CHTR - Charter Communications

[cameronfen]

Quote from Malone back in 2017:

 

"We fundamentally believe we can make money for the shareholders through a wireless offering with the unique relationship that we have with the Verizon MVNO," Comcast Chairman and CEO Brian Roberts said in his most recent quarterly earnings call. "We can't go into detail about that relationship for obvious reasons, but we have the ability to do things that we think put us in a position to make that statement come true and create real value for our shareholders along the way."

Malone, however, said he believes that it's more likely that consolidation will take place among wireless and cable providers, rather than cable companies launching their own wireless networks.

"At some point, the [wireless] network that's supplying that to you is unhappy with you becoming a full competitor on their capital assets. And you start to get squeezed. You also don't have the ability to innovate services, because you're essentially a reseller of their service," he said.

Malone pointed to further and more aggressive relationships between cable and wireless companies as a solution to that problem.

"It's fine for Charter and Comcast to go down the MVNO road for a while, particular in the [business-to-business] world, because they have a great relationship with Verizon, which is the best technology network," he said. "So you can start that way, but my belief is they will have to have a much deeper relationship with Verizon in the long run to make that work."

 

I think a big reason most mvnos dont do well is they usually dont bring anything to the table.  They just give you the Verizon network for example with less advertising and brand strength as Verizon and nothing else, so you have to compete on price.  Obviously this is a huge disadvantage for Charter and other cable companies but at least they have an inborn advantage over traditional telecoms with their hotspots they can exploit, so it might go better for them. 

[KJP]

Sure I'm not arguing the Charter has a sweet deal right now being able to rent telecom assets at regulated prices while having sole ownership of its fiber assets, but a.) if charter has too much sucess with this approach (which is not a guarantee as how many people switch to mvnos actually even among us investors who know they have the same assets), it's a relatively easy case for telecoms to argue that they should have free access to fiber at regulated prices.  That being said the more important argument is that while Charter likely has an advantage now, the long term and structural advantage goes to whoever develops wireless broadband.

 

Where are you getting this information?  Charter does not rent telecom assets under regulated prices...  its MVNO deal was privately negotiated as part of a sale of spectrum in 2011.

 

Right that's correct I forgot about this case, However,  I think by law though telecoms have to rent the telecom assets to mvnos at a price that if can't be negotiated will be set by government, but this is slightly different.  My point here though is the government is basically forcing telecoms to rent to charter and other mvnos and that could be problematic when charter gets to successful in the mobile space.

 

I'm not aware of any obligation in the United States to provide network access to an MNVO, nor any regulation of the wholesale rates negotiated between mobile network operators and MVNOs.  (The FCC does require interconnection among wireless  networks, i.e., "roaming," at commercially reasonable rates.)  Indeed, some of the commentary around a potential Sprint-T-Mobile merger is that wholesale rates should be regulated in the future because those two are big suppliers to MVNOs.  For example, here's one argument that Sprint and T-Mobile should not be permitted to merge without a new wholesale pricing regulatory regime being put in place:  https://globenewswire.com/news-release/2018/05/21/1509213/0/en/Founder-and-Former-CEO-of-Boost-Mobile-USA-Raises-Concerns-that-Prepaid-Customers-are-Being-Forgotten-in-Sprint-T-Mobile-Merger-Plan.html

 

If you are aware of any source discussing the regulation of wholesale rates charged by MNOs to MVNOs, I'd be very interested to see it.

 

The requirement is under Title II of the Communications Act which requires incubmbent carriers to provide wholesale access at cost based rates to new entrants.  Historically this applied to voice and there were questions as to whether that covered data.  In 2015 when the FCC applied Net Neutrality they did so with a broad brush by having internet/data governed by Title II (which incorporates a huge amount of potential gov't control well beyond Net Neutrality - gov't can regulate access, price, investment, etc).  While the FCC now is seeking to reverse the Net Neutrality requirements there's a question of whether that is going to be specific to Net Neutrality or if they are entirely exempting internet/data from Title II regulation.

 

As John Malone has said repeatedly, you want to own your network or you are at the mercy of the people who do.  There have been very, very few MVNO's in the US that have been successful over the long term.

 

As recently as last month in Flat Wireless v. Cellco Partnership, FCC 18-117 (August 2, 2018), the FCC reiterated its position that the "cost-based" rate regime that applies to certain Title II services does not apply to wireless voice and data roaming.  See paragraphs 15-16 of the Flat Wireless order available here:  https://docs.fcc.gov/public/attachments/FCC-18-117A1.pdf  Instead, where the obligation applies, the standard is "commercial reasonableness."  So, while the FCC could impose cost-based rate regulation of wireless voice and data under Title II, it has not yet done so.

 

I have not been able to find any source discussing whether pure MVNOs, i.e., entities that do not themselves operate any facilities-based service, are even entitled to the "commercial reasonableness" standard that applies to MNOs under the FCC's Data Roaming Order.  So, I'm back where I started:  In situations where there is no contract between the parties, does a pure MVNO have any legal basis for forcing an MNO to provide it access? 

