tag:theconversation.com,2011:/global/topics/verizon-6983/articlesVerizon – The Conversation2022-06-14T12:30:08Ztag:theconversation.com,2011:article/1837882022-06-14T12:30:08Z2022-06-14T12:30:08ZTumblr’s enduring appeal reveals the potency of the web’s cultural memory<figure><img src="https://images.theconversation.com/files/468558/original/file-20220613-26-bds824.jpg?ixlib=rb-1.1.0&rect=172%2C29%2C4820%2C3270&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Since its inception in 2007, Tumblr has served as a countercultural hub.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/in-this-photo-illustration-the-tumblr-logo-seen-displayed-news-photo/1230550547?adppopup=true">Rafael Henrique/SOPA Images/LightRocket via Getty Images</a></span></figcaption></figure><p>When tech billionaire Elon Musk made a deal to <a href="https://www.npr.org/2022/04/25/1094671225/elon-musk-bought-twitter-plans">acquire Twitter in April 2022</a>, many Twitter users threatened to <a href="https://fortune.com/2022/04/27/twitter-mass-user-swings-musk-buyout-people-deleting-adding-accounts/">shut down their accounts</a> and migrate elsewhere online.</p>
<p>Tumblr – a microblogging platform launched in 2007 long known as a laboratory for <a href="https://psmag.com/social-justice/how-tumblr-taught-social-justice-to-a-generation-of-teenagers">social justice causes</a> and burgeoning fan cultures – became one contender. </p>
<p>However, many Twitter users proposing a migration to Tumblr seemed to be those <a href="https://twitter.com/BREAKDOWNMAMI/status/1518987368455356420">who had abandoned the site only a few years prior</a>.</p>
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<p>In 2018, Tumblr content deemed sexually explicit – or <a href="https://www.businessinsider.com/nsfw-means">NSFW</a> – was banned. The controversial policy led to a <a href="https://doi.org/10.1177%2F0163443720968461">mass exodus</a> from the site, the so-called <a href="https://www.tumblr.com/search/tumblr%20apocalypse">Tumblr apocalypse</a>.</p>
<p>Both as <a href="https://doi.org/10.1177%2F1461444821996715">a communication researcher</a> and early era user of Tumblr, I’ve contemplated the site’s unique place in internet culture. And in the years following the NSFW ban, I’ve seen many try to make sense of Tumblr as a platform on <a href="https://thehustle.co/01202022-tumblr/">the</a> <a href="https://www.insidehook.com/daily_brief/internet/could-euphoria-cause-tumblr-resurgence">cusp</a> <a href="https://www.theatlantic.com/technology/archive/2022/02/tumblr-internet-legacy-survival/621419/">of</a> <a href="https://qz.com/emails/quartz-company/2139456/tumblr-making-comeback/">a</a> <a href="https://www.mediaupdate.co.za/social/151662/the-comeback-of-tumblr-everything-you-need-to-know">comeback</a> or a vestige of <a href="https://studybreaks.com/tvfilm/tumblr-renaissance/">a</a> <a href="https://mashable.com/article/tumblr-adult-content-ban">bygone</a> <a href="https://mashable.com/article/tumblr-mistakes-tiktok-teen-creators">era</a>.</p>
<p>And yet, long overshadowed by social media platforms like Facebook and Snapchat, Tumblr continues to resist easy answers to what it is and could be.</p>
<h2>From ‘blue hellsite’ to hell in a handbasket</h2>
<p>Since its inception, Tumblr has served as a countercultural hub for women, queer folks, young people and marginalized communities. At the same time, it has long dealt with issues such as recurrent bugs and functionality problems, <a href="https://www.vice.com/en/article/3da838/an-attempted-suicide-forced-a-tumblr-community-to-open-its-eyes-about-bullying">bullying</a>, <a href="https://melmagazine.com/en-us/story/nazis-on-tumblr-are-attempting-to-make-white-supremacy-hip">hate speech</a> and <a href="https://www.theatlantic.com/technology/archive/2012/02/tumblr-has-cutting-and-anorexia-and-bulimia-problem/331358/">the glorification of self-harm</a>, leading some users to term it the “blue hellsite.” </p>
<p>In spite of that, Tumblr remains a home to art, fandom, memes and social critique. This is partly due to the flexibility of the main user interfaces. Both the individualized blogs and real-time feeds display an array of original and <a href="https://help.tumblr.com/hc/en-us/articles/231236387-Reblogs">re-blogged</a> media, ranging from written posts to videos. In allotting greater control over how users presented themselves online – through, for example, <a href="https://help.tumblr.com/hc/en-us/articles/115001572547-Getting-Started-on-Tumblr">pseudonymity</a> and relaxed content moderation – Tumblr stood out as a bastion for <a href="https://techcrunch.com/2011/02/21/founder-stories-why-david-karp-started-tumblr-blogs-dont-work-for-most-people/?guccounter=1">creative expression</a>.</p>
<p>This approach contributed to its <a href="https://www.statista.com/chart/1113/tumblrs-explosive-growth/">explosive growth</a>, which crested in <a href="https://financesonline.com/number-of-tumblr-blogs/">2013 and 2014</a> when Tumblr claimed <a href="https://www.cnet.com/tech/services-and-software/people-spend-more-time-on-tumblr-than-on-twitter-or-facebook-ceo-brags/">users spent more time on the site than Facebook and Twitter</a>. </p>
<figure class="align-center ">
<img alt="Two smiling men sit in front of a screen." src="https://images.theconversation.com/files/468556/original/file-20220613-24-76asy5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/468556/original/file-20220613-24-76asy5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=405&fit=crop&dpr=1 600w, https://images.theconversation.com/files/468556/original/file-20220613-24-76asy5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=405&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/468556/original/file-20220613-24-76asy5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=405&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/468556/original/file-20220613-24-76asy5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=510&fit=crop&dpr=1 754w, https://images.theconversation.com/files/468556/original/file-20220613-24-76asy5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=510&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/468556/original/file-20220613-24-76asy5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=510&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Tumblr founder David Karp meets with President Barack Obama in 2014 at a high point for the social media platform.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/president-barack-obama-speaks-during-an-event-on-the-news-photo/450398894?adppopup=true">Mandel Ngan/AFP via Getty Images</a></span>
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</figure>
<p>Such openness also facilitated the rise in NSFW content that became a core part of Tumblr’s identity. For the user base, access to queer, feminist and alternative representations of sex and sexuality was meaningful, leading to self-exploration and community building for vulnerable groups such as LGBTQ+ youth. And for those who produced their own NSFW content, Tumblr’s leniency <a href="https://jezebel.com/i-m-hoping-it-won-t-decimate-my-income-tumblrs-porn-ba-1830879496">meant</a> <a href="https://www.huffpost.com/entry/tumblr-sex-workers-nsfw-artists-lose_n_5c0714fbe4b0fc236111037e">income</a>. </p>
<p>The embrace of NSFW content – <a href="https://www.theverge.com/2018/12/5/18126451/tumblr-porn-social-media-ban">a rarity for social media platforms </a> – was even endorsed by its founder David Karp, who once characterized Tumblr as “<a href="https://www.wired.co.uk/article/tumbling-on-success">an excellent platform for porn</a>.” </p>
<p>In 2013, <a href="https://money.cnn.com/2013/05/20/technology/yahoo-buys-tumblr/index.html">after Yahoo acquired Tumblr</a>, there was concern that the platform would tighten its content policies. However, Yahoo CEO Marissa Mayer promised Tumblr users <a href="https://www.reuters.com/article/us-tumblr-yahoo-idUSBRE94I0C120130520">that little would change</a>.</p>
<p>Events that followed, however, would transform Tumblr.</p>
<p>First, in 2017, <a href="https://www.cnbc.com/2017/06/13/verizon-completes-yahoo-acquisition-marissa-mayer-resigns.html">Verizon Communications bought Yahoo</a>. Later that year, <a href="https://www.vox.com/2017/11/27/16706032/tumblr-david-karp-leaves-ceo-yahoo-oath">Karp left the company</a>. Then, in early 2018, a federal law called <a href="https://www.vox.com/culture/2018/4/13/17172762/fosta-sesta-backpage-230-internet-freedom">FOSTA-SESTA</a> passed, which made website operators like Verizon liable for sex trafficking or sex work carried out on their platforms. That November, Apple Store <a href="https://www.theverge.com/2018/11/20/18104366/tumblr-ios-app-child-pornography-removed-from-app-store">removed the Tumblr app</a> after child sexual abuse material was found on the site. Weeks later, Tumblr announced a ban on NSFW content that went into effect on Dec. 17, 2018.</p>
<p>But that same month, <a href="https://www.vox.com/the-goods/2018/12/4/18126112/tumblr-porn-ban-verizon-ad-goals-sex-work-fandom">Vox reported</a> that the NSFW ban was underway well before the Apple Store controversy. The objective: to sell more ads.</p>
<p>Tumblr’s various parent companies have long tried to monetize a platform <a href="https://www.nytimes.com/2012/07/15/magazine/can-tumblrs-david-karp-embrace-ads-without-selling-out.html">historically resistant to traditional advertising</a>. The ban became a way to attract companies hesitant to advertise alongside pornography. </p>
<p>This move was transparent to many Tumblr users, who claimed that Verizon was repackaging its profit motive as a crusade to protect children.</p>
<p><a href="https://doi.org/10.1177%2F1461444821996715">I’ve researched how</a>, in response to the NSFW ban, pockets of resistance emerged, ranging from <a href="https://logoffprotest.tumblr.com/post/181154543489/logoffprotest-logoffprotest-dbdspirit-the">boycotts</a> and <a href="https://www.change.org/p/tumblr-stop-the-december-17th-tumblr-nsfw-ban">petitions</a> to scathing critiques and <a href="https://www.dailydot.com/unclick/tumblr-dead-twitter-mourning-memes/">memes</a>. The policy, at its core, was a battleground for a deeper power struggle between platform owners and users. </p>
<p>The disconnect between how the two sides envisioned the platform ended up being mutually destructive. While Tumblr’s user culture was irreparably damaged, its corporate side also suffered, experiencing <a href="https://mashable.com/article/tumblr-lost-a-third-of-its-users-after-porn-ban">massive drops in site traffic</a>. In 2019, Verizon sold Tumblr to Wordpress’ owner, Automatic, for US$3 million – <a href="https://www.washingtonpost.com/technology/2019/08/13/tumblr-once-sold-billion-owner-wordpress-just-bought-site-fraction-that/">a fraction of the $1.1 billion Yahoo had paid for it</a>.</p>
<h2>The end or a new beginning?</h2>
<p>While <a href="https://studybreaks.com/tvfilm/tumblr-tag-ban/">clashes over site policy</a> persist to this day, I’ve started to see talk about Tumblr’s possible resurgence. </p>
<p>Even before Musk’s Twitter announcement, the platform seemed to be making strides in regaining public interest and relevancy.</p>
<p>There’s been the hype around the <a href="https://draculadaily.substack.com/about">Dracula Daily newsletter</a>, which <a href="https://theconversation.com/dracula-daily-reanimates-the-classic-vampire-novel-for-the-age-of-memes-and-snark-183084">percolated on Tumblr</a> in May 2022. Fan cultures for newer shows like “<a href="https://www.insidehook.com/daily_brief/internet/could-euphoria-cause-tumblr-resurgence">Euphoria</a>” and “<a href="https://www.tumblr.com/tagged/succession*?sort=top">Succession</a>” have also flourished on the site. And in meme culture, “<a href="https://www.vox.com/the-highlight/2019/12/11/20991671/memes-decade-doge-baby-yoda">Tumblr humor</a>” – typified by a dry, absurdist and self-deprecatory wit – continues to <a href="https://www.tiktok.com/@diseasedisorder/video/7092488402880318762">circulate</a> <a href="https://twitter.com/jelIyjar/status/1221846975437426689">widely</a> <a href="https://www.buzzfeed.com/hannahmarder/25-times-tumblr-was-ridiculously-weird-about-animals">online</a>. </p>
<p>But Tumblr’s “resurrection” seems to rely primarily on <a href="https://partner.studentbeans.com/blog/gen-z-trends/gen-zs-nostalgia/">a youth culture in the grips of nostalgia</a> for the early 2010s. What has been termed <a href="https://www.nylon.com/life/2014-tumblr-nostalgia-tiktok">Tumblrcore</a> – a 2010s subculture with a particular media taste, internet experience and soft grunge style – is a recent addition to the trend. Its renewed popularity was affirmed earlier this year with <a href="https://www.vogue.com/article/2014-tumblr-girl-aesthetic">Vogue’s coverage</a> of the “2014 Tumblr Girl aesthetic.” </p>
