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Normally, I let this type of nonsense just fade away, but coming from the New York Times, which I thought was a respectable newspaper with some Intelligent people on their staff, I have to publically take issue with a much of what it had to say.

ASI Editor to NYT Editor

Monday, August 06, 2007

I just read the New York Times editorial published today titled "A Half-Win for Cellphone Users" about the FCC Report and Order regarding the 700-MHz spectrum. Normally, I let this type nonsense just fade away, but coming from the New York Times, which I thought was a respectable newspaper with some intelligent people on their staff, I have to publically take issue with a much of what it had to say.

The most ludicrous paragraph is the last one in the editorial: "The closed nature of America's wireless networks is the main reason that its cellphone technology is so primitive compared with Europe's and Japan's. The F.C.C.'s new rules go part of the way to solve this, but unfortunately, American consumers have once again been denied a truly open and competitive cellular market."

There are a few things wrong with this statement. First, in Japan, there are three networks, NTT DoCoMo, KDDI and Softbank (the ex-Vodafone network). KDDI uses CDMA and NTTDoCoMo and Softbank use PDC (similar to GSM) and UMTS. The cell phones on NTTDoCoMo cannot be used on KDDI and vice versa. The next point that is incorrect is that we have such primitive cellphone technology compared to Europe and Japan. AT&T Wireless uses exactly the same 3G technology used in Europe and Japan, while NTTDoCoMo and Softbank, AT&T Mobile and T-Mobile use exactly the same 2G technology as all of the European networks (GSM). In the United States, we have as many if not more wireless devices available on a per-network basis and most of our handsets are subsidized so they are less expensive to the consumer than in Europe or Japan.

A case can be made that tying a specific portion of spectrum to a specific technology, as they do in Europe (but not in most other parts of the world) actually stifles competition because every network is the same, using the same technology, and if a better technology comes along there is no way to deploy it. Suppose for a moment that a brand new technology was discovered that was so compelling it would change the world of wireless as we know it. In the United States and most other parts of the world, it could be implemented. In Europe, unless the EU changes its policy, it would not be able to be deployed because it would not be one of the two permitted technologies.

What is primitive about our wireless networks? They are world class, they are evolving rapidly with third-generation and soon fourth-generation technologies and they do offer wholesale access to others. How does the NYT think MVNOs (Mobile Virtual Network Operators) such as Virgin Mobile, Helio, Disney Mobile and others deliver their services?

One difference I will concede to is coverage, but there are reasons for the differences. In Europe and Asia, the first wireless networks were built by government-owned telephone companies. Why is this important? They were built using tax dollars, with no permits for sites, virtually no limit to where sites could be built and with few if any restrictions. The coverage was good from the beginning and then improved. When the networks were privatized and new networks were permitted, the new networks had to build to the same footprint as the original networks in order to compete. It should be noted that today these countries have the same issues getting sites permitted and built as we do. And since Europe's 3G networks are limited to a single band, which is considerably higher than ours, their build-outs require more sites for the same coverage at a much higher cost. The last reason is the sheer size of the United States when compared to all of Europe or Japan.

The NYT editorial starts out by saying, "The Federal Communications Commission opened the door to much needed competition in cellphone services last week when it set the rules for an auction of public airwaves early next year. It did a disservice to consumers by not requiring the winners to resell capacity to other carriers on a wholesale basis. This decision is likely to slow the arrival of new competitors and technologies. It could also delay creation of a higher-speed cellular pipe to the Internet to compete with D.S.L. and cable."

I don't know who the NYT has been talking to, but how could not letting other networks buy service on a wholesale basis (which they do) impact or slow down the arrival of new competitors and technologies? New competitors can show up at the auctions and bid on the spectrum and they can enter into wholesale agreements with existing networks. What does wholesaling have to do with new technologies?

WiMAX, a new technology, is being deployed by Clearwire and Sprint, both of the 3G technologies in use today in the United States are being enhanced and there are at least two new technologies in the wings that should make their debut prior to 2010. Where is the slowdown?

Open Access, which the NYT says is a partial victory for the consumer, is very misunderstood today. It does not mean free access, it does not mean my iPhone will be capable of running on the Verizon Wireless network and it does not mean the next iPhone or next-generation devices can't be tied to exclusive deals. It simply means that on one segment of one portion of spectrum, it will be possible to obtain a device and be assured you can put it on that network―not that you can take it to some other network with a different technology.

I am disappointed with the NYT's editorial staff for not checking the facts, for making errant assumptions and for writing an editorial that so completely ignores the facts.

COMMENTS: This is an archived post. Commenting is no longer available.

Liz Dordal - 08/06/2007 21:48:39

The reason our wireless technology seems so "primitive" compared to Asia is because the Asian wired infrastructue is nonexistant, comparatively. Period.

Liz Dordal - 08/06/2007 21:49:40

PS.. and the NYT is hardly credible except for liberal issues.

Andrew Seybold - 08/06/2007 21:52:19

Liz, thanks for your comments, and you are correct, if you remember that iMODE which was NTT DoCoMO's hit for Internet access in Japan was virtulally the only way most of those living there could get onto the Internet. It worked well it is time, but I have to say that Japan has also, recently been a leader in fiber to the home and high-speed Internet access, but it was not always.
Thanks again for the comments!

Dick Gossen - 08/06/2007 22:39:08

Way to go, Andy! Well done.
I must say, tho, I am a bit perplexed as to how a man of your intelligence and perspective could be dismayed by liberal, class warfare speak coming from the NYT. Intelligent people on their staff, yes; respectable, no.

Andrew Seybold - 08/06/2007 22:54:10

Dick--Thanks for the kind words and yest I know about the NYT times but I also know how many people beleive what they say is alwayrs the truth and in this case it is not so I could not remain quiet.

