Once in a while a telecom policy fight erupts that you just know promises to deliver the wonk’s idea of fireworks. The latest such power struggle is over the upcoming auction of 700 MHz spectrum, a major piece of wireless real estate that will be made vacant by the impending transition to digital TV and that could serve as the conduit for a third broadband pipe into the home.
Here’s the core fight so far, in a nutshell: FCC Chairman Kevin Martin has floated draft rules for how this auction will be conducted and in so doing has reserved some spectrum for “open access,” which will allow different kinds of handsets to work with the spectrum. Google and some public interest groups say the “open” part of the proposal doesn’t go far enough. They’d like to see the spectrum opened up to all competing content and application services, and they’d like to see the winning bidders offer some spectrum for wholesale buyers, among other things. Google is willing to go so far as to put up $4.6 billion of its money to buy spectrum if the FCC would just agree to more “open” ground rules.
The Congressional panel in charge of telecom matters, the Energy and Commerce Committee’s Subcommittee on Telecommunications and the Internet, has already held one hearing on the issue. Today that same body held its customary FCC oversight hearing and the top topic was, of course, the 700 MHz auctions. (Video of the hearing will be available here.)
Subcommittee chair Rep. Ed Markey (D-MA) urged the assembled commissioners to do more in terms of opening up the spectrum. In particular, the idea of allow bidders to sell capacity at wholesale to third party service and content providers got a nod from several lawmakers.
Rep. Mike Doyle (D-PA) said that the auction is the most important policy issue in telecom and is quoted as saying to the commissioners, somewhat dramatically, that “this auction is a test for each of you that history will long remember.”
Republicans, including ranking minority member Rep. Fred Upton (R-MI) and Rep. Joe Barton, ranking minority member of the full committee, mostly don’t agree with this idea. But that’s not surprising — the Republicans have mostly agreed with the positions of the incumbent telcos over the past four or five Congresses on matters related to competition and policy.
Given this level of heat and bi-partisan division, not to mention the growing power of Google in the debate, no one should be surprised that this issue is shaping up to be a fun (to watch) telecom policy slugfest. Stay tuned for more.
Posted by Cynthia Brumfield at 6:04 PM | Print | Comments (0)AT&T issued its Q2 07 earnings report this morning and the news wasn’t that great. (Ignore most of what you read in the business press about AT&T’s earnings — the giant telco consistently puts out, and the press merely repeats, apples-to-oranges financial data that compare AT&T prior to its acquisition of BellSouth to AT&T after its acquisition of BellSouth, making the telco look like it has surged in growth year-over-year.)
From what I can see from the earnings release and associated reports, AT&T continued losing local access lines at a healthy clip, broadband growth slowed substantially and wireless growth only stayed steady during the quarter. Total access lines dropped to 64.08 million, down 7% year-over-year. Total broadband subscribers advanced to 13.3 million, up 439,000 during the quarter, a run-rate down 7% from the 472,000 net broadband adds during Q2 06 and down 36% from the 691,000 net broadband adds during Q1 07.
Video growth was strong during the quarter, with AT&T adding a net new 200,000 multichannel video customers. But, the company’s vaunted U-verse fiber-to-the-node video initiative wasn’t responsible for most of this gain — plain old DBS drove the majority of the growth.
Wireless was the relative bright spot for AT&T, even though the impact of the iPhone, which went on sale June 29, had yet to be felt during the quarter. AT&T added 1.5 million net new wireless customers during the quarter, on par with year-ago levels and up 17% from Q1 07 levels, to wrap up the quarter with 63.7 million wireless customers.
Bottom-line for the telco: Operating revenues rose 1% year-over-year to $29.5 billion, but net income soared by 73% to $2.9 billion as the newly combined company benefitted from reduced overhead, labor and operational costs.
The good news for AT&T: the company activated 146,000 iPhones during the last two days of the month, and I would posit that most of these activations occurred on a single day, June 30. Although some analysts are apparently concerned that this number is too low, my guess is that it presages a very, very robust Q3 07 for AT&T, with activations during the month of July easily topping the 1.5 to 2.0 million mark. A good chunk of those new customers are no doubt completely new customers for AT&T wireless.
Company execs confirmed during the earnings call that activations were robust in July and that traffic in AT&T stores was above historic levels. But, however many iPhone activations AT&T ultimately implements for the quarter, the iPhone obviously came at the right time for the carrier, given the continued loss of access lines and slow-down in broadband growth.
| AT&T Key Statistics | |||||
| 2Q06 | 3Q06 | 4Q06 | 1Q07 | 2Q07 | |
| Total access lines (mil.) | 68.66 | 67.53 | 66.47 | 65.43 | 64.08 |
| Net access line change (mil.) | (1.34) | (1.13) | (1.06) | (1.04) | (1.35) |
| DSL customers (000) | 11,047 | 11,597 | 12,161 | 12,842 | 13,203 |
| Quarterly adds (000) | 471 | 550 | 564 | 681 | 361 |
| AT&T U-Verse High-Speed Internet (000) | 1.0 | 3.0 | 4.0 | 13.0 | 50.0 |
| Satellite Broadband (000) | - | 4.0 | 5.0 | 6.0 | 8.0 |
| Total Broadband (000) | 11,048 | 11,604 | 12,170 | 12,861 | 13,300 |
| Quarterly adds (000) | 472 | 556 | 566 | 691 | 439 |
| Video Customers (000) | 1,280 | 1,400 | 1,510 | 1,697 | 1,897 |
| Quarterly adds (000) | 100 | 120 | 110 | 187 | 200 |
| Satellite Video | 1,280 | 1,397 | 1,507 | 1,684 | 1,846 |
| U-Verse Customers (000) | - | 3 | 3 | 13 | 51 |
| Video Penetration of Consumer Primary Lines | 3.8% | 4.2% | 4.6% | 5.2% | 5.9% |
| Wireless Voice Customers (mil.) | 57.3 | 58.7 | 61.0 | 62.2 | 63.7 |
| Net Adds | 1.5 | 1.3 | 2.3 | 1.3 | 1.5 |
| Wireless Data Subs (mil.) | 26.5 | 30.3 | 32.2 | 33.4 | 36.8 |
| Wireless Revenues (bil.) | $ 8.3 | $ 8.7 | $ 8.8 | $ 9.1 | $ 10.4 |
| Wireless Data Revenues (mil.) | 1,456 | 1,651 | |||
| Total operating revenues (mil.) | $29,204 | $29,392 | $29,558 | $28,969 | $29,478 |
| Net Income | $ 1,674 | $ 2,220 | $ 2,204 | $ 2,848 | $ 2,904 |
| Source: Emerging Media Dynamics, Inc. analysis of company data. © 2007. | |||||
Posted by Cynthia Brumfield at 12:42 PM | Print | Comments (0)
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