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2013/11/15

| 11.15.13 | Sprint/T-Mobile merger faces fewer obstacles (but still a longshot)

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November 15, 2013
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Today's Top Stories

  1. Analysis: Airline merger opens door to still-unlikely Sprint/T-Mobile deal
  2. Sprint, T-Mobile, Dish and others urge FCC's Wheeler to let them get 600 MHz spectrum
  3. Sprint buys Revol's PCS spectrum licenses in Ohio as Revol winds down
  4. FCC's Wheeler pressures CTIA to clarify carriers' phone unlocking policy
  5. Google promotes white space spectrum database to developers, businesses


Also Noted: Radisys
Spotlight On... H Block auction moving ahead as scheduled
Pfizer moves away from BlackBerry; Sprint offering at least $20 for recycled phones and much more...

Microsoft pushes for TV white space, mixing policy and philanthropy
White space spectrum and technology can sometimes seem ho-hum, but it has a major backer in Microsoft. The software giant has embarked on a global strategy to develop and promote TV white space technology as well as spread the news about the benefits of liberalized spectrum policies in conjunction with the use of dynamic spectrum-sharing technologies. For more on Microsoft's white space efforts, check out this FierceWirelessTech special report.


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News From Across the Wireless Industry:
1. Is Verizon using Redbox Instant and Ellipsis to build a virtual pay TV platform?
2. Customer experience management to drive telco IT spending to $60.7B by 2017, says Ovum
3. Vivendi targets mid-2014 for SFR split


This week's sponsor is Cisco.

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Today's Top News

1. Analysis: Airline merger opens door to still-unlikely Sprint/T-Mobile deal


The Department of Justice's proposed settlement allowing American Airlines and US Airways to merge has sparked speculation that the Obama administration might allow a merger between Sprint (NYSE:S) and T-Mobile US (NYSE:TMUS) before the next president takes office. However, there are formidable barriers to such a deal, including the administration's own wireless priorities.

The Justice Department's antitrust settlement on American Airlines and US Airways, which came after the DOJ had sued to block the merger in August, will consolidate the airline industry down to four major players. The settlement includes divestitures at major airports and a pledge to maintain service to smaller cities. The tactic marks a reversal from the hardline stance that the DOJ took when it sued to block AT&T's (NYSE:T) proposed 2011 acquisition of T-Mobile, which led to that deal unraveling.

Executives from Sprint and T-Mobile have expressed a desire in recent months to combine at some point in the future to serve as a more effective counterweight to AT&T and Verizon Wireless (NYSE:VZ), which, according to industry analyst Chetan Sharma, accounted for 71 percent of U.S. mobile data services revenues in the third quarter and 68 percent of the nation's subscription base.

T-Mobile CFO Braxton Carter said at an investor conference in late September he thinks further consolidation in the U.S. wireless market is inevitable. "It's the logical ultimate combination," he told Reuters recently of a merger between Sprint and T-Mobile. "It is not a question of if but a question of when there is further consolidation in our industry."

Sprint CFO Joe Euetneuer has declined to comment directly on the merger of Sprint and T-Mobile. He said recently though that other markets have showed that having three competitors of roughly the same scale produces more competition. "From a macro perspective one would say that [further consolidation] would be a good thing for the industry," he said.

Japanese operator SoftBank has acquired 80 percent of Sprint via a deal that was finalized in July, around the same time Sprint acquired partner Clearwire. T-Mobile completed its own merger with prepaid player MetroPCS in May and has been operating as a publicly traded company since then. AT&T is pursuing a deal to acquire smaller prepaid player Leap Wireless (NASDAQ:LEAP), a deal AT&T expects to close early next year.

However, any Sprint/T-Mobile deal would face numerous complications. First, Sprint is in the middle of a complex network buildout and just committed to a nationwide deployment of its 2.5 GHz spectrum to augment its LTE service. That will take time, money and focus from the company's management team. Additionally, T-Mobile has spent 2013 carving out a new brand niche as the "uncarrier," and is completing its own LTE deployment.

Further, the two companies operate on different spectrum bands and technologies. T-Mobile uses 1700 MHz AWS spectrum for its LTE network and 1900 MHz PCS spectrum for HSPA+ services, while Sprint supports LTE on 800 MHz, 1900 MHZ and 2.5 GHz and CDMA services on 800 MHz and 1900 MHz. Sprint is still getting out from under its disastrous merger with Nextel, and likely does not relish the idea of more complicated network technology integrations.

Moreover, according to BTIG analyst Walter Piecyk, a Sprint/T-Mobile merger would fly in the face of the Obama administration's stated preference of having four national carriers.