<p>Tumblr, then, like the <a href="https://www.theverge.com/2016/10/28/13456208/why-vine-died-twitter-shutdown">defunct video sharing platform Vine</a>, has become a touchpoint <a href="https://www.newyorker.com/culture/infinite-scroll/how-tumblr-became-popular-for-being-obsolete">for young people </a> who grew up on the internet and have emotional ties to its cultural history. As companies like <a href="https://www.businessinsider.in/home/facebook-wants-to-bring-back-young-adults-on-its-platform-but-they-say-theres-nothing-much-it-can-do-to-win-them/articleshow/90206539.cms#:%7E:text=It%20has%20lost%202.7%25%20of,been%20on%20a%20steady%20decline.">Facebook struggle</a> with the Gen Z demographic, Tumblr has, for some of them, emerged as an attractive “vintage” alternative – comparable to <a href="https://www.insidehook.com/article/internet/why-are-young-people-using-disposable-cameras">the return of disposable cameras</a> among young people. </p>
<h2>The TikTok roadblock</h2>
<p>But alongside these glimmers of regeneration, Tumblr faces two key obstacles.</p>
<p>The first is the ascent of TikTok. Though also <a href="https://www.tiktok.com/community-guidelines?lang=en">prohibiting NSFW content</a>, TikTok has imported many of Tumblr’s cultural features – from discourses around <a href="https://www.gaytimes.co.uk/originals/its-here-and-queer-how-tiktok-became-the-gen-z-tool-of-lgbtq-education/">sexuality</a> and <a href="https://www.marketingdive.com/news/tiktok-helps-gen-z-learn-about-social-justice-issues-study-finds/582916/">social justice</a> to the promotion of <a href="https://gritdaily.com/tiktok-eating-disorders/">pro-anorexia content</a> and <a href="https://youthopia.sg/read/cyberbullying-on-tiktok-is-a-major-issue/">bullying</a>. With TikTok as the beating heart of online youth culture, Tumblr is pushed further to its edges.</p>
<p>The second is Tumblr itself. While fighting to increase site traffic and <a href="https://www.dailydot.com/unclick/tumblr-monetization-post-fanfic/">earn ad revenue without driving users away</a>, the NSFW ban, like a vengeful spirit, continues to haunt Tumblr. One need only look at responses to <a href="https://twitter.com/tumblr/status/1518696182050004993">Tumblr’s</a> <a href="https://twitter.com/tumblr/status/1518727409213734912">tweets</a> in the wake of Musk’s acquisition announcement. Representing the loss of once-prized community values, the ban, for many, became an emblem of the broken <a href="https://www.basicbooks.com/titles/rebecca-mackinnon/consent-of-the-networked/9780465063758/">social contract</a> between users and ownership.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1518780382929297408"}"></div></p>
<p>And so contradictory forces shape Tumblr’s standing. On the one hand, the memory of Tumblr keeps it alive in popular culture. At the same time, the underbelly of this memory – the part consumed by unresolved wrongs and resentments – seems to stop short any growth that could lead to a true renaissance. </p>
<h2>Beyond platform ‘life’ and ‘death’</h2>
<p>The peculiar case of Tumblr shows how classifying platforms as dead, dying or alive can be limiting. Such a frame often operates according to a capitalist logic in which “growth” means life and “stagnation” signals death.</p>
<p>Dwelling somewhere in between surge and stasis, Tumblr serves as a reminder that platforms are not just profit-driven businesses but gathering places with rhythms and cycles of their own. They are also cultural artifacts that, in moving through the collective imagination, take on different shapes and functions. </p>
<p>Attention to the in-between reveals a more complex relationship between users, platforms and owners. It is here the savviness of social media users is on display. Though platform owners wield unilateral power and control, users are increasingly equipped with an arsenal of resistance tactics, including exodus or migration. The rise of this untethered user – one who takes a nomadic approach to digital life – may pose an unexpected threat to digital intermediaries. </p>
<p>Tumblr is a case in point. And yet, in its new phase of existence, it remains a vibrant space for communication, culture and laughs. Its home at the margins should instead push us to imagine an internet free from the belief that bigger is always better.</p><img src="https://counter.theconversation.com/content/183788/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeanna Sybert does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Despite a mass exodus of users in 2018, Tumblr continues to be a place that fosters fandom and subcultures. Now, Gen Zers searching for a dose of early-2010s internet nostalgia are signing up.Jeanna Sybert, Ph.D. Candidate in Communication, University of PennsylvaniaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1767812022-02-22T13:42:53Z2022-02-22T13:42:53ZWhat is 3G and why is it being shut down? An electrical engineer explains<figure><img src="https://images.theconversation.com/files/447377/original/file-20220218-19-1gyfpm0.jpg?ixlib=rb-1.1.0&rect=0%2C8%2C5887%2C3904&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The sun is setting on 3G networks.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/frted/50211584991/">Ted/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>On Feb. 22, 2022, AT&T <a href="https://www.fcc.gov/consumers/guides/plan-ahead-phase-out-3g-cellular-networks-and-service">is scheduled to turn off</a> its 3G cellular network. T-Mobile is scheduled to turn its off on July 1, 2022, and Verizon is slated to follow suit on Dec. 31, 2022.</p>
<p>The vast majority of cellphones in service operate on 4G/LTE networks, and the world has begun the transition to 5G, but <a href="https://www.latimes.com/business/story/2021-11-05/column-5g-wireless-transition">as many as 10 million phones</a> in the U.S. still rely on 3G service. In addition, the cellular network functions of <a href="https://www.vox.com/recode/22912235/3g-shutting-down-att-verizon-tmobile">some older devices</a> like Kindles, iPads and Chromebooks are tied to 3G networks. Similarly, some older internet-connected systems like home security, car navigation and entertainment systems, and solar panel modems are 3G-specific. Consumers will need to <a href="https://www.vox.com/recode/22912235/3g-shutting-down-att-verizon-tmobile">upgrade or replace</a> these systems.</p>
<p>So why are the telecommunications carriers turning off their 3G networks? As an electrical engineer who <a href="http://www.ece.tufts.edu/%7Emaivu/">studies wireless communications</a>, I can explain. The answer begins with the difference between 3G and later technologies such as 4G/LTE and 5G.</p>
<p>Picture a family trip. Your spouse is on the phone arranging activities to do at the destination, your teenage daughter is streaming music and chatting with her friends on her phone, and her younger sibling is playing an online game with his friends. All those separate conversations and data streams are communicated over the cellular network, seemingly simultaneously. You probably take this for granted, but have you ever wondered how the cellular system can handle all those activities at the same time, from the same car?</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/447385/original/file-20220219-7720-1sa1ix3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Three children in the backseat of a car use tablet devices" src="https://images.theconversation.com/files/447385/original/file-20220219-7720-1sa1ix3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/447385/original/file-20220219-7720-1sa1ix3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/447385/original/file-20220219-7720-1sa1ix3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/447385/original/file-20220219-7720-1sa1ix3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/447385/original/file-20220219-7720-1sa1ix3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/447385/original/file-20220219-7720-1sa1ix3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/447385/original/file-20220219-7720-1sa1ix3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">How does it work when everyone in your car is using cellular voice and data service at the same time, and so are many of the people in the cars around you?</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/siblings-using-digital-tablet-in-back-seat-of-car-royalty-free-image/1297084394">The Good Brigade/DigitalVision via Getty Images</a></span>
</figcaption>
</figure>
<h2>Communicating all those messages</h2>
<p>The answer is a technological trick called <a href="https://www.electronicdesign.com/technologies/communications/article/21802209/electronic-design-fundamentals-of-communications-access-technologies-fdma-tdma-cdma-ofdma-and-sdma#%E2%80%9DOFDMA%E2%80%9D">multiple access</a>. Imagine using a sheet of paper to write messages to 100 different friends, one private message for each person. The multiple access technology used in 3G networks is like writing every message to each of your friends using the whole sheet of paper, so all the messages are written on top of each other. But you have a special set of pens with different colors that allows you to write each message in a unique color, and each of your friends has a special pair of glasses that reveals only the color intended for that person.</p>
<p>However, the number of colored pens is fixed, so if you want to send messages to more people than the number of colored pens you have, you will need to start mixing colors. Now when a friend applies their special lenses, they will see a little bit of the messages to other friends. They won’t see enough to read the other messages, but the overlap might be enough to blur the message intended for them, making it harder to read.</p>
<p>The multiple access technology used by 3G networks is called Code Division Multiple Access, or CDMA. It was invented by Qualcomm founder <a href="https://www.invent.org/inductees/irwin-mark-jacobs#:%7E:text=NIHF%20Inductee%20Irwin%20Mark%20Jacobs%20Invented%20CDMA%20Technology">Irwin M. Jacobs</a> with several other prominent electrical engineers. The technique is based on the concept of spread spectrum, an idea that can be <a href="https://www.americanscientist.org/article/random-paths-to-frequency-hopping">traced back to the early 20th century</a>. Jacobs’ <a href="https://ieeexplore.ieee.org/abstract/document/289411?casa_token=F0fopuxled0AAAAA:fRxNKBHn6n4t6jdDbfwCFJ26gXM_DxKH8QMzJMdWUwgh4_oGcEFf9Y6MgqSqmzU9Rxn_Eyzc9A">1991 paper</a> showed that CDMA can increase the cellular capacity manyfold over systems at the time.</p>
<p>CDMA lets all cellular users send and receive their signals at all times and over all frequencies. So if 100 users wish to initiate a call or use a cell service at around the same time, their 100 signals will overlap with each other over the entire cellular spectrum for the whole time they communicate.</p>
<p>The overlapping signals create interference. CDMA solves the interference problem by letting each user have a unique signature: a code sequence that can be used to recover each user’s signal. The code corresponds to the color in our paper analogy. If there are too many users on the system at the same time, the codes can overlap. This leads to interference, which gets worse as the number of users increases.</p>
<h2>Slices of time and spectrum</h2>
<p>Instead of allowing users to share the entire cellular spectrum at all times, other multiple access techniques divide access by time or frequency. Division over time creates time slots. Each connection can last over multiple time slots spread out in time, but each time slot is so short – a matter of milliseconds – that the cellphone user doesn’t perceive the interruptions from alternating time slots. The connection appears to be continuous. This time slicing technique is time-division multiple access (TDMA).</p>
<p>The division can also be done in frequency. Each connection is given its own frequency band within the cellular spectrum, and the connection is continuous for its duration. This frequency slicing technique is frequency division multiple access (FDMA).</p>
<p>In our paper analogy, FDMA and TDMA are like dividing the paper into 100 strips in either dimension and writing each private message on one strip. FDMA would be, for example, horizontal strips, and TDMA would be vertical strips. With individual strips, all messages are separated.</p>
<p>4G/LTE and 5G networks use Orthogonal Frequency Division Multiple Access (OFDMA), a highly efficient combination of FDMA and TDMA. In the paper analogy, OFDMA is like drawing strips along both dimensions, dividing the whole paper into many squares, and assigning each user a different set of squares according to their data need.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/447363/original/file-20220218-49929-6p63vs.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="a graph in four parts, two showing stripes, one showing layers and another showing squares" src="https://images.theconversation.com/files/447363/original/file-20220218-49929-6p63vs.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/447363/original/file-20220218-49929-6p63vs.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=298&fit=crop&dpr=1 600w, https://images.theconversation.com/files/447363/original/file-20220218-49929-6p63vs.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=298&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/447363/original/file-20220218-49929-6p63vs.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=298&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/447363/original/file-20220218-49929-6p63vs.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=374&fit=crop&dpr=1 754w, https://images.theconversation.com/files/447363/original/file-20220218-49929-6p63vs.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=374&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/447363/original/file-20220218-49929-6p63vs.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=374&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Different techniques for sharing access to wireless network resources.</span>
