Part II of a two-part series.
MMTC’s eleventh annual Access to Capital conference gave its attendees an opportunity to understand the implications of telecom market trends for consumers and entrepreneurs. The second day of the conference included the Internet Ecosystem panel, which featured a discussion on the challenges and opportunities for minorities in the Internet and mobile broadband space.
Panelists included AT&T’s Jim Cicconi, Senior Executive Vice President of External and Legislative Affairs, Dr. Anna-Maria Kovacs, Visiting Senior Policy Scholar from Georgetown University’s Center for Business and Public Policy, and T-Mobile’s Kathleen O’Brien Ham, Vice President, Federal Regulatory Affairs. MMTC Chair and NetCommunications President Hon. Julia Johnson moderated the discussion.
During the first portion of the panel session, Dr. Kovacs gave an insightful, data-rich presentation where she outlined three key factors that make minority communities ideal ground for investment (1) population growth (2) increasing buying power (3) and an increasingly better educated and a comparatively younger population. These demographic characteristics of minority communities coincide with sociological factors, namely the dominance of digital technology and this is where the opportunity lies.
Dr. Kovacs’ background (and predictions) on the opportunities for investment in communities of color provided context for the session. The policy discussion focused on the IP Transition and the spectrum auctions. The market conversation was more about the relationship between competition, affordability, and broadband access and use.
AT&T, T-Mobile and other telecom firms provide the services ecosystem that makes it possible for us to access the Internet and mobile broadband. This is why federal polices directed toward these firms impact everyone who uses communications services.
Ham said in her remarks that T-Mobile emphasizes affordability when it comes to providing unlimited data to its customers.
In general, there are two reasons telecom companies like AT&T and T-Mobile figure into policy discussions about opportunities and barriers for minorities in the Internet space: (1) an increasing number of communities of color are “cutting the cord” and (2) cost of services can be a prohibitive factor for use and adoption of broadband Internet (whether in the home or through mobile access).
The fact is that a growing number of American minority households have become “wireless-only.” In 2012, 51 percent of Hispanics lived in wireless-only households, as compared to 33 percent of whites.
Cicconi discussed the challenges associated with managing consumer costs. He said that consistent access to spectrum is the way that carriers like AT&T keep costs low.
Spectrum is the increasingly scarce primary resource used to provide wireless services. The consumer-side implications associated with spectrum shortage include a number of things. From the consumer’s perspective, it changes everything from the cost of service plans to range of services offered.
“We are trying to meet the need with 40 percent of the spectrum,” Cicconi said.
Throughout the entire session, each speaker discussed the future of the telecommunications market as well as opportunities on the horizon for communities of color.
At one point, Dr. Kovacs posed a question to her fellow panelists about the potential for entrepreneurship in the Internet and mobile broadband space. She asked panelists to discuss some of the practical changes that spring from people’s ability to access so much more information thanks to broadband, particularly when it comes to entrepreneurial opportunity.
AT&T representative Jim Cicconi responded that the bigger concern is about how we use broadband networks and technology to support economic opportunity across the board.
“For the minority community in particular, every study shows that minorities and low-income Americans depend disproportionately on wireless devices for Internet access, and so if we are to ensure that no one is left behind, we need to make sure that the capacity is there to deal with that demand and to continue to serve those people,” Cicconi stated.
On this point, Ham added, “Providing the low-cost or affordable option for all that great Internet access is going to trigger a lot of activity amongst our customer base, the majority of which is minority- and women-based. There are a number of offshoots from wireless activity; one is the content and app community in the Android and iOS world. We’re talking two million plus apps.”
Ham also discussed opportunities in the franchising of dealerships. This is the business model employed by MetroPCS, which recently merged with T-Mobile. “MetroPCS had a very successful model, which is why we merged with them. They had a model in which they went into urban communities and they set up franchises and hired people from those communities and were very successful in that business.”
Ham explained that MetroPCS will soon expand into markets that they could not have entered before primarily because they didn’t have spectrum in those markets. The leverage T-Mobile provides MetroPCS will also lead to more franchising opportunities, she said.
The conversations over the course of the session continued to evolve to include more discussion on the indirect benefits of competitive markets. The panelists’ comments suggested that when networks are competitive and people are afforded access, it paves the way for entrepreneurship.
One of the key points from the discussion on spectrum was that bringing more spectrum to the market is one way of improving competition. The panelists also said that upgrading the network infrastructure with ever more advanced technologies like wireless IP networks also affects competition.
Johnson asked panelists about the FCC’s Technology Advisory Committee recommendation from this June on transitioning the nation to an all IP network by 2018. In his response, Mr. Cicconi stated, “The IP Transition is inevitable. It is happening today. Across America, people are making these choices. Minority consumers are making those decisions and are opting disproportionately for wireless, for example.” He added, “We’ve gone very quickly from a nation where 99 percent of all Americans had a copper line voice phone in their homes, and that was their primary means of communication. Today, only a third do, so two-thirds of Americans have decided they no longer need this; it’s not relevant to them anymore. And the direction indicates that by the end of this year that the number may be as low as a quarter of all Americans.”
Cicconi ended his remarks on the subject by saying that the modernization of America’s communications network infrastructure is needed and necessary. He said that it is vital to all Americans and vital to our economic competitiveness going forward. Ham responded that “IP alternatives give people choices; it’s occurring across all segments. When a wireless phone competes against a cable VoIP connection, then we know that competition is there.” Ham noted that T-Mobile’s network is already all IP.
To view the panel discussion in its entirety, please access the video online. Dr. Anna-Maria Kovacs’ presentation can be accessed from the MMTC website. Photos taken of the panel are also available online.