"The top priority in the administration is a successful incentive auction" of 600 MHz broadcast TV spectrum, Piecyk told FierceWireless, which he thinks is not likely until 2015. "It's hard to believe that the administration, through its arms of the FCC or DOJ, would permit the merger of these two companies ahead an incentive auction, especially given the FCC is considering applying bidding restrictions on AT&T and Verizon."

At the heart of the incentive auctions is billions of dollars in expected funding for a nationwide public safety broadband network. Getting that funding requires broadcaster involvement, Piecyk noted, and getting enough broadcasters involved will likely rely on the belief that there will be numerous bidders for the 600 MHz spectrum. "These are big stakes at play," he said.  

For more:
- see this WSJ article (sub. req.)

Related Articles:
T-Mobile CFO thinks deal with Sprint is possible
AT&T CEO: Europe is ripe for mobile broadband investment
AT&T's Aio reassures customers as Leap acquisition approaches
Verizon's McAdam dismisses unlimited data plans: 'You will run out of gas'
AT&T wins approval of Alltel purchase, but with conditions
Verizon to buy Vodafone's 45% stake in Verizon Wireless for $130B

Read more about: AT&T Mobility
back to top


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2. Sprint, T-Mobile, Dish and others urge FCC's Wheeler to let them get 600 MHz spectrum


FCC Chairman Tom Wheeler has been on the job for barely two weeks, but Sprint (NYSE:S), T-Mobile US (NYSE:TMUS), Dish Network (NASDAQ: DISH) and other smaller carriers are already lobbying him to ensure rules that let them get access to 600 MHz broadcast TV spectrum in the forthcoming incentive auctions.

In a letter to Wheeler on Thursday, the companies' top executives--along with executives from U.S. Cellular (NYSE:USM), C Spire Wireless, Bluegrass Cellular, Cellular One, the Competitive Carriers Association and the Computer & Communications Industry Association--urged Wheeler to adopt rules for the auctions that would ensure "that the two dominant wireless incumbents not be allowed to lock competitive carriers out of acquiring low-band spectrum in the upcoming 600 MHz auction."

AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ) have repeatedly said limits on how much spectrum they can acquire in the auction will limit how much revenue the auction generates and will amount to picking winners and losers.

"AT&T and Verizon already hold licenses for nearly 80 percent of the low-band spectrum available for commercial broadband use," the executives wrote. "They have economic incentives to acquire the remaining low-band spectrum in the 600 MHz band to stop our companies--their competitors--from offering truly sustainable, competitive wireless broadband service across America. Low-band spectrum, with its excellent propagation and building penetration properties, is an essential element of the spectrum mix wireless carriers must have to offer wireless customers spectrally-efficient competitive pricing, terms, features, and technology."

"To be clear, none of us has ever suggested excluding the largest two carriers from the 600 MHz auction. Reasonable spectrum-aggregation limits, however, will help ensure that carriers of all sizes have a meaningful opportunity to acquire the low-band spectrum they need to sustain effective and efficient competition," they wrote. "More competition, in turn, means more jobs, more investment , faster innovation, and more economic growth in America. Competition will also enable the Commission to maintain its 'light-touch' regulatory approach to the wireless industry, rather than the aggressive regulation that duopoly tends to engender."    

Since taking office, Wheeler has been conspicuously silent on the hot-button issue of limits or bidding restrictions for the incentive auctions. The FCC is still receiving input and developing rules for the auctions, and the debate has been raging for well over a year between the larger and smaller carriers.  

Wheeler has said in multiple interviews that one of his chief goals is figuring out how to promote economic growth and innovation through competition, and another is enabling networks to deliver new services.

However, the whole debate over spectrum aggregation limits will largely be a moot point if the FCC can't persuade enough broadcasters to give up their spectrum for auction in the first place. The best-case scenario the FCC is hoping for is for broadcasters to give up 120 MHz of spectrum, but that will largely be determined by how much money broadcasters think they will get for the airwaves in the auction.  

"It would be a mess if you gave a party and nobody came," Wheeler recently told FierceWireless in an interview, acknowledging that broadcasters' participation is crucial.

