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Motley Fool thinks AT&T is bullish when it comes to spectrum

A post in the Motley Fool describes AT&T management as “bullish” when it comes to spectrum. The post uses AT&T’s attempts at acquiring T-Mobile last year (Wow, has it been a year?) as an example. Another example includes buying smaller companies in order to obtain more spectrum. AT&T’s two-year data plan package for 3G and 4G tablets is expected to eat into Sprint’s reputation as the cheapest provider of data, according to Motley Fool.

The bullishness appears like the appropriate strategy in my opinion. Sprint has made 70% of itself available for purchase by Japan’s Softbank and is also considering buying out the remaining investors in Clearwire. While Sprint’s pending moves won’t be enough to knock AT&T or Sprint from their industry leading positions, Sprint can become a stiffer competitor in the wireless market.

Hopefully the Federal Communications Commission continues to play observer this time around. A facilitating regulator the FCC was not as it signaled to the industry and the U.S. Department of Justice its lack of support for last year’s proposed takeover of T-Mobile by AT&T. By rule, the FCC must approve the transfer of licenses from Clearwire to Sprint assuming Clearwire no longer operates as a separate entity if Sprint goes ahead with a buy. I would not be surprised if Sprint goes ahead with a complete acquisition that sends Clearwire into spectrum heaven. It would probably make the company more valuable to Softbank if Sprint actually has its name on those licenses.

Either way, the FCC should, to use a sports term, let them play. If any regulatory approvals are needed, they should be granted with haste. A minimalist regulatory approach is what’s needed right now.

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Sprint goes after spectrum from U.S. Cellular

Sprint recently announced plans to buy spectrum and customers from U.S. Cellular. For $480 million and the assumption of certain liabilities, the nation’s number three wireless carrier will get 585,000 customers in the states of Illinois, Indiana, Michigan, Missouri, and Ohio.

Sprint will obtain 20 MHz of spectrum in the 1900 MHz band in Chicago, South Bend, Indiana, and Champaign, Illinois. An additional 10 MHz of spectrum will be acquired in St. Louis, Missouri.

The mid 2013 closing on this deal all depends on the U.S. Department of Justice and the Federal Communications Commission. Hopefully these august agencies will recognize that this autonomous transaction spawned in the free market is the fastest and most efficient way to get spectrum into the hands of companies and customers willing to pay the premium for it.

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Should regulators have a problem with Sprint being owned by a Japanese cell phone provider?

Posted October 12th, 2012 in FCC, Government Regulation, spectrum, Sprint and tagged , , by Alton Drew

The New York Times yesterday reported that Japanese telecommunications company SoftBank is in merger talks with Sprint, possibly to invest up to $12.5 billion for a 70% stake in the company. On the surface, I don’t see a regulatory problem with such merger unless the Federal Communications Commission is ready to buck precedence on foreign companies owning U.S. operations.

The first issue will be whether Sprint will be directly or indirectly controlled by any other corporation of which more than one-fourth of the capital stock is owned of record or voted by aliens, their representatives, or by a foreign government or representative thereof, or by any corporation organized under the laws of a foreign country. If the answer to the first issue is yes, then the second issue will be whether the public interest will be served by the refusal or revocation of such license.

The Federal Communications Commission will make its determination based on the following criteria. First, the FCC will determine if the claimed benefits of the transaction are actually related to the transaction. There must be likelihood that the benefits result from the investment and the benefits would unlikely result from other means that entail less anti-competitive effects.

Second, the claimed benefits must be verifiable. The parties must be provide sufficient evidence supporting each claimed event so the FCC can verify the likelihood of the benefits and their magnitude.

Finally, where there are substantial and likely harms from the transaction, the parties must demonstrate that the benefits they claim will result from the transaction must reveal a higher degree of magnitude and likelihood.

Right now Sprint and SoftBank are just talking, according to the Times report. We should have some idea as to what they claim the transactions benefits will be over the next several days.

