An Ignoble Experiment

2. FCC to examine whether new net neutrality rules should apply to wireless

AT&T Mobility (NYSE: T) said it plans to launch HD Voice services using Voice over LTE technology in select markets starting May 23. The company said the Samsung Galaxy S4 mini will be the first phone that can make use of the service, and that it will expand the service to additional devices in the future.

Samsung Galaxy S4 mini

AT&T said its VoLTE-powered HD Voice service will launch in select areas in Illinois, Indiana, Minnesota and Wisconsin, and it will expand to additional markets later.

Engadget reported earlier this month that AT&T would launch VoLTE on May 23.

The news finally brings to a close the long wait for a Tier 1 U.S. wireless carrier to launch VoLTE-powered HD Voice. AT&T and Verizon Wireless (NYSE: VZ) executives have been discussing plans to launch VoLTE since at least 2010, but both carriers have delayed their VoLTE launches in the intervening years. Verizon Wireless (NYSE:VZ) in 2010 said the carrier would launch VoLTE by late 2012 or early 2013, but now the carrier expects to launch VoLTE sometime this year. And AT&T had said in 2010 the carrier hoped to launch VoLTE by the end of 2013, a target the carrier reiterated in 2013. But AT&T missed that launch window by five months.

Although VoLTE technology represents a significant change in the way voice conversations are transmitted over the wireless network--conversations are transmitted via IP technology on LTE rather than via circuit-switched connections--AT&T said only that customers can expect "crystal clear conversations" and made no other mention of any other VoLTE powered services.

AT&T also said that HD Voice customers will be able to simultaneously talk while surfing the Web, though that capability has long been available on AT&T's HSPA and LTE networks.

AT&T's promise of "crystal clear conversations" is notable since Verizon has hinted that its forthcoming launch of VoLTE could power new services. Verizon CEO Lowell McAdam said in December that Verizon is testing VoLTE and that the technology would enable "a whole suite of high-end communication services" such as HD Voice and video conferencing, and that "FaceTime-like applications will be much easier from the device than they are today." However, McAdam didn't specify when Verizon would offer such advanced services, and AT&T may well introduce new, VoLTE-powered services at a later date.

AT&T made no mention of Asus' PadFone X in its HD Voice announcement. AT&T in January said it would launch the PadFone with VoLTE technology to support HD Voice. However, the carrier still does not yet sell the device. When questioned about the PadFone X and whether AT&T still plans to launch the device at some point in the future, AT&T spokesman Mark Siegel said "he can't speculate on specific devices and when they might be available."

AT&T isn't the only carrier offering HD Voice service, though it is the only Tier 1 carrier to launch HD Voice using VoLTE technology. Sprint (NYSE: S) introduced EVRC-NW HD Voice about two years ago on the HTC Evo 4G LTE smartphone. The carrier expects to offer nationwide HD Voice sometime in the middle of this year. T-Mobile US (NYSE:TMUS), for its part, turned up W-AMR HD Voice on HSPA in January 2013.

For more:
- see this AT&T release

Read more about: HD Voice, LTE
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This week's sponsor is GSMA.

By Phil Goldstein

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3. T-Mobile, Univision partner to launch Univision Mobile MVNO aimed at Hispanics

WASHINGTON--The FCC voted to approve draft net neutrality rules that would re-examine whether to treat wireless networks differently from wired broadband networks as the commission seeks to craft new rules that would ensure consumers get equal access to all Internet content.

As when the FCC last tried to adopt net neutrality rules in 2010, wireless carriers would face a transparency rule that would require them to disclose if they are treating traffic differently on their networks. The newly proposed rules would enhance the transparency requirements and would, as FCC Chairman Tom Wheeler said, require that networks disclose any practices that could change a consumer's or content provider's relationship with the network.

The FCC voted at its open meeting on a 3-2, party-line basis on what is known as a "notice of proposed rulemaking" on net neutrality. The three Democrats on the panel approved the rules, with the two Republicans, Commissioners Ajit Pai and Michael O'Rielly, voting against the proposed rules.

The commission will open up the proposal to comment starting today and initial comments are due on July 15 and reply comments due Sept. 10, with the aim of voting on final rules by the end of the year.

