and exposure to US networks to reroute traffic through China.

Perhaps this is an incident which many should have expected, but it does demonstrate the US Government is taking a more comprehensive approach to tackling China, bringing more companies into the fray.

Last month, it was suggested the Department of Justice is attempting to put the brakes on a subsea cable which is being funded by Facebook and Google, as well as a Chinese partner. Dr Peng Telecommunication and Media Group does have ownership ties to the Chinese Government, though two US firms could get hit by collateral damage through this DoJ investigation.

All of these incidents indicate the aggression from the US Government is widening and becoming increasingly complex. The likes of ZTE, Alibaba, OnePlus and Xiaomi should perhaps be wondering when they will be dragging into the conflict.

US starts edging towards mid-band spectrum release

The Federal Communications Commission (FCC) has released a statement all the telcos have been waiting for; there is finally going to be a spectrum auction for the 3.5 GHz band.

The telcos will have to wait more than year to access the valuable spectrum assets, though the FCC team will hope to discuss rules and procedures to carve up the much-desired mid-band spectrum next June. The auction will likely be later in the year or early 2021, though it is evidence of the slow-moving wheels of progress.

“Making more spectrum available for the commercial marketplace is a central plank of the Commission’s 5G FAST strategy,” FCC Chairman Ajit Pai said in a blog post.

“We’ve already completed two spectrum auctions this year and will begin a third on December 10. And at our September meeting, we will vote to seek comment on draft procedures for an auction of 70 MHz of spectrum in the 3.5 GHz band to begin on June 25, 2020.”

For the telcos, this will be welcome news. The US has largely focused on high-frequency spectrum bands, the mmWave assets, though commentators have suggested this has not been able to deliver the desired experience for 5G connectivity. High speeds might be achievable, however there is a serious compromise to be made on the coverage maps.

This is where the European telcos are reaping the benefits. Most of the 5G launches have been based on mid-band spectrum, striking what is a much more palatable balance between increased speeds and reasonable coverage. This coverage can later be supplemented by higher frequency connectivity to add additional speeds in the future, though the 100+ Mbps speeds should be more than enough for the moment.

“The 3.5 GHz band is prime spectrum for 5G services,” Pai said. “But when I became Chairman, we didn’t have the right rules in place to encourage the deployment of 5G in the band.

“That’s why I asked Commissioner O’Rielly to lead our effort to adopt targeted updates to the licensing and technical rules for the 3.5 GHz band with the aim of promoting more investment and innovation.”

Alongside frequencies in the 3.5 GHz band, the FCC is also considering new procedures to free-up more spectrum in the 3.7-4.2 GHz frequency range. Currently being used for video, this band will offer much more opportunity than the 70 MHz being released for auction in the 3.5 GHz band.

Although the mmWave frequencies will be critical in delivering the promised speeds for the 5G era, it does look like the US has gone the long-way around delivering the foundations for 5G. European telcos and regulators have generally prioritised mid-band spectrum, allowing for a 5G-ish experience on current network densities, with the long-term ambition of supplementing with higher frequencies.

This approach seems to be a much more reasonable one. It creates a foundation layer, with coverage maps consumers have come to expect, though speeds can grow as adoption increases and applications emerge which require the ridiculous speeds which are being promised.

With these auctions promised by the FCC, the US is heading in the right direction, albeit, quite slowly.

Pai gobbles up Sprint and T-Mobile US merger

After months of headaches and sleepless nights, the tides of favour seem to be turning for Sprint and T-Mobile US as the FCC chief gives his blessing for the union.

254 days into the 180 days the FCC gives itself to approve mergers, FCC Chairman Ajit Pai has officially confirmed his position. It is still not quite 100% guaranteed for the two telcos, however with Pai’s recommendation, the future is looking very rosier.

“After one of the most exhaustive merger reviews in Commission history, the evidence conclusively demonstrates that this transaction will bring fast 5G wireless service to many more Americans and help close the digital divide in rural areas,” Pai said in a statement.

“Moreover, with the conditions included in this draft Order, the merger will promote robust competition in mobile broadband, put critical mid-band spectrum to use, and bring new competition to the fixed broadband market.”

Suggesting this was a protracted and painful process might be one of the biggest understatements of the year. However, it might have been necessary considering the significant impact a merger of this scale could potential have on competition, diversification and network deployment across the US.

