An Ignoble Experiment

2. T-Mobile to shut down MetroPCS CDMA network in New England, Las Vegas by end of Q2

Spectrum controlled by Sprint (NYSE: S) represents the bulk of the airwaves the FCC is expected to add to its so-called spectrum screen, potentially inhibiting any deal between Sprint and T-Mobile US (NYSE:TMUS).

According to the Wall Street Journal, and consistent with statements last week from an FCC official, 101 MHz of Sprint's 2.5 GHz spectrum is being added to the screen out of the net 128.5 MHz in total being added. Sprint had argued its 2.5 GHz spectrum--Sprint owns around 120 MHz of 2.5 GHz spectrum in 90 percent of the top 100 U.S. markets--should not be counted in the screen. Sprint is using the spectrum to deploy TD-LTE service and increase speed and capacity on its network.

Dish Network's (NASDAQ: DISH) spectrum--40 MHz of AWS-4 spectrum and the 10 MHz block of 1900 PCS H Block spectrum it recently won at auction--will also be counted. Sprint and Dish's spectrum will be added to the screen because the FCC determined that the airwaves are suitable and available for mobile broadband use, the FCC official said.

The FCC will vote on the new spectrum screen at its May 15 meeting. However, the rules could change before then.

The FCC currently uses the screen as a factor when reviewing spectrum transactions to determine whether they are in the public interest. If a carrier acquires too much spectrum and violates the screen, the deal is more closely scrutinized. Currently, the screen is different for each proposed transaction. The FCC has been reviewing changes it should make to the screen since 2012.

The screen can trigger a more detailed competitive analysis by the FCC, and currently the trigger occurs when a wireless provider holds one-third or more of the available spectrum in a given market. As the Journal noted, the new screen would cause Sprint to hit or exceed the one-third threshold in most major markets.

The proposed changes will keep using the one-third spectrum holding factor. The proposed rules would also continue to use a case-by-case review for transactions involving spectrum below 1 GHz.

The new spectrum screen rules will only affect transactions after the upcoming spectrum auctions, for AWS-3 spectrum later this year and the 600 MHz auction, planned for mid-2015.

A Dish spokesman declined to comment and a Sprint spokesman did not immediately respond to a request for comment.

However, in a recent FCC filing that noted a meeting Sprint had last week with FCC officials, Sprint said it was important for the FCC to differentiate between different bands of spectrum included in the screen. The company said the changes would make the screen less meaningful in determining which transactions warranted extra scrutiny.

"Sprint noted that proposals to include the vast majority of the 2.5 GHz band, without significant reductions to reflect the encumbrances to broadband deployment (over and above the educational reserve and white spaces), would produce counter-intuitive results under the screen," the company wrote. "This outcome would render the proposed revised screen ineffectual in diagnosing the potential for undue market power and thus would not assist the Commission in identifying transactions warranting in-depth competitive review. Moreover, as proposed the revised screen would contravene the public interest by facilitating the ability of the most dominant firms to bolster their already-dominant spectrum holdings."

SoftBank CEO Masayoshi Son explicitly called for a deal between SoftBank-owned Sprint and T-Mobile in March, and said combining the No. 3 and 4 wireless carriers would ignite a "massive price war" and more competition in the U.S. market. However, since then speculation about a deal has gone cold amid perceived opposition from regulators.

The changes to the spectrum screen would make it more difficult for Sprint to pursue a deal with T-Mobile. "Sprint could still bid on AWS-3 spectrum even though it would take them over the spectrum screen but it has indicated little interest in bidding on AWS-3 spectrum," BTIG analyst Walter Piecyk wrote in a blog post. "More importantly, an acquisition of T-Mobile would clearly take them well over the screen, whether they bought AWS-3 or not. Some might argue that Sprint could divest some 2.5/2.6 GHz spectrum but this spectrum is central point to Softbank CEO's Masa Son's differentiated strategy."

Piecyk also noted that the changes to the screen could potentially allow the other Tier 1 carriers to buy Dish and AWS-3 spectrum without hitting the new proposed screen threshold.

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

Related Articles:
FCC to add Sprint, Dish spectrum to spectrum screen
SoftBank's Son: We can start a 'massive price war' following a Sprint/T-Mobile deal
AT&T warns it might skip 600 MHz incentive auction due to FCC's proposed restrictions
Report: FCC's planned incentive auction rules would set aside spectrum for smaller carriers
Wooing TV broadcasters is FCC's next big job for 600 MHz incentive auction
Verizon says FCC can't ignore Sprint's 2.5 GHz licenses in spectrum screen
FCC to issue report on 600 MHz incentive auction structure in the spring

Read more about: Sprint
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This week's sponsor is IEEE Computer Society.