<span class="attribution"><a class="source" href="https://www.mdpi.com/1099-4300/21/3/273/htm">Entropy 2019, 21(3), 273</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<h2>End of the line for 3G</h2>
<p>Now you have a basic understanding of the difference between 3G and the later 4G/LTE and 5G. You might still reasonably ask why 3G needs to be shut down. It turns out that because of those differences in the access technology, the two networks are built using completely different equipment and algorithms. </p>
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<p>3G handsets and base stations operate on a wideband system, meaning they use the whole cellular spectrum. 4G/LTE and 5G operate on narrowband or multi-carrier systems, which use slices of the spectrum. These two systems need completely different sets of hardware, from the antenna on the cell tower down to the components in your phone. </p>
<p>So if your phone is a 3G phone, it cannot connect to a 4G/LTE or 5G tower. For a long while, the cellular service providers have been keeping their 3G networks going while building a completely separate network with new tower equipment and servicing new handsets using 4G/LTE and 5G. Imagine bearing the cost of operating two separate networks at the same time for the same purpose. Eventually, one has to go. And now, as the carriers are starting to deploy 5G systems in earnest, that time has come for 3G.</p><img src="https://counter.theconversation.com/content/176781/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mai Vu receives funding from National Science Foundation. </span></em></p>As the wireless telecommunications companies ramp up their 5G rollouts, they are beginning to pull the plug on their 3G networks. 2022 is the end of the line for the venerable cellphone service.Mai Vu, Associate Professor of Electrical and Computer Engineering, Tufts UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1753062022-01-25T13:28:14Z2022-01-25T13:28:14ZHow 5G puts airplanes at risk – an electrical engineer explains<figure><img src="https://images.theconversation.com/files/442368/original/file-20220124-13-p8az99.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C1563%2C875&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The FAA raised concerns that new, full-speed 5G cellphone services near airports could interfere with aircraft operations.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/44073224@N04/28345407183/">Bernal Saborio/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>New high-speed cellphone services have raised concerns of interference with aircraft operations, particularly as aircraft are landing at airports. The Federal Aviation Administration has <a href="https://www.faa.gov/5g">assured Americans that most commercial aircraft are safe</a>, and AT&T and Verizon have agreed to <a href="https://www.npr.org/2022/01/18/1073859389/verizon-att-5g-rollout-delay-airports-airlines-faa">hold off on installing their new cellphone antennas</a> near airports for six months. But the problem has not been entirely resolved.</p>
<p>Concerns began when the U.S. government <a href="https://docs.fcc.gov/public/attachments/DOC-370267A1.pdf">auctioned</a> part of the <a href="https://www.cnn.com/2022/01/19/tech/c-band-5g-att-verizon-rollout/index.html">C-band spectrum</a> to wireless carriers in 2021 for US$81 billion. The carriers are using C-band spectrum to <a href="https://theconversation.com/what-is-5g-an-electrical-engineer-explains-173196">provide 5G</a> service at full speed, 10 times the speed of 4G networks.</p>
<p>The C-band spectrum is close to the frequencies used by key electronics that aircraft rely on to land safely. Here’s why that can be a problem.</p>
<h2>Keeping order on the spectrum</h2>
<p>Wireless signals are carried by radio waves. The radio spectrum ranges from 3 hertz to 3,000 gigahertz and is part of the electromagnetic spectrum. The portion of the radio spectrum that carries the signals from your phone and other wireless devices is <a href="https://www.ctia.org/news/what-is-spectrum-a-brief-explainer">20 kilohertz to 300 gigahertz</a>.</p>
<p>If two wireless signals in the same area use the same frequency, you get garbled noise. You hear this when you are midway between two radio stations using the same or similar frequency bands to send their information. The signals get garbled and sometimes you hear one station, at other times the other, all mixed with a healthy dose of noise. </p>
<p>Therefore, in the U.S., the use of these frequency bands is tightly regulated by the Federal Communications Commission to ensure that radio stations, wireless carriers and other organizations are assigned “lanes,” or frequency spectra, to use in an orderly fashion.</p>
<h2>Bouncing radio waves off the ground</h2>
<p>Modern airplanes use altimeters, which calculate the time it takes for a signal to bounce back from the ground to determine a plane’s altitude. These altimeters are a vital part of automatic landing systems that are especially useful in cases where there is low visibility. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/442379/original/file-20220124-23335-w6fct0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A hand on an aircraft yoke in front of a multicolor display panel" src="https://images.theconversation.com/files/442379/original/file-20220124-23335-w6fct0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/442379/original/file-20220124-23335-w6fct0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=385&fit=crop&dpr=1 600w, https://images.theconversation.com/files/442379/original/file-20220124-23335-w6fct0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=385&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/442379/original/file-20220124-23335-w6fct0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=385&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/442379/original/file-20220124-23335-w6fct0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=484&fit=crop&dpr=1 754w, https://images.theconversation.com/files/442379/original/file-20220124-23335-w6fct0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=484&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/442379/original/file-20220124-23335-w6fct0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=484&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The radio altimeter in an aircraft tells the pilot how far off the ground the aircraft is.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/AustraliaMalaysiaPlane/6fb7b6c1d681451e988f5f9efad4205b/photo">AP Photo/Rob Griffith</a></span>
</figcaption>
</figure>
<p>So, if an altimeter interprets a signal from a wireless carrier as the rebounded signal from the ground, it may think that the ground is closer than it is and prematurely try to lower the landing gear and do the other maneuvers that are needed to land an aircraft. If interference with wireless carrier signals corrupts and garbles the altimeter’s radio signals, the altimeter may not recognize the rebounded signal and thus be unable to figure out how close to the ground the plane is.</p>
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<p>The portions of the radio frequency spectrum used by airplanes and cellphone carriers are different. The problem is that airplane altimeters use the 4.2 to 4.4 gigahertz range, while the recently sold – and previously unused – C-band spectrum for wireless carriers ranges from 3.7 to 3.98 gigahertz. It turns out the 0.22 gigahertz difference between the signals may not be quite enough to be absolutely sure that a cellphone carrier signal will not be mistaken for or corrupt an altimeter’s signal.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/442380/original/file-20220124-27-n2x6kx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Four vertical rectangular devices mounted on the corner of a roof of a building with a church spire in the background" src="https://images.theconversation.com/files/442380/original/file-20220124-27-n2x6kx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/442380/original/file-20220124-27-n2x6kx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/442380/original/file-20220124-27-n2x6kx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/442380/original/file-20220124-27-n2x6kx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/442380/original/file-20220124-27-n2x6kx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=499&fit=crop&dpr=1 754w, https://images.theconversation.com/files/442380/original/file-20220124-27-n2x6kx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=499&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/442380/original/file-20220124-27-n2x6kx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=499&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Full-speed 5G signals like those in services that wireless carriers are currently rolling out might interfere with aircraft altimeters.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/VirusOutbreak5GConspiracyTheories/71c36ff2fca14b4baf1ee83fda44af00/photo">AP Photo/Alastair Grant</a></span>
</figcaption>
</figure>
<h2>Steering clear of trouble – for now</h2>
<p>The telecommunication industry has argued that the gap of 0.22 gigahertz is enough and <a href="https://apnews.com/article/why-are-airlines-worried-about-5g-f908b6eff8551b580dfd111029c5be2d">there will be no interference</a>. The airline industry has been <a href="https://www.npr.org/2022/01/07/1071409710/airlines-are-concerned-5g-wireless-service-may-affect-the-ability-to-land-planes">more cautious</a>. Even if the risk is very small, I believe the consequences of a plane crash are enormous.</p>
<p>Who is correct? The chances of such interference are very small, but the truth is that there isn’t much data to say that such interference will never happen. Whether there will be interference depends on the receivers in the altimeters and their sensitivity. In my view, there is no way to ensure that such stray interfering signals will never reach altimeters. </p>
<p>If the altimeters can register the stray signals as noise and filter them out, then they can function correctly. Upgrading aircraft altimeters <a href="https://www.cnn.com/2022/01/22/tech/5g-airlines-crisis-what-happened/index.html">is a costly proposition</a>, however, and it’s not clear who would pay the cost.</p>
<p>The FAA has been testing altimeters and <a href="https://arstechnica.com/tech-policy/2022/01/airline-ceos-make-u-turn-now-say-5g-isnt-a-big-problem-for-altimeters/">clearing ones that can be relied on</a> in the near future. AT&T and Verizon have agreed to not put up 5G transmitters and receivers near the 50 largest airports for six months while a solution is being worked out. This has averted a major crisis in the near term, but it isn’t a permanent solution. </p>
<p>Moreover, regional airlines and rural airports <a href="https://www.cnn.com/2022/01/20/business/faa-5g-airliner-approvals/index.html">remain at risk of interference</a>.</p><img src="https://counter.theconversation.com/content/175306/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Prasenjit Mitra works with Remcom Inc. He does not receive any funding from them. </span></em></p>Airplanes use radio waves to determine how far off the ground they are. New 5G cellphone services come close to the same frequencies the airplanes use. Here’s how that can be a problem.Prasenjit Mitra, Professor of Information Sciences and Technology, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1261702019-11-14T18:27:52Z2019-11-14T18:27:52ZCities and states take up the battle for an open internet<figure><img src="https://images.theconversation.com/files/301382/original/file-20191112-178520-1dalirv.jpg?ixlib=rb-1.1.0&rect=53%2C0%2C6000%2C3997&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Communities across the U.S. are taking network construction into their own hands.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/concept-network-troubleshoot-supporter-administrator-internet-507379189">T.Dallas/Shutterstock.com</a></span></figcaption></figure><p>Internet service providers like Comcast and Verizon are <a href="https://www.cadc.uscourts.gov/internet/opinions.nsf/FA43C305E2B9A35485258486004F6D0F/%24file/18-1051-1808766.pdf">free to slow down, block or prioritize internet traffic</a> as they wish, without interference by the federal government. That’s the effect of an October ruling by the D.C. Circuit Court of Appeals, <a href="https://www.fcc.gov/document/fcc-releases-restoring-internet-freedom-order">upholding a 2017 ruling by the Federal Communications Commission</a> that reversed rules requiring what is called “<a href="https://theconversation.com/understanding-net-neutrality-10-essential-reads-71848">net neutrality</a>” – treating all internet traffic equally, regardless of where it’s from or what kind of data it is.</p>
