Gramercy Capital’s Joan Lappin contributed a short and insightful piece on Clearwire’s inventory of spectrum. The piece, “Everybody Covets that Clearwire Spectrum”, appeard on Forbes.com. While Ms. Lappin does not support the proposed acquisition of T-Mobile by AT&T, she raises an interesting point about Clearwire and one of its owners, Sprint.
“AT&T has made its case to buy T Mobile as one in which the combination of the two would provide T with badly needed spectrum. But if both companies are capacity constrained, it is hard to see how that computes. In round numbers, Clearwire has more spectrum than the combined ATT and T Mo will have if that deal is allowed to fly. (I vigorously oppose the deal on anti-trust grounds because if approved as it will result in a duopoly in the U.S. sending cellular prices much higher.)
Even as it has been starved for cash and had to suspend its own 4G buildout this year, Clearwire’s top management has known all along that it must “evolve” away from the WiMax offering it now has to 4G LTE.
It ran a test in Phoenix some months ago that was wildly successful in speed. It said on its recent conference call that for $600 million it can transition its network to LTE (Long Term Evolution TDD) by overlaying what it has already built. What I don’t understand is why it would take a year to do that as described on their conference call.
If you send the workers out into the field to do a software upgrade and swap out a few line cards, I’m not sure why that takes a year but whatever. Sprint is talking billions to build its own LTE network. HELLO. Why would you do that when you already own half of Clearwire and far less than a billion would do to complete a national build? Makes no sense to me.
Remember that the only part of Sprint’s business that is growing and not shriveling away is the 4G part which is carried on the Clearwire network. In the meanwhile, the geniuses at Sprint are wasting time talking to LightSquared which has no money and it isn’t clear has any frequency either. “
While I disagree with Ms. Lappin on the merger, I agree that Sprint is not making any sense. According their vice-president for government affairs, John Taylor, AT&T is being disingenuous about its decision not to spend $3.8 billion to expand its network.
As I stated in an earlier post, AT&T exercised its good business judgment to pursue a plan that involves not only buying hard facilities, but also T-Mobile’s customers. While Sprint, like any other opponent to the acquisition, is entitled to their position, is it really in the public interest for the Federal Communications Commission or the U.S. Department of Justice to give weight to arguments of a carrier that is apparently, in my opinion and the opinion of a number of analysts, struggling to make good business decisions of its own?