March 2015 – Net Policy News

From India, a plea to keep royalties reasonable

A 5% compulsory license. From Africa and from Asia, I’ve heard many calls to keep royalties fair. Corporate giants like Cisco and Intel, who collect relatively few royalties, quietly agree. Royalties paid in poor nations overwhelmingly flow to rich countries, not a good result. If those royalties are high, so much the worse.

See Fairness for Africa: Cheaper Transit, Reasonable Royalties, Fair Taxes

America has been the strongest supporter of high royalties, partly because of a patent system unprepared for goods like cellphones with literally hundreds of claims. That is starting to change, as Chinese companies, particularly Huawei, are now filing more patents than the U.S. giants. The U.S. share of patents is about 25% and falling. We will soon have a negative balance on patent accounts.

Carlos Slim of Telmex tells me that $50 smartphones will result in two billion more people connected. But $50 smartphones are impossible with the level of royalties demanded by powerful companies.

Adtran, Alcatel, Ericsson sales will fall: Scott Belcher of TIA Trade Association

(Satire) Company CFO’s haven’t confirmed. Adtran’s Tom Stanton saw his stock go down -0.73% today while the market went up +1.47%. Scott Belcher, Tom’s handpicked TIA chief, issued a press release predicting “a slowdown in capital investment,” after the U.S. Net Neutrality order. Stanton is more vulnerable to a U.S. slowdown than any other large telecom vendor because over 60% of his sales are in the U.S. Adtran has done a remarkable job winning a large vectored VDSL contract in Germany in a fierce competition with Alcatel. To grow in Europe, they’ve had to accept much lower margins than in the U.S., making any U.S. cutback even more painful.

The U.S. is also a crucial market for wireless suppliers Alcatel & Ericsson. Both Verizon and AT&T have covered over 90% of the U.S. with LTE and are slowing down. Any further cutbacks would be particularly painful. Ericsson has just announced 2,000 layoffs and I’ve lost track of how many people Alcatel has let go. Alcatel and Ericsson are being propped up by a cartel arranged by the EU and China. Each is given about 10% of the Chinese market and Huawei is no longer bidding as aggressively for European contracts. The EU had to threaten huge tariffs to protect these “national champions.”

For the record

When I take a public stand or give advice to an official, I record it here.

March 10 2015 I signed the Change.org petition to bring down Internet prices in Senegal.

Wages, real estate and much more are less expensive in Senegal than in France. The only reason prices are higher is competition is more limited in Africa. It’s particularly troubling because the money is flowing out of Africa to a European company.
France Telecom is profitable in France at much lower prices. The same would be possible in Senegal.

Brian leads the charge for 10 GHz spectrum

Both Republicans and Democrats support more spectrum. “Some issues are neither Republican nor Democrat” then FCC Chair Kevin Martin once said to me. More spectrum for everyone – unlicensed or lightly licensed – is proving popular for both. Republicans Latta, Guthrie and Rubio joined liberal Democrats asking the FCC to move this forward.

2.4 GHz WiFi is already often crowded and 5 GHz is starting to fill up. An ISP engineer implementing WiFi gateways tells me his company already has to bring down energy levels in apartment buildings or performance suffers. The telcos are trying to steal a big hunk of WiFi spectrum for their own (very expensive) networks.

The FCC has a powerful incentive to stop LTE-U, beyond the obvious harnm to WiFi. Giving the free spectrum to telcos lowers their incentive to bid in the 600 MHz spectrum auction, soon come. The FCC is promising a great deal of money to the treasury from that auction. A failure would be a major political problem.

Brian Hinman of Mimosa, an old friend, has led the drive to open a massive 500 MHz of the 10 GHz band now used for amateur radio. That would almost double the total WiFi spectrum. Much more including comments from both sides and my comment that Mimosa’s 4×4 MIMO radios are shipping and may be a price/performance breakthrough.