<p>Giving corporate telecom giants this power is <a href="http://www.publicconsultation.org/united-states/overwhelming-bipartisan-majority-opposes-repealing-net-neutrality">wildly unpopular among the American people</a>, who know that these companies have <a href="https://www.engadget.com/2016/12/02/fcc-accuses-atandt-and-verizon-of-violating-net-neutrality/">overcharged customers</a> and <a href="https://www.freepress.net/our-response/expert-analysis/explainers/net-neutrality-violations-brief-history">interfered with users’ internet access</a> in the past. </p>
<p>However, people who advocate for an open internet, free of corporate roadblocks, might find solace in another aspect of the court’s ruling: States and local governments may be able to mandate <a href="https://qz.com/1721633/us-net-neutralitys-crushing-defeat-this-week-may-end-up-saving-it/">their own net neutrality rules</a>.</p>
<h2>The effort is underway</h2>
<p>Governors in six states – Hawaii, Montana, New Jersey, New York, Rhode Island and Vermont – have already signed executive orders enforcing net neutrality by prohibiting state agencies from doing business with internet service providers that limit customers’ online access. Four states have passed their own laws <a href="http://www.ncsl.org/research/telecommunications-and-information-technology/net-neutrality-legislation-in-states.aspx">requiring internet companies to treat all online content equally</a>: California, Oregon, Washington and Vermont. A <a href="https://www.governing.com/news/headlines/GT-New-Hampshire-Bill-Will-Allow-Multi-Town-Broadband-System.html">New Hampshire bill</a> is in the works.</p>
<p><a href="https://www.freepress.net/news/press-releases/more-100-mayors-sign-pledge-protect-open-internet-fccs-net-neutrality-repeal">More than 100 mayors</a> representing both large urban centers such as San Francisco and small cities such as Edmond, Oklahoma, have pledged not to sign contracts with internet service providers that violate net neutrality. </p>
<p>These mayors are leveraging the lucrative contracts that their municipalities have with internet providers to wire public schools, libraries and local government buildings to pressure these companies into observing net neutrality throughout the city.</p>
<p>The emerging patchwork of local- and state-level net neutrality legislation could help ensure that millions of Americans have access to an open internet. However, people living outside of these enclaves will still be vulnerable to the whims of for-profit internet service providers. In our new book, “<a href="https://yalebooks.yale.edu/book/9780300241402/after-net-neutrality">After Net Neutrality: A New Deal for the Digital Age</a>,” we argue that the best way to protect the public interest is to remove internet service from the commercial market and treat broadband as a public utility.</p>
<p><iframe id="KXdlE" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/KXdlE/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Corporations focus on profits</h2>
<p>Broadband giants have spent <a href="https://www.opensecrets.org/news/issues/net_neutrality/">millions of dollars</a> lobbying against federal open internet regulations since 2006. Industry-backed efforts even included funding a network of far-right online trolls <a href="https://www.buzzfeednews.com/article/jsvine/net-neutrality-fcc-fake-comments-impersonation">to spam the FCC’s website</a> with anti-net neutrality propaganda. These companies continue to want the <a href="https://www.bloomberg.com/news/articles/2018-09-04/youtube-and-netflix-throttled-by-carriers-research-finds">power to manipulate online traffic</a>, such as charging users and content providers like Netflix <a href="https://techcrunch.com/2014/03/20/netflix-blasts-isps-calls-for-strong-net-neutrality-and-explains-why-it-pays-comcast/">to access each other</a> – even though both are already paying for connections to the internet.</p>
<p>This history of manipulation highlights a recurring challenge to the ideal of net neutrality: Governments seek to reconcile the public’s interest in open, nondiscriminatory online communication with the profit interests of large internet service providers. The resulting policies only narrowly target corporations’ manipulative practices, while letting the companies continue to own and control the physical network itself.</p>
<h2>Cities build their own</h2>
<p>A different vision of how the internet could operate is already taking shape across the United States. In recent years, many cities and towns around the country have <a href="https://muninetworks.org/communitymap">built their own broadband networks</a>. These communities are often seeking to provide affordable high-speed internet service to neighborhoods that the for-profit network providers aren’t adequately serving.</p>
<p>One of the best-known efforts is in the city of <a href="https://www.thenation.com/article/chattanooga-was-a-typical-post-industrial-city-then-it-began-offering-municipal-broadband/">Chattanooga, Tennessee</a>, which built its own high-speed fiber-optic internet network in 2009. </p>
<p>Chattanooga’s experiment has been an unequivocal success: According to <a href="https://www.vice.com/en_us/article/ne5k5m/consumer-reports-broadband-company-ratings">a 2018 survey</a> conducted by Consumer Reports, Chattanooga’s municipal broadband network is the top-rated internet provider in the entire U.S. </p>
<p>More than <a href="https://muninetworks.org/communitymap">500 other communities</a> around the country operate publicly owned internet networks. In general, these networks are <a href="https://cyber.harvard.edu/publications/2018/01/communityfiber">cheaper, faster and more transparent in their pricing</a> than their private sector counterparts, despite lacking Comcast and Verizon’s gigantic economies of scale. Because the people operating municipal broadband networks serve communities rather than large shareholders on Wall Street, they have a vested interest in respecting net neutrality principles.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/301571/original/file-20191113-77326-13rw9zc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/301571/original/file-20191113-77326-13rw9zc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/301571/original/file-20191113-77326-13rw9zc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/301571/original/file-20191113-77326-13rw9zc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/301571/original/file-20191113-77326-13rw9zc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/301571/original/file-20191113-77326-13rw9zc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/301571/original/file-20191113-77326-13rw9zc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/301571/original/file-20191113-77326-13rw9zc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The city of Chattanooga has connected its residents and businesses with a municipally owned high-speed internet network.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/aerial-chattanooga-tennessee-tn-skyline-1173602353">Kevin Ruck/Shutterstock.com</a></span>
</figcaption>
</figure>
<h2>Thinking bigger</h2>
<p>A number of much larger-scale public broadband initiatives have also been proposed to combat the power of the giant internet companies. In the 2018 election cycle, Democratic gubernatorial candidates from <a href="https://www.thenation.com/article/could-vermont-become-the-first-state-with-universal-broadband/">Vermont</a> and <a href="https://www.thedailybeast.com/one-democrats-bold-plan-to-win-back-rural-trump-voters-cheap-internet">Michigan</a> proposed building publicly owned statewide internet networks. </p>
<p><a href="https://www.ledgertranscript.com/What-presidential-candidates-are-saying-in-their-broadband-proposals-27938409">Several Democratic presidential candidates</a> have announced plans to build <a href="https://www.benton.org/blog/2020-candidates-offer-plans-extend-reach-broadband">thousands of miles of publicly owned high-speed internet</a> connections. They vary in the details, but all are responses to the concentration of corporate control over internet access – both in terms of who gets high-speed service in what locations at what price, and what content those connections carry. </p>
<p>Together, these initiatives reflect a growing understanding that Americans need a more expansive vision of an open internet to truly realize the <a href="https://www.eff.org/cyberspace-independence">democratic promise of an internet that reaches everyone</a>. </p>
<p>High-quality, affordable, restriction-free internet access can come from publicly owned providers that answer directly to the people. In our view, and in the eyes of a growing number of Americans, the broadband industry uses its entrenched market power to serve itself, not the public.</p>
<p>[ <em><a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=expertise">Expertise in your inbox. Sign up for The Conversation’s newsletter and get a digest of academic takes on today’s news, every day.</a></em> ]</p><img src="https://counter.theconversation.com/content/126170/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Victor Pickard is a board member of the media reform organization Free Press. </span></em></p><p class="fine-print"><em><span>David Elliot Berman does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A recent federal court ruling lets big telecom companies censor the internet in ways that boost their own profits – but also allows local and state governments to outlaw censorship if they wish.David Elliot Berman, Ph.D. Candidate in Communication, University of PennsylvaniaVictor Pickard, Associate Professor of Communication, University of PennsylvaniaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/660142016-09-30T19:12:58Z2016-09-30T19:12:58ZWhy did Yahoo take so long to disclose its massive security breach?<figure><img src="https://images.theconversation.com/files/139927/original/image-20160930-8030-9vsk7p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Need you announce you've been hacked? The clock is ticking.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-321319685.html">Woman with clock and megaphone via shutterstock.com</a></span></figcaption></figure><p>In late September, Yahoo announced that <a href="https://yahoo.tumblr.com/post/150781911849/an-important-message-about-yahoo-user-security">at least 500 million user accounts had been compromised</a>. The data stolen included users’ names, email addresses, telephone numbers, dates of birth and encrypted passwords, but not credit card data. Large data breaches have become increasingly common: Just in 2016 we have found out about Yahoo’s breach as well as the <a href="https://thehackernews.com/2016/05/linkedin-account-hack.html">LinkedIn hack</a> (compromising 167 million accounts) and the <a href="http://www.usatoday.com/story/tech/2016/05/31/360-million-myspace-accounts-breached/85183200/">MySpace breach</a> (360 million accounts).</p>
<p>The Yahoo breach affected more users than the other two, but all of them share a crucial element: They were announced to the public <a href="http://www.zdnet.com/article/the-hidden-breach-is-the-new-enemy/">years after the fact</a>. The <a href="http://www.computerworld.com/article/3077478/security/linkedin-s-disturbing-breach-notice.html">LinkedIn hack happened in 2012</a>, <a href="https://www.wired.com/2016/05/hack-brief-old-myspace-account-just-came-back-haunt/">MySpace was breached in 2013</a> and Yahoo was hacked in 2014. Not until 2016 did users of the three sites found out their information had been stolen.</p>
<p>When personal information is stolen, rapid response is important. Customers need to change their passwords, and take other steps to protect their identity, including securing bank accounts and credit records. If people don’t know a breach has occurred and that they need to take these protective steps, they remain vulnerable.</p>
<p>So why does it take such a long time for companies to disclose that they have been hacked? It’s not as simple as you might think – or hope.</p>
<h2>Time is a key factor</h2>
<p>It’s not yet clear when Yahoo learned about its attack, though in this case the timing is questionable. A news article published on August 1 quoted <a href="https://motherboard.vice.com/read/yahoo-supposed-data-breach-200-million-credentials-dark-web">a company spokesperson saying Yahoo was “aware” a hacker was selling</a> login details for 200 million Yahoo accounts in an online black market.</p>
<p>But more than a month later, the company filed a document with U.S. financial regulators <a href="http://fortune.com/2016/09/23/yahoo-data-breach-government/">saying it didn’t know</a> of any claims of “unauthorized access” that might have an effect on its <a href="http://www.nytimes.com/2016/07/25/business/yahoo-sale.html">pending sale to Verizon</a>. And Verizon said publicly that it had heard about the breach <a href="http://money.cnn.com/2016/09/22/technology/verizon-yahoo-data-breach/">only two days before</a> Yahoo announced it to the world.</p>