 

 

 

 

[dwy000]

Sure I'm not arguing the Charter has a sweet deal right now being able to rent telecom assets at regulated prices while having sole ownership of its fiber assets, but a.) if charter has too much sucess with this approach (which is not a guarantee as how many people switch to mvnos actually even among us investors who know they have the same assets), it's a relatively easy case for telecoms to argue that they should have free access to fiber at regulated prices.  That being said the more important argument is that while Charter likely has an advantage now, the long term and structural advantage goes to whoever develops wireless broadband.

 

Where are you getting this information?  Charter does not rent telecom assets under regulated prices...  its MVNO deal was privately negotiated as part of a sale of spectrum in 2011.

 

Right that's correct I forgot about this case, However,  I think by law though telecoms have to rent the telecom assets to mvnos at a price that if can't be negotiated will be set by government, but this is slightly different.  My point here though is the government is basically forcing telecoms to rent to charter and other mvnos and that could be problematic when charter gets to successful in the mobile space.

 

I'm not aware of any obligation in the United States to provide network access to an MNVO, nor any regulation of the wholesale rates negotiated between mobile network operators and MVNOs.  (The FCC does require interconnection among wireless  networks, i.e., "roaming," at commercially reasonable rates.)  Indeed, some of the commentary around a potential Sprint-T-Mobile merger is that wholesale rates should be regulated in the future because those two are big suppliers to MVNOs.  For example, here's one argument that Sprint and T-Mobile should not be permitted to merge without a new wholesale pricing regulatory regime being put in place:  https://globenewswire.com/news-release/2018/05/21/1509213/0/en/Founder-and-Former-CEO-of-Boost-Mobile-USA-Raises-Concerns-that-Prepaid-Customers-are-Being-Forgotten-in-Sprint-T-Mobile-Merger-Plan.html

 

If you are aware of any source discussing the regulation of wholesale rates charged by MNOs to MVNOs, I'd be very interested to see it.

 

The requirement is under Title II of the Communications Act which requires incubmbent carriers to provide wholesale access at cost based rates to new entrants.  Historically this applied to voice and there were questions as to whether that covered data.  In 2015 when the FCC applied Net Neutrality they did so with a broad brush by having internet/data governed by Title II (which incorporates a huge amount of potential gov't control well beyond Net Neutrality - gov't can regulate access, price, investment, etc).  While the FCC now is seeking to reverse the Net Neutrality requirements there's a question of whether that is going to be specific to Net Neutrality or if they are entirely exempting internet/data from Title II regulation.

 

As John Malone has said repeatedly, you want to own your network or you are at the mercy of the people who do.  There have been very, very few MVNO's in the US that have been successful over the long term.

 

As recently as last month in Flat Wireless v. Cellco Partnership, FCC 18-117 (August 2, 2018), the FCC reiterated its position that the "cost-based" rate regime that applies to certain Title II services does not apply to wireless voice and data roaming.  See paragraphs 15-16 of the Flat Wireless order available here:  https://docs.fcc.gov/public/attachments/FCC-18-117A1.pdf  Instead, where the obligation applies, the standard is "commercial reasonableness."  So, while the FCC could impose cost-based rate regulation of wireless voice and data under Title II, it has not yet done so.

 

I have not been able to find any source discussing whether pure MVNOs, i.e., entities that do not themselves operate any facilities-based service, are even entitled to the "commercial reasonableness" standard that applies to MNOs under the FCC's Data Roaming Order.  So, I'm back where I started:  In situations where there is no contract between the parties, does a pure MVNO have any legal basis for forcing an MNO to provide it access?

The response is quite nuanced.  It's also entirely a discussion of price and not access.  Access is required by Title II and Flat is just arguing price.  The FCC has stated that they have preferred to stay out of price discussion and basically act as arbiter if a carrier is gouging.  But it is not a question of whether Flat has access rights.  They do.  They just don't like the price.

[KJP]

Sure I'm not arguing the Charter has a sweet deal right now being able to rent telecom assets at regulated prices while having sole ownership of its fiber assets, but a.) if charter has too much sucess with this approach (which is not a guarantee as how many people switch to mvnos actually even among us investors who know they have the same assets), it's a relatively easy case for telecoms to argue that they should have free access to fiber at regulated prices.  That being said the more important argument is that while Charter likely has an advantage now, the long term and structural advantage goes to whoever develops wireless broadband.

 

Where are you getting this information?  Charter does not rent telecom assets under regulated prices...  its MVNO deal was privately negotiated as part of a sale of spectrum in 2011.

 

Right that's correct I forgot about this case, However,  I think by law though telecoms have to rent the telecom assets to mvnos at a price that if can't be negotiated will be set by government, but this is slightly different.  My point here though is the government is basically forcing telecoms to rent to charter and other mvnos and that could be problematic when charter gets to successful in the mobile space.