Nick Ruark - 08/06/2007 23:06:33

Andy, while not trying to defend the NYT by any means, I believe we should all keep in mind that they certainly are not the only media (or other) entity who has had a difficult time comprehending what just what "open access" really is.....good commentary!

Andrew Seybold - 08/06/2007 23:54:56

Nick-thanks for the post and yes I know that Open Access is being mis-understood by many, but that does not excuse the NYT from not doing thier homework! Also thanks for the positive feed-back,

Ingo Detlefsen - 08/07/2007 08:01:06

I'm afraid the statement about Europe does not tell the real picture:

"In Europe and Asia, the first wireless networks were built by government-owned telephone companies. Why is this important? They were built using tax dollars, with no permits for sites, virtually no limit to where sites could be built and with few if any restrictions."

In fact in Germany and other European countries frequency spectrum for GSM was bought by some companies in which the government is ONE shareholder (e.g. Deutsche Telekom, France Telecom). But even this companies did not (as their competitors e.g. ePlus, Mannesmann (now Vodafone)) build the networks with taxes.

The aquisition of sites was and is a problem partly due to higher population density and rejection by citizen, but as the MNOs were forced to realise certain coverage goals (linked with acquisition of spectrum) they could rely on governmental support on that. However it is not applicable to say there is "virtually no limit to where sites could be build". MNOs did struggled and still do to get sites permitted and accepted.

Brad Smith - 08/07/2007 10:13:17

As a journalist covering wireless for a few years I've been surprised by the number of journalists in the world who think Europe is ahead of the U.S. in wireless telecom. You can take individual pieces where Europe might offer better service, but overall the U.S. is equal to or farther ahead. I felt much the same as you, Andy, about the NYT's "primitive" assertion, which is laughable. What was the first network in the world to offer GSM's high-speed wireless technology, HSDPA? AT&T/Cingular. You hit the proverbial nail on the head with your comments.

Andrew Seybold - 08/07/2007 10:51:47

Ingo--I read your comments with interest, and I am in the midst of some additional research but my existing informaotion that the first GSM networks built in Europe were Government owned and operatred for the first few years and once additional spectrum was opened up the companies were privatized and new entrants joined the market.

Brad--from ny journalist to another thank you for your comments, and I agree that many of the general press sitll have the notion that Europe is ahead of the United States when it comes to wireless.

mark seery - 08/08/2007 17:29:32

Hi Andrew,

It is good and constructive to set the record straight. Debate and exchange is good.

However I think there is an exposure here. I have not done any specific research on the issue, but it does seem to me that every one I meet believes that the U.S. is behind international markets in this area. It may not be correct, but it is a pervasive viewpoint, at least from my anecdotal information, so in some sense the NY Times is just amplifying broadly held views.

It seems to me that operators have let these impressions linger and have not put much effort in to convincing the public otherwise. So if all that happens from this event is some sensitive reaction (from operators), and no ongoing education plan, or ongoing plan to at least give consumers the impression that they have different choices (for example more aggressive marketing of non-subsidized phones - perhaps iPhone is a trend setter?) then this tension point is going to persist.

Andrew Seybold - 08/08/2007 18:27:38

Mark-you make a good point-although I would say that organizations such as 3G Americas and the CDG would be better able to convey a technology message since their members are not only carriers but from all segments of the wireless eco system

Mel Samples - 08/09/2007 13:35:40

Now please don't take this out of context - Andy, as you mentioned regarding standards in europe - without an aggressive, competitive environment as we have here, EVDO, HSDPA, maybe even commercial CDMA itself would still be in the lab.

So let's see. If I'm a very large U.S. commercial cellular provider I need 1) spectrum, 2) sites, 3) favorably regulations, 4) barriers to entry for competitors, etc, etc. I have to move fast to be competitive. The environment is complex, systems are expensive, and the risk is high.

So, step one, use un-definable terms. Talk about things that can't be easily quantified but in terms that stir concern.
Step two, keep moving the target. As soon as someone (the media?) starts to understand, move on to a new pseudo-problem.

If done right, it creates a "pervasive viewpoint", "amplified by the media", that the rest of the world is doing better than we are. Since Americans just hate to be last, what are the chances that this helps create a favorable environment for the incumbents?

Again, none of this is illegal, immoral, or even necessarily bad - it's just reality. Whoever is defining the terminology will drive the change.

Rob Frieden - 08/19/2007 10:10:27

Hello Andrew:

I admire your work, but respectfully disagree with a complete dismissal of the NYT editorial. While I would not consider American wireless "primative" there are several regulatory and structual issues that contribute to its expense and inflexibility. The wireless net neutrality/Carterfone issue underscores that wireless could be better in America. See my blog entry
available at:
If consumers are not locked into a two year contract they have greater opportunities to vote with their dollars and force carriers to compete more aggressively. Sure wireless carriers subsidize handsets and they are cheaper in the US than in Europe. But the subsidy is more than offset by the lock in. No one seems to appreciate the lost of consumer welfare when we can't buy a $2 handset at a flea market and secure service at lower prices, because no handset subsidy occurs.

Why is wholesale important? I do not see robust price competition among facilities-based operators. Scrape off the commercials and hype and there is limited actual out of pocket differences. Wholesaling promotes resale competition, something Virtual Mobile Network Operators offer. In Europe consumers can access super cheap phones and secure service with calling cards, options on far better terms than what Virgin Mobile and others offer in the U.S.

According to the International Telecommunication Union the U.S ranks 63th in the world in terms of wireless market penetration. I agree that a superior wireline network contributes to this comparatively low performance, but comparatively high rates also factors in.

My bottom line, wireless carriers do not offer Americans "best practices" because a concentrated market and lax regulation permit it.