Making a Play For Sprint

By Brad

Last week, satellite TV provider DISH announced it was making a play to purchase wireless provider Sprint for a price just north of $25 billion, or some $5 billion more than Japanese provider SoftBank had offered to buy the carrier. And as Phil Goldstein of Fierce Wireless reports, DISH is taking a patriotic angle to promote its bid:

Dish said its offer for Sprint “is better for the American consumer, better for Sprint’s shareholders, and better for U.S. national security than the SoftBank proposal.”

Dish’s comments are likely a reference to concerns about foreign ownership of domestic telecommunications companies as well as specific concerns that Sprint could use equipment from Chinese vendors ZTE and Huawei in its network.

Goldstein also reports that Sprint has formed a “special committee on its board” to go through DISH’s offer.

Deal of the Day

By Brad

For years now, satellite TV provider Dish Network has been making noises about jumping into the wireless game. Now, Peter Svensson of the Associated Press reports, they’ve put together a blockbuster deal:

Dish Network Corp. is trying to snag U.S. wireless carrier Sprint Nextel Corp. away from its Japanese suitor in recognition of the way satellite dishes are losing their relevance in the age of cellphones that play YouTube videos.

Dish offered $25.5 billion in cash and stock on Monday for Sprint, which Dish says beats the offer from Japan’s Softbank Corp. Softbank is offering $20 billion in cash, and shareholders get to keep 30 percent of Sprint. Dish is offering $17.3 billion in cash, and Sprint shareholders get 32 percent of the combined Dish-Sprint.

Sprint already leads all other U.S. carriers when it comes to spectrum holdings, so its combination with Dish — which currently controls a lot of spectrum of its own — may be a big hurdle with regulators. Still, given the pokiness of regulatory relief when it comes to wireless and spectrum, proposed deals such as this one shouldn’t be surprising. Stay tuned.

Working Together

By Brad

How important is spectrum to the wireless industry? So important that normally fierce competitors are working together. As Phil Godstein of Fierce Wireless reports:

AT&T Mobility, Verizon Wireless and T-Mobile USA inked an agreement with the Department of Defense to explore the possibility of sharing 95 MHz of spectrum that is currently used by the Pentagon and other federal agencies located in the 1755 - 1850 MHz band.

The announcement comes as the FCC and National Telecommunications and Information Administration encourage spectrum sharing between commercial and government users as one way to meet Americans’ seeming insatiable demand for mobile broadband.

So far, Sprint is sitting out the agreement, though Goldstein notes they will “follow the group’s work.”

Not So Fast

By Brad

Late last year, Sprint announced it was being acquired by Japan’s Softbank. Now, Brendan Sasso of The Hill reports, the Justice Department has asked the FCC to hit pause on approving the deal:

In letter to the FCC released on Tuesday, an attorney for the Justice Department’s National Security Division said DOJ, the Department of Homeland Security and the FBI need more time to investigate the deal for any “national security, law enforcement, and public safety issues.”

John Taylor, a Sprint spokesman, said the request is routine for deals involving a foreign company and that Sprint still expects the deal to close by the middle of this year.

Sprint Gobbles Clearwire

By Brad

As expected, Sprint has made a move to greatly bolster its spectrum holdings. Via Ryan Kim of GigaOm:

Sprint followed through on its bid to buy the remaining portion of Clearwire that it doesn’t own, and will spend $2.2 billion or $2.97 per share to complete the deal, the operator announced Monday. The deal by Sprint, which already owned 51.7 percent of Clearwire, values the 4G provider at about $10 billion, including net debt and spectrum lease obligations of $5.5 billion.

Sprint Makes a Move

By Brad

Earlier this week, it was rumored Sprint would make a bid to completely buy out mobile broadband provider Clearwire. Now, Hayley Tsukayama of the Washington Post reports, the rumors have become reality:

Sprint has made a buyout bid for the remaining stake of Clearwire that it does not already own, a move that would bolster the company’s spectrum portfolio.

The nation’s third-largest carrier currently owns 51 percent of Clearwire.

If the deal is finalized, Sprint’s all important spectrum holdings would increase substantially.

Sprint Toward Investment

By Brad

Via Mike Dano of Fierce Wireless, it looks like Sprint may be looking to absorb all of wireless broadband provider Clearwire:

Sprint Nextel is reportedly in active discussions to purchase the 49 percent of Clearwire that it doesn’t already own, according to media reports. The transaction could be finalized by the end of this year.

