An Ignoble Experiment

2. T-Mobile's Carter promises 20x20 MHz LTE 'in all of our major metropolitan areas' - at some point

AT&T (NYSE: T) expects to begin deploying LTE Broadcast technology, also known as LTE Multicast, sometime in 2015, according to a top AT&T executive.

AT&T Chief Strategy Officer John Stankey disclosed the timeline in an appearance at the Oppenheimer Technology, Internet & Communications Conference. "You should expect that you'll see us begin to roll out Multicast capabilities as we move through next year," he said. "Initially, we'll be doing it on a targeted basis and we'll be doing it in some specific areas where we think there's immediate deployment."

Stankey said that as AT&T gets more scale and normalizes its relationships with content providers, the carrier wants the "flexibility to use that technology on a broader application."

LTE Multicast is based upon evolved Multimedia Broadcast Multicast Service (eMBMS), and it allows the same content to be sent to a large number of subscribers at the same time, resulting in a more efficient use of network resources than each user requesting the same content and then having the content unicast to each user.

Until now AT&T had only disclosed it was "exploring the possibility of offering eMBMS services" using the 700 MHz D and E Block spectrum it acquired from Qualcomm (NASDAQ:QCOM) in 2011.

Verizon Wireless (NYSE: VZ) plans to start seeding its device base with phones that can support LTE Multicast in the fourth quarter and also plans to commercially launch the service in 2015. Speaking at the same conference earlier this week, Verizon Communications CFO Fran Shammo called the advent of Multicast "the pivotal point that starts to change the way content is delivered over a mobile handset which opens up content into the wireless world."

Stankey expounded on AT&T's philosophy of how wireless customers' relationship to mobile content will change over time. "Inherently, customers want to be able to watch and entertain themselves wherever they are, under their terms," he said. He added that "the reality of the industry today and how content is licensed and sold doesn't fit elegantly into that model."

The AT&T executive said that he thinks there is a strong customer desire to get content any time they want and "there's a willingness to pay." He said he thinks the content delivery model "is going to change pretty dramatically."

As the wireless market matures and growth from smartphones and tablets slow over the next few years, Stankey said, the "basis of competition will shift onto other terms. We know that what customers want to do with their mobile devices is they want to entertain themselves." He said that video and to a lesser extent music are what drives the bulk of wireless data traffic.

"It's important that we understand how customer buying decisions are going to be linked to content over time," he said, noting that a top reason customers buy broadband today is linked to TV services in their homes. "I think over time in the mobile space there will be a tighter link to aspects of what kind of content people can consume and how easily they can get at what they want to watch."

For more:
- see this webcast

Read more about: LTE Multicast, Verizon Wireless
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By Phil Goldstein

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3. T-Mobile may throttle speeds of LTE subs who use unlimited data for P2P file sharing, constant video streaming

T-Mobile US (NYSE:TMUS) eventually intends to deploy spectrum for LTE service in configurations that are larger than 20x20 MHz, according to CFO Braxton Carter. However, he did not provide a specific timeline for that effort.

Speaking at the Oppenheimer Technology, Internet & Communications Conference, Carter said T-Mobile will have "several" 20x20 MHz LTE deployments on air by the end of the year.

Carter said T-Mobile will need to engage in some engineering work to make sure its remote radio heads can support 30x30 MHz or 40x40 MHz deployments, but he said T-Mobile will "expand past 20x20" as its network evolves.

The T-Mobile CFO noted that T-Mobile does not have legacy technologies or spectrum bands to support, which he said means the carrier can deploy spectrum on its network more quickly and efficiently than its competitors. With wider LTE spectrum channels, T-Mobile will be able to offer faster speeds and more capacity.

"That speed translates into significant 4G data capacity that we can put over the network," he said. "The faster it's going through the pipe, the more we can carry over the pipe." The carrier's long-term goal is to have at least 20x20 MHz LTE configurations "in all of our major metropolitan areas," he said.

T-Mobile currently has 15x15 MHz LTE deployments in 17 markets and expects to have 26 by year-end. The carrier calls its 15x15 MHz LTE deployments "Wideband LTE." The carrier's overall LTE network now covers 239 million POPs, and Carter said and the company aims to cover at least 250 million POPs by the end of 2014.