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Orange County hasn’t made its interference case against wireless carriers

Posted September 26th, 2012 in AT&T, Broadband, FCC, Government Regulation, spectrum, Sprint and tagged , , , , , by Alton Drew

The Orange County, California Sheriff’s Department would like the Federal Communications Commission to reconsider its order that provided spectrum management flexibility in the 800MHz band. Orange County argues that authorizing early testing and deployment of wideband CDMA in the non-reconfigured portion of the 800MHz band has caused interference with their public safety communications.

CDMA refers to Code Division Multiple Access, a mobile phone technology that uses code on the receiver’s end to separate out the calls. A newer version called wideband CDMA or 3G GSM requires wider channels and carries more data, and that is the policy dilemma.

The FCC’s intent behind its Report and Order in Docket Nos. 11-110 and 12-64 was to allow wireless carriers to introduce more advanced wideband technologies on their licensed spectrum where there was little risk to public safety operations. The FCC issued the order in expectation that licensees introduce CDMA and LTE technologies while incurring additional compliance costs.

The introduction and evident demand for the new iPhone serves to validate the FCC’s policy position. The demand for new, innovative technology continues to grow. Commercial carriers must continue to seek out additional spectrum to manage consumer needs. Allowing flexibility in channelization allows wireless carriers to meet that ongoing goal.

In addition to policy, Orange County did not explicit show where current rules on interference were violated. For example, FCC rule 90.672 spells out specific requirements for a showing of unacceptable interference in the 800MHz band. Orange County fails to assert that the requirements under Rule 90.672 were met.

Also FCC rule 90.673 spells out a wireless carrier’s obligation to abate interference. Orange County has not clearly asserted that AT&T failed to abate the interference in a timely and practicable manner, although it gives Sprint credit for doing so. How much of a difference Sprint’s CDMA vs. AT&T’s GSM configurations play in abatement efforts is not discussed in Orange County’s complaint.

From a policy perspective, reconsidering the Report and Order only sets back efforts to meet the increasing consumer demand for spectrum. The FCC should require both AT&T and Orange County to work through the FCC’s resolution procedures or otherwise negotiate some solution to the problem short of amending the order.

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Will the FCC have another mega merger to consider?

The Internet is blowing up not only with news of the sale of Apple’s iPhone 5, but also with the speculation that Sprint may be considering a little mischief in the mergers and acquisitions arena. One commentary on Seeking Alpha reports that Sprint CEO Dan Hesse may be considering buying a smaller carrier after the build-out of the company’s 4G LTE network.

Who might be the potential buys? They may include MetroPCS, Leap Wireless, or U.S. Cellular. Of course this is all speculation, but should Sprint make a move to purchase one of these carriers, I would hope that the Federal Communications Commission and the United States Department of Justice would have the good economic sense to let this merger go through.

First, such a move would satisfy the FCC’s alleged preference for competition and the benefits it brings to the consumer. An enlarged Sprint could reach more consumers and with the increased economies of scale, they would be able to serve those consumers at lower costs than with its current network.

Second, with a company like Leap Wireless in its portfolio, Sprint can not only continue providing unlimited data plans to consumers, but has another brand that can extend wireless broadband services into lower income markets. These would mean more consumers adopting wireless broadband and enjoying its benefits of connectivity.

Third, the FCC need not worry about a duopoly remaining in the wireless market after the transaction is completed. Sprint may end up a stronger third alternative to AT&T and Verizon.

But hey; what about T-Mobile? T-Mobile may be out of play simply because T-Mobile runs on a GSM network while Sprint CDMA network. Why incur the additional expense converting T-Mobile over to Sprint’s network when U.S. Cellular, MetroPCS, and Leap Wireless run on CDMA.

Finally, there is no reason for government interference in the making of a market in such an instance. Wireless carriers have naturally been expressing demand for spectrum especially since the introduction of the iPhone In 2007 began the onslaught on spectrum we see today.

Oh well, we’ll stay tuned.