An Ignoble Experiment

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Verizon Wireless (NYSE: VZ) intends to allow its rural LTE roaming partners to gain access to its AWS spectrum to enhance capacity on their LTE networks, according to a Verizon executive.

In an interview with FierceWireless, Verizon's Philip Junker said Verizon has "entered into leases for AWS spectrum" with an unspecified number of its LTE in Rural America (LRA) partners. Verizon launched the LRA program in 2010 to expand LTE service in rural parts of the country via partners; Verizon's first partner carriers launched service in 2012. Verizon now counts 21 partners, 18 of which have launched LTE service, Junker said.

Junker, Verizon's executive vice president of business development and the head of the LRA program, noted that LRA members lease Verizon's 700 MHz Upper C Block spectrum. They then build out their own networks and sell service to their own customers, but have access to Verizon's network vendors, LTE device portfolio and their subscribers can roam onto Verizon's nationwide LTE network and the networks of other LRA partners. The program allows Verizon to quickly and cheaply build out rural areas.

Up until now, the LRA members only had access to Verizon's 700 MHz spectrum; the carrier's 700 MHz LTE network covers around 306 million POPs. But Verizon closed its acquisition of nationwide AWS spectrum from a group of cable companies in 2012. Since the fall of 2013, Verizon has also been busy deploying its LTE service on its nationwide AWS-1 spectrum to bolster its network capacity with as much as 20 MHz of additional spectrum. The carrier has dubbed the combination of LTE on 700 MHz and AWS spectrum as "XLTE."

Verizon said that more than 350 markets now have XLTE service (up from around 300 at the end of June). Verizon's 700 MHz LTE network is available in more than 500 markets in the U.S.

"We continue to challenge ourselves," Junker said of the overall LRA program. "We want to continue to expand the footprint." He said that Verizon knows its LRA members "are going to have a need for additional capacity to support their customers and our roamers. So we envision AWS-1 will play a role in that."

Junker said that up until now the 700 MHz spectrum Verizon has leased to its partners has been "more than sufficient" but that Verizon wants to "plan ahead." Junker declined to name which carriers have struck AWS spectrum leasing agreements with Verizon or when they might deploy AWS spectrum in their footprints.

Verizon's LRA partners include Bluegrass Cellular; Cross Telephone; Pioneer Cellular; Cellcom; Thumb Cellular; Strata Networks; S and R Communications; Carolina West; Custer Telephone Cooperative; Convergence Technologies; KPU Telecommunications; Chariton Valley Communication Corporation; Appalachian Wireless; Northwest Missouri Cellular; Chat Mobility; Matanuska Telephone Association; MTPCS' Cellular One brand; Phoenix Wireless; Triangle Communications; Nemont's Sagebrush Cellular brand; and Copper Valley Telecom.

Of those, only Phoenix Wireless, Triangle Communications and Sagebrush have not yet launched LTE service, Junker said. However, Phoenix and Triangle are new to the program as of this year. Junker said more than 220,000 customers across the 18 partners who have launched are now being served with LTE. He said Verizon's LRA partners' networks cover around 2.3 million people.

Verizon plans to launch Voice over LTE service later this year. Junker declined to say if or when Verizon's LRA members might get access to Voice over LTE capabilities, but noted that Verizon is "committed to enabling our LRA partners to bring new, advanced services to market in a reasonable timeframe."

Meanwhile, Sprint (NYSE: S) is seeking to expand its own LTE footprint via agreements with rural carriers under a similar program. In June, Sprint counted agreements with 12 carriers covering around 34 million POPs in 23 states. The participating carriers include nTelos Wireless, SouthernLINC Wireless, C Spire Wireless, Nex-Tech Wireless, Flat Wireless, SI Wireless, which does business as MobileNation, Inland Cellular, Illinois Valley Cellular, Carolina West Wireless, James Valley Telecommunications, Phoenix Wireless and VTel Wireless.

Read more about: AWS, LTE
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This week's sponsor is Anritsu.

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2. T-Mobile's Legere predicts 'uncarrier' will pass Sprint in subs by end of 2014

By Phil Goldstein

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3. Verizon adds Kodiak-powered enhanced PTT service for select Android phones for $5/month

Now that a deal between T-Mobile US (NYSE:TMUS) and Sprint (NYSE: S) is dead, T-Mobile CEO John Legere is taking the gloves off and repeated his prediction that T-Mobile will surpass Sprint in terms of subscribers to become the No. 3 U.S. carrier by the end of this year.