Wheeler's initial proposal released late in April was revised after it sparked a thunderous debate, with consumer advocates and Internet companies worried that the agency would undermine the fundamental principles of net neutrality. Three protestors who said the FCC should regulate the Internet strongly were escorted out of the room before the start of the meeting.

The FCC's notice adopts a "no-blocking" rule that prohibits broadband providers from depriving content providers of "a minimal level of access to the broadband provider's subscribers."

Perhaps most controversially, for content not prohibited by the "no-blocking rule" the proposed rules would require broadband providers to adhere to a still-to-defined standard of "commercially reasonable" practices. The proposed rules seek comment on whether "paid prioritization" agreements that would allow content providers to pay ISPs for faster access should be banned altogether.

Wheeler sought to lay out starkly what would not be considered commercially reasonable, perhaps in part to assuage the concerns that were raised by his initial embrace of that approach.

Nothing in the proposal, Wheeler said, authorizes paid prioritization. "The potential for there to be some kind of a fast lane, available to only a few, has many people concerned," he said. "Personally, I don't like the idea of the Internet divided between haves and have-nots. I will work to see that that does not happen."

Wheeler said that the "speed and quality of the connections the consumer purchases must be unaffected by the content he is or she is using." He said if ISPs slowed the speed below what consumers bought, "it would be commercially unreasonable, and therefore prohibited." Wheeler also said it would not be commercially reasonable to charge content providers such as Netflix (NASDAQ: NFLX) to use the bandwidth for which consumers had already paid.

In terms of its legal foundation, the new proposed rules rely on Section 706 of the Telecommunications Act of 1996, which Wheeler has said gives the FCC "the ability to encourage broadband deployment by, among other things, removing barriers to infrastructure deployment, encouraging innovation and promoting competition." The notice seeks comment on the best source of legal authority for the FCC and whether it should use Title III for wireless services.

Importantly, the new rules will also seek comment on whether the FCC should reclassify broadband as a Title II common-carrier telecommunications service, and not an information service. The notice also seeks comment on whether and how the FCC should abstain from imposing some Title II obligations. The embrace of Title II is favored by net neutrality proponents because it could put the rules on firmer legal footing, and it is strongly opposed by carriers and ISPs, which have warned that treating the Internet as a utility would strongly harm innovation and investment and be immensely complicated to figure out.

The FCC is reworking its net neutrality rules following a ruling in January from a federal appeals court that said the FCC overstepped its authority in issuing its earlier rules. The FCC in 2010 decided to classify broadband as an "information service" and not as a "telecommunications service," the classification used for traditional telephone companies, which must follow common carrier rules. By doing so, the court said the FCC could not then impose its rule against "unreasonable discrimination" and "anti-blocking" rules on Internet providers that said ISPs couldn't block lawful traffic and wireless carriers couldn't block competing over-the-top services. Essentially, because the FCC did not use the right classification, it couldn't then impose common carrier rules on "information service" providers.

The notice also provides for a "multi-faceted" process to resolve disputes, including an ombudsperson to act as a watchdog for consumers, startups and other small businesses.

The Republicans questioned the FCC's authority to even make new rules and voiced their strong opposition. "While courts can recognize that an agency may legally reverse course as long as it adequately explains the reasons for changing its position, I am concerned about the real world impact that such a decision could have on the communications industry and the economy as a whole," O'Rielly said. "The current framework has provided a climate of certainty and stability for broadband investment and Internet innovation. Upending that framework could disrupt the tremendous progress that has been made over the last decade."

Rosenworcel said she would have chosen to defer action on net neutrality but agreed that "we cannot have a two-tiered Internet with fast lanes that speed the traffic of the privileged and leave the rest of us lagging behind."

Read more about: FCC, net neutrality
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By Phil Goldstein

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4. Report: Regulators may be easing opposition to Sprint, T-Mobile merger

Spanish-language broadcaster and media company Univision is partnering T-Mobile US (NYSE:TMUS) to launch its own branded MVNO, Univision Mobile, aimed at delivering a mobile experience tailored to the needs and desires of Hispanic consumers.

The service will start May 19 and will be sold at 1,800 Walmart stores in the U.S. and 6,000 independent dealers serving Hispanic communities throughout the country. Customers can either bring their compatible devices to the service and buy a SIM card or choose from a range of T-Mobile devices. The launch was first reported as a rumor by TMoNews.