<p>All those events, of course, were years after the breach had actually happened. This is an uncommonly long delay. According to a recent report from network security firm FireEye, in 2015 the median amount of time an <a href="https://www2.fireeye.com/rs/848-DID-242/images/Mtrends2016.pdf">organization’s network was compromised before the breach was discovered</a> was 146 days.</p>
<p>That includes all sizes of companies in all types of business. As a major internet company with an extremely large user base, it’s reasonable to expect Yahoo might detect – and disclose – breaches much sooner than other firms.</p>
<h2>Detecting, and confirming, the hack</h2>
<p>The company has said it believes the attack was conducted by a national government, though it hasn’t said from what country. That may suggest the attack was more sophisticated, and therefore harder to detect – but <a href="http://www.wsj.com/articles/yahoo-hackers-were-criminals-rather-than-state-sponsored-security-firm-says-1475081065">it’s impossible to know if that’s true</a>, because the company has declined to offer details of how the breach was achieved. </p>
<p>In addition, anyone on the internet can claim anything they want – <a href="http://www.zdnet.com/article/the-target-breach-two-years-later/">companies have to investigate their systems</a> to find out whether someone who is advertising they have login information for sale actually took anything, or is just making it up to cause trouble.</p>
<p>Nontechnical reasons that Yahoo took so long to discover the hack could include frequent <a href="http://www.zdnet.com/article/yahoo-hires-new-ciso-now-the-third-exec-in-role-in-6-months/">changes in leadership</a> of its security team and the companywide stress of finding a buyer.</p>
<h2>Notifying the public</h2>
<p>Once a company has learned it has been hacked, it’s important to tell customers – and the public – so that people can take proper measures to protect their information, privacy and identities. </p>
<p>At present there is no federal law regarding when companies must tell the public about information security breaches. In 2015, Democrats <a href="https://www.washingtonpost.com/news/post-politics/wp/2015/01/12/obama-to-propose-legislation-on-data-breaches-student-privacy/">proposed giving firms 30 days</a> from discovering a hack to announcing it had happened. That effort failed because many states, which have varying requirements, have stricter standards that the federal law would have overruled.</p>
<h2>Recovering a corporate reputation</h2>
<p>Tech companies can typically recover quickly from data breaches – if they respond fast and take the necessary steps to notify their users. That’s true even for corporations whose data breaches resulted in the compromise of customers’ credit card information, such as <a href="http://techland.time.com/2013/12/19/the-target-credit-card-breach-what-you-should-know/">Target in 2013</a> and <a href="http://www.wsj.com/articles/home-depot-breach-bigger-than-targets-1411073571">Home Depot in 2014</a>. </p>
<p><a href="http://time.com/money/4251435/home-depot-data-breach-reimburse/">Lawsuits filed</a> after the breaches have <a href="http://fortune.com/2015/04/16/target-mastercard/">cost companies millions</a> in settlement costs, not to mention legal fees and lost business. The lesson is clear: Early disclosure of a data breach is better. If Yahoo knew about its hack as early as August – or even years ago – and took this long to announce it to the public, the company has manifestly betrayed its users’ trust. </p>
<p>Though Yahoo <a href="http://www.businesswire.com/news/home/20160922006198/en/">urged users to change their passwords</a> and security questions after the public disclosure of the security breach, <a href="https://twitter.com/search?q=%23yahoobreach">thousands of users took to social media</a> to express anger that it had taken the company two years to uncover the data breach. The <a href="http://www.mercurynews.com/2016/09/23/yahoo-hit-with-class-action-lawsuit-over-massive-data-breach/">lawsuits filed against Yahoo</a> are mounting.</p>
<p>It can be extremely difficult for companies, even tech-focused ones like Yahoo, to protect themselves from skilled and determined hackers. But not reporting the attack as soon as it’s suspected can be almost as damaging as the hack itself.</p><img src="https://counter.theconversation.com/content/66014/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Yanfang Ye does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>LinkedIn, MySpace, Yahoo: Why does it take such a long time for companies to disclose that they have been hacked?Yanfang Ye, Assistant Professor of Computer Science and Electrical Engineering, West Virginia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/630102016-07-25T16:07:12Z2016-07-25T16:07:12ZVerizon’s five-billion-dollar bet on Yahoo looks like an alliance of the weakest<p>US telecoms giant Verizon paid an eye-opening US$4.8 billion for Yahoo’s search, email and advertising businesses which will be merged into its own online operation <a href="http://fortune.com/2015/06/24/verizon-gains-aol/">bought from and still branded as AOL</a>, to better compete against tech giant rivals Google and Facebook. </p>
<p>The new Yahoo-AOL alliance will control 5.2% of the digital advertising market compared to Google’s 39% and Facebook’s 15%. Yahoo’s CEO Marissa Mayer has <a href="https://theconversation.com/whats-going-on-at-yahoo-54121">struggled to prevent Yahoo’s continuing decline</a>, with losses mounting despite a US$3 billion investment in new features and acquisitions. </p>
<p>Unfortunately, these “alliances of the weak”, where smaller companies merge in order to try and take on stronger competition, are very rarely successful. If anything, they usually create only a weak competitor that is now bigger than before. And this is what seems likely to have happened with Yahoo-AOL here, in a market in which the winner takes all: if a firm isn’t in the top two then without a credible niche market to exploit the firm will suffer. Yahoo’s <a href="http://www.recode.net/2016/7/18/12217390/marissa-mayer-last-stand">recent results were particularly disappointing</a>. Why should adding Verizon and the AOL into the mix change that?</p>
<p>The history of AOL itself is sobering. As a leading light of the online world in the 1990s it grew rich enough to be able to <a href="http://fortune.com/2015/01/10/15-years-later-lessons-from-the-failed-aol-time-warner-merger/">buy the giant media conglomorate Time Warner</a> in a US$164 billion deal in 2001. But the merger was unsuccessful: within a year the combined operation had lost 97% of its value, which is believed by many to be the worst merger ever. AOL’s dial-up modem internet infrastructure was rapidly superseded by broadband, and Time Warner’s expensive content needed wide offline media access anyway to create a return – something AOL could never provide.</p>
<h2>Winner takes all</h2>
<p>In many internet markets there are clear network effects in terms of suppliers and buyers: more suppliers attracts more buyers, which in turn attracts more sellers to sell to the growing number of buyers. In this mutually reinforcing process the rewards tend to go to the largest, which is usually among the first to enter the market. Late arrivals tend to struggle unless they can find some sort of niche. Examples include Amazon and Ebay’s domination of the online market place, just as Uber dominates the on-demand ride-sharing business, Facebook dominates social networking, and LinkedIn dominates professional networking. </p>
<p>The efficiency of internet markets and ease of access and participation means network effects are particularly powerful online, pushing weaker players out.</p>
<p>In technology markets such dominant positions tend to persist, brought down only through major upheavals in technology that are often rapid and unpredictable – just ask AOL. Alternatively, the market loses interest and moves on to other options, as email and Twitter have lost out to Snapchat, WhatsApp and Instagram. </p>
<p>The history of technology is littered with the remains of once all-powerful companies: Nokia, once the king of smartphones; RIM, makers of the must-have Blackberry; or IBM, which for decades dominated the computer industry, from mainframe and personal computer hardware and operating systems to application software and services, but which today struggles to find its way. Seeing how these titans have fallen, it’s not so hard to believe that Twitter, Microsoft, and even Apple may one day follow the same trajectory unless they can invent or secure access to the <a href="http://www.inc.com/jessica-stillman/5-top-vcs-predict-the-biggest-tech-change-coming-in-the-next-five-years.html">“next big thing”</a>.</p>
<h2>Taking a last stand?</h2>
<p>Yahoo has struggled against the strength of network effects for a long time despite the promises of various CEOs. It’s difficult to see how this merger will change anything, or indeed how Verizon will benefit. Buying up AOL and Yahoo, which are essentially media content and advertising businesses, is a big change from Verizon’s business of offering broadband internet and mobile phones. It’s not clear what benefits arise from combining both as they are such different businesses. As the mobile telecoms industry matures, Verizon’s move seems like a gamble on finding future growth in unrelated areas – always a high risk path.</p>
<p>The acquisition appears motivated by AOL’s chief executive Tim Armstrong, who some see as a better boss at Yahoo than current CEO Mayer. Mayer has been under pressure from investors for failing to stop the rot at Yahoo. If this task falls to Armstrong he will certainly have his work cut out – not just to turn around the fortune of one failing tech giant, but to oversee the merger of two. </p>
<p>A failure to integrate is frequently blamed for botched acquisitions and mergers that destroy the value of the merged businesses. Loss of market share and key personnel during the integration process is the norm, and competitors use the opportunity to move in on customers and staff alike. The process is major distraction for staff, who wonder what the future holds for them. Effectiveness collapses and the business suffers. There are few exceptions. Armstrong will need all the luck he can get.</p><img src="https://counter.theconversation.com/content/63010/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Colley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>How will Verizon benefit from the mega-merger between its subsidiary AOL and Yahoo?John Colley, Professor of Practice, Associate Dean., Warwick Business School, University of WarwickLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/610642016-06-16T16:49:46Z2016-06-16T16:49:46ZAppeals court upholds net neutrality rules – why you should care<figure><img src="https://images.theconversation.com/files/126800/original/image-20160615-14060-1hsl83g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The court ruling will keep all internet traffic treated equally.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-67487518/stock-photo-website-traffic.html">Laptop with arrows via shutterstock.com</a></span></figcaption></figure><p>If you like binge-watching Netflix, streaming audio or online gaming, then you should be celebrating this week. And if your business depends on reaching a wide audience online, you should join in. A federal appeals court decision this week means your internet service provider can’t slow down your access to particular sites, nor let others pay to be in a faster lane of service. It all comes down to the principle called net neutrality.</p>
<p>The court upheld the Obama administration’s <a href="http://www.nytimes.com/2016/06/15/technology/net-neutrality-fcc-appeals-court-ruling.html">net neutrality rules</a> governing companies that deliver internet service to U.S. homes and businesses. At the heart of the case was the Federal Communications Commission’s February 2015 <a href="https://www.fcc.gov/general/open-internet">Open Internet Order</a>. It requires that everyone – whether they are individuals, small businesses or large corporations – must have equal access to the whole internet, just like everyone has equal access to the telephone network. </p>
<p>Companies that provide internet service have fought against these rules. In addition to charging people for internet access at home, they hoped to earn even more money by <a href="http://bits.blogs.nytimes.com/2014/02/02/disruptions-paying-to-travel-in-the-internets-fast-lanes/">charging content providers for priority “fast lanes”</a> for their traffic. For example, without net neutrality rules, Comcast would be allowed to slow down (or even block) its customers’ traffic coming from Netflix – even though the Netflix viewers had already paid Comcast for internet access. And Comcast could speed things up again if Netflix directly paid Comcast even more money.</p>