Interestingly, Carter said that T-Mobile will look to buy more 700 MHz A Block spectrum, but "will be very disciplined and opportunistic" in acquiring it. "We're probably the natural buyer," he said, adding that T-Mobile is in conversations with other companies but that those may need to be paused because of collusion rules related to the AWS-3 auction, which starts in November. He said that in the first part of 2015, T-Mobile might pursue more A Block deals, but that in the meantime it will start seeding its customer base with smartphones that can support A Block spectrum, starting in the fourth quarter. U.S. Cellular (NYSE:USM) is one of the other large remaining holders of A Block spectrum.

T-Mobile purchased $2.365 billion worth of 700 MHz A Block spectrum from Verizon Wireless earlier this year, and more recently purchased $50.5 million worth of A Block 700 MHz spectrum from CenturyLink, I-700 A Block LLC and others.

Carter also took the opportunity to knock Sprint (NYSE: S), which last week dropped its plans to merge with T-Mobile amid intense regulatory opposition. Carter said that pushback from regulators at the FCC and Department of Justice "could not have been stronger."

"I think it's going to be difficult for Sprint," Carter said. He noted that the centerpiece of Sprint's network strategy is to use its vast trove of 2.5 GHz spectrum for TD-LTE services to deliver superfast speeds. Yet Carter noted that because of the weak propagation characteristics of 2.5 GHz spectrum, Sprint will need to invest significantly for "years" to build out that network on a nationwide basis. Sprint aims to have 100 million POPs covered with 2.5 GHz LTE by the end of 2014.

"The issue is that the densification that is required in the network to have a ubiquitous 4G data experience using that spectrum is a lot more densification than that network currently has today," he said. The spectrum can deliver fast speeds, he said, but "what good is that if you just churn them right out the back door?"

Speaking about M&A opportunities, Carter called French operator Iliad's $15 billion bid for 56.6 percent of T-Mobile "very flattering" but "a very inadequate value proposition." However, he added, "I think rarely people come with their best bid to start," and said Iliad founder Xavier Niel is a "very impressive entrepreneur."

Carter also called Dish Network (NASDAQ: DISH) Chairman Charlie Ergen a "brilliant man" and noted that Dish's AWS-4 and 1900 MHz PCS H Block spectrum are near T-Mobile's spectrum holdings, and that it would be prohibitively expensive for Ergen to build out a network on his own. Ergen has said now that a Sprint/T-Mobile deal is off the table he remains open to partnering with T-Mobile but is not ruling out any options in wireless, including working more closely with Sprint.

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

Related Articles:
T-Mobile's Legere: We don't need to make a deal to be successful
T-Mobile: 92% of MetroPCS CDMA subs moved onto GSM network amid shutdown in 3 markets
T-Mobile brings 'Wideband' 15x15 MHz LTE service to Las Vegas
T-Mobile's 4x2 MIMO upgrade proves its worth in recent tests
T-Mobile passes Sprint with 230M LTE POPs, while Verizon dominates with 306M LTE POPs
T-Mobile's 'data-strong' network gains LTE coverage, bandwidth

Read more about: Braxton Carter
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By Phil Goldstein

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4. Lenovo sees booming Q2 sales, looks to emerging markets for smartphone growth

T-Mobile US (NYSE:TMUS) said it may throttle the data speeds of its subscribers with unlimited data plans who engage in peer-to-peer file sharing or use their phones as modems to download continuous and automatic data feeds.

"A very small number of our customers are misusing their Simple Choice Unlimited data service in violation of their rate plan and terms and conditions by bypassing the default tethering feature or engaging in peer-to-peer (P2P) file-sharing," T-Mobile said in a statement to FierceWireless.

"This type of usage can negatively impact our ability to offer affordable unlimited data," the company said. "In order to protect all T-Mobile customers, we will be reaching out to these people to educate them on our terms and conditions of service, but if the misuse continues, they could have their data speeds reduced for the remainder of their billing cycle."