 

I'm not aware of any obligation in the United States to provide network access to an MNVO, nor any regulation of the wholesale rates negotiated between mobile network operators and MVNOs.  (The FCC does require interconnection among wireless  networks, i.e., "roaming," at commercially reasonable rates.)  Indeed, some of the commentary around a potential Sprint-T-Mobile merger is that wholesale rates should be regulated in the future because those two are big suppliers to MVNOs.  For example, here's one argument that Sprint and T-Mobile should not be permitted to merge without a new wholesale pricing regulatory regime being put in place:  https://globenewswire.com/news-release/2018/05/21/1509213/0/en/Founder-and-Former-CEO-of-Boost-Mobile-USA-Raises-Concerns-that-Prepaid-Customers-are-Being-Forgotten-in-Sprint-T-Mobile-Merger-Plan.html

 

If you are aware of any source discussing the regulation of wholesale rates charged by MNOs to MVNOs, I'd be very interested to see it.

 

The requirement is under Title II of the Communications Act which requires incubmbent carriers to provide wholesale access at cost based rates to new entrants.  Historically this applied to voice and there were questions as to whether that covered data.  In 2015 when the FCC applied Net Neutrality they did so with a broad brush by having internet/data governed by Title II (which incorporates a huge amount of potential gov't control well beyond Net Neutrality - gov't can regulate access, price, investment, etc).  While the FCC now is seeking to reverse the Net Neutrality requirements there's a question of whether that is going to be specific to Net Neutrality or if they are entirely exempting internet/data from Title II regulation.

 

As John Malone has said repeatedly, you want to own your network or you are at the mercy of the people who do.  There have been very, very few MVNO's in the US that have been successful over the long term.

 

As recently as last month in Flat Wireless v. Cellco Partnership, FCC 18-117 (August 2, 2018), the FCC reiterated its position that the "cost-based" rate regime that applies to certain Title II services does not apply to wireless voice and data roaming.  See paragraphs 15-16 of the Flat Wireless order available here:  https://docs.fcc.gov/public/attachments/FCC-18-117A1.pdf  Instead, where the obligation applies, the standard is "commercial reasonableness."  So, while the FCC could impose cost-based rate regulation of wireless voice and data under Title II, it has not yet done so.

 

I have not been able to find any source discussing whether pure MVNOs, i.e., entities that do not themselves operate any facilities-based service, are even entitled to the "commercial reasonableness" standard that applies to MNOs under the FCC's Data Roaming Order.  So, I'm back where I started:  In situations where there is no contract between the parties, does a pure MVNO have any legal basis for forcing an MNO to provide it access?

The response is quite nuanced.  It's also entirely a discussion of price and not access.  Access is required by Title II and Flat is just arguing price.  The FCC has stated that they have preferred to stay out of price discussion and basically act as arbiter if a carrier is gouging.  But it is not a question of whether Flat has access rights.  They do.  They just don't like the price.

 

I agree that Flat is about price, because Flat is a facilities-based provider so clearly has a right of access at some price.  Under the FCC's data roaming rule, however, " [a] facilities-based provider of commercial mobile data services is required to offer roaming arrangements to other such providers on commercially reasonable terms and conditions[]"  40 CFR 20.12(e)(1) (emphasis added).  "Other such providers" appears to refer to other "facilities-based providers," not pure MVNOs.  That's why I've been asking solely about the obligation to provide access to MVNOs, i.e., non-facilities-based providers, and have found no source addressing the issue.

 

EDIT:  I just reviewed the Data Roaming Rule itself.  I think it answers my question by limiting the access obligation to true roaming, not resale.  See paragraph 38 & n.116.  Based on that, why do MVNOs have a right of access?

[dwy000]

Sure I'm not arguing the Charter has a sweet deal right now being able to rent telecom assets at regulated prices while having sole ownership of its fiber assets, but a.) if charter has too much sucess with this approach (which is not a guarantee as how many people switch to mvnos actually even among us investors who know they have the same assets), it's a relatively easy case for telecoms to argue that they should have free access to fiber at regulated prices.  That being said the more important argument is that while Charter likely has an advantage now, the long term and structural advantage goes to whoever develops wireless broadband.

 

Where are you getting this information?  Charter does not rent telecom assets under regulated prices...  its MVNO deal was privately negotiated as part of a sale of spectrum in 2011.

 

Right that's correct I forgot about this case, However,  I think by law though telecoms have to rent the telecom assets to mvnos at a price that if can't be negotiated will be set by government, but this is slightly different.  My point here though is the government is basically forcing telecoms to rent to charter and other mvnos and that could be problematic when charter gets to successful in the mobile space.

 

I'm not aware of any obligation in the United States to provide network access to an MNVO, nor any regulation of the wholesale rates negotiated between mobile network operators and MVNOs.  (The FCC does require interconnection among wireless  networks, i.e., "roaming," at commercially reasonable rates.)  Indeed, some of the commentary around a potential Sprint-T-Mobile merger is that wholesale rates should be regulated in the future because those two are big suppliers to MVNOs.  For example, here's one argument that Sprint and T-Mobile should not be permitted to merge without a new wholesale pricing regulatory regime being put in place:  https://globenewswire.com/news-release/2018/05/21/1509213/0/en/Founder-and-Former-CEO-of-Boost-Mobile-USA-Raises-Concerns-that-Prepaid-Customers-are-Being-Forgotten-in-Sprint-T-Mobile-Merger-Plan.html

 

If you are aware of any source discussing the regulation of wholesale rates charged by MNOs to MVNOs, I'd be very interested to see it.