CNBC, citing two people familiar with the situation, reported that Sprint is investigating the purchase. Separately, the Wall Street Journal and Bloomberg, also citing unnamed sources, later reported the same thing. Both CNBC and the Journal noted that Sprint executives are talking to Clearwire shareholders such as Intel and Comcast, but that it’s unclear what Sprint would pay to acquire Clearwire’s outstanding shares. Clearwire currently commands a market value of $1.8 billion and holds around $5 billion in debt.

Sprint already owns 50.8% of Clearwire, but increasing their investment could substantially help in building out their LTE network.

Acquisitions

By Brad

At the Washington Post, Hayley Tsukayama reports that Sprint, which is currently in the process of being purchased by the Japanese wireless company Softbank, is looking to make an acquisition of its own:

Sprint is moving to buy an addition stake in Clearwire, giving it control of the broadband firm.

Sprint already owns 48 percent of Clearwire — a partnership that has allowed Sprint to build out the 4G network it needs to compete with AT&T and Verizon.

If the deal goes through, Sprint’s spectrum holdings would increase dramatically. Yet another example of secondary market transactions being one of the fastest ways to get spectrum to market.

Exploring a Higher Bid

By Brad

Yesterday, T-Mobile and MetroPCS announced their intention to merge into one company. Today, Aaron Kirchfeld and Scott Moritz of Bloomberg report, fellow carrier Sprint is prepping a counter-offer for MetroPCS:

Sprint is crunching the numbers and holding talks with its advisers to weigh the feasibility of a higher offer, said the people, who asked not to be identified because the talks are private. The Overland Park, Kansas-based company began re- evaluating a MetroPCS offer a few weeks ago, before the T-Mobile deal was made public, and could decide as early as next week whether to pursue an offer, two of the people said.

Light Dimming for LightSquared

By Brad

Over at GigaOm, Kevin Fitchard reports beleaguered mobile broadband startup LightSquared has received more bad news:

Sprint on Friday terminated its partnership with LightSquared, not only denying the would-be operator its biggest 4G customer, but also blocking LightSquared’s path to building an LTE network.

LightSquared once had ambitious plans to deploy a 4G LTE network nationwide, but interference issues with GPS service all but scuttled the deal.

Roaming & Investment

By Brad

In a post at AT&T’s Public Policy Blog, Bob Quinn, the company’s Senior Vice President-Federal Regulatory and Chief Privacy Officer, argues that the recent announcement from wireless carrier Sprint that it was going to rely on roaming to provide customers coverage in Kansas and Oklahoma reveals major flaws in two orders from the FCC:

First, in 2010, the FCC reversed itself by eliminating the Home Market Rule. That rule, which was pretty logical and straightforward, said that, if a carrier owned spectrum, it was good public policy to require them to build out that spectrum and therefore they should not be able to demand roaming from other carriers in those “home markets.” Thus, if Sprint owned spectrum in Kansas and Oklahoma, it wouldn’t have a regulatory “right” to roam. Then, last April, the Commission extended roaming rules that had previously been limited to voice services (and that now contain no Home Market exception) to broadband infrastructure.

In arguing to impose those requirements on its competitors, both Sprint and the FCC said that broadband roaming obligations would actually promote “the deployment of broadband facilities and thus expand coverage.”  Good in theory, I suppose, but not in practice, as I stated at the time. As a result of those two FCC Orders, Sprint can now use other folks’ networks rather than pony up its own investment dollars. Nice work if you can get it.

Quinn goes on to explain why his company is hopeful the D.C. Court of Appears will step in to scale back the FCC’s orders:

We remain hopeful that the Court will reject the FCC’s market intervention here and realize that this regulation actually disincents investment by everyone in the marketplace at a time when promoting investment and job growth should be priority #1 for every policymaker in this country.  And it serves as another lesson in why unbridled discretion to shape markets in the name of competition is not always good public policy.

An Extension for LightSquared

By Brad

With mobile broadband start-up LightSquared continuing to face regulatory problems, Greg Bensinger of Dow Jones reports Sprint — which has struck a tentative 15-year deal with the company — has offered an extension:

Sprint Nextel Corp. said Sunday it gave billionaire Philip Falcone’s LightSquared Inc. wireless venture a 30-day extension to a Dec. 31 deadline to get Federal Communications Commission clearance to operate its network.

Sprint’s is looking to partially deploy its 4G LTE network on LightSquared’s spectrum, so gaining regulatory approval is a big deal for both companies.

A Report From CWA

By Brad

In response to the Department of Justice’s move to block the merger of AT&T and T-Mobile, the Communications Workers of America has released a new report on the effect blocking the merger will have. Titled, rather bluntly, “Blocking the AT&T/T-Mobile Merger will Harm Consumers, Communities & the Economy,” the report covers everything from AT&T’s commitment to expand 4G LTE, to the effect the merger will have on much-needed job creation.