For more:
- see this letter (PDF)

Related Articles:
FCC's Wheeler promises to work with broadcasters ahead of incentive auctions
New report urges FCC to avoid bidding restrictions for broadcast incentive auctions
T-Mobile, Verizon join forces on 600 MHz auction band plan
AT&T blasts T-Mobile proposal for 600 MHz auction
T-Mobile proposes sliding spectrum screen rule for 600 MHz auction
AT&T's Stephenson: Favoring Sprint, T-Mobile in 600 MHz auction a 'big gamble'

Read more about: C Spire Wireless, Bluegrass Cellular
back to top



3. Sprint buys Revol's PCS spectrum licenses in Ohio as Revol winds down


Regional wireless carrier Revol Wireless is selling 12 PCS spectrum licenses in the Ohio area to Sprint (NYSE:S). The transaction appears to be part of a wider effort by Revol to shore up its struggling business.

According to FCC documents, Sprint is buying the licenses to bolster the capacity of its network in the region. Sprint didn't say what type of network technology it would deploy on the 1900 MHz licenses, but the carrier likely will use the radio waves to expand the reach of its growing LTE network, which will eventually work across Sprint's 1900 MHz, 800 MHz and 2.5 GHz licenses.

Sprint spokesman John Taylor described the transaction as "small" and said Sprint will gain roughly 10-15 MHz per market in areas across Cleveland, Columbus, Indianapolis, Toledo and elsewhere. Taylor declined to provide financial details of the transaction. The FCC must approve the spectrum license transfer from Revol to Sprint.

It's unclear exactly what the move means for Revol. According to the FCC's spectrum database, Revol is transferring all of its spectrum licenses to Sprint. Further, Revol noted that "current customers are not part of the business transaction and will not be transitioned to Sprint," and ominously added that "unless CUI (Cleveland Unlimited Inc, the parent company of Revol) is otherwise able to transition all of its customers to another carrier, CUI plans to provide 30 days' notice to all non-transitioned customers in advance of any termination of service."

The news comes shortly after Revol confirmed to Crain's Cleveland Business that it has shut down around half of its stores in the Cleveland, Columbus and Indianapolis areas. The company said it now owns around 20 stores, down from a high of 40 during the middle of last year.

"It's a competitive environment," Revol CEO Timothy Yager told the publication. "I wish it was a little less competitive."

Multiple Revol representatives did not respond to questions from FierceWireless.

A person familiar with the matter said that Revol is working to wind down its operations and sell its customer base. That dovetails with the company's warnings in its FCC filing that it will terminate service if it is unable to transition its customers to another carrier.

Revol's creditors took over the regional carrier in 2011 when it was unable to make payments on $150 million in debt. At that time Revol's creditors brought in a new management, including Yager, to run the carrier.

For more:
- see this FCC filing (PDF)
- see this FCC announcement
- see this Crain's Cleveland Business article

Related Articles:
Sprint abandons pursuit of H Block spectrum
AT&T starts using PCS spectrum for LTE service
Revol sidesteps bankruptcy, plans LG Android smartphone

Read more about: Revol
back to top



4. FCC's Wheeler pressures CTIA to clarify carriers' phone unlocking policy


FCC Chairman Tom Wheeler is pushing the CTIA to amend its policies so that carriers would be more proactive in allowing consumers to unlock their phones. Wheeler said the CTIA and the wireless industry should act by year-end or expect the FCC to issue regulations on the issue.

Wheeler, a former CTIA president himself, is adding impetus to an issue that has been gaining momentum this year, as more government agencies have come behind the idea that consumers need more freedom to unlock their mobile devices.

In the letter to CTIA President Steve Largent, Wheeler wrote that any unlocking policy must "provide a clear, concise, and readily accessible policy on unlocking," and should unlock mobile wireless devices "for customers, former customers, and legitimate owners when the applicable service contract, installment plan, or early termination fee has been fulfilled." Further, he wrote, carriers should "affirmatively notify customers when their devices are eligible for unlocking and/or automatically unlock devices when eligible, without an additional fee." Wheeler also wrote that carriers "process unlocking requests or provide an explanation of denial within two business days," and that carriers unlock devices for military personnel upon deployment.

"It appears that CTIA and the FCC are in agreement on all but the third item regarding consumer notification," Wheeler wrote. "Absent the consumer's right to be informed about unlocking eligibility, any voluntary program would be a hollow shell."

Wheeler said the FCC's staff has been working on the issue with the CTIA for eight months and wants to resolve it soon. "Enough time has passed, and it is now time for the industry to act voluntarily or for the FCC to regulate," he wrote. "Let's set a goal of including the full unlocking rights policy in the CTIA Consumer Code before the December holiday season."

The hubbub over unlocking intensified in March after the Obama administration said it supports consumers who want to unlock their mobile phones without fear of breaking the law. The administration urged legislative fixes to remedy a recent government ruling on the topic that removed protections for people who do unlock their phones. The White House's statement was prompted by a petition on the issue that received more than 114,00 signatures.