 

The requirement is under Title II of the Communications Act which requires incubmbent carriers to provide wholesale access at cost based rates to new entrants.  Historically this applied to voice and there were questions as to whether that covered data.  In 2015 when the FCC applied Net Neutrality they did so with a broad brush by having internet/data governed by Title II (which incorporates a huge amount of potential gov't control well beyond Net Neutrality - gov't can regulate access, price, investment, etc).  While the FCC now is seeking to reverse the Net Neutrality requirements there's a question of whether that is going to be specific to Net Neutrality or if they are entirely exempting internet/data from Title II regulation.

 

As John Malone has said repeatedly, you want to own your network or you are at the mercy of the people who do.  There have been very, very few MVNO's in the US that have been successful over the long term.

 

As recently as last month in Flat Wireless v. Cellco Partnership, FCC 18-117 (August 2, 2018), the FCC reiterated its position that the "cost-based" rate regime that applies to certain Title II services does not apply to wireless voice and data roaming.  See paragraphs 15-16 of the Flat Wireless order available here:  https://docs.fcc.gov/public/attachments/FCC-18-117A1.pdf  Instead, where the obligation applies, the standard is "commercial reasonableness."  So, while the FCC could impose cost-based rate regulation of wireless voice and data under Title II, it has not yet done so.

 

I have not been able to find any source discussing whether pure MVNOs, i.e., entities that do not themselves operate any facilities-based service, are even entitled to the "commercial reasonableness" standard that applies to MNOs under the FCC's Data Roaming Order.  So, I'm back where I started:  In situations where there is no contract between the parties, does a pure MVNO have any legal basis for forcing an MNO to provide it access?

The response is quite nuanced.  It's also entirely a discussion of price and not access.  Access is required by Title II and Flat is just arguing price.  The FCC has stated that they have preferred to stay out of price discussion and basically act as arbiter if a carrier is gouging.  But it is not a question of whether Flat has access rights.  They do.  They just don't like the price.

 

I agree that Flat is about price, because Flat is a facilities-based provider so clearly has a right of access at some price.  Under the FCC's data roaming rule, however, " [a] facilities-based provider of commercial mobile data services is required to offer roaming arrangements to other such providers on commercially reasonable terms and conditions[]"  40 CFR 20.12(e)(1) (emphasis added).  "Other such providers" appears to refer to other "facilities-based providers," not pure MVNOs.  That's why I've been asking solely about the obligation to provide access to MVNOs, i.e., non-facilities-based providers, and have found no source addressing the issue.

 

My guess is that Comcast and Charter would argue that their fiber based and broad Wi-Fi platform would constitute a facilities based provider.  Especially since this refers to data and not voice. 

 

The more interesting question is whether Verizon is entitled to access Charter and Comcast's last mile/last foot fiber network.  By including internet access under Title II back in 2015 it gives FCC ability to require and enforce access and price.  They specifically said they had no intention to but we all know government promises.  Interestingly, the amount of network investment by overbuilders like Google Fiber ground to a quick halt after that.  Who's going to invest billions in a network that they may have to share with competitors (exactly like Verizon has to with their wireless network).

[KJP]

Sure I'm not arguing the Charter has a sweet deal right now being able to rent telecom assets at regulated prices while having sole ownership of its fiber assets, but a.) if charter has too much sucess with this approach (which is not a guarantee as how many people switch to mvnos actually even among us investors who know they have the same assets), it's a relatively easy case for telecoms to argue that they should have free access to fiber at regulated prices.  That being said the more important argument is that while Charter likely has an advantage now, the long term and structural advantage goes to whoever develops wireless broadband.

 

Where are you getting this information?  Charter does not rent telecom assets under regulated prices...  its MVNO deal was privately negotiated as part of a sale of spectrum in 2011.

 

Right that's correct I forgot about this case, However,  I think by law though telecoms have to rent the telecom assets to mvnos at a price that if can't be negotiated will be set by government, but this is slightly different.  My point here though is the government is basically forcing telecoms to rent to charter and other mvnos and that could be problematic when charter gets to successful in the mobile space.

 

I'm not aware of any obligation in the United States to provide network access to an MNVO, nor any regulation of the wholesale rates negotiated between mobile network operators and MVNOs.  (The FCC does require interconnection among wireless  networks, i.e., "roaming," at commercially reasonable rates.)  Indeed, some of the commentary around a potential Sprint-T-Mobile merger is that wholesale rates should be regulated in the future because those two are big suppliers to MVNOs.  For example, here's one argument that Sprint and T-Mobile should not be permitted to merge without a new wholesale pricing regulatory regime being put in place:  https://globenewswire.com/news-release/2018/05/21/1509213/0/en/Founder-and-Former-CEO-of-Boost-Mobile-USA-Raises-Concerns-that-Prepaid-Customers-are-Being-Forgotten-in-Sprint-T-Mobile-Merger-Plan.html

 

If you are aware of any source discussing the regulation of wholesale rates charged by MNOs to MVNOs, I'd be very interested to see it.