The entire report is a must-read, but there are a few points made that are worth highlighting, beginning with the argument that blocking the merger will be good for preserving competition. As CWA states:

“[T]here is no long-term future for a stand-alone T-Mobile as an effective competitor: it has neither the spectrum nor the capital to create a competitive network utilizing the latest wireless technology (called 4G LTE). In January 2011 the CEO of T-Mobile’s parent company, Deutsche Telekom (DT), stated that DT would not provide the capital for T-Mobile’s 4G LTE deployment. T-Mobile also is on a downward trajectory suffering from declining revenue, eroding profit margins and increasing customers defections.”

With Verizon, AT&T, and now Sprint making the shift to 4G LTE technology, the fact that T-Mobile will soon be left behind regardless of the merger continues to be overlooked. And given that only AT&T and T-Mobile are compatible when it comes to network technology, the idea that T-Mobile could simply merge with someone else simply isn’t realistic. From the report:

There are two separate technological family trees that are not easily compatible. GSM based systems have evolved through UMTS, HSPA+, LTE and, the next step, LTE Advanced. CDMA based systems have evolved to EVDO.

• The merger between AT&T and T-Mobile creates technological synergies because each of these companies utilizes GSM and HSPA based networks.

• A merger between Sprint and T-Mobile (these companies were in merger discussions) would have experienced significant technological challenges because the two companies utilize different and incompatible technologies. T-Mobile’s systems are GSM based while Sprint’s systems are CDMA based.

As for AT&T’s ability to expand its 4G LTE network to cover nearly every corner of America — a key point, as it dovetails with President Obama’s State of the Union pledge to bring advanced mobile broadband to everyone — CWA points out such an expansion wouldn’t be feasible without the merger due to capacity and spectrum constraints:

AT&T’s other options could not remotely approach the merger in terms of increasing capacity, utilizing spectrum more efficiently, improving service and expanding 4G LTE deployment… [I]t would take AT&T eight years to obtain and activate the number of cell sites it will obtain from T-Mobile. AT&T also could not depend on a possible federal auction to reallocate spectrum because it is a multi-year process that needs Congressional approval, a FCC rule making, the actual auction and then a period for relocation of incumbent licenses and integration of existing network and equipment with the spectrum — if the bid is successful.

These are just a few of the salient points CWA makes about the merger. There’s much more to be found in the full report, including the effects blocking the merger will have on job creation and efforts to close the digital divide. You should definitely dig in.

CTIA Day One: The Kickoff Keynote

By Brad

The keynote for this year’s CTIA Enterprise and Applications Conference featured CEOs from the top three wireless companies: Dan Hesse of Sprint, Ralph de la Vega of AT&T, and Dan Mead of Verizon.

Despite some light ribbing, the tone was one of collaboration, with all three CEOs rightly noting that much of the industry’s impressive growth was due to working with each other and with the various innovators up and down the industry chain.

Taking the stage first, Sprint’s Dan Hesse focused heavily on sustainability, running down an extensive list of efforts his company was currently doing to be more environmentally and socially responsible (Sprint’s efforts in helping to curb distraction while driving were impressive, and gave Hesse a set-up for a funny story about his own efforts to keep his teenage son safe behind the wheel).

Next up was AT&T’s Ralph de la Vega, whose main message was innovation — both within the company and by encouraging it throughout the industry. Highlighting the company’s Foundry program, an $80 million commitment to encourage developers of mobile applications, de la Vega was genuinely excited to announce the initiative already had over 100 projects in development.

Closing out the keynote, Verizon’s Dan Mead told the audience, “Even though the wireless industry is fiercely competitive, it’s a success due to mutual cooperation.” He then touched on government regulation, pointing at an ongoing light touch from regulators as critical to maintaining the industry’s impressive growth and, striking the cooperation chord again, said that the industry must work with the government to keep wireless moving, stating, “We have a responsibility to make sure we operate with the highest integrity.”

Things Are Heating Up

By Brad

With AT&T’s merger with T-Mobile still receiving scrutiny in the Beltway, things are heating up in the advertising world. Since the merger was first announced, AT&T has been touting the benefits of its joining with T-Mobile, including the expansion of AT&T’s 4G LTE network to the vast majority of America. Rival carrier Sprint, meanwhile, has attempted to counteract the merger’s benefits for consumers by hitting hard on the competition angle.