Above all else, the US is a monstrous market with an incredibly small number of nationwide telcos. This does of course offer economy of scale to improve investment capabilities, though there is a risk of regional monopolies due to the sheer size and geographical variance across the country. Proposed mergers which would take the number of national telcos from four to three has been extinguished in the past, though this one has passed almost every test.

The greenlight from the FCC Chairman is an important step, adding momentum to positive news from the Department of Justice in the last few weeks. At the end of July, the DoJ’s antitrust division gave the thumbs up, assuming Sprint’s prepaid brand Boost is divested, and Pai has made the same demands.

This is one concession which many expected, but we have major issue with. Dish will acquire the Boost brand, allowing it to make use of its horde of valuable spectrum, satisfying the demands, though will this be enough to maintain the current levels of competition, the objective of both the FCC and DoJ? We do not believe so.

Firstly, instead of having four established telcos in the US, consumers will now have to choose from three telcos and a newbie with zero experience of effectively running a mobile business and network. Dish does not have the competence, experience, infrastructure, processes, billing systems or supply chain to run a mobile business, and it will take years to build these elements to the degree expected.

Secondly, Dish is now an MVNO. It will be able to make use of the T-Mobile network, but the FCC and DoJ has replaced a functional MNO with an MVNO and expects no-one to notice the difference. Both of these agencies expect Dish to have its own network up-and-running in a few years, but this is another ridiculous ambition.

As mentioned in the first point, this is a company which is not practiced in the dark arts of mobile. The three remaining traditional players took decades to rollout their own networks, and they are still not genuine nationwide telcos (there are still network gaps across the country). How is Dish expected to create a nationwide, 4G and 5G, network across a country of 9.8 million km2, with an incredibly variety of different urban densities, geographical landscapes and economic societies.

If anyone thinks Dish is going to be a replacement which can maintain the current status quo, they are quite frankly fooling themselves.

What is worth noting is that this is not the end of the road for Sprint and T-Mobile. It might have secured the relevant regulatory approval, but now it will have to combat the various legal challenges.

Led by New York Attorney General Letitia James, a coalition of State Attorney Generals have filed a lawsuit to block the proposed merger. The lawyers are arguing the merger would harm competition, and it should be blocked to maintain the status quo. As it stands, with four separate MNOs challenging each other, prices and mobile experience is improving for the consumer; the lawyers are arguing that the situation is not broken, it is in fact improving, so why should the FCC and DoJ try to fix an imaginary problem?

Although the approval process from the DoJ and FCC might have been considered a significant problem, the telcos will not have to face legal heavyweights from more than a dozen States. Lawyers have a way of being very difficult when they want to be, so there might well be a few more twists and turns in this saga.

Verizon sues City of Rochester over 5G fees

US telco Verizon has filed a lawsuit against the City of Rochester, suggesting a newly created telecommunications code violates federal law and the maximum fees telcos can be charged.

Filed in the District Court for Western New York, Verizon’s lawyers will be attempting to argue that the implementation of the new telecommunications code by the city will prohibit the rollout of 5G technologies in the area. This is of course early days, though it could go some way in creating legal precedent throughout the US.

Using FCC rules which were passed last September, Verizon will argue the newly adopted telecommunications code in the City of Rochester violates the maximum fee of $270 a year which can be charged by the local governments. Although we were unable to figure out how much each site could cost Verizon annually, it does appear to run into the thousands.

“To better serve its customers and the City and to begin to serve new customers and provide new services, Verizon Wireless seeks to extend, densify, and upgrade its wireless network infrastructure, including to install additional Small Wireless Facilities to support the provision of current and next-generation telecommunications services such as 5G and to deploy fiber to connect these facilities,” the filing states.

“To successfully do this, Verizon Wireless requires new approvals from Defendant to access City property.

“As a result of Defendant’s actions, Verizon Wireless has been, and will continue to be, damaged and irreparably harmed absent the relief requested herein. The harm caused by Defendant’s unlawful actions includes, but is not limited to, an effective prohibition on Verizon Wireless’s ability to provide telecommunications services in the affected area of the City.”

Similar to regulatory changes in the UK with the new Electronic Communications Code, the FCC is attempting to protect the interests of the telcos. As real-estate owners know the telcos have no choice but to increase the number of cell sites to provide the promised 5G experience to consumers, they are in a position of power. The new rules from the FCC, and the creation of the $270 annual limit, is supposed to create a responsible transaction which benefits both parties.

