Microsoft President Brad Smith was wrong claiming "Today 23.4 million Americans in rural areas still lack broadband internet access." The figures are from 2014. Since then probably half or more have been reached by AT&T or Verizon LTE. Each report 98% LTE coverage, with T-Mobile close. LTE speeds are higher than the proposed White Space radios.

He also was almost certainly wrong claiming White Spaces would be, "Over 50 percent cheaper than the cost of current fixed wireless technology like 4G." By almost any appropriate comparison, WS would be more expensive and slower than LTE. The Microsoft/BCG figure assumes that AT&T, Sprint, T-Mobile, and Verizon would not be part of an LTE rural plan. All four have massive amounts ofcompletely unused rural spectrum as well as existing facilities that would bring down the cost. (AT&T has 60 MHz of spectrum unused nationwide, enough to more than duplicate the entire Verizon network.) 

M/BCG instead assumes LTE would come from a new company New entrants might have high costs for spectrum and would need to be much more heavily subsidized than existing carriers.  

Their estimate for the cost of the LTE cell is based on a tower cell site sized for 300-1,000. They compare that with a WS radio sized for a few dozen at most. An LTE cell of similar size and capacity would be cheaper than the likely WS radios rather than many times more expensive. LTE gear is produced in billion quantities, a thousand times more than even an optimistic WS plan. This almost certainly will keep LTE gear less expensive.

Tessera patent case pushes dozens of Broadcom chips out of the country. U.S. could be next.  The German court upheld a Tessera patent "for smoothing the planes of semiconductor chips." The court ruling resulted in this notice on the Broadcom website:

With subsidies in sight, telcos reduce investment. There's no firm data, but the net result of the $7B broadband stimulus may have been fewer unserved homes connected. Since 2009, carrier investment in broadband in rural areas has gone down drastically.  Ajit Pai is moving forcefully on his plan to promote rural broadband, for which I applaud him. 

Takeaway: Pai wants to spend $billions to bring broadband to the unserved. Under current plans, most of the money is likely to go where telcos would build without a subsidy, buy obsolete technology, or give the telcos two or three times what the job should cost. Any spending on wireless except where towers or backhaul is unavailable should be assumed wasteful until proven otherwise.  Realistic costs need to be developed and subsidies allocated on that basis.

Pai is putting $4.5B on the table this week to bring 4G wireless to those they project won't be served without it. I believe Pai is honorable but is being misled by staffers and lobbyists. He proudly signed his name to a statement below that the $200M he approved for New York State would go to "the deployment of broadband infrastructure to unserved areas of rural New York." (Emphasis added.) Most of that money will not go to unserved areas.

Millions of dollars are being spent to persuade Ajit Pai FCC decisions on pole attachments, broadband paperwork, local regulations, neutrality and backhaul prices will "incent investments and more broadband deployment. I've listened to CTO's, CFO's and CEO's explaining investment strategy for nearly two decades. I'm convinced none of his policy proposals will have significant impact on actual investment or deployment. Pai can determine whether I'm right by making six phone calls and asking one question on each. Just call the CEOs or CFOs of AT&T, Charter, Comcast, Sprint, T-Mobile, & Verizon. They control 90% of mobile and 65% of landlines. 

Ask them, "If I make these changes, how much will you increase your capital spending and rural deployment?" Verizon made a point of telling Wall Street that despite the 5G build, they wouldn't increase capex in the coming years. Charter/Time Warner has said they will cut and I believe AT&T similar. Sprint has said they will not come close to their fiscal 2016 capex. Most of the remaining companies - Century, Frontier, Altice - are financially weaker and even less likely to invest.

Capital spending is mostly driven by technology change, competition, market demand, underlying financial problems, and equipment cost.

Sprint and T-Mobile should be laughed at if they claim their merger won't hurt competition. Craig Moffett is on target. The almost free offer "is an almost perfect affirmation that the current industry structure is serving customers very well indeed?  Sprint and T-Mobile have been test-running a narrative along the lines of 'if you think it’s competitive now, imagine what we could do if we merged.' Well, it’s hard to imagine that regulators will be tempted to imagine anything much better than giving away service for free (imagine!)."

The Sprint move is actually sensible because they have far more capacity most places than they can sell. They have ~60 MHz of spectrum unused in most of the U.S., enough to more than duplicate Verizon's network. They are going to Gig LTE in 2017, a doubling or tripling of capacity, and look to be the first to massive MIMO in the U.S., which is raising capacity 3X to 10X in Asia.

Markets don't capture externalities. Most of us understand that "the market" produces a pollution problem if unregulated. Utilities can save money burning dirty coal; the pollution cost falls on others. That's been a hard problem to solve for two decades. Telecom policy has many similar choices. 

If you believe that better mobile broadband is an important goal, you often can't expect even strong competition to deliver what's best. LTE gets 2x to 10x the capacity in the same spectrum, depending on how it's configured.  Allocating spectrum to 3G rather than 4G, as some countries still do, cuts the total bandwidth available. Choices like that are common in spectrum policy. Economists think of spectrum as a commons, where if everyone maximizes their own profits the overall system is a problem. 

I think this issue particularly important where there are few landlines, which is most of Africa and much of Latin America.