Actionable advice from mobile cloud leaders. Visit www.computer.org/Mobile-Cloud

By Phil Goldstein

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3. Microsoft's Elop says Nokia brand won't be used on future smartphones

T-Mobile US (NYSE:TMUS) is notifying customers of its MetroPCS prepaid brand in New England and Las Vegas that they will need to upgrade their devices as T-Mobile prepares to shut off MetroPCS' legacy CDMA network in those areas and move customers to its GSM-based network.

A MetroPCS web page tells customers in those areas they should check to see if their phone is eligible for an upgrade credit so they can get a new, GSM-based phone. Some phones will be free plus sales tax. Customers need to upgrade by June 30.

The website notes: "Don't wait--customers on the legacy network in New England and Las Vegas will need to upgrade by 6/30/14. Phones operating on this legacy network will no longer work effective 7/1/14."

"We are not shuttering service for MetroPCS customers," T-Mobile said in a statement. "We ARE moving MetroPCS 3G CDMA customers to a better, faster network and offering them 4G HSPA+/LTE phones--giving them a better experience on a better network at almost no cost to them."

In February, T-Mobile said it would shut down MetroPCS' CDMA networks in Philadelphia, Las Vegas and Boston by the end of this year, a year earlier than expected.

At an investor conference in early March, T-Mobile CFO Braxton Carter said that the transition of MetroPCS customers to T-Mobile's network was going better than expected. At that time, he said that around 40 percent of MetroPCS customers were using T-Mobile's GSM/HSPA+/LTE network, and that by the end of the year 80 percent of MetroPCS customers would be on the T-Mobile network. Carter said that the CDMA shutdowns would happen on a market-by-market basis, and that the shutdown of MetroPCS' CDMA network would result in an additional $1 billion in annual cash flows for T-Mobile.

T-Mobile is refarming MetroPCS' AWS spectrum to bolster capacity on its LTE network. The company also recently confirmed it is starting to deploy 4x2 MIMO antenna technology in its LTE network to enhance network performance at the cell edge and generally boost the customer experience.

T-Mobile has said it will expand its LTE network to encompass its entire 2G EDGE network by the middle of 2015. T-Mobile's LTE network currently covers 210 million POPs, and the company has previously said it plans to increase that to 230 million by mid-year and 250 million by the end of 2014.

For more:
- see this MetroPCS page
- see this PhoneScoop article
- see this TMoNews article

Related Articles:
T-Mobile confirms deployment of 4x2 MIMO to boost LTE network performance
AT&T to launch renewed Cricket prepaid brand in Q2
T-Mobile takes on Verizon in LTE advertising and network battle
T-Mobile to upgrade 2G EDGE network to LTE in coverage push
T-Mobile's Ray knocks RootMetrics report, lays out LTE vision
T-Mobile notches 1.6M new subs in Q4, will shutter 3 MetroPCS CDMA markets this year

Read more about: CDMA, Handsets
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By Phil Goldstein

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4. Report: HTC names new CFO as current finance chief focuses on sales

Now that Microsoft's (NASDAQ:MSFT) $7.5 billion deal to buy Nokia's (NYSE:NOK) devices and services business has officially closed, Microsoft is starting to reveal some changes that are coming. One, according to Microsoft executive Stephen Elop, is that Microsoft does not plan on using the Nokia brand for much longer for Nokia's smartphones.

Click here to watch Microsoft's new ad for Nokia phones.

As part of the deal, Microsoft has the right to license the Nokia brand for feature phones. However, Elop indicated that Nokia Windows Phones smartphones, which Nokia has been marketing under the Lumia brand, will not carry Nokia's distinctive branding much longer.

"Microsoft Mobile Oy is a legal construct that was created to facilitate the merger," Elop said on Nokia's website in a live question and answer session. "It is not a brand that will be seen by consumers. The Nokia brand is available to Microsoft to use for its mobile phones products for a period of time, but Nokia as a brand will not be used for long going forward for smartphones. Work is underway to select the go forward smartphone brand."

Elop is now executive vice president of Microsoft's Devices Group and reports to Microsoft CEO Satya Nadella. Elop, a Microsoft veteran, stepped down as Nokia CEO last fall and had been serving as head of Nokia's devices and services division. Nokia executives Jo Harlow, Juha Putkiranta, Timo Toikkanen and Chris Weber have also moved over to Microsoft, along with 25,000 other Nokia employees.

During the Q&A, Elop said Nokia's devices unit can now take innovation even further, but he did not provide many details. By combining with Microsoft, "we will each be able to innovate together in ways that we could not as separate companies. Lots of good things ahead."