Today, things heated up a notch with AT&T running an ad against Sprint in Washington D.C.. As Shira Ovide of the Wall Street Journal reports:

As AT&T Inc. works to convince regulators and lawmakers on the merits of its proposed takeover of T-Mobile USA, the telecom giant said it is launching an advertising blitz in Washington focused on its original selling point for the deal: better wireless service.

“In case you’re wondering why Sprint is trying to kill the AT&T/T-Mobile merger… It’s all about spectrum,” reads the text of the AT&T ad slated to run starting Tuesday in publications popular on Capitol Hill, such as the Washington Post, Politico and the Hill newspapers.

Sprint has long claimed AT&T’s spectrum concerns are off the mark, which is no doubt why AT&T decided to highlight Sprint’s industry dominance in spectrum holdings. Meanwhile, Sprint is also receiving blowback on the labor front, with the Communications Workers of America — which has a good relationship with AT&T, given the telecom’s union-friendly stance — taking out ads of its own with the headline:

Sprint — a creator of American jobs? We don’t think so.

Images of the ads are available after the jump.

there's more...

Talking About Clearwire

By Brad

Olga Kharif and Alex Sherman of Bloomberg report that Sprint is in talks with cable giant Comcast to increase Sprint’s ownership of Clearwire in order to keep plans afloat to build out next-generation LTE mobile broadband:

Sprint and Comcast, which are already investors in Clearwire along with Time Warner Cable Inc. and Bright House Networks LLC, are discussing ways to provide funding to the money-losing Kirkland, Washington-based company so it can build out its high-speed wireless network. Clearwire plans to spend about $600 million to upgrade its network to so-called long-term evolution, or LTE, technology, to compete against AT&T Inc. and Verizon Wireless, the company said this month.

New Competition in LTE

By Brad

Competition in the next-generation mobile broadband market is heating up. With Verizon already deploying its LTE network nationwide, and AT&T pledging to expand its network to the majority of the country following its proposed merger with T-Mobile, provider Clearwire — partnering with Sprint — is gearing up to be one of the world’s first operators to launch what’s known as LTE TDD, or Long Term Evolution Time Division Duplex.

That’s certainly a complicated moniker, but thankfully Dan Jones at Light Reading has provided a handy explanation of what LTE TDD is, and what makes it exciting.

Partnering for the Next Generation

By Brad

With Verizon currently rolling out its advanced 4G LTE network, and AT&T pledging to greatly expand the reach of its 4G LTE network after its proposed merger with T-Mobile, Roger Cheng of CNet reports another big player in America’s wireless industry is working to stoke competition for the next generation of wireless:

Sprint Nextel will confirm its network-sharing agreement with LightSquared in conjunction with its earnings announcement on July 28, according to people familiar with the situation.

The agreement, in which Sprint’s network will be used as the infrastructure backbone to LightSquared’s upcoming 4G Long-Term Evolution network, will shed some light on where Sprint wants to head with its own 4G ambitions.

CWA on Why AT&T and T-Mobile Makes Sense

By Brad

As executives from AT&T, T-Mobile, Sprint and various consumer and activist groups convene in the Senate today, the Communications Workers of America has released a research paper outlining the benefits of AT&T joining with T-Mobile. The full paper is available on their site (PDF), but here’s an excerpt (bolds in original):

On March 20, 2011, AT&T announced an agreement to purchase T-Mobile USA. This development did not come out of the blue: Deutsche Telekom (DT) was actively considering a sale to either Sprint or AT&T. The alternative to the AT&T merger was not a standalone T-Mobile but a merger with Sprint. Thus, a comprehensive assessment of the impact of the AT&T/T-Mobile merger should include a comparison with the only real alternative that was being considered seriously: a Sprint/T-Mobile merger. As shown below, consumers, workers, and communities will be better served by a T-Mobile merger with AT&T than one with Sprint.

The Better Choice

By Brad

Josh Smith of the National Journal reports the Communications Workers of America — the country’s largest telecom union — has come out strongly in favor of AT&T joining forces with T-Mobile:

T-Mobile’s current owner, Germany-based Deutsche Telecom, was looking to dump the American company because it couldn’t grow its subscriber base, according to CWA. “T-Mobile was going to be sold to either AT&T or Sprint,” the union argues. “AT&T is the better option for consumers and workers.”

CWA makes the case that Sprint is in no financial position absorb the stress of a merger, while AT&T is stronger, has a better track record with mergers, and uses more compatible technology.

Perhaps the crux of the union’s support, however, lies in labor positions. CWA accuses Sprint of taking “strongly anti-union” positions and shipping jobs overseas, while AT&T remains neutral.