<p>The rules were created out of concern internet service providers would reserve high-speed internet lanes for content providers who could pay for it, while relegating to slower speeds those that didn’t – or couldn’t, such as libraries, local governments and universities. Net neutrality is also important for innovation, because it protects small and start-up companies’ <a href="https://www.fastcompany.com/3042787/what-a-net-neutrality-lose-would-mean-for-entrepreneurs">access to the massive online marketplace</a> of internet users. This week’s <a href="https://www.cadc.uscourts.gov/internet/opinions.nsf/3F95E49183E6F8AF85257FD200505A3A/$file/15-1063-1619173.pdf">D.C. Circuit Court of Appeals ruling</a> establishes a level playing field for online information providers.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/fpbOEoRrHyU?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">John Oliver explains net neutrality on ‘Last Week Tonight.’</span></figcaption>
</figure>
<h2>Internet as a public utility</h2>
<p>The ruling will likely be <a href="http://www.attpublicpolicy.com/broadband-classification/att-statement-on-u-s-court-of-appeals-net-neutrality-decision/">appealed to the Supreme Court</a>. But it is important because this particular court has previously thrown out past efforts by the FCC to create similar rules governing internet access. In 2014, it <a href="https://www.cadc.uscourts.gov/internet/opinions.nsf/3af8b4d938cdeea685257c6000532062/$file/11-1355-1474943.pdf">found that the FCC lacked the authority</a> to make net-neutrality rules, because it did not yet classify internet service in the same way it did telephone service – as a “utility” worthy of special protections.</p>
<p>The <a href="https://transition.fcc.gov/Daily_Releases/Daily_Business/2015/db0312/FCC-15-24A1.pdf">FCC reclassified internet service</a> in the 2015 Order as “Title II,” acknowledging that <a href="http://www.theverge.com/2015/2/26/8114265/fcc-ruling-net-neutrality-victory-internet-title-ii">internet service has become a utility</a>, a necessity in daily life. Title II service providers – like phone companies – are not allowed to discriminate in the service they provide. Creating a “fast lane” would amount to discrimination based on the content of the data being transmitted.</p>
<h2>Investments and profits</h2>
<p>Internet service providers are <a href="http://www.dailydot.com/politics/lobbyists-net-neutrality-fcc/">fighting the rules</a> because they are frustrated that they spend huge amounts of money building and expanding the infrastructure of the internet, which other companies profit from. Some of those companies, such as Netflix, Amazon, Google and Facebook, <a href="http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-netflix-earnings-fourth-quarter-2015-20160119-story.html">make significant, even extraordinary, amounts of money</a>.</p>
<p>Net neutrality doesn’t solve this desire of the companies that provide the backbone of internet communications to be rewarded as richly as the companies using it. Internet service providers view this as a fundamental unfairness. They are, after all, handling <a href="https://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/vni-hyperconnectivity-wp.html">more and more data every year</a>. But attempting to solve this issue by allowing paid, fast-lane service would remake the web in ways that would punish internet users more than these companies. Fast-lane fees would be passed on to consumers, consumers’ use of vital but noncommercial sites could be comparatively tedious, and internet service providers could advantage content and sites they own. </p>
<p>Video streaming services are of particular concern to service companies because because video files are so large and take up so much network capacity. A December 2015 report from Canadian networking company Sandvine found that during peak evening hours, <a href="https://www.sandvine.com/pr/2015/12/7/sandvine-over-70-of-north-american-traffic-is-now-streaming-video-and-audio.html">streaming audio and video accounted for 70 percent</a> of North American internet downloading activity, up from 35 percent five years earlier. </p>
<p>Net neutrality also doesn’t solve the problem that <a href="https://www.scribd.com/doc/271665456/Mapping-the-Digital-Divide">most Americans do not live in areas served by more than one high-speed internet service</a>, let alone those in <a href="https://theconversation.com/technology-is-improving-why-is-rural-broadband-access-still-a-problem-60423">rural America who don’t even have one</a>. Customers who dislike the content priorities and policies of their provider can’t change companies, making net neutrality an important preventative measure in this uncompetitive marketplace.</p>
<p>In most of the country, those who want or need broadband service must accept the terms and conditions of a single service provider. Now, at least, that company can’t favor certain types of online activity over others, just for the sake of its own profits.</p><img src="https://counter.theconversation.com/content/61064/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amanda Lotz does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>If you like binge-watching Netflix, streaming audio or online gaming, then you should be celebrating this week. And if your business depends on reaching a wide audience online, you should join in.Amanda Lotz, Fellow, Peabody Media Center; Professor of Media Studies, University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/413872015-05-20T10:08:40Z2015-05-20T10:08:40ZThe economics of net neutrality and how Verizon’s AOL deal subverts an open internet<p>Telecommunication companies were up in arms in February after the Federal Communications Commission (FCC) made net neutrality the <a href="http://www.npr.org/sections/thetwo-way/2015/02/26/389259382/net-neutrality-up-for-vote-today-by-fcc-board">law of the land</a> by classifying broadband internet as a utility, seeming to ensure there would be no pay-to-play fast lanes.</p>
<p>Not so fast. As Verizon’s planned acquisition of AOL reminds us, there’s another way to cash in on giving certain content preferential treatment: buy it.</p>
<p>The wireless carrier’s <a href="http://www.usatoday.com/story/money/business/2015/05/12/verizon-aol/27162459/">US$4.4 billion purchase</a> allows it to use the content to attract more users, and potentially push people toward that content by giving it preferential treatment – for example, not having that count against the allotted data cap. It also gives the company the market power to drive harder bargains with other content providers.</p>
<p>While this is certainly legal, it subverts the reason we need net neutrality in the first place: to drive innovation on the content side, you need to have nonpreferential access to the pipes delivering it, so content providers anywhere can reach consumers equally.</p>
<p><a href="https://scholar.google.com/citations?user=ZsszgbAAAAAJ&hl=en">Research</a> we’ve been conducting for the past six years on the topic shows that the only way to prevent this subversion is “strong” net neutrality and its enforcement. The economics of the industry indicate that these companies will always have an incentive to create fast and slow lanes, charging tolls for the former. </p>
<p>Other than situations of clear public interest or safety, there should not be any reason for prioritizing some online content over others. There also needs to be careful scrutiny of mergers like this one to ensure that internet providers aren’t finding a back door to prioritizing certain content.</p>
<p>What we also learned, surprisingly, is that the big content companies – while ostensibly in favor of net neutrality – actually have an incentive to oppose it as well. If Google can pay extra to get its YouTube video content to consumers faster, it would have the economic incentive to do so, thereby marginalizing smaller players that can’t afford to pay the fees. </p>
<h2>The origin of high-speed toll lanes</h2>
<p>Consumers today access a lot of their content online from popular content providers – Netflix, YouTube, Hulu, to name a few – whose names would have barely registered in our consciousness 10 to 15 years ago.</p>
<p>Anticipating this surge of online traffic, several internet service providers (ISPs) such as AT&T and Verizon came up with the <a href="http://articles.latimes.com/2006/apr/09/business/fi-neutral9">idea</a> that they should be able to charge content providers like Netflix for prioritization. This new source of revenue would then be used to invest in improving infrastructure, such as upgrading to fiber. </p>
<p>It is the controversy behind this idea that finally morphed into the net neutrality debate that we know today.</p>
<h2>Winners and losers</h2>
<p>The debate has been fierce, and, unlike many other arcane policy issues, it has spilled over into the public arena. Surprisingly, however, there has been a relative lack of rigorous economic analysis on the topic – specifically, who are the winners and losers if we abandon net neutrality. </p>
<p>To address this, we developed a <a href="http://pubsonline.informs.org/doi/pdf/10.1287/isre.1090.0257">model</a> that relies on game theory – the study of strategic decision-making using mathematical models – in 2011. It considers a monopolist ISP within a certain geographic area that has to decide whether or not to offer paid prioritization to competing content providers. </p>
<p>As might be expected, our analysis indicated that ISPs had an economic incentive to “deviate” from net neutrality. More worrisome, if a content provider generated significantly higher amounts of revenue from its subscribers than its competitors, then the ISP might find it useful to charge a prioritization fee that is so high that only the dominating content providers can afford to pay.</p>
<p>This could end up marginalizing smaller content providers to the extent that they might be <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1540-5915.2011.00338.x/full">completely wiped out</a> of the market. The dominant content provider might then end up with a larger market share, but the ISP could still charge the high fees to extract that extra “rent” because of its monopoly power.</p>
<p>Furthermore, our analysis indicates that the ISPs would have even less incentive to expand and improve their infrastructure – the primary reason they offer to implement paid prioritization in the first place.</p>
<h2>Impact on the internet economy</h2>
<p>These results might have implications for the internet economy as we know it. At present, its growth is fueled by the easy proliferation of new types of ideas and content, which is a direct result of the ease of entry into any online market. There is also a sense of fair play – anyone with an innovative idea has a shot at glory.</p>
<p>But without net neutrality, ISPs can effectively act as gatekeepers of content, and, if fledgling startups cannot afford to pay the packet prioritization fees, they will not be able to effectively challenge the incumbents. Researchers at Google and Microsoft have <a href="http://www.nytimes.com/2012/03/01/technology/impatient-web-users-flee-slow-loading-sites.html">found</a> that consumers are prone to leave a website if it takes just a few hundred milliseconds more than a rival website, and with packet prioritization, companies without deep pockets can expect such a future.</p>
<p>Many proponents of net neutrality have proposed that the culprit here is the lack of competition at the local ISP level. The FCC now defines broadband access as allowing download speeds of least 25 megabits per second. By that definition, <a href="http://www.nytimes.com/2015/02/27/technology/net-neutrality-fcc-vote-internet-utility.html">three-quarters</a> of US households have at most one broadband service provider, and only one-quarter has access to two or more. </p>
<p>So is competition the answer?</p>
<p>Our latest <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2529693">research</a> models this scenario and finds that ISPs will still want to abolish net neutrality.</p>
<h2>From proponents to opponents</h2>
<p>More interestingly, upending the commonly held belief that content companies will always support net neutrality, we find that under certain conditions it becomes economically beneficial for the dominant provider to reverse its stance on net neutrality. Indeed, even after paying the ISP’s prioritization fees, it makes more money than what it would under net neutrality. </p>
<p>In effect, the dominant content provider can use competition among ISPs to its advantage and marginalize its own rivals. Therefore, perhaps not coincidentally, there have been reports that large internet companies “<a href="http://www.nytimes.com/2014/11/13/technology/in-net-neutrality-debate-tech-giants-on-the-sidelines.html">have not joined</a> online protests, or otherwise moved to mobilize their users in favor of new rules.”</p>
<p>Content providers appear to support the principles of net neutrality only if it suits them. Netflix, for example, is a big and vocal supporter, yet it may be actually <a href="http://arstechnica.com/business/2015/03/netflix-opposes-data-cap-exemptions-except-when-it-benefits-from-them/">benefiting</a> from differential treatment in Australia.</p>
<p>Who loses out most in the absence of net neutrality? The smaller internet firms, which would not be able to afford the prioritization fees.</p>
<h2>Caution ahead?</h2>