Microsoft has said it will continue to support Nokia's Android-powered X Phone line of devices, likely because they use Microsoft services. The X phones are targeted at price points below low-end Lumia devices. Elop elaborated on that: "Microsoft acquired the mobile phones business, inclusive of Nokia X, to help connect the next billion people to Microsoft's services," he said. "Nokia X uses the MSFT cloud, not Google's. This is a great opportunity to connect new customers to Skype, outlook.com and Onedrive for the first time. We've already seen tens of thousands of new subscribers on MSFT services."

In other Windows Phone news, research firm Kantar Worldpanel ComTech found that the platform made up 8.1 percent of smartphone sales in the 12 weeks to the end of March across the top five European markets (the UK, France, Spain, Italy and Germany). In that time period and for those markets, Android made up 70.7 percent of sales and iOS made up 19.2 percent. "Windows had a tough start to the year as a result of its entry-level Nokia models facing fierce competition from low-end Motorola, LG and Samsung Android smartphones," Kantar noted.

Additionally, The Verge reported that one of the first new Windows Phone 8.1 devices Microsoft will release via Nokia will have a 5-megapixel front-facing camera to take better selfies. The report, citing unnamed sources, said the device (codenamed "Superman") will be a 4.7-inch, mid-range phone expected to debut toward the end of the year.

Microsoft has also put out its first advertisement for Nokia since the deal closed. The ad emphasizes Nokia's bright colors for its phone and uses The Kinks song "I'm Not Like Everybody Else" to play up Nokia's underdog image in the smartphone market. The emphasis seems to be on the notion that using Windows Phone will set consumers apart.

For more:
- see this Nokia post
- see this Marketing Week article
- see this Kantar post
- see this The Verge article
- see this BGR article

Read more about: Microsoft, Windows Phone
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By Phil Goldstein

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5. Rumor Mill: Facebook to unveil Facebook Audience Network mobile ad network this week

HTC has reportedly named a new CFO as its current CFO focuses more on global sales amid the company's efforts to revive revenues behind its new flagship One M8 smartphone and mid-range phones.

Chang

According to a Bloomberg report, which cited unnamed sources, Edward Wang was named CFO to replace incumbent CFO Chang Chialin, who is putting more effort into his role as the smartphone maker's global sales chief. Wang was previously associate vice president of finance and accounting, according to HTC's annual report.

HTC declined to comment on Wang's appointment and referred to a statement it made in December when Chang was appointed to the sales role. Chang will remain CFO "until the time a transition of responsibilities makes sense," HTC said in the Dec. 17 statement.

If Wang's appointment is confirmed it would follow news on Friday that Scott Croyle, HTC's senior vice president of design and the man behind the distinctive look of the One smartphones, will be leaving the firm. HTC said he is leaving as part of a "long-term transition" and will still be a part of HTC product development in a consultancy role for a few months.

As The Verge notes, Croyle led HTC's industrial design and user experience teams since his One & Co studio was acquired by HTC in 2008. "HTC remains at the forefront of smartphone innovation," the company said. "Scott Croyle will be focusing on special projects and dedicated on next generation developments."

The Verge said Croyle's deputy, Jonah Becker, will likely to take over most of his duties. However, HTC also said that Drew Bamford has been promoted from leading the company's Sense UI user experience to being in charge of all HTC software and services and will report directly to CEO Peter Chou.

"Drew Bamford is an experienced and talented leader at HTC with solid track records in leading and building our user experience team," the company said. "Effective immediately, in addition to his current duties in product development and user experience, Drew will lead HTC Creative Labs and focus on innovative new products and user experience strategies."

HTC reported a net loss of $62 million in the first quarter as revenue for the quarter dropped to $1.09 billion, down from $1.41 billion in the year-ago quarter. On March 25, HTC introduced and started selling the One M8, the successor to last year's One M7 smartphone. The company hopes that the device's updated software, camera and industrial design will help lure buyers as well as its strong carrier distribution, especially in North America.

HTC hopes it can gain inroads on Samsung Electronics' Galaxy S5, its main competitor for the moment in the high-end smartphone market. HTC is also using an unconventional marketing campaign aimed at leveraging Internet buzz and solid reviews about the M8 by telling potential buyers not to take HTC's word for it on whether they should buy the phone, but to simply "go ask the Internet." HTC also aims to go after the middle of the smartphone market with its new Desire-branded phones.

For more:
- see this Bloomberg article
- see this The Verge article
- see this Re/code article
- see this GigaOM article

Related Articles:
HTC posts $62M loss for Q1 ahead of One M8's debut
HTC's Mackenzie details new marketing strategy for One M8 to counter Samsung
HTC unveils One M8 flagship smartphone - and Verizon gets to sell it in stores first
HTC releases mid-range Desire phones, aims to bring sensibility of One to mass market
Report: HTC to privately demo a smart watch at MWC
HTC names CFO as head of global sales

Read more about: Smartphones
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By Phil Goldstein

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