However, it does not appear the City of Rochester agrees with the position of the FCC. In creating its own telecommunications code, it does appear higher fees can be charged for cell sites, while some officials state they are attempting to reduce potential clutter and eyesores created by the additional mobile infrastructure.

Looking at the timeline, Verizon wrote to city officials to ask for revisions to the code on January 10 and February 7, before the code was enacted on February 20 without any amendments, taking effect on April 1. Another letter was sent on April 15 questioning whether the code was compliant with federal law, with city officials finally responding on April 30 suggesting they were happy with the set-up. On July 30, the city officials demanded payment from the telco.

In short, Verizon is claiming the fees are acting as a prohibitor to the delivery of connectivity in the city, therefore federal law is being violated.

What is worth noting, that due to the focus on mmWave for the delivery of 5G services in the US, more cell sites will have to be deployed. This is unavoidable, as to deliver the higher speed promised by 5G, higher-frequency airwaves will have to be utilised. This does not appear to be a problem, however coverage distance will have to be sacrificed leading to the densification plans set-forward by the telcos.

Although this is the first lawsuit of this nature which has been brought to our attention, we suspect there are numerous other local governments attempting to sweat public assets to secure more funding. This is one of the first, but this might become quite a common lawsuit to read about over the coming months and years, as densification strategies gather momentum.

Appeals court halts FCC red-tape cutting quest

The US Court of Appeals for the District of Columbia Circuit has put the brakes on FCC attempts to reduce bureaucracy surrounding small cell deployment in the US.

In March last year, the FCC introduced new rules which would remove certain approvals required for the deployment of small cells. In short, telcos would no-longer have to seek review from the National Historic Preservation Act (NHPA) and National Environmental Policy Act (NEPA) prior to deployment.

In response to the new rules, the United Keetoowah Band of Cherokee Indians in Oklahoma, the Blackfeet Tribe, and the Natural Resources Defense Council (NRDC) objected, suggesting the FCC should not be allowed to remove the approvals with such ease and with a lack of consultation.

In this case, the US Court of Appeals for the District of Columbia Circuit has agreed. Certain aspects of the order have been upheld, however, the removal of this red-tape has been condemned by the Federal Judges.

“We grant in part the petitions for review because the Order does not justify the Commission’s determination that it was not in the public interest to require review of small cell deployments,” the courts opinion states.

“In particular, the Commission failed to justify its confidence that small cell deployments pose little to no cognizable religious, cultural, or environmental risk, particularly given the vast number of proposed deployments and the reality that the Order will principally affect small cells that require new construction.”

For the FCC, this is a loss, despite a positive statement from Commissioner Brenden Carr.

“I am pleased that the court upheld key provisions of last March’s infrastructure decision,” said Carr. “Most importantly, the court affirmed our decision that parties cannot demand upfront fees before reviewing any cell sites, large or small.

“We are reviewing the portion of last March’s decision that the DC Circuit did not affirm and look forward to next steps, as appropriate.”

This might sound positive but let’s not forget the objective of the FCC in introducing these new rules; speed-up deployment of 4G and 5G infrastructure in regions which might fall into the digital divide.

As we move forward into the 5G era, new opportunities are going to emerge for all economies around the world. The financial benefits are constantly being thrust into our face by telco lobbyists, however for these economic surges to be realised the right infrastructure needs to be in place.

This is where the FCC plays the most significant role. Pai has taken a machete to red-tape in recent years to offer more freedoms to the telco and media industry on the whole, and this was another step in that direction. Removing certain tick boxes would help the telcos roll-out new networks faster, though it seems it has over-stepped its mark in this instance.

FCC allocates $20bn to close US digital divide

One of the genuine risks of the accelerated journey towards the digital economy is the widening digital divide, though an extra $20 billion from the FCC could help even the landscape.

Although the US is one of the most advanced digital nations in the world, the difference between the haves and have nots is quite staggering. If you were to compare the connectivity options for a millennial in San Diego to a farmer in rural Ohio, you wouldn’t assume it was the same country. Some might see it as a first world problem, however with the benefits of connectivity being applied to areas such as education and healthcare, it is irresponsible to allow this divide to continue.

