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FCC signals it likes AT&T’s $14 billion broadband play

Posted November 7th, 2012 in 4G, AT&T, Broadband, FCC, Government Regulation, LTE and tagged , , , , by Alton Drew

The Federal Communications Commission is whistling a tune investors should like. Today the regulator of one-sixth of the American economy hailed AT&T’s decision to invest $14 billion in Long Term Evolution (LTE) and IP wired broadband networks as “proof positive that the climate for investment and innovation in the U.S. communications sector is healthy.” FCC Chairman Julius Genachowski noted that today’s announcement brings the total to $200 billion invested in broadband networks since 2007.

According to a statement released earlier today by AT&T, the company expects its LTE network to cover 300 million people by the end of 2014. In addition, fiber deployment is expected to reach an additional 1 million businesses. Also, 99% of customers in wireline service areas will be able access high-speed broadband via IP wired networks or 4G LTE, according to a press release issued today by AT&T.

Of particular interest to investors is the expected mid-single digit growth in earnings per share over the next three years, with unspecified higher growth beyond that.

If the FCC is concerned by an apparent abandonment by AT&T of any plans to deploy copper in the future, the agency did not let on in its press release this afternoon.

“As our National Broadband Plan said, extending wired and wireless broadband across America is the
‘great infrastructure challenge of the 21st century’”, said Mr. Genachowski. “America’s 21st century economy and our global leadership depend on meeting this challenge. Through our groundbreaking steps to free up spectrum, our once-in-a-generation overhaul of Universal Service, our phase-down of the byzantine and outdated inter-carrier compensation system, our Broadband Acceleration Initiative and numerous other actions, we’ve taken major strides to promote private investment in broadband networks.”

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Sprint Encourages Incorporation of H-Block Frequencies Into Current Operations

On July 2, 2012, Sprint Nextel argued to the Federal Communications Commission that the company needs to incorporate frequencies from the PCS H-Block into the company’s current operations. Sprint argued that the wireless broadband company could provide additional capacity and higher peak speeds if this were done.

Back in 2004, the FCC auctioned off the band of frequencies 1915-1920 MHz and paired it with the band of frequencies 1995-2000 MHz to create the PCS H Block. The block was to be used for 3G services.

According to Sprint, the PCS H Block contains near term deployable spectrum. Sprint may need to deploy as soon as possible if it is to keep up in the modern day armed race that is deployment of 4G services. It has already lost opportunities to purchase carriers MetroPCS and T-Mobile. What they have may not be enough, according to telecom analyst Roger Entner. The company has about half of the spectrum AT&T and Verizon have available for their 4G LTE networks.

Not a good position to be in if the number three wireless carrier in the country wants to maintain that spot much less keep its investors happy. The company is bumping up against the FCC’s potential delay in getting rules written that would administer the auction of these frequencies. Add the competition from Verizon and AT&T for these frequencies and you get a much sharper picture of Sprint’s political and legal moves last year to stop AT&T from acquiring T-Mobile.

Should the FCC acquiesce to Sprint’s hard court lobbying to have rules promulgated that swing in the company’s favor? No it should not. Sprint and the FCC always cry about competition and robust markets, and transparency. This is the time for the FCC to show that it actually believes in competition. Any rules promulgated to auction of the PCS H Block should allow all wireless carriers the opportunity to compete for the spectrum. Let airwave access move to the carrier that can extract the most value for the most consumers.

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Sprint is getting further into the iPhone game

Posted March 30th, 2012 in Broadband, mobile telephone, Sprint, wireless communications and tagged , , , by Alton Drew

The Wall Street Journal reported back on 27 March 2012 that Sprint has plans to offer 4G phones on an LTE network. Given the time and energy the company wasted trying to block the AT&T/T-Mobile merger, it’s about time.

It’s good to see from a broadband adoption standpoint that Sprint is deploying a network that can help the company deploy these advanced mobile devices. If it can leverage a price strategy that gets the company more customers at a lower price to consumers, all the better. Lower prices charged to consumers keeps them connected.

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Now they are complaining …

Posted February 21st, 2012 in FCC, Government Regulation, spectrum and tagged , , , , by Alton Drew

CNN started a weeklong series today on the spectrum crunch. What I found interesting was the number of comments to the first post. In a way, I wanted to say, “I told you so.”

My cursory review of the comments found that consumers had no sympathy for disciples of 4G. Customers who swore that they only used their phones to (shudder) make phone calls were critical of consumers who spent too much time on the networks posting pictures, texting, and socially networking with friends that for half the monthly subscription price they could have lunch with.

I, along with one other commenter I read, raised the issue of this is what you get when you are afraid of consolidation. I repost my comment to CNN here for your review.

Slowing down inevitable price increases can only come about in one of two ways. The first way is unacceptable, which is to regulate prices. Wireless access to broadband, while increasingly important for commerce, is not a utility. Additional regulation in wireless will bring about greater inefficiencies in terms of service delivery. Wireless firms would have to create new service niches in order to subsidize rates for consumers who could otherwise not afford increased prices.

The second option is to allow more consolidation. Consolidation creates the economies of scale necessary for keeping rates down. Economies of scale means lower cost per unit of service provided. Bigger firms help to deliver this type of scale. This is why denying the AT&T, T-Mobile merger was a big mistake.

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Norquist raps FCC on knuckles for pulling a John Kerry

Grover Norquist co-authored a piece criticizing the FCC’s foot-dragging on the issue of spectrum access. As a case study, Mr. Norquist refers to the challenges LightSquared is facing from other agencies while the FCC apparently is looking the other way. According to Mr. Norquist, the FCC is pulling a John Kerry double take: I was for LightSquared building a $14 billion 4G network before I was against LightSquared building a $14 billion network.

I did appreciate Mr. Norquist’s take on the FCC’s push for rules that would basically allow the agency to choose to whom spectrum will go and to decide who gets to bid on it in the first place. What the FCC is signaling is not competitive bidding. The FCC should not be picking winners and losers. The Japanese did something similar in the 1990s; picking the industries they felt should survive.

Have you heard of the Lost Decade? This type of economic strategy didn’t help Japan pull out of its economic and financial doldrums. Why should we expect picking favorites to work here in the U.S.?