<p>The computing and telecommunications revolution is just getting started, and the future promises to be far more wondrous than we could ever imagine. From the viewpoint of the long-term viability and vibrancy of the internet economy, our research suggests that allowing preferential treatment of content of any kind would have profound negative effects.</p>
<p>The FCC has passed net neutrality rules, but challenges remain, and they could yet be overturned – whether by a court, or by a future FCC which could be dominated by opponents of the policy.</p>
<p>Verizon’s takeover of AOL is a reminder that these rules alone aren’t enough. They must be vigorously enforced to ensure no content – even a company’s own offerings – is afforded special privileges.</p>
<p>The oft-promoted argument that prioritization is needed because newer types of content will overwhelm the internet infrastructure seems overblown. In many countries around the world, people enjoy much <a href="http://www.netindex.com/download/allcountries/">faster internet speeds</a> at <a href="http://www.netindex.com/value/allcountries/">prices</a> much lower than in the US. The enforcement of net neutrality does not seem to hamper broadband access or innovation.</p>
<p>One of the main reasons behind the explosion of innovation and competition on the internet is that newcomers have always had a level playing field: every packet is treated like any other. </p>
<p>Preferential treatment of online traffic based on commercial considerations tilts that field to the advantage of the players with deeper pockets and thus deters innovation. Rather than killing innovation, net neutrality preserves it.</p><img src="https://counter.theconversation.com/content/41387/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Subhajyoti Bandyopadhyay received funding from the NET Institute and the Public Utility Research Center at the University of Florida for carrying out some of the research referred to in this article.</span></em></p><p class="fine-print"><em><span>Hong Guo received funding from the NET Institute and the Public Utility Research Center at the University of Florida for carrying out some of the research referred to in this article.</span></em></p>Net neutrality is supposed to keep internet providers from offering preferential treatment, but there’s a loophole when the ISP owns the content.Subhajyoti Bandyopadhyay, Associate Professor, University of FloridaHong Guo, Assistant Professor in Information Systems, University of Notre DameLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/417362015-05-13T17:55:28Z2015-05-13T17:55:28ZVerizon could learn a thing or two from Comcast about how to make most of its new cash cow<figure><img src="https://images.theconversation.com/files/81547/original/image-20150513-2497-1hpddx1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Is this what Verizon sees in AOL?</span> <span class="attribution"><span class="source">Cash cow via www.shutterstock.com</span></span></figcaption></figure><p>Verizon Communications announced yesterday that it would pay US$4.4 billion to acquire AOL, a company that once had so much financial leverage, promise and ambition that it could afford to buy Time Warner for about $164 billion in 2001. </p>
<p>To put it lightly, the synergies anticipated for that combined company <a href="http://fortune.com/2013/05/21/5-worst-internet-acquisitions-of-all-time/">did not arise</a>, and Time Warner <a href="http://www.wsj.com/articles/SB10001424052748704825504574586393655471238">spun it off</a> in 2009 after AOL lost billions in value. </p>
<p>Will Verizon have more luck?</p>
<p>The acquisition seems to make plenty of sense. Verizon has lots of earnings that it has retained over the years and the ability to borrow billions. AOL gives Verizon access to advanced technology for selling ads and delivering high-quality web video. </p>
<p>That’s important because Verizon understands its biggest revenue sources are stagnating. Local and long-distance telephone service carried via copper wire generates declining revenues and profits. Verizon also understands that it must confront the possibility that basic wireless telephone service, its <a href="https://www.verizon.com/investor/app_resources/interactiveannual/2012/downloads/12_vz_ar.pdf">single biggest revenue source</a>, has reached maturity. </p>
<p>Moving up the vertical “food chain” into content helps the company diversify and generate new sources of revenue from both advertisers and subscribers. </p>
<p>Could AOL become Verizon’s new cash cow to compensate for any declines in revenue in its core businesses? </p>
<p>Bear in mind that a few years after splitting from AT&T in 1984, Verizon briefly <a href="http://www.nytimes.com/1997/01/16/business/pacific-telesis-and-2-other-bells-in-dispute-over-a-tv-venture.html">dabbled in</a> developing new revenue streams by producing content itself. That effort failed miserably in part because Verizon didn’t hire staff skilled in content creation and management. </p>
<p>By combining third-party and self-generated content, Verizon’s latest acquisition stands a better chance at succeeding – a lesson already learned by Comcast, the nation’s largest cable TV and broadband provider. </p>
<h2>Lessons from Comcast</h2>
<p>While Comcast has a woeful record in customer service, the company is notable for successfully integrating content distribution with content generation. It has vertically integrated up and down the food chain of content creation, syndication, distribution and delivery to consumers. </p>
<p>Comcast will of course try to squeeze every last dollar it can from subscribers as a cable television operator with a national market share exceeding 30%. But it understands that should the cable model deteriorate, it must diversify into many other types of content creation and technologies for distributing it.</p>
<p>Most recently, Comcast <a href="http://mediadecoder.blogs.nytimes.com/2013/02/12/comcast-buying-g-e-s-stake-in-nbcuniversal-for-16-7-billion/">acquired</a> NBCUniversal in 2013 as part of this strategy. But by then, it had already built up a sizable inventory of content through ownership interests in many cable programming networks and regional sports networks.</p>
<p>Facing the prospect of declining subscriptions to its legacy cable service, Comcast is pursuing a strategy with many prongs. The company wants to increase – or minimize reductions – in average revenue per user by enhancing the value proposition in a cable subscription. It does this by promoting “on demand” access to content anytime, anywhere, via any device and in any delivery format. </p>
<p>Comcast also wants to acquire more market share through acquisitions, making it an even more formidable content access negotiator and able to push for even higher subscription fees. </p>
<p>That strategy foundered last month after regulatory concerns over its market power forced it to <a href="http://www.usatoday.com/story/money/2015/04/24/how-comcast-deal-to-buy-time-warner-cable-fell-apart/26313471/">abandon</a> its proposal to acquire Time Warner Cable. The Federal Communications Commission and the Justice Department had legitimate concerns about one company controlling nearly 40% of both the legacy video delivery market (cable television) and the emerging broadband market (that offers a substitute for cord cutters).</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/81549/original/image-20150513-2497-1wq9616.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/81549/original/image-20150513-2497-1wq9616.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/81549/original/image-20150513-2497-1wq9616.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/81549/original/image-20150513-2497-1wq9616.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/81549/original/image-20150513-2497-1wq9616.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/81549/original/image-20150513-2497-1wq9616.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/81549/original/image-20150513-2497-1wq9616.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/81549/original/image-20150513-2497-1wq9616.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Comcast’s purchase of NBCUniversal gave it a ton of content to deliver to its customers.</span>
<span class="attribution"><span class="source">Comcast building via www.shutterstock.com</span></span>
</figcaption>
</figure>
<h2>Controlling content is key</h2>
<p>In a nutshell, Comcast embraces change, even as it pushes the legal and regulatory envelope for permissible market domination in old media. </p>
<p>By controlling access to “must see” video content, Comcast can tap multiple sources of revenues, even if consumer eyeballs migrate from old to new media. Thus, it can welcome new links between consumers and content rather than fearing new technologies as vehicles for piracy and revenue siphoning.</p>
<p>Comcast rightly considers the demise of linear “appointment television” – in which content is only available at a designated time – as more of an opportunity for profit than a financial threat. </p>
<p>Increasingly consumers have no patience for rationed and media-specific access to content. That’s what propelled Netflix, for example, to make entire seasons of TV shows such as House of Cards available for “binge watching” instead of the traditional week-by-week allocation. More companies are following suit.</p>
<p>Comcast and other companies making the most of changing tastes know that consumer stickiness – how much time someone spends consuming media and absorbing advertising – can grow faster and higher if it provides on demand alternatives to the traditional distribution model. </p>
<h2>AOL can do the same for Verizon</h2>
<p>And that’s what Verizon hopes to get out of its purchase of AOL, allowing it to operate a powerful and desirable media and advertising platform. </p>
<p>Economists use the term double-sided markets to identify instances where an intermediary, like Verizon, provides services downstream to retail broadband subscribers, but also upstream to other carriers and sources of content. </p>
<p>Only a small number of companies such as Verizon and Comcast have the financial resources and geographical footprint to create a substantial broadband platform. Because of a concentrated industry and converging media, the FCC and other national regulatory authorities have established open internet access rules – aka net neutrality – <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2502122">designed</a> to prevent platform operators from exploiting their broadband platform in ways that harm consumers and competitors. </p>
<p>Verizon’s acquisition of AOL can help bolster its platform by providing compelling content, better ways to link advertisers and consumers and offering a trusted brand for accessing content via four available screens: television sets, computer monitors, smartphones and tablets. </p>
<p>Unlike the trouble Comcast had convincing regulators that the Time Warner acquisition would not harm consumers, Verizon should have better luck framing its AOL purchase as a win for customers. Its deal involves vertical integration that can enhance consumers’ perception of value from services previously available from two separate companies, rather than Comcast’s more horizontal kind that would have eliminated competition in the industry. </p>
<p>Rather than merely buying out a competitor and adding market share, Verizon will acquire a presence in competitive markets it knows it should enter.</p>
<p>Maybe this time it will welcome the new talent.</p><img src="https://counter.theconversation.com/content/41736/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rob Frieden currently receives no funding from any company, institute, foundation or other organization. On previous occasions he has provided consultancy services primarily for international organizations such as the World Bank.</span></em></p>Comcast has successfully moved from managing the pipes to owning the content as well, all the while pushing the legal envelope as far as it can.Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/177882013-09-04T05:46:50Z2013-09-04T05:46:50ZWhy Vodafone did not have to pay UK tax on the Verizon deal<figure><img src="https://images.theconversation.com/files/30628/original/cfy7bxm4-1378224438.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Outpacing tax.</span> <span class="attribution"><span class="source">NRMA</span></span></figcaption></figure><p>How does a UK company manage to earn £84 billion in one deal without paying any tax? It is the question many people are asking after Vodafone <a href="http://www.bbc.co.uk/news/business-23933955">sold off its stake</a> in US telecoms company Verizon Wireless <a href="http://www.bbc.co.uk/news/business-23924860">without apparently troubling the UK taxman</a>. The deal has once again sparked off discussions over corporate avoidance schemes, and the notion of paying a “fair share” of tax.</p>
<p>Vodafone’s headquarters are in Berkshire, and the company is one of the biggest listed on the London Stock Market, so one might think it should pay UK tax on its profits. And if it is not paying UK tax, this could only be as the result of some dodgy tax avoidance scheme. This sounds like a reasonable assumption, but unfortunately it is wrong.</p>
