California Regulator Sympathizes With Upstart, Probes T-Mobile Dismantling in Sale Inquiry
SANTA CLARA, Calif. -- The struggles of a planned commercial broadband service for low-end customers, and the prospect that most of T-Mobile’s network will be dismantled, raised the concern of the head of a California Public Utilities Commission’s inquiry into the proposed purchase of the carrier by AT&T. At a workshop in Silicon Valley, the two commissioners present expressed interest in the efforts and market challenges of start-up Box Top to get broadband into low-income homes including those of old people and minorities by using TV sets, cellphones and merchant subsidies. “You're going after the digital divide,” said Commissioner Timothy Simon. And Commissioner Catherine Sandoval, leading the inquiry, pressed an AT&T executive Friday into acknowledging that about two-thirds of T-Mobile’s network facilities would be “decommissioned” because the combined company would have little use for them.
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Box Top developed a set-top box with Android applications to help get the unconnected into cyberspace with “just a sliver of bandwidth,” said Anita Taff-Rice, the company’s legal and policy adviser. E-commerce sites would pick up the expense of visits to them, on the “1-800 voice model,” and a customer’s other metered DSL or mobile-broadband costs would be pay-as-you-go or covered by promotions from merchants, she said. Carriers aren’t trying this approach, because “their billing systems are just not set up to this kind of highly dynamic, highly flexible kind of billing,” Taff-Rice said. The answer is to “do the metering and monitoring at the edge of the network,” she said.
Taff-Rice said Box Top’s worries about the T-Mobile sale include Internet “control,” at the expense of customers’ ability to use whatever applications they want, and openness, because U.S. providers have shown “less receptivity” to supplying the company than counterparts elsewhere, including in South Yorkshire, England, where it’s running a trial. “We haven’t seen the cooperation from the carriers” at home, Taff-Rice said. And it’s not just telcos, she said. “We have not gotten a lot of interest from cable companies,” either, because they “see us as competitors,” Taff-Rice said.
Sandoval followed up with William Hogg, AT&T Services’ senior vice president of network planning and engineering, when he didn’t answer directly a commission aide’s question about a statement by Steven Stravitz, a consultant for deal opponent Sprint from Spectrum Management Consulting, that the buyer plans to get rid of almost two-thirds of T-Mobile’s network facilities. “That’s an average,” Hogg said. “It’s going to vary market to market.” John Donovan, AT&T’s chief technology officer, accused unspecified deal critics of “oversimplification in theoretical models to drive points.” He said “customer disruptions” have to be taken into account better in forecasting what AT&T could do.
Powerful carriers stifle competition through exclusives on locked handsets, combined with multiyear service contracts and early-termination fees, said Dale Piiru, a senior analyst with the commission’s Division of Ratepayer Advocates. The T-Mobile sale would remove an innovative competitor and discourage AT&T from advancing technology, he said. Piiru sought approval conditions to loosen the combined company’s handset locks. “If we're going to have this duopoly” with AT&T and Verizon Wireless, “we're going to need some strong mitigating measures so consumers have some choice,” he said.
Michael Woodward, AT&T vice president for mobile devices, and Cole Brodman, T-Mobile USA chief marketing officer, said mobile competition, including from healthy and growing niche and regional players, would keep the combined company innovative and responsive. The variety, sophistication and number of sources of smartphones continue growing beyond any carrier’s control, they said. “We don’t think any conditions” on approval of the acquisition “are necessary or merited,” AT&T spokesman Lane Kasselman told us. Donovan said his company is adding a second Silicon Valley innovation center this year. The company will keep what had been considered a temporary center in Palo Alto when the permanent one opens in September, he said in an interview.