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Do I sense anti-trust promotion from smaller wireless carriers?

I just finished tuning into The Communicators on CSPAN-2. The guest was Steven Berry, president and chief executive officer of the Competitive Carriers Association. They represent a bunch of wireless carriers from T-Mobile and Sprint on down. Mr. Berry managed to give interim Federal Communications Commission chairman Mignon Clyburn some love this evening for her ability to move AT&T towards voluntarily allowing smaller carrier devices to inter-operate on the larger carrier’s network.

Mr. Berry addressed what he saw as the disadvantages of smaller carriers not being able to transmit a national footprint without the ability of their devices operating on a larger carrier’s network and touted Ms. Clyburn pro-consumer proclivities as helping bringing AT&T around in the 700 MHz band and hoped that the FCC would be able to help bring about the same results in 600 MHz band.

If you are a Run-DMC fan, think of the line from the “King of Rock” where the rap duo boasts that they and their music can knock down ceilings and walls. That’s why the 600 MHz and 700 MHz portions of the airwaves are preferably where cell phone companies would like to transmit their phone signals. Phone signals can travel long distances on these frequencies, which is ideal for rural wireless communications. Signals traveling on these airwaves can penetrate walls which is advantageous to urban communications where someone may be making a phone call from the basement.

What got my ears up was Mr. Berry’s discussion on consolidation in the wireless market. Mr. Berry expressed his concern that Tier 2 carriers were riding off into the sunset, pointing out that at least five Tier-2 carriers had gone the way of the Dodo bird over the last twelve months. Mr. Berry asked how far consolidation should go. His question sounded like an invitation for more anti-trust action on the part of the federal government, especially given his belief that Ms. Clyburn and perceived new chairman Tom Wheeler have consumer interests at heart. That’s a red flag for government action that promotes competition. We heard those words before two years ago when the U.S. Department of Justice sued to stop the acquisition of T-Mobile by AT&T.

Is anti-trust law designed to promote competition while protecting consumers or is it designed to keep a couple competitors at bay while leveling the technology playing field for everyone else? Again, Mr. Berry appeared to be hinting so considering the question may be premature.

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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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How long will T-Mobile stay number four?

Yahoo! News has an article on Deutsche Telekom’s dilemma regarding its T-Mobile USA unit. It appears that even with $3 billion and a billion dollars worth of spectrum, Deutsche will have a hard time making T-Mobile a viable provider of 4G services.

While the big boys, AT&T and Verizon build out their 4G LTE platforms, T-Mobile is not expected to afford the construction of its own LTE network. A partnership with AT&T would have been nice, but the allegedly forward looking U.S. Department of Justice nixed that piece of solid business judgment in the bud.

With Sprint mismanaging itself into a second tier regional carrier, and T-Mobile resigning itself to quasi 4G status, a weakened oligopoly is starting to show itself. Looks like all we have done is jacked up the transactions costs for getting us to a duopoly.

What type of restructure in our regulatory institutions would be necessary for avoiding this type of waste in the future?