The companies said the no-contract service will have three plans:

$30 per month for unlimited voice and text
$45 per month for unlimited, voice and 2.5 GB of data at 3G speeds before throttling down to 2G speeds
$55 per month for unlimited, voice and 2.5 GB of HSPA+ speeds before throttling

All of the plans include unlimited international texting from the U.S. to select Latin American countries and more than 200 countries and destinations around the world. Additionally, they include 100 minutes per month to call mobile or landline numbers from the U.S. to Mexico, Colombia, the Dominican Republic, Peru, Venezuela, Panama, Costa Rica and Chile.

The plans also come with unique content, including Univision ringtones and wallpapers, sneak previews of new Univision shows and premieres and opportunities for behind-the-scenes VIP access to Univision events and television/radio personalities. Further, once the service is activated, users get access to a Univision Mobile "portal" that gives smartphone customers access to news, sports, and entertainment, as well as Univision apps, including UVideos and Uforia.

Gustavo Pena, T-Mobile's senior marketing manager for Univision Mobile, said through its market research the carrier had found that "the specific needs of Hispanic wireless consumers were not 100 percent met, and were not met in the most efficient and affordable way by other carriers and other brands."

Pena said one pain point is that more than half of all Hispanics in the U.S. called internationally in 2013, according to Nielsen, but most wireless carriers offer bolt-on international calling plans that are not included in the basic plan, or only include calls to landlines. That's why the Univision plan offers the 100 minutes per month in international calling, he said.

Additionally, Pena said Hispanic consumers are more driven by price points than other demographics and are very loyal to brands. That's why T-Mobile partnered with Univision, because the two saw in each other well-known brands that Hispanics would trust.

Univision is the largest media company serving the more than 56 million Hispanics in the U.S., and its flagship Univision station reaches 96 percent of all Hispanic households, according to Ignacio Meyer, Univision's senior vice president of enterprise development. The company has been working with T-Mobile for two years to conduct market research and develop the service.

Meyer noted that, according to Nielsen, nearly three out of four Latinos own smartphones (72 percent), which is nearly 10 percentage points higher than average in the United States, and 49 percent of Latinos say they plan to replace or upgrade their smartphone within the next six months. He also said they are twice as likely as the average American to share content on social media.

Pena added that while Univision does not think the Hispanic market has radically different communication needs than the general population, he noted that Hispanics are growing in influence, and that companies need to "cater to them specifically and speak to them in a culturally relevant way" since they are, on average, younger, have higher brand loyalty and use more social media.

Pena said that T-Mobile worked closely with Walmart to decide where to sell Univision Mobile and the stores would be not only in areas with large Hispanic populations, but also where T-Mobile had strong network coverage and where there was a local Univision station with good coverage as well.

Univision joins a handful of other major companies in partnering with T-Mobile to offer wireless service. Walmart Family Mobile launched on T-Mobile's network in 2010, and Target launched its Brightspot service on T-Mobile's network in 2013.

This also is not the first time T-Mobile has tried to attract the Hispanic market in the U.S. Last October the carrier launched a multi-year partnership with Shakira, the Grammy-winning singer from South America, by hosting a free concert in New York City's Bryant Park.

Since then, T-Mobile has raised awareness for her primary charity, The Barefoot Foundation, which helps build schools for communities in Latin America. Shakira appeared in an exclusive behind-the-scene video taken during a recent commercial shoot, and has appeared in a Spanish-language commercial touting T-Mobile's family plans. Additionally, more than 2,500 T-Mobile stores feature original creative content and a Shakira retail presence with items such as a Shakira wall mural, video content, point-of-sale and window displays.

Verizon Wireless (NYSE: VZ) last May also announced a plan to go after the Latino market, albeit in a much more indirect way. The company partnered with actress and singer Jennifer Lopez to create Viva Móvil, an authorized Verizon reseller. Verizon has no monetary involvement in Viva Móvil though; Lopez is the majority shareholder.

For more:
- see this release
- see this TMoNews article

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T-Mobile hitches brand to Shakira in hopes of drawing Latino market
Jennifer Lopez's Viva Móvil brand will launch 4 more stores in September
J.Lo, Verizon target Latino market with Viva Móvil-branded stores, online shopping
CTIA to leverage star power at next week's show - CTIA 2013

Read more about: Univision Mobile, MVNO
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By Mike Dano

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