 

The requirement is under Title II of the Communications Act which requires incubmbent carriers to provide wholesale access at cost based rates to new entrants.  Historically this applied to voice and there were questions as to whether that covered data.  In 2015 when the FCC applied Net Neutrality they did so with a broad brush by having internet/data governed by Title II (which incorporates a huge amount of potential gov't control well beyond Net Neutrality - gov't can regulate access, price, investment, etc).  While the FCC now is seeking to reverse the Net Neutrality requirements there's a question of whether that is going to be specific to Net Neutrality or if they are entirely exempting internet/data from Title II regulation.

 

As John Malone has said repeatedly, you want to own your network or you are at the mercy of the people who do.  There have been very, very few MVNO's in the US that have been successful over the long term.

 

As recently as last month in Flat Wireless v. Cellco Partnership, FCC 18-117 (August 2, 2018), the FCC reiterated its position that the "cost-based" rate regime that applies to certain Title II services does not apply to wireless voice and data roaming.  See paragraphs 15-16 of the Flat Wireless order available here:  https://docs.fcc.gov/public/attachments/FCC-18-117A1.pdf  Instead, where the obligation applies, the standard is "commercial reasonableness."  So, while the FCC could impose cost-based rate regulation of wireless voice and data under Title II, it has not yet done so.

 

I have not been able to find any source discussing whether pure MVNOs, i.e., entities that do not themselves operate any facilities-based service, are even entitled to the "commercial reasonableness" standard that applies to MNOs under the FCC's Data Roaming Order.  So, I'm back where I started:  In situations where there is no contract between the parties, does a pure MVNO have any legal basis for forcing an MNO to provide it access?

The response is quite nuanced.  It's also entirely a discussion of price and not access.  Access is required by Title II and Flat is just arguing price.  The FCC has stated that they have preferred to stay out of price discussion and basically act as arbiter if a carrier is gouging.  But it is not a question of whether Flat has access rights.  They do.  They just don't like the price.

 

I agree that Flat is about price, because Flat is a facilities-based provider so clearly has a right of access at some price.  Under the FCC's data roaming rule, however, " [a] facilities-based provider of commercial mobile data services is required to offer roaming arrangements to other such providers on commercially reasonable terms and conditions[]"  40 CFR 20.12(e)(1) (emphasis added).  "Other such providers" appears to refer to other "facilities-based providers," not pure MVNOs.  That's why I've been asking solely about the obligation to provide access to MVNOs, i.e., non-facilities-based providers, and have found no source addressing the issue.

 

My guess is that Comcast and Charter would argue that their fiber based and broad Wi-Fi platform would constitute a facilities based provider.  Especially since this refers to data and not voice. 

 

The more interesting question is whether Verizon is entitled to access Charter and Comcast's last mile/last foot fiber network.  By including internet access under Title II back in 2015 it gives FCC ability to require and enforce access and price.  They specifically said they had no intention to but we all know government promises.  Interestingly, the amount of network investment by overbuilders like Google Fiber ground to a quick halt after that.  Who's going to invest billions in a network that they may have to share with competitors (exactly like Verizon has to with their wireless network).

 

Under current law, I don't think Comcast and Charter would have a right of access to Verizon's wireless network because the Data Roaming Rule states: "It is reasonable for a provider to condition the effectiveness of a data roaming arrangement on the requesting provider’s provision of mobile data service to its own subscribers using a generation of wireless technology comparable to the technology on which the requesting provider seeks to roam."  [Paragraph 44 of the Second Report and Order issuing the Data Roaming Rule]

 

As for what the law will be in the future .... good question.  I don't think any "connectivity" company can like the buzz surrounding an argument that an access obligation should be imposed on Amazon.

[cameronfen]

Sure I'm not arguing the Charter has a sweet deal right now being able to rent telecom assets at regulated prices while having sole ownership of its fiber assets, but a.) if charter has too much sucess with this approach (which is not a guarantee as how many people switch to mvnos actually even among us investors who know they have the same assets), it's a relatively easy case for telecoms to argue that they should have free access to fiber at regulated prices.  That being said the more important argument is that while Charter likely has an advantage now, the long term and structural advantage goes to whoever develops wireless broadband.

 

Where are you getting this information?  Charter does not rent telecom assets under regulated prices...  its MVNO deal was privately negotiated as part of a sale of spectrum in 2011.

 

Right that's correct I forgot about this case, However,  I think by law though telecoms have to rent the telecom assets to mvnos at a price that if can't be negotiated will be set by government, but this is slightly different.  My point here though is the government is basically forcing telecoms to rent to charter and other mvnos and that could be problematic when charter gets to successful in the mobile space.