The ruling on unlocking, from the Library of Congress, concerns the Digital Millennium Copyright Act, and was issued in October 2012. In effect, the Library of Congress, which governs copyright law, said that there is no copyright exemption for unlocking cellphones, making unauthorized unlocking potentially illegal.

In September, at the Obama administration's direction, the National Telecommunications and Information Administration petitioned the FCC to mandate that carriers unlock mobile phones and tablets free of charge and let customers who have met their contractual obligations switch to another carrier.

"Americans should be able to use their mobile devices on whatever networks they choose and have their devices unlocked without hassle," NTIA Administrator Lawrence Strickling said in a statement at the time. The NTIA also added in a statement that the proposed rule "would shift the burden associated with device unlocking onto the carriers that imposed the locks, and ensure they consistently do so in a way that is both expeditious and transparent."

Scott Bergmann, CTIA's vice president of regulatory affairs, said in a statement the trade group is interested in working with Wheeler and the FCC on the issue. "Today's U.S. consumers have a wide variety of unlocked device and liberal carrier unlocking policies available to them," he said. "CTIA also continues to advocate for the passage of 'The Unlocking Consumer Choice and Wireless Competition Act' (H.R. 1123), which would address consumer confusion about unlocking as a result of the 2012 decision of the Librarian of Congress. While CTIA supports giving consumers a robust set of options, it is important for consumers to note that an unlocked phone doesn't necessarily mean an interoperable phone, given the technological and engineering realities of wireless networks."

The bill Bergmann referenced, which was introduced in March by Rep. Bob Goodlatte (R-Va.), would, as the Congressional Budget Office explains, repeal the October 2012 ruling and reinstate an earlier rule that provided broader authority to unlock phones. The bill would also direct the Librarian of Congress to consider, within a year after enactment, whether to extend that broader authority to other categories of wireless devices in addition to smartphones.

As CTIA notes, an unlocked phone is not necessarily an interoperable phone. For instance, phones that work on AT&T Mobility's (NYSE:T) network are unlikely to work on Sprint's (NYSE:S) network since the two carriers use different technologies and spectrum bands.

For more:
- see this FCC letter (PDF)
- see this AllThingsD article
- see this The Verge article

Related Articles:
NTIA pushes FCC to mandate free cell phone unlocking
AT&T crows of unlocking policy; new legislation would protect unlocking
White House throws support behind unlocking phones
FCC's Genachowski: We'll investigate ruling on unlocked phones
Petition against unlocked phones ruling will force White House response
T-Mobile, Ting respond to rules requiring carrier approval to unlock phones

Read more about: Ntia
back to top



5. Google promotes white space spectrum database to developers, businesses


Google's (NASDAQ:GOOG) TV white space spectrum database system won approval for operation from the FCC over the summer, and now the company is encouraging developers and businesses to take advantage of it and the unlicensed airwaves it catalogues.

Since the summer, Google said "early testers have provided feedback and insights on future innovations. Testers included GE Industrial Communications, which used the database to explore how it could enable new communication options for its Industrial Internet products," according to Google's Alan Norman, who is the principal for access strategy at the company. Writing in a company blog post, Norman said that helping to manage white space spectrum--vacant frequencies that sit between TV broadcast channels--is part of Google's strategy to "further encourage dynamic spectrum sharing and the wireless innovation that it supports."

"Now, we're launching a developer API for the database that enables general exploration for any user, as well as a commercial account option for device manufacturers," he wrote. "The commercial account allows equipment makers to register their devices with our database in order to operate on available TV white space."

Google said Adaptrum, a Silicon Valley-based company focused on white space spectrum, is the first device manufacturer to be certified to use its spectrum database. Adaptrum is using the tool to provide public Wi-Fi on the campus of West Virginia University.

"The white space network, which is managed by Air.U co-founder Declaration Networks, uses Adaptrum's equipment integrated with our Spectrum Database," Norman wrote. "The collaboration shows how dynamic spectrum sharing can help deliver broadband coverage and capacity to more rural areas."

White space supporters such as Google contend the unlicensed spectrum is suitable for bringing cost-effective broadband service to rural and remote areas in the United States and around the world. The FCC has authorized use of five spectrum blocks for TVWS operations: 54 to 60 MHz, TV channel 2; 76 to 88 MHz, TV channels 5 and 6; 174 to 216 MHz, TV channels 7 to 13; 470 to 608 MHz, TV channels 14 to 36; and 614 to 698 MHz, TV channels 38 to 51.