According to an internal memo posted by the blog TMoNews, the policy will go into effect Aug. 17 and applies only to customers with T-Mobile's $80 unlimited Simple Choice plan. The plan offers unlimited data use and a phone and up to 5 GB of mobile hotspot service.

Under T-Mobile's terms and conditions, "misuse" of the carrier's service includes using the service "in connection with server devices or host computer applications, including continuous Web camera posts or broadcasts, automatic data feeds, automated machine-to-machine connections or peer-to-peer (P2P) file-sharing applications that are broadcast to multiple servers or recipients, 'bots' or similar routines that could disrupt net user groups or email use by others or other applications that denigrate network capacity or functionality."

The publication said that, according to the memo, T-Mobile will give users who are engaged in the prohibited activities warnings before throttling them. First, the carrier will contact the subscribers and let them know their speeds could be reduced until their next billing cycle if they continue to engage in the prohibited behavior, and will apply a note to their account that they have been warned. If the behavior continues, T-Mobile will throttle their speeds.

It should be noted that almost all wireless carriers have similar language in their contract terms and conditions. For example, AT&T Mobility (NYSE: T) prohibits using its service "as a substitute or backup for private lines or full-time or dedicated data connections" and P2P filing sharing, among other actions. Verizon Wireless (NYSE: VZ) and Sprint (NYSE: S) have similar language in their terms of service.

According to the Washington Post, the FCC declined to comment on T-Mobile's announcement. The agency has asked all four Tier 1 carriers about their throttling policies.

FCC Chairman Tom Wheeler has been particularly aggravated by Verizon's recent announcement that it may start slowing down the speeds of LTE customers who still have legacy unlimited data plans who cross into the top 5 percent of data users and when they are connected to high-traffic cell sites. Verizon said that threshold is about 4.7 GB per month.

For more:
- see this TMoNews article
- see this Washington Post article

Related Articles:
FCC's Wheeler again knocks Verizon's unlimited-LTE data-throttling policy
Verizon defends new network management policy as 'measured and fair' in response to FCC
FCC's Wheeler calls Verizon's LTE 'network optimization' policy 'disturbing'
Verizon expands 'network optimization' policy to LTE customers with unlimited data plans

Read more about: Verizon Wireless, Sprint
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By Phil Goldstein

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SPOTLIGHT ON... This isn't your grandpa's closed captioning: Multiscreen environments add complexity

Lenovo reported booming sales and profit for the second quarter and the Chinese vendor is looking beyond its homeland to emerging markets for future smartphone growth, according to CEO Yang Yuanqing. The Lenovo chief is eagerly awaiting the finalization of its purchase of Motorola Mobility, which he said will give Lenovo a leg up in North America and Latin America.

Yang
Justin Sullivan/Getty Images News

Lenovo said profit for the second quarter, its fiscal first quarter, jumped 23 percent to $213.5 million, up from $173.9 million in the year-ago period and beating analysts' estimates, according to Bloomberg. Total revenue climbed 18 percent to $10.4 billion, up from $8.79 billion a year earlier.

Research firm IDC said Lenovo was the No. 4 smartphone player in the world in the second quarter, with 5.4 percent market share, as smartphone sales jumped nearly 39 percent to 15.8 million units. While Lenovo did not disclose specific figures, the company said smartphone shipments in the quarter jumped more than fourfold outside of China.

In an interview with the Wall Street Journal, Yang noted Lenovo is still on track to close its $2.91 billion purchase of Motorola by the end of the year. He said the business is complementary to Lenovo's existing business and that Motorola's new products are showing strength in Western Europe and India. According to a report last month in The Information, Motorola currently expects to sell between 28 and 32 million smartphones this year, up from about 16 million in 2013.

"We are encouraged by Motorola's improvements. Their results for the latest quarter are much better than the previous year," Yang said. "Our commitment is we will turn around Motorola in four to six quarters. Today, I'm even more optimistic about meeting that target."

Yang noted that in China Lenovo has expanded its sales channels outside of carriers and online, and said in China Lenovo will look to balance growing its market share with profitability, adding that "our smartphone business in China make a little bit of money, but not so much."