 

I'm not aware of any obligation in the United States to provide network access to an MNVO, nor any regulation of the wholesale rates negotiated between mobile network operators and MVNOs.  (The FCC does require interconnection among wireless  networks, i.e., "roaming," at commercially reasonable rates.)  Indeed, some of the commentary around a potential Sprint-T-Mobile merger is that wholesale rates should be regulated in the future because those two are big suppliers to MVNOs.  For example, here's one argument that Sprint and T-Mobile should not be permitted to merge without a new wholesale pricing regulatory regime being put in place:  https://globenewswire.com/news-release/2018/05/21/1509213/0/en/Founder-and-Former-CEO-of-Boost-Mobile-USA-Raises-Concerns-that-Prepaid-Customers-are-Being-Forgotten-in-Sprint-T-Mobile-Merger-Plan.html

 

If you are aware of any source discussing the regulation of wholesale rates charged by MNOs to MVNOs, I'd be very interested to see it.

 

The requirement is under Title II of the Communications Act which requires incubmbent carriers to provide wholesale access at cost based rates to new entrants.  Historically this applied to voice and there were questions as to whether that covered data.  In 2015 when the FCC applied Net Neutrality they did so with a broad brush by having internet/data governed by Title II (which incorporates a huge amount of potential gov't control well beyond Net Neutrality - gov't can regulate access, price, investment, etc).  While the FCC now is seeking to reverse the Net Neutrality requirements there's a question of whether that is going to be specific to Net Neutrality or if they are entirely exempting internet/data from Title II regulation.

 

As John Malone has said repeatedly, you want to own your network or you are at the mercy of the people who do.  There have been very, very few MVNO's in the US that have been successful over the long term.

 

As recently as last month in Flat Wireless v. Cellco Partnership, FCC 18-117 (August 2, 2018), the FCC reiterated its position that the "cost-based" rate regime that applies to certain Title II services does not apply to wireless voice and data roaming.  See paragraphs 15-16 of the Flat Wireless order available here:  https://docs.fcc.gov/public/attachments/FCC-18-117A1.pdf  Instead, where the obligation applies, the standard is "commercial reasonableness."  So, while the FCC could impose cost-based rate regulation of wireless voice and data under Title II, it has not yet done so.

 

I have not been able to find any source discussing whether pure MVNOs, i.e., entities that do not themselves operate any facilities-based service, are even entitled to the "commercial reasonableness" standard that applies to MNOs under the FCC's Data Roaming Order.  So, I'm back where I started:  In situations where there is no contract between the parties, does a pure MVNO have any legal basis for forcing an MNO to provide it access?

The response is quite nuanced.  It's also entirely a discussion of price and not access.  Access is required by Title II and Flat is just arguing price.  The FCC has stated that they have preferred to stay out of price discussion and basically act as arbiter if a carrier is gouging.  But it is not a question of whether Flat has access rights.  They do.  They just don't like the price.

 

I agree that Flat is about price, because Flat is a facilities-based provider so clearly has a right of access at some price.  Under the FCC's data roaming rule, however, " [a] facilities-based provider of commercial mobile data services is required to offer roaming arrangements to other such providers on commercially reasonable terms and conditions[]"  40 CFR 20.12(e)(1) (emphasis added).  "Other such providers" appears to refer to other "facilities-based providers," not pure MVNOs.  That's why I've been asking solely about the obligation to provide access to MVNOs, i.e., non-facilities-based providers, and have found no source addressing the issue.

 

My guess is that Comcast and Charter would argue that their fiber based and broad Wi-Fi platform would constitute a facilities based provider.  Especially since this refers to data and not voice. 

 

The more interesting question is whether Verizon is entitled to access Charter and Comcast's last mile/last foot fiber network.  By including internet access under Title II back in 2015 it gives FCC ability to require and enforce access and price.  They specifically said they had no intention to but we all know government promises.  Interestingly, the amount of network investment by overbuilders like Google Fiber ground to a quick halt after that.  Who's going to invest billions in a network that they may have to share with competitors (exactly like Verizon has to with their wireless network).

 

Under current law, I don't think Comcast and Charter would have a right of access to Verizon's wireless network because the Data Roaming Rule states: "It is reasonable for a provider to condition the effectiveness of a data roaming arrangement on the requesting provider’s provision of mobile data service to its own subscribers using a generation of wireless technology comparable to the technology on which the requesting provider seeks to roam."  [Paragraph 44 of the Second Report and Order issuing the Data Roaming Rule]

 

As for what the law will be in the future .... good question.  I don't think any "connectivity" company can like the buzz surrounding an argument that an access obligation should be imposed on Amazon.

