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700-MHz Interoperability Issues Hurt FirstNet – U.S. Cellular

There is an adage in the rough-and-tumble world of Washington, D.C., wireless politics. If a smaller player that has less power wants to succeed, it needs to play the public safety card. In the First Responder Network (FirstNet), the proposed nationwide public safety network, rural wireless carriers may have found another arrow for their quiver as they battle to deploy LTE in the Lower 700-MHz band.

“The current, and potentially future, dearth of rural LTE networks will be problematic not only for potential customers and for commercial licensees in rural markets, but also for public safety users who may desire to roam on commercial systems in those areas,” LeRoy Carlson, chairman, U.S. Cellular, told the Senate Commerce communications subcommittee at an April 9 hearing on the state of rural communications.

With FirstNet required to enter into roaming agreements with commercial providers to ensure nationwide coverage, rural carriers will be essential to the goal of ubiquitous coverage.

“A lack of interoperability therefore could impede first responders’ ability to respond to emergencies,” Carlson said.

A lack of interoperability in the 700-MHz band is reducing the availability of LTE handsets, which is impeding and, in some cases, halting the build out of rural LTE cellular systems, Calson said at the hearing.

“Significant opportunities for small and regional carriers – who otherwise would be in a position to provide robust competition to the dominant national carriers – have been lost due to the artificial barriers created by their inability to obtain devices capable of operating on their spectrum holdings,” Carlson said. “The importance of continuing to advance robust competition is especially crucial at this time given that the wireless industry is in its most precarious competitive state in over a decade.”

The interoperability issues stem from two separate incompatible band classes for LTE that were developed in the lower 700-MHz band. The lack of interoperability between Band 12 and Band 17 has caused a split between large and small wireless carriers that has left many small carriers with a lack of LTE handsets to sell on their spectrum. As a result, a number of Lower A Block licensees were compelled to request an extension of their interim construction benchmark deadlines, which the FCC recently granted.

“Unfortunately, at this time, the potential for Lower 700-MHz A Block deployments to spur increased competition has not come to fruition because additional competitive carrier LTE deployments have been delayed and/or limited by the continued fragmentation of the Lower 700-MHz spectrum band,” Carlson said.

Interestingly enough, while Carlson stood in solidarity with rural carrier have-nots, his company, U.S. Cellular, has proven to be an exception, launching an LTE Band 12 network in 2012 with King Street Wireless, with a small cache of LTE phones.

“Even [U.S. Cellular] remains constrained in its ability to gain access to a wide variety of LTE-capable devices,” Carlson said.

Without interoperability, Carlson asserted, small, regional wireless carriers will never have the critical mass to drive development of low-cost, competitive LTE handsets, therefore killing off the deployment of LTE in the lower A band.

Clearwire Ramps Up LTE Build in 4Q

Even with revenues dropping 14 percent in the last quarter and losses mounting, Clearwire exceeded its goal for LTE Advanced-ready network build, according Erik Prusch, president and CEO.

“We began to ramp up our build activity in the fourth quarter 2012 and exceeded our target of 800 fully commissioned sites with more than 1,000 LTE sites awaiting connection to Sprint’s core network at year-end,” he said during the 4Q earnings conference call.

The carrier remains on track to meet its goal of 2,000 LTE sites on air by the end of June 2013, increasing to 5,000 LTE sites on air by the end of 2013. To that end, it has 2,700 notices to proceed in hand, according to Prusch.

Clearwire had capital expenditures of $102 million in the fourth quarter, compared with $34 million for the previous quarter and $23 million for the fourth quarter 2011.

Capex in 4Q consisted primarily of LTE deployment in addition of WiMAX maintenance, according to Hope Cochran, chief financial officer. The total cost of the LTE build out is expected to be $600 million.

“Our LTE build hit its stride in the fourth quarter and we expect LTE equipment purchases for the initial phase of the build to ramp even faster in the coming quarters, as we build 5,000 sites by the end of 2013,” she said.

Clearwire’s revenue shortfall stirred rumors in the press about whether the carrier can survive the year without accepting financing from Sprint, which would essentially end Dish Network’s merger attempt.

Network Vision Deployment Hits a Fever Pitch; Let the Capex Flow

Even with weather hindrances, such as Superstorm Sandy, Sprint nearly doubled the number of sites in its Network Vision sites on air in the last 90 days, with more than 8,000 sites in 58 cities, according to the fourth quarter 2012 earnings conference call.

LTE services are expected to commence in nearly 170 more expected in coming months, construction has been started in more than 450 cities and more than 19,500 sites are now ready for construction, a 45 percent increase compared with the third quarter, according to Steve Elfman, president, Sprint network operations.

“In the fourth quarter, average new sites on air per week grew 83 percent from the third quarter,” he said. “We have zoning complete on 29,000 sites and leasing complete on 27,000 sites, a 34 percent increase over Q3 for both.”

Average downlink and uplink speeds are in the range of 6 to 8 megabits per second for downlink and 2 to 3 megabits per second for uplink, according to Elfman.

“We are also very pleased with the performance we are seeing on LTE sites we have on air,” he said.  “We expect this performance to improve as we bring full site clusters on air and continue to tune the network.”

Progress on the Network Vision is the result of increased investment at Sprint Nextel. The carrier is beginning the second year of the investment phase its turnaround, which includes building a new network platform and eliminating duplicative network cost structure.

“We are committed to deploying Network Vision as quickly as we can, said Dan Hesse, Sprint Nextel. “We doubled our wireless capex year over year as we deployed this leading edge network.”

Capital expenditures for the fourth quarter were more than $1.9 billion, including $1.3 billion of Network Vision capital. Network Vision capital was up 24 percent sequentially as the build continues to gain momentum, according to Joseph Euteneuer, chief financial officer.

And the money will continue to flow into infrastructure in 2013. In the first two quarters of 2013, total capex is expected to be at a similar or higher than fourth quarter 2012, Euteneuer said.

“We believe that the faster we can deploy the capital and higher standards we can deploy in the network architecture the better off we will be,” he said. “Including some delays spend from 2012 coming into 2013, these areas will contribute to heightened capital spend in 2013 while we believe will help us move more quickly towards becoming a stronger and more competitive company.”

Jennifer Fritsche, senior analyst, Wells Fargo, applauded Sprint’s capex spend plans, which would amount to $3.8 billion in the first half of 2013.

“Big capex number yes. But now is time to spend,” she said. “We believe it is smart for the company to spend this now in an effort to make it competitive with its larger peers.”

Of course, capex spend in the second half 2013 will be affected greatly by the result of the Softbank’s attempt to infuse $20 billion into the carrier.

LTE Small-Cell Backhaul Solutions

ZTE has unveiled a series of backhaul solutions for LTE small-cell technology that will help operators address technical challenges, and that will offer support for a wide range of data transmission methods, including a packet-bearer network backhaul solution, a fixed broadband backhaul solution (through PON, xDSL and cable), a microwave wireless backhaul solution, a Wi-Fi non-line-of-sight (NLOS) wireless backhaul solution and a TD-LTE backhaul solution. Operators will have more flexibility and choice in customizing their backhaul networks based on their own requirements. Another advantage is its multimodule support. The support for wireless transmission modules such as Wi-Fi and TD-LTE also addresses the (NLOS) challenges of network construction in urban areas. www.zte.com.cn

January 2013: Buyers Guide

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January 2013: Buyers Guide

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