However, Lenovo has grand ambitions for growth outside of China. "Although China is still the most important market for our smartphone business, we think we have even more opportunities outside China, particularly in emerging markets," he said. "In the quarter through June, our smartphone shipments grew almost 300 percent in Southeast Asia and more than 500 percent in Eastern Europe. Those are our future potential markets, so we definitely put more effort and more resources into those markets. Profitability in those markets is actually better than that in China. Not only can those markets give us growth, but they can also give us profit."

Lenovo faces tough competition inside and outside China from Huawei, the world's No. 3 smartphone player, as well as industry leader Samsung Electronics and smaller vendors like ZTE and Xiaomi. Samsung just unveiled the Galaxy Alpha, a mid-range smartphone with a metal banded construction that will be priced lower than its flagship Galaxy S5.

Yang said that the shift away from premium, high-end smartphones toward more mid-tier and mass-market phones could give Lenovo an edge on Samsung.

"We have seen this before in the PC market, and we have a lot of experience in these kinds of transitions," he said. "We know how to develop products for mainstream and entry-level markets. We have good supply chain management. We know how to balance innovation with efficiency."

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

Also Noted

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Closed captioning on TV and over video in general is often overlooked. However, in the wake of FCC rules, passed in 2012, that require television programs and movies to have closed captions even in the online video space--and an added rule this year regarding short clips--broadcasters and online video providers are scrambling to make sure their online catalogs are captioned. But some, broadcasters in particular, complain that the rules are onerous and will place tremendous expense on them. The traditional technologies used to place captions correctly on TV screens are from a different era and were built for a different way of delivering video. Thus, adding captions in the online video era requires providers to change their workflow and technologies--if they haven't done so already. For more on this topic, check out this FierceOnlineVideo special report.

Quick news from around the Web.

AT&T: We're using WCS C, D Block spectrum for in-flight Wi-Fi because of interference concerns. http://t.co/4dArEns8ff (@FierceWireless) August 14, 2014

> AT&T Mobility is juicing tablet sales by offering $200 off an iPad to customers who also purchase a new iPhone and a two-year contract. Article

> Avago Technologies will sell its LSI Axxia Networking Business to Intel for $650 million as Intel looks to strengthen its position in the network infrastructure chipset market. Article

> Apple banned the use of benzene and n-hexane in the manufacturing of its iPhones. Article

> Qualcomm is denying allegations it had a financial relationship with the Chinese official overseeing a probe of the firm. Article

> AT&T Mobility ranked highest in J.D. Power's newest customer satisfaction study. Release

> China Mobile said it will reduce its phone subsidy expenses by $2 billion. Article

Wireless Tech News

> According to analyst firm ABI Research, carriers across the world are moving apace toward LTE-Advanced technology. The firm estimated there are currently roughly 60 LTE-Advanced trials, commitments and commercial deployments worldwide, of which 22 commitments were from Western Europe, 16 from Asia-Pacific, and five from North America. Article

> The oneM2M "candidate release of technical specifications," aimed at laying the groundwork for a global M2M service layer, is open for public comment until Nov. 1. Article

Telecom News

> Adtran is finding that the European telecom market's recent spate of mergers and acquisitions could have a beneficial effect on its pursuit of new international revenues, said an executive during its Connect event at its headquarters in Huntsville, Ala. Article

> AT&T's growing GigaPower footprint will be a competitive differentiator because it offers symmetrical upstream and downstream speeds of 1-Gig and can meet the growing amount of upstream traffic, said a top AT&T executive. Article

Cable News

> South Korea's SK Broadband is taking credit for being the first service provider to up-scale full HD video contents into Ultra HD (UHD)--or 4K--images using a proprietary solution that delivers a UHD experience with existing HD videos. Article

> Never one not to fast-follow, Comcast has given the concept of TV binging a run-through on a smaller, more compact stage--'mini-binging' as USA Today put it--in an effort to combat OTT and drive subscribers from DVRs to video on demand. Article

And finally… AT&T Mobility CEO Ralph de la Vega takes the ALS ice bucket challenge. Video

Lowenstein's View: Memo to new Sprint CEO: How to turn things around

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