This is the conundrum which the FCC has faced in recent years. It is of course commercially attractive to drive connectivity options in the densely populated urban areas, but such are the sparse and environmentally challenging regions across some of the US, vast numbers of people are being left behind.

Here, the FCC is proposing the establishment of the Rural Digital Opportunity Fund, which will direct $20.4 billion towards closing the digital divide.

“In short, we’re proposing to connect more Americans to faster broadband networks than any other universal service program has done,” said FCC Chairman Ajit Pai.

“I’m excited about what this initiative will mean for rural Americans who need broadband to start a business, educate a child, grow crops, raise livestock, get access to telehealth, and do all the other things that the online world allows. And I look forward to kicking off this new auction next year.”

This fund will have a broader scope than the previous Connect America Fund (CAF), and will aim to assist regions which are not currently able to access download speeds of 25 Mbps and upload speeds of 3 Mbps, significantly higher than the caps placed on the CAF funds.

The funding will be allocated in two phases. Firstly, using data which has already been collected by the FCC, a reverse auction will be implemented to hand out the funds. Alongside this auction, a new data collection tool will be implemented to offer greater depth to the insight. In the second phase, the intelligence gathered through this tool will help allocate funds as well as to those communities which missed out in the first phase.

With what will be known as the Digital Opportunity Data Collection initiative, the FCC will aim develop more granular broadband deployment data. This initiative will aim to collect geospatial broadband coverage maps from fixed broadband ISPs, and also develop crowd-sourcing portal that will gather input from consumers as well as from state, local, and Tribal governments. Through crowd-sourcing the data, the FCC will hope to validate the information put forwards by the ISPs.

This is a sensible approach from the FCC, as while the ISPs will have the biggest treasure troves when it comes to data, they have also shown themselves to be misleading in the past. With such a tool at its disposal, the FCC can become a more intelligent organization, taking proactive steps towards fixing the digital divide as opposed to simply signing blank cheques for the telcos to cash.

“I appreciate the hard work that went into this item to fix the Commission’s broken mapping process,” said FCC Commissioner Michael O’Reilly.

“Like some of the very laudable mapping bills being considered by Congress, including those by Chairman Wicker and Senator Capito, this item takes important steps in creating a more accurate and useful picture of broadband coverage, which should allow the Commission’s universal service policies to better focus on those millions of Americans left behind without access to broadband service today.”

And while this might sound like a positive step-forward, Commissioner Jessica Rosenworcel, a political opponent of Pai and O’Reilly, has found something to be irked about. Rosenworcel fears the maps might be replaced by a difficult to find URL and handing control of data collection to the administrator of the funds is not the best way forward.

Although we should not be surprised by the objections, they are incredibly weak. Rosenworcel has said she likes the idea, though her objections are seemingly just trying to be awkward, playing the childish role of political opponent wherever possible. While we rarely have anything positive to say about Pai and his cronies in the FCC, this is a sensible move forward and Rosenworcel seems to be finding objections purely because it adds to the theatrics of politics.

What is incredibly difficult to understand is how severe the digital divide actually is in the US. The FCC suggests there are 21 million US citizens who cannot access acceptable broadband speeds, though Rosenworcel has quoted a report which claims the digital divide is as high as 162 million.

This outlandish claim pays homage to a report from Microsoft which should be taken with a bucketful of salt. Let’s not forget, Microsoft is a firm which will benefit from stoking the fire and attracting additional funds to fuel connectivity deployments in the rural community.

This in itself is one of the significant problems when attempting to tackle the digital divide; no-one actually knows what the starting point is. Depending on your commercial aims and political allegiance, the number of underserved citizens will vary wildly. How can one address a problem when the variables remain unknown? It is nothing more than shooting in the dark, hitting the mark occasionally but likely to miss the most important targets.

Alongside these changes in funding connectivity, the FCC has also released a statement which will address how funding for telehealth services is allocated.

This is where the idea of connectivity can be more than simply a means to access entertainment, taking the digital divide beyond the realms of first world problem. There are communities in the US who are underserved by medical services thanks to doctor shortages and hospital closures. The Rural Health Care Programme aims to address these challenges, making use of connectivity to ensure all US citizens have access to medical services as and when they need them.

The latest proposal is another reform to how funds are allocated, attempting to identify the regions which are most severely underserved. Funding will be increased by 43% to $571 million.