"I predict the #uncarrier will overtake @Sprint in total customers by the end of the year! There, I said it!," Legere tweeted. That follows a more fulsome prediction he made earlier when T-Mobile trumpeted that it had surpassed Sprint to become the top facilities-based U.S. prepaid carrier.

"The good news just keeps on coming for T-Mobile," Legere said in a statement. "The momentum we're seeing with our T-Mobile and MetroPCS brands is outstanding, and the fact that we've blown by everyone to take the No.1 spot in prepaid is icing on the cake. As a matter of fact, I'm going on record--I predict we'll overtake Sprint in total customers by the end of this year. Not someday. Not next year. This year. Americans are voting with their feet, and they're joining this Un-carrier revolution by the millions."

The comments essentially stand as a challenge to Sprint's incoming CEO Marcelo Claure, who takes the helm Monday from outgoing CEO Dan Hesse.

T-Mobile boasted it now has 15.64 million prepaid customers compared to Sprint's 15.19 million prepaid subscribers. However, those numbers do not take into account TracFone Wireless, América Móvil's U.S. MVNO, which counts 25.5 million prepaid customers.

In any case, Legere's prediction appears relatively realistic. Industry analyst Chetan Sharma noted that T-Mobile is now "within a striking distance of Sprint and could become the No. 3 operator in the country before early 2015."

Sprint ended the second quarter with 54.55 million total customers, including wholesale, MVNO and customers it acquired from U.S. Cellular (NYSE:USM) and Clearwire. It had 53.33 million customers on its "Sprint platform" CDMA and LTE networks.

Meanwhile, T-Mobile ended the second quarter with 50.54 million total customers when including M2M and MVNO subscribers. However, unlike Sprint, which has continued to bleed subscribers, T-Mobile has been adding customer at a steady clip the past six quarters.

In the first two quarters of 2014, T-Mobile added 3.87 million total net wireless customers, including 2.23 million branded postpaid subscribers. Sprint lost 801,000 total net wireless customers in the first two quarters, including Sprint platform postpaid net losses of 412,000 customers. However, Sprint has promised to return to postpaid customers growth in the fourth quarter and is testing new rate plans, which it might introduce at some point later this year.

In the meantime, T-Mobile continues to bear down on Sprint and Legere has vowed to introduce another "uncarrier" offering later this summer. Sharma noted to PC World that T-Mobile has netted positive subscriber growth in every quarter since the beginning of 2013, and is about to erase all the losses it suffered in a period that began in 2009.

For more:
- see this Twitter post
- see this Re/code article
- see this PC World article

Read more about: subscriber numbers, subscriber growth
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By Phil Goldstein

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4. Analyst: Dish could sell spectrum to Verizon or AT&T

Verizon Wireless (NYSE: VZ) is launching a new push-to-talk service for certain Android smartphone users that includes new features for conference calls and group calls as well as the ability to launch PTT services over Wi-Fi.

Verizon's Droid Maxx will support its new PTT service.

Verizon said the new "Push to Talk Plus" service, which customers will have to access via a downloadable app, will cost $5 extra per month. The carrier said for a limited time customers who add the service to their account will receive a credit for the first six months of service.

The new Verizon service is powered by PTT vendor Kodiak Networks, which also supports AT&T Mobility's (NYSE: T) Enhanced Push-to-Talk service, which AT&T launched in 2012.

Verizon said its Push to Talk Plus service includes improved voice quality and faster call set up time on its LTE network, and also has new features designed for group calls, including:

--Talker Priority, which lets the person initiating a group call override a group call and be the only speaker everyone hears.
--Late Join, which lets a person who is joining a group PTT call late join the group call.
--Rejoin, which lets people drop and rejoin ongoing group calls.
--Users also have the option to use PTT over Wi-Fi.

The new service is only available right now on a handful of smartphones, including the Motorola Droid Maxx, Samsung Electronics Galaxy S5, Casio G'zOne Commando and others. Verizon said it will be available soon on more devices, including the ruggedized Kyocera Brigadier.

PTT services are not as big as they once were in the U.S., especially after the mid-2013 shutdown of Sprint's (NYSE: S) iDEN network. However, carriers continue to offer the service, especially for enterprise customers and for specific industries like construction and businesses with remote field workers.