<p>The assets being sold are owned by a Netherlands-based holding company, so according to international rules no tax is due in the UK. Moreover, even if the assets had been owned by a UK company, and UK tax was in principle due on the profits, the sale would likely qualify for the capital gains tax relief applied to the sale of “substantial shareholdings”, introduced by the 2002 Financial Act.</p>
<p>So, whether subject to international tax rules, or to national tax rules, Vodafone is not liable to UK tax on this deal.</p>
<h2>Taxation as a donation</h2>
<p>It is commonly accepted that corporations should pay their “fair share of tax”. Given Vodafone benefits from being headquartered in the UK, perhaps it should pay UK tax on its profits anyway, as a matter of corporate social responsibility. Again, this idea sounds reasonable, but is it?</p>
<p>Essentially, this would be asking Vodafone to pay tax which is not due by law. Or, in other words: we would be asking Vodafone to give a donation to the UK exchequer. Not many individuals – if any – would do that.</p>
<p>Also, the legal obligations of corporations are distinct from those of individuals. Company law requires directors to act in the interest of their firm - this does not necessarily mean paying the least amount of tax possible, but it often does.</p>
<p>So, Vodafone cannot be blamed for not paying tax which is not due under the law. Indeed doing so could – depending on the circumstances of the donation – be deemed to be contrary to (company) law.</p>
<h2>Change the laws</h2>
<p>For Vodafone to have been liable for UK capital gains tax fundamental changes would need to occur to both national and international tax rules.</p>
<p>On the international front, it is rather coincidental that the deal was announced just a few days before the G-20 Leaders’ Summit in St. Petersburg where new measures to combat tax avoidance and evasion will be on the agenda.</p>
<p>In particular the OECD’s new action plan on base erosion and profit shifting, known as <a href="http://www.oecd.org/ctp/BEPSActionPlan.pdf">BEPS</a>, is set to be discussed. The plan’s objective is to ensure that corporations pay their “fair share of tax”, by identifying actions needed for countries to prevent base erosion and profit shifting as a means to curbing corporate tax avoidance worldwide.</p>
<p>The OECD initiative, which follows a request from the G20 in June 2012, has many merits, not least in maintaining the momentum on the need for urgent international tax reform. But there is still concern over whether it can efficiently resolve existing problems.</p>
<p>The BEPS action plan is premised on the maintenance of basic rules which underpin the current international tax system. These basic rules stipulate that tax is due either in the “country of residence” (ie where the company is based), or the country where the economic activity takes place. Such notions of entitlement on the basis of residence and source date back to the 1920s, and are unsuitable to deal with a global economy. Constantly patching-up these rules, and making small amendments, in order to deal with the challenges of such an economy is <a href="https://theconversation.com/oecd-tax-avoidance-plan-is-no-quick-fix-for-eu-16243">not a long-term solution</a>. A deep reform of the international tax system is necessary.</p>
<p>In particular, it is worth considering a complete change in paradigm from residence and source-based taxation to destination-based taxation. Under a <a href="http://www.sbs.ox.ac.uk/centres/tax/symposia/Documents/2013/de%20la%20Feria_Devereux.pdf">corporate destination-based tax</a>, tax would be due on the country where the customer is located. Such a tax would deal with tax avoidance by removing its incentives: there would be no tax reasons for a company to relocate its headquarters or economic activity, since tax would be due wherever the customer is based. Customers are difficult to move; the company’s market is where it is, and it is not easily susceptible to manipulation.</p>
<p>So, eliminating, or at least significantly minimising, corporate tax planning and avoidance requires a deep reform of international tax law as it stands.</p>
<h2>Business friendly?</h2>
<p>Had Vodafone been deemed to be liable to UK tax rules, tax would still only be due if the current law granting a capital gains exemption for “substantial shareholdings” was abolished. This sounds like another reasonable proposal. In the context of the current budget difficulties, when ordinary taxpayers are suffering from difficult tax and benefits measures, is it really fair to grant such relief to big corporations?</p>
<p>But it is important to understand the rationale for such tax measures. This exemption was adopted as part of the UK drive to attract investment – which in turn creates employment and growth – by creating a business-friendly fiscal environment. It is the same rationale that led to the recent decrease in corporate tax rates.</p>
<p>The downside of this policy is of course the loss of (potential) revenue which must be weighed up against the gains in employment and growth. This is a difficult calculation to make, a matter of policy choice, and different countries have adopted different positions. What is fundamental, however, is that the public – and the politicians – understand the calculation, and its consequences.</p><img src="https://counter.theconversation.com/content/17788/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rita de la Feria has previously received funding from the ESRC, and from the European Tax Policy Forum. She is affiliated with the Oxford University Centre for Business Taxation.</span></em></p>How does a UK company manage to earn £84 billion in one deal without paying any tax? It is the question many people are asking after Vodafone sold off its stake in US telecoms company Verizon Wireless…Rita de la Feria, Professor of Law, Durham UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/177582013-09-02T20:37:07Z2013-09-02T20:37:07ZVodafone misses opportunity to reinvest Verizon proceeds<figure><img src="https://images.theconversation.com/files/30563/original/7b9kzn9c-1378137902.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Vodafone has money to burn.</span> <span class="attribution"><span class="source">Steve Parsons/PA </span></span></figcaption></figure><p>It’s the biggest corporate deal in more than a decade. Since the AOL-TimeWarner and the Mannesmann-Vodafone deals at the turn of the century, no transaction has come close to the US$130 billion involved in the sale of Vodafone’s 45% stake in Verizon Wireless. </p>
<p>Most executives would get quite excited about what one might achieve with this kind of money. Not Vodafone’s CEO Vittorio Colao. He and his team have decided to pass on <a href="http://money.cnn.com/2013/09/02/investing/vodafone-shareholder-payout/">71% of the proceeds</a> directly to shareholders, leaving him, after servicing debt and tax obligations, with only US$6 billion to play with. These are earmarked for an organic investment programme entitled “Project Spring”, which seems, by and large, a continuation of its ongoing “Vodafone 2015” network expansion strategy. Critics wonder if this is enough.</p>
<p>The windfall for shareholders has been <a href="http://www.bbc.co.uk/news/business-23926429">likened to a fortuitous stimulus</a> to the British economy. In any case, short-term investors will be more than happy. Anyone who has bought Vodafone shares in the last few days, despite the rapid increase in price, will not be disappointed. But what about stakeholders with a more long-term interest in the health of the company?</p>
<p>The telecommunications industry is fraught with uncertainty and not for the faint-hearted. It is not just that technologies come and go at an alarming rate, turning the tables on incumbents every three years or so. New challengers do too. The trend towards convergence of traditionally separate areas of business is enlarging the set of direct competitors.</p>
<p>Companies with origins in the provisioning of cable TV, broadband internet, and fixed telephony, are now increasingly likely to all offer all three types of services in one integrated package. Pick up your landline and your call will travel as VoIP (voice over internet protocol). Your landline phone has probably become cordless, communicating wirelessly with a modem. When you surf the net, your computer may communicate wirelessly too, with the same modem, using the same broadband line as your phone. Whether you watch TV on your desktop, a classic TV screen, or another device, they connect the same way. What you pay for is connectivity. How you use it is up to you.</p>
<p>The latest addition to this package is mobile telephony. Since the advent of 4G, the speed at which you can surf the net or watch TV on your phone and iPad is comparable to using your desktop PC. In fact, some customers may soon get a faster connection using 4G than they can via broadband, since high-speed coverage in less densely populated regions is more efficiently achieved through mobile networks than fibre cables that are brought all the way to the door. If 4G works just as well as wifi, why not get all of your connectivity this way?</p>
<p>Vodafone recognised this development and recently abandoned its mobile-only strategy. Its investments in <a href="http://www.bbc.co.uk/news/business-17810568">Cable & Wireless</a> and <a href="http://www.theguardian.com/business/2013/jun/24/vodafone-buys-kabel-deutschland">Kabel Deutschland</a> provide the company with a network backbone that can cope with traffic volumes more typically handled by broadband behemoths like BT. Conversely, BT has invested in a 4G licence which will allow it to service more remote customers with connectivity, edging in on Vodafone’s turf. Integrated companies such as Spanish giant Telefonica are there already.</p>
<p>So what were previously four separate areas of business - cable tv, broadband internet, landlines and mobile telephony - are going to be just one, that of connectivity provision. The converged field contains roughly four times more competitors than each of the original areas. Add the increasing attempts by regulators to create a pan-European market, with telecommunications providers that act seamlessly across national borders, and the number of competitors multiplies even further. It doesn’t take much to foresee some serious shake-out. Former specialist “pure-play” firms such as Vodafone face the greatest uphill battle. The Verizon boost to Vodafone’s investment capital would come just in time and it seems odd that only such a small fraction of the overall proceeds is designated for reinvestment.</p>
<p>Consumers care less about how connectivity arrives on their devices than about how fast, seamless, and reliable it is. Vodafone would thus be well advised to expand into high-speed broadband networks. After its recent deals in the UK and Germany, Vodafone could look towards Italy and Spain, its next biggest markets in Europe. </p>
<p>In Italy, Fastweb, a subsidiary of Swisscom, appears a candidate for network acquisition. Vodafone’s investment in Spanish networks, jointly with Orange, stand to reach about 20% of households there and could be beefed up by an acquisition of Ono, a local provider with good coverage but as-of-yet lower network speeds. Beyond acquisitions, existing networks in key markets such as the UK, Germany, Italy and Spain would benefit from continued upgrading.</p>
<p>Moving into new countries presents another possible option. For example, Telecom Italia’s and Vivendi’s operations in emerging Brazil could be bought and combined into a larger mobile player. But geographic expansion seems a less attractive way to spend the Verizon proceeds, because it would increase Vodafone’s breadth but not depth. It would bind capital and prevent strategic investments in Europe, much as the US stake in Verizon did. Adding more countries to the portfolio would do little to fortify Vodafone’s position in existing countries, leaving them exposed to the headwinds of convergence and increased competition. Alas, for now, the amount of money retained seems to preclude such action anyway.</p>
<p>These are turbulent times in the telecommunications sector, but there should still be life after the shake-out. Trends towards automated homes, and the <a href="https://theconversation.com/explainer-the-internet-of-things-16542">Internet-of-Everything</a> more generally, offer firms some attractive areas for growth. If they are still standing, that is. </p><img src="https://counter.theconversation.com/content/17758/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ronald Klingebiel researches and advises companies in the telecommunications industries. His work attracts support from both corporate and government funding sources.</span></em></p>It’s the biggest corporate deal in more than a decade. Since the AOL-TimeWarner and the Mannesmann-Vodafone deals at the turn of the century, no transaction has come close to the US$130 billion involved…Ronald Klingebiel, Assistant Professor of Strategy, University of WarwickLicensed as Creative Commons – attribution, no derivatives.