THE NAVIGANT REPORT – MORE FANTASY THAN FACT
This post is a message sent to the GSM Association on June 25, 2013 criticizing their publication and use of a commissioned report by Navigant Economics that presents a disturbingly misleading picture of the state of the mobile sector in the U.S. and its comparison with Europe.
Use and Impact of the Navigant Report
I have read the recently published report “Mobile Wireless Performance in the EU & US” commissioned by the GSM Association from Navigant Economics. I have seen how prominently it is featured on the GSMA web site. The report is also being frequently cited on both sides of the Atlantic to support specific policy and regulatory proposals. It is being presented as delivering supposedly credible evidence of the current respective states and performance of European and US mobile markets. The findings and analyses presented in the report are being actively exploited to influence the outcome of very important and controversial assessments of alternatives for future public policy and regulation in the mobile sector in both Europe and the U.S. The question of the validity of the report is therefore a matter of considerable interest and concern.
The Report is a Product of the U.S. Duopoly’s Fact-Averse Propaganda Machine
However regrettably and to my dismay the Navigant report is severely flawed. It presents a very lopsided and misleading view of the status of the mobile and indeed broadband market in the U.S. that is based on substantial errors of fact and notable omissions of critical evidence.
Although this report is not formally identified with Verizon and AT&T it largely reflects and reiterates the evidence-averse partisan positions and unfounded assertions of these two largest U.S. operators, translated to a European reference point. At the end of this message I suggest a way for the GSM Association – and its largest European members who are using this report to support their proposals – to extract itself from a vulnerable position in which reliance on a fundamentally incorrect and misleading report as one basis for its recommendations for new or modified regulations and public policies in European mobile markets exposes all who endorse its contents to formidable and effective attacks on their credibility.
I agree that there are improvements to be made in the performance and regulation of mobile markets in Europe. But the best models and lessons to follow can be found in examples within Europe itself. They are not to be found in the U.S. today or in the prescriptions being advanced by consultancies and academics primarily associated with the lobbying activities of AT&T and Verizon to praise their achievements and claim that only current regulations are inhibiting these two operators from performing even better.
The Navigant report does not provide a sound basis or objective fact-based analyses for productive debates about the best path forward for public policy and regulation in Europe. This debate should take account of and strive to achieve a reasonable balance between the interests of all key stakeholders including consumers, network operators, and other services providers as well as the public interests embodied in national and regional economic and social goals.
Examples of Unacceptable “Evidence”
The findings, misrepresentations and positions advocated in the Navigant report are depressingly familiar in the U.S. context. Verizon, AT&T and the consultants and academics they regularly commission to produce allegedly “independent” justifications of their claims regularly publish and pronounce statements and related assertions that should be unacceptable to most Europeans. The positions they take amount to equating a “free”, i.e. an effectively competitive market with complete freedom for the largest operators to do whatever they want and can do with their immense financial resources with no restraints, regardless of the incentives then available to them to act in ways that harm consumers and other competitors but benefit their own finances via oligopoly rents. As Oscar Wilde said, “I can resist anything except temptation.”
This well-financed propaganda machine in the U.S. mobile sector regularly ignores facts, evidence, logic, and commonsense. For example I reproduce in an atatchment a chart contained in a filing on June 17th to the FCC by the US trade association the CTIA (which is dominated by its two largest members) that presents the U.S. as the best in class in spectral efficiency. The Navigant report was attached to this filing by the CTIA to help support its claims of the global superiority of U.S. mobile performance and hence of its two largest operators (despite their having to contend with the obstacles allegedly put in their way by regulation). The simultaneous filings in the same FCC Docket by AT&T and Verizon also reference the Navigant report to support essentially the same claims.
The metric used in this very recent CTIA document is spurious and fatally flawed. I and others have demonstrated the inherently dishonest nature of this metric to the CTIA (and to Verizon and others who have used it in the past) on multiple occasions (see attached article). Their only response has been to ignore us completely and continue to present and update the metric in defiance of the underlying structure of cellular networks in which frequencies are shared only by the mobile subscribers within any one cell (of which there are about 300,000 in the U.S.) and not as the metric assumes by all the customers in a country or all of an operator’s subscribers in its entire footprint within a country.
I wonder what the reactions of Europeans, Asians and others would be if this metric purporting to show their remarkable relative engineering and operational incompetence compared to Americans were to be presented at the World Mobile Congress. On the other hand two countries left out of the CTIA table might be delighted, China in realizing, as the attached article shows, that according to this metric its mobile operators are several times more efficient in their use of spectrum than the U.S., and India to discover that it performs much, much better than Japan in this regard.