 

The discussion is much deeper in research than I have done, but even if there is not a law written out it has been implicit that if telecoms dont let mvnos use the network the government will force telecoms to rent out the network.  If you have two firms, the total economic profit of the two competing firms is less than the economic profit of the monopolist as competition gives some surplus to consumers.  The consequence is a telecom makes more profit being a monopolist and not renting out, rather than charging rent that an mvno would pay and face the competition.  So whether it is a de jure regulation or not, it is certainly a de facto one because if telecoms do not comply the government will force them to rent. 

[Spekulatius]

There is no Monopoly in wireless. Typically MVNO exist, because it is cost effective for a wireless network provider to rent out his network and increase the utilization. That is also where constraints come in - the customers of MVNO can get throttled if network constraints become an issue. MVNO cust9mers typically get throttled befor the native network customers get throttled. That’s something I learned in Howardsforums.

[walkie518]

There is no Monopoly in wireless. Typically MVNO exist, because it is cost effective for a wireless network provider to rent out his network and increase the utilization. That is also where constraints come in - the customers of MVNO can get throttled if network constraints become an issue. MVNO cust9mers typically get throttled befor the native network customers get throttled. That’s something I learned in Howardsforums.

On throttling, this makes sense.

 

I had a call with a smb spectrum sales person recently.  He noted that businesses will get access to wireless product in Q1.  He also noted that residential customers have unlimited everything while being wireless.  However, it's unclear what happens when you start roaming. 

 

Charter is likely aiming to trap a spread over whatever they have to pay Verizon for usage?  Anyone have experience with the new product?

[Ahab]

https://www.axios.com/newsletters/axios-deep-dives-e77fc11d-b382-4020-9891-4b1ba1ca283f.html

 

Slightly off topic, but I enjoyed this Axios primer on 5G. I've been trying to make sense of 5G in regards to assessing Charter and other TMT plays.

[undervalued]

https://www.theverge.com/2018/10/2/17927712/verizon-5g-home-internet-real-speed-meaning

[WayWardCloud]

I live in LA and my internet provider is Charter. I don't see any reason why I would switch to Verizon home 5G.

Incidentally, I also don't see any reason why I would switch my mobile service to Charter.

It seems that cable cos and tel cos are busy expanding marginally into one another territory just to show they can inflict some damage while not offering any new service of actual value to the consumer  ::)

 

Will this turn into an actual full on war or is it just pre-merger foreplay to get better terms?

Comcast, Charter, Verizon and ATT all have usually understood they could make more money by playing nice. This is unlike European operators which you can tell by the price we pay for broadband and cell service vs the rest of the world. The only company with actual disruptive DNA here is TMobile/Sprint but you don't successfully merge overnight AND attack 4 bigger established players at the same time so I'm not too worried.

 

If I'm wrong and it's a real war then I believe cable has the upper hand for two reason.

- They have just finished their latest investment cycle (all digital + docsis 3.0 @1Gig everywhere) while telcos are in the first inning of theirs (5G) so more free cash flow firepower going forward.

- Thanks to the MVNO agreement they could scale up inside telco territory very fast by dropping their mobile price aggressively if they wanted to. On the other hand, if Verizon wants a significant chunk of cable it would take them several years and billions of $. I believe cable hasn't priced their mobile offerings as competitively as they could have and that it is by design to try and avoid a full on war.

 

Two questions if anyone knows:

-Does the forced MVNO agreement include 5G?

-Does it have an end date?

[vince]

I live in LA and my internet provider is Charter. I don't see any reason why I would switch to Verizon home 5G.

Incidentally, I also don't see any reason why I would switch my mobile service to Charter.

It seems that cable cos and tel cos are busy expanding marginally into one another territory just to show they can inflict some damage while not offering any new service of actual value to the consumer  ::)

 

Will this turn into an actual full on war or is it just pre-merger foreplay to get better terms?

Comcast, Charter, Verizon and ATT all have usually understood they could make more money by playing nice. This is unlike European operators which you can tell by the price we pay for broadband and cell service vs the rest of the world. The only company with actual disruptive DNA here is TMobile/Sprint but you don't successfully merge overnight AND attack 4 bigger established players at the same time so I'm not too worried.

 

If I'm wrong and it's a real war then I believe cable has the upper hand for two reason.

- They have just finished their latest investment cycle (all digital + docsis 3.0 @1Gig everywhere) while telcos are in the first inning of theirs (5G) so more free cash flow firepower going forward.

- Thanks to the MVNO agreement they could scale up inside telco territory very fast by dropping their mobile price aggressively if they wanted to. On the other hand, if Verizon wants a significant chunk of cable it would take them several years and billions of $. I believe cable hasn't priced their mobile offerings as competitively as they could have and that it is by design to try and avoid a full on war.

 

Two questions if anyone knows:

-Does the forced MVNO agreement include 5G?

-Does it have an end date?

 

Excellent post!!