Database systems such as Google's, which provides a list of available TV white space channels, are necessary to support unlicensed radio devices transmitting in the spectrum bands used by broadcast television. In order to avoid creating interference, TV band devices must contact an authorized database system to obtain a list of channels that are available at their individual locations and operate only on those channels. 

Google is not the only corporate backer of white space. Microsoft (NASDAQ:MSFT) has embarked on a global strategy to develop and promote TV white space technology as well as spread the news about the benefits of liberalized spectrum policies in conjunction with the use of dynamic spectrum-sharing technologies. Microsoft has involved itself in lots of initiatives to bring Internet connectivity to the unconnected and underserved, and has coordinated or participated in white space spectrum trials in places as diverse as Kenya, South Africa, Tanzania and the United Kingdom.

For more:
- see this Google blog post
- see this Google page
- see this Engadget article
- see this The Verge article

Special Report: Microsoft mixing TV white space, spectrum policy and altruism

Related Articles:
Redline TV white space system wins FCC, Industry Canada approvals
Ofcom picks BT, Microsoft and Google for 'major' white spaces trial
Microsoft flaunts WISER method of identifying TV white space
Google's TV white space database approved for operation
Google, Key Bridge wrap up TV white space database trials

Read more about: Google, Microsoft
back to top



Also Noted

This week's sponsor is Radisys.

eBrief | Partnering for DPI Deployment

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SPOTLIGHT ON... H Block auction moving ahead as scheduled

FCC Chairman Tom Wheeler said Thursday the 1900 MHz PCS H block auction will go forward on Jan. 22, as scheduled, despite Sprint (NYSE:S) and T-Mobile US (NYSE:TMUS) indicating they will not participate. According to Broadcasting & Cable, Wheeler said at a news conference after his first monthly FCC meeting as chairman that the absence of Sprint and T-Mobile will change the dynamics of the auction, but he pointed out that there was a reserve price of $1.56 billion, so the carriers' absence does not mean the FCC will necessarily lose out on revenue. He also said Sprint and T-Mobile ditching the auction could open the door to others to participate--Dish Network (NASDAQ: DISH) is now seen as the most likely winner of the auction. According to Broadcasting & Cable, Wheeler also said if he could walk around with a signboard advertising the auction, the message would be "Y'all come." Article

Quick news from around the Web.

@FierceWireless: Is #Verizon using Redbox Instant and Ellipsis to build a virtual pay TV platform? Article via @FierceCableFollow@FierceWireless

> Alcatel-Lucent plans to invest more heavily in its patent-licensing business. Article

> Sprint will offer at least $20 for recycled phones. Article

> Sprint is selling the HTC One Max for $149 with a contract. Article

> Sprint waived fees for U.S. calls and text Messages to the Philippines in the wake of the disaster there. Post

> Google released an iOS app for its Play Music service. Article

> Pharmaceutical giant Pfizer said it will move away from BlackBerry's phones. Article

> Samsung said it will invest in research into ice chemistry and next-generation computing cells. Post

> Microsoft said it will support Facebook Login in its Windows Phone platform. Article

> Nokia said it will add Bluetooth LE to all its Lumia smartphones. Article

> BlackBerry updated its BBM app for Android and iOS users. Article

> Samsung is reportedly at work on a Galaxy smartphone with a three-sided display. Article

> European regulators have agreed to allow LTE and 3G connections on airplanes. Article

> The FCC released its Android mobile speed test app. Article

Telecom News

> Cisco reported that fiscal Q1 2014 switching sales rose 3 percent to $3.75 billion as it saw an increase in the Americas and EMEA regions. Article

> AT&T said it hired 30 workers to support its broadband and cloud efforts in Connecticut. Article

Cable News

> Charter Communications said it will begin marketing its pay TV and broadband services under a new brand, Charter Spectrum, early next year. Article

> Comcast is taking on Disney and Viacom with its NBCU buyout of Sprout. Article

And finally… Coin promises to replace your plastic cards with a single digital one. Article


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Jobs


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The Account Executive is responsible for selling Optimum Lightpath Products and services to mid market companies in an assigned geographic area. This position will sell to new accounts as well as to existing accounts as assigned. The AE-II will generate leads by cold calling, networking and referrals as well as closing leads generated through various marketing initiatives...Learn More

> Need a job? Need to hire? Visit FierceWirelessJobs

Announcing FierceWirelessJobs, the new FierceMarkets careers site. Find the perfect job or post your openings at http://www.fiercewireless.com/jobs.

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