Specific Flaws in the Navigant Report
Several key points where the Navigant report is in error and distorts the facts are found in a presentation given at the ECTA conference in Brussels today (also attached). I concur with the contents of this presentation that confirm my own knowledge of the U.S. situation and include additional details on European markets of which I was not fully aware.
Furthermore the Navigant report makes no mention of the damaging impact and adverse consequences both nationally and internationally (e.g. for roaming) of non-interoperability in U.S. LTE networks. Verizon and AT&T are planning extensive expansion of non-interoperability in the near future. These two operators initiated this unnecessary and anti-competitive violation of principles, embodied in U.S. Communications Law for almost 80 years, after the conclusion of the 700 MHz digital dividend auction in the U.S. in 2008. The global 3GPP standards body was used surreptitiously in 2008 to introduce a carrier- specific band plan for the U.S. with no involvement of other key stakeholders including the FCC and other U.S. mobile operators.
Fortunately for competition elsewhere non-interoperability will be confined to the U.S. and most likely to Canada and to some Caribbean islands that must align their spectrum band plans with the U.S. Even Mexico the other large neighbor of the U.S. as well as the rest of Latin America will adopt an interoperable band plan for 700 MHz (the APT plan). a decision which I am glad to say the GSMA has welcomed.
Directions in the U.S. Market
The future of broadband (not just wireless or mobile) in the U.S. is not promising for consumers or for competition in light of current trends that first saw the abolition of a wholesale basis for competition in access network services. Then in 2012 there was a strong move towards the elimination of facilities-based competition as well, thanks to the development and marketing cartel formed last year by Verizon and four leading cable companies.
Absent both a reasonable wholesale regime and facilities-based rivalry there can be no effective competition. “No regulation is our representation” is the historically resonant (in the language of the American War of Independence) practical outcome being sought by AT&T and Verizon.
Conclusion and Recommendation
I have found and find the GSMA to be a source of very useful information and positive and creative thinking about the best uses of spectrum, that is a scarce publicly owned, inexhaustible and very valuable resource. There are very important contemporary issues of spectrum management, regulation, and rules of competition and consumer rights about which people of good faith can differ in reaching conclusions and formulating recommendations, since inevitably matters of judgment as well as of facts and evidence are involved. But the debates about and analyses of these issues should be conducted in good faith and with careful attention to finding and presenting the truth and the whole truth as best as any of us can define it.
I regret to say that the Navigant report, like the CTIA’s use of a spurious metric of spectrum efficiency does not qualify as a good faith analysis of a comparison of the EU and the U.S. or of the impact of alternative regulations and policies on the performance of mobile markets.
There are aspects of the U.S. environment and culture that may still offer useful lessons or indicators for Europeans – and vice versa. This is true for network services, although since the pioneering days of U.S. public policy and regulation in the last decades of the 20th century that inspired changes across the world too many choices in the U.S. since the turn of the century have been influenced by an ideology that confuses “free” markets with unfettered large corporations. This ideology views all regulations as inherently burdensome, unfair, and hostile to innovation.
Regrettably while many current regulations are damaging along one or more of these dimensions it is also true that the U.S.-led flowering of the internet would not have been possible without regulations governing the actions of large operators whose present day successors (Verizon and AT&T) are now trying to take us back to a future that will look more like the past. Their backward looking “future” will be characterized by a market run by an entrenched oligopoly instead of the creatively destructive dynamics that should be a central feature of the broadband and in mobile the LTE- and HSPA-dominated network landscape. Harvard Presidents conferring law degrees have been saying since the 1930s, “”You are ready to aid in the shaping and application of those wise restraints that make men free.” Similarly regulations are indispensable “wise restraints that make a market free.”
I among others would be happy to engage in an open, public, honest, fact-driven debate about the best path for European, U.S. and other geographies’ policy makers and regulators. It will be difficult to conduct this debate constructively if the GSMA and others offer as valuable and credible contributions to these discussions the glaring misrepresentations or obvious errors in the Navigant report – of both commission (what it says that is not so) and omission (the key facts it leaves out).
The GSM Association and any of its members that tout the Navigant report in support of their policy and regulatory initiatives are incurring a significant risk that they will be discredited despite all the useful and creative past and ongoing work being done by the GSMA in many other contexts, as the key content and arguments in this report are inevitably exposed as false and misleading.
My suggestion for avoiding this outcome before it becomes too late is that with all due respect the GSM Association should back off from or even withdraw the Navigant report. It should then collect and study all the relevant facts on the ground (or in the airwaves) and develop creative scenarios of the mobile future that can be presented as a credible, defensible, and constructive body of evidence and thought behind recommendations for policy and regulatory changes.
I would be happy to discuss the points I have raised and other related matters of fact and evidence with you and indeed with Navigant at your convenience.