[scorpioncapital]

The question is what will the investment do and will there be time to adjust. I think the point is there is no immediate inflection point IF cable has pressures from 5G fixed wireless. It may be a slow drip. It can get dangerous when a big technology or innovation change disrupts a giant decade old business, specially a monopoly. Like textile mills in USA. It wasn't overnight. It was a slow grind. The key is to protect your capital if you see the writing on the wall, which is not quite clear yet. I'm position sizing accordingly. However if you own GLIBA, you don't have to do anything just let Maffei hopefully see the right time to make a move. Some faith required but coordinating between position size , your own judgement and that of your intelligent partner should keep you out of hot water

[atbed]

The question is what will the investment do and will there be time to adjust. I think the point is there is no immediate inflection point IF cable has pressures from 5G fixed wireless. It may be a slow drip. It can get dangerous when a big technology or innovation change disrupts a giant decade old business, specially a monopoly. Like textile mills in USA. It wasn't overnight. It was a slow grind. The key is to protect your capital if you see the writing on the wall, which is not quite clear yet. I'm position sizing accordingly. However if you own GLIBA, you don't have to do anything just let Maffei hopefully see the right time to make a move. Some faith required but coordinating between position size , your own judgement and that of your intelligent partner should keep you out of hot water

 

Maybe the slow grind accelerates after the FCC auctions off more mid-band spectrum

[DooDiligence]

https://www.multichannel.com/news/charter-completes-rollout-of-audienceapp

[Liberty]

‪ANH filing showing that $CHTR prob bought back 0.8% of shares outstanding last month (9.6% annual pace): 

 

https://www.sec.gov/Archives/edgar/data/914545/000089924318026402/xslF345X03/doc4.xml‬

[scorpioncapital]

Wow. I also note their balance sheet is sparkling clean. I haven't seen a nice balance sheet like this everywhere ) Seems balance sheet risk is going to come and haunt many a zombie and/or messy company going forward.

 

 

[nkp007]

‪ANH filing showing that $CHTR prob bought back 0.8% of shares outstanding last month (9.6% annual pace): 

 

https://www.sec.gov/Archives/edgar/data/914545/000089924318026402/xslF345X03/doc4.xml‬

 

Keep buying!!!

[vince]

‪ANH filing showing that $CHTR prob bought back 0.8% of shares outstanding last month (9.6% annual pace): 

 

https://www.sec.gov/Archives/edgar/data/914545/000089924318026402/xslF345X03/doc4.xml‬

 

I think the denominator is larger for the Newhouse shares owned than the 20 plus million showed on those filings, therefor a smaller overall percentage repurchased.  I could be wrong about the way they present it but Newhouse definitely owns more than that.

[Liberty]

‪ANH filing showing that $CHTR prob bought back 0.8% of shares outstanding last month (9.6% annual pace): 

 

https://www.sec.gov/Archives/edgar/data/914545/000089924318026402/xslF345X03/doc4.xml‬

 

I think the denominator is larger for the Newhouse shares owned than the 20 plus million showed on those filings, therefor a smaller overall percentage repurchased.  I could be wrong about the way they present it but Newhouse definitely owns more than that.

 

Hmm, I think you''re right, the proxy seems to say that they own 34,778,200 shares. That would make the pace 0.4%, or 4.8% of O/S annually, if they are being proportional in what they sell back to the company.

[khturbo]

I went back and looked at the quoted numbers for how much A/N sold every month and it just never exactly lined up with the actual quarterly buyback. I tried pretty much every different permutation and the numbers were always off by a bit.

 

I'm guessing that they just might not sell proportionately. Probably the only reason to be concerned / excited was if they didn't sell any, or sold like 5% of their stake in a quarter, respectively.

[vince]

I went back and looked at the quoted numbers for how much A/N sold every month and it just never exactly lined up with the actual quarterly buyback. I tried pretty much every different permutation and the numbers were always off by a bit.

 

I'm guessing that they just might not sell proportionately. Probably the only reason to be concerned / excited was if they didn't sell any, or sold like 5% of their stake in a quarter, respectively.

 

What denominator did you use?  And it probably shouldnt line up perfectly cause the buyback reporting dates are different then financial reporting dates.  You would have to accurately guess how much was bought back say in the last 2 weeks of September even if Octobers buyback was reported before the quarterly call

[khturbo]

I did it with both the number quoted in the SEC filings and also adjusted it to the extra shares they own (maybe it was 33 million or something like that? I stupidly deleted my work).

 

That actually makes sense on the reporting dates. I thought they were reporting sales through month end. I had tried staggering the months based on a lag but didn't realize that perhaps the filings didn't get through month end.

[vince]

I did it with both the number quoted in the SEC filings and also adjusted it to the extra shares they own (maybe it was 33 million or something like that? I stupidly deleted my work).

 

That actually makes sense on the reporting dates. I thought they were reporting sales through month end. I had tried staggering the months based on a lag but didn't realize that perhaps the filings didn't get through month end.

 

Ya its not clear (at least to me) what days the buyback reports include.  However, still very useful to know what they are doing in the interim even if its not exact.  Did anyone see Mafei kind of criticize Chtr mgmt about "blowing their load at 350" or something like that maybe 6 months ago, do nt remember what transcript.  He was clearly frustrated that Chtr wasnt going to act aggressively and go over 4.5 times when price dropped well under 300.