Sprint still offers an enhanced CDMA-based PTT solution via Qualcomm (NASDAQ:QCOM) called CDMA Direct Connect. AT&T has its enhanced PTT offering, which is an IP-based service that runs over AT&T's HSPA and LTE networks and even works with Apple's (NASDAQ: AAPL) iPhone. Meanwhile, Voxer provides a network-agnostic push-to-talk app and has recently been focusing more on the enterprise market.

For more:
- see this Verizon post
- see this Engadget article
- see this PhoneScoop article

Related Articles:
Voxer focuses on enterprise, brings push-to-talk app to the Web
SouthernLinc strikes deal to add nationwide GSM/UMTS to iDEN service
With iDEN shutdown just days away, Sprint begins 800 MHz refarming for CDMA, LTE
AT&T brings PTT app to iPhone ahead of Sprint's iDEN shutdown

By Phil Goldstein

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5. SoftBank's Son predicts rising U.S. price competition, calls Claure a 'street fighter'

There continues to be speculation about whether Dish Network (NASDAQ: DISH) will angle to buy T-Mobile US (NYSE:TMUS) or partner with Sprint (NYSE: S) to make use of its more than 50 MHz of wireless spectrum. However, according to a new research note from New Street Research analyst Jonathan Chaplin, Dish's best path forward could be to sell its spectrum to either Verizon Wireless (NYSE: VZ) or AT&T (NYSE: T) and still keep its satellite TV business.

AT&T is currently in the process of buying Dish rival DirecTV (NASDAQ: DTV). And Verizon Communications CEO Lowell McAdam has made clear that he doesn't want to own a satellite business, but that Dish "has something interesting assets."

"Dish wants to capture some of the bourgeoning value they see in wireless, they want a network partner, and they want to be able to offer a full suite of voice, content and broadband services in the home and on the go," Chaplin noted.

Indeed, Dish Chairman Charlie Ergen said this week that in terms of wireless, Dish's "dream would be to compete in the marketplace, bring a better product to consumers, be disruptive, be innovative and enhance the video business that we have today."

Dish controls more than 50 MHz of spectrum, including 40 MHz in the AWS-4 band and 10 MHz of the 1900 MHz PCS H Block, part of which is adjacent to AWS-4. Ergen compared Dish's spectrum to the equivalent of the largest untapped oil reserve in the wireless market. He also suggested that because Dish has the option of converting all of its AWS-4 spectrum to downlink spectrum where the most user demand is, its spectrum will be worth twice the value of whatever carriers wind up paying in this fall's AWS-3 spectrum auction. The AWS-3 auction includes a mix of uplink and downlink spectrum.

According to Chaplin, there is a scenario in which Dish could sell its spectrum to Verizon or AT&T and all sides would benefit. First, Dish would sell its spectrum to one of the carriers for "at least" $28 billion, and that buyer could purchase Dish and then spin off its satellite business to avoid a massive tax bill.

"In return, Dish gets access to capacity on the carrier's network in the markets where they need it. They use this capacity for both fixed and wireless services," Chaplin wrote. "Dish's capacity needs are a great complement to those of the carriers: Dish needs capacity in rural markets where many of their subs reside and where wireless is an adequate alternative to weak wireline plant; the carriers need capacity in dense urban markets where Dish has very few customers and would be at a significant competitive disadvantage. With this approach, Dish monetizes the spectrum while at the same time significantly increasing the value of their DBS business."

Chaplin noted that in the long run Verizon and AT&T will need more spectrum beyond what they are expected to acquire in the AWS-3 auction and next year's incentive auction 600 MHz broadcast spectrum, in which they will face restrictions on bidding.

"Verizon and AT&T currently have 38 % and 34% of industry revenues but just 16% and 20% of industry spectrum, respectively," Chaplin wrote. "Assuming spectrum is fully utilized over time, a carrier's traffic share should match their spectrum share, and revenue share should match traffic share. Both companies should be able to increase spectrum share modestly over the next two auctions; however, they won't come close to closing the gap. Dish's spectrum would help tremendously--it is largest source of capacity available today and would take Verizon and AT&T to 31% and 45% spectrum share, respectively (post auction)."

Currently, AT&T and Verizon "both have less than 1 MHz of downlink spectrum per million retail subs, a shortfall relative to TMUS and Sprint with 1.16 and 2.25 MHz/sub, respectively. With Dish's spectrum, Verizon would be able to catch up to TMUS (54% improvement in spectrum/sub) whereas AT&T would gain a significant advantage over all carriers except for Sprint (54% improvement)."

For more:
- see this Seeking Alpha transcript

Read more about: AT&T Mobility
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By Phil Goldstein

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