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Are Sprint’s own business moves justifying AT&T’s?

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?

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Sprint gives investors, consumers a misconception of the discovery process

Sprint’s vice president for government affairs, John Taylor, recently posted a blog entry describing AT&T’s resubmission of economic data as a red flag that the Federal Communications Commission is getting nearer to not approving AT&T and T-Mobile’s joint request to transfer wireless licenses from T-Mobile to AT&T. On the contrary, observers of the FCC’s review, particularly consumers and investors, should look at this as part of the process of clarifying information rather than a got you moment for a number of reasons.

First, because the members of the FCC have been keeping their word about being mum about the transfer application, we should not assume to know what the FCC or its staff is thinking. Any government affairs professional will tell you that resubmitting economic and cost data is par for the course. Either the FCC’s staff could not follow the information, or they probably simply needed more detail; detail, I may add, that may be sufficient to approve the transfer request.

Second, the FCC’s standard for review of the license transfer is whether the transfer of the licenses is in the best interest of the public. Any past commissioner or regulatory commission staffer, whether on the state or federal level, will tell you that the public interest standard elicits groans from regulators and industry alike. There is no bright line definition; it‘s hard to pin down.

Given the enormity of this transaction, the pending review by the U.S. Department of Justice, the market’s taste for big mergers, and consumer advocates disdain for this transaction, it is very reasonable to conclude that the FCC is not only playing this close to the vest, but being very cautious.

Like any baseball season, opponents of the transaction may find themselves in first place prior to the all-star break, but even an avid baseball fan like Mr. Taylor should know that the pennant winner may be the team that came from behind in the last half of the season.

Investors and consumers should simply see this as the seventh inning stretch.

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AT&T/T-Mobile is more than just the phone

Posted August 28th, 2011 in AT&T, FCC, Government Regulation, mobile telephone, T-Mobile USA, wireless communications and tagged , , by Alton Drew

CNET.com’s Kent German questioned in a recent blog post why Sprint’s move to sell the iPhone starting in mid October would not improve AT&T’s chances of getting its proposed acquisition of T-Mobile approved.

That’s because it is about the phones, the operating systems that drive them, and the apps that are developed for a app-hungry consumer. When the FCC talks about promoting a robust wireless ecosystem, they are also talking about the operating system and applications portion of wireless. T-Mobile, AT&T, Sprint, Verizon; all are just platforms for programs and maintenance plans. The U.S. must implement and grow its 4G environment in order to attract new and improved operating systems and apps.

T-Mobile has all but said that they are exiting the U.S. if this acquisition does not go through. The FCC can either grant the licenses now, or auction them off two years later when T-Mobile exits the U.S. market because Deutsche Telekom decided to cut off its allowance. That delay will only cost T-Mobile’s customers more money because they will have to buy services priced in a more spectrum constrained market.

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MMTC’s Honig makes compelling argument about Dr. King, broadband adoption

In a piece written for The Huffington Post, David Honig, co-founder of the Minority Media and Telecommunications Council, makes a valid argument for increasing efforts to promote broadband adoption in unserved and underserved urban and rural communities. Social media is playing an increasingly important role in getting information out. The updates on Hurricane Irene and the earthquake and aftershocks that hit the east coast recently are reminders of the communications alternative social media provides. Events in the Middle East and North Africa also show how effective an organizing tool social media can be.

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Too much emphasis on $3.8 billion option

A lot of focus is being placed on the $3.8 billion AT&T could have paid to expand beyond its initial plan of record. The $3.8 billion is incremental to the original plan. Both plans would have called for upgrades and expansions of physical networks, but neither plan included the additional licenses needed nor the customer base that T-Mobile has. The acquired customer base is at the heart of the premium.

It appears the companies business judgment said to pay for it now rather than later and deploy an ITU standard 4G service vs. HSPA. I’d rather see the FCC defer to AT&T’s business judgment than replace it with theirs. That would create a slippery slope much scarier than a mere transfer of licenses.