AT&T has added to its Advanced Wireless Service (AWS) spectrum cache with the acquisition of 49 licenses in the 1710-1755 MHz and 2110-2155 MHz bands from Aloha Partners II, covering nearly 50 million people in 14 states, including California, Colorado, Connecticut, Idaho, Illinois, Indiana, Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, Ohio, Pennsylvania and Texas.
As a result of recent spectrum consolidation (AT&T purchase of LEAP and T-Mobile’s buy of US Cellular’s AWS spectrum), Aloha Partners stood as the largest remaining independent AWS spectrum holder, according to Wells Fargo Senior Analyst Jennifer Fritzsche.
“This is an important transaction for AT&T, in our view, because it adds capacity to its AWS spectrum holdings, notably to the AWS received from its acquisition of LEAP,” Fritzsche wrote in a research note. “We note the importance of AWS to AT&T as the spectrum is what we characterize as ‘plug and play’ in that there is already a developed ecosystem and most phones already support this spectrum for roaming.”
Aloha Partners Deal Dovetails LEAP Spectrum Buy
Last July, AT&T purchased LEAP Wireless, which had frequencies in the PCS and AWS bands that were complementary to AT&T’s existing spectrum. LEAP had spectrum covering 41 million pops, which AT&T plans to use for 4G LTE deployment.
The LEAP deal provided AT&T with 20 megahertz of spectrum in metro areas including Las Vegas, San Diego, Washington, Baltimore, Pittsburgh, Denver, Cincinnati, Charlotte, Chicago, Milwaukee, Philadelphia and Phoenix.
AT&T is deploying AWS for LTE until the Wireless Communications Service (2.3 GHz) comes online, which is scheduled for 2015.
Formed in 2004, Aloha Partners II purchased 15 licenses covering 38 million pops from the FCC in the Advanced Wireless Spectrum (AWS) auction. In 2007 and 2008, Aloha Partners II purchased an additional 37 AWS licenses covering 12 million pops from Nextwave Wireless. Before the sale, Aloha Partners II said it was the eighth-largest owner of spectrum in the United States, with licenses that cover 50 million people.
Originally, Aloha Partners II had planned to build its own wireless broadband networks. But faced with the growth in data demand from smartphones and tablets, the company said on its website that it no longer believed it had sufficient spectrum to meet demand and was considering joint ventures with existing wireless carriers to implement its strategy.
The U.S. Department of Justice will allow both Verizon’s proposed acquisitions of spectrum from the cable companies and T-Mobile USA’s contingent purchase of a significant portion of that spectrum from Verizon to go forward. The transactions facilitate active use of the spectrum and will benefit wireless consumers, according to the department. The transactions still must be reviewed by the FCC.
But the spectrum agreement came with a cost. Verizon and SpectrumCo (Comcast, Time Warner Cable, Bright House Networks and Cox Communications) will have to make changes to several agreements concerning both the sale of bundled wireless and wireline services and the formation of a technology research joint venture, both of which were deemed to be anticompetitive by the Justice Dept.
“By limiting the scope and duration of the commercial agreements among Verizon and the cable companies while at the same time allowing Verizon and T-Mobile to proceed with their spectrum acquisitions, the department has provided the right remedy for competition and consumers,” said Joseph Wayland, acting assistant attorney general in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division’s enforcement action ensures that robust competition between Verizon and the cable companies continues now and in the future as technological change alters the telecommunications landscape.”
Verizon and the cable companies, which are direct competitors in many local markets, had become just a little bit too cozy for the Justice Department’s liking, having entered into a series of commercial agreements that required the companies to sell each other’s products and create an exclusive technology research joint venture.
“The series of commercial agreements between Verizon and the cable companies would have threatened this competition,” the Justice Department wrote. “Most notably, the agreements, as originally structured, would have required Verizon Wireless to sell the cable companies’ services on an “equivalent basis” with FiOS where FiOS is available, thereby reducing Verizon’s ability and incentive to sell its own services aggressively.”
In December of last year, SpectrumCo, a joint venture among Comcast Corporation, Time Warner Cable and Bright House Networks, announced an agreement to sell Verizon its 122 Advanced Wireless Services spectrum licenses covering 259 million POPs for $3.6 billion. News of the deal and the approval by Justice is good for the wireless infrastructure industry. The added spectrum will undoubtedly fuel Verizon Wireless, as well as T-Mobile, in the deployment of cell sites and amendments to existing sites.
Jonathan Campbell, PCIA director of government affairs, reacted to the decision, saying “The Verizon-SpectrumCo deal will benefit wireless consumers by freeing up unused spectrum which — along with essential wireless infrastructure — can be used to deliver next-generation wireless services. PCIA applauds the parties, the Department of Justice and the Federal Communications Commission for their efforts to reach an agreement that will facilitate deployment of vital wireless services.”
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With spectrum constraints causing network congestion, AT&T has announced additional plans to improve network performance and add capacity. The carrier intends to redeploy spectrum currently used for basic 2G services to support advanced mobile Internet services on its 3G and 4G networks by 2017.
Customers will be transitioned from GSM and EDGE networks on a market-by-market basis. Currently, 12 percent of the carrier’s postpaid customers are using 2G handsets.
“We expect to fully discontinue service on our 2G networks by approximately January 1, 2017. Throughout this multi-year upgrade process, we will work proactively with our customers to manage the process of moving to 3G and 4G devices, which will help minimize customer churn,” the carrier said in a filing with the Securities Exchange Commission.
The carrier said it will use tiered data plans to facilitate moving users over to 3G and 4G. It noted that 61.6 percent of its postpaid smartphone subscribers were on tiered data plans at the end of June, up from 44.8 percent at the same time last year.
“Such offerings are intended to encourage existing subscribers to upgrade their current services and add connected devices, attract subscribers from other providers, and minimize subscriber churn,” the company said. “In July 2012, we announced new data plans that would allow subscribers to share data among devices covered by their plan.”
As AT&T pledged to continue investing in its network capacity, it added that it still needs FCC action on spectrum to advance its broadband capacity goals.
“Spectrum constraints could affect the quality of existing voice and data services and our ability to launch new, advanced wireless broadband services. Any spectrum solution will require that the FCC make new or existing spectrum available to the wireless industry to meet the needs of our subscribers,” AT&T wrote.
Tower operators should expect to see less rent from AT&T as it removes its 2G equipment from sites.
What began as such a promising idea for a $7 billion nationwide broadband wireless network with 40,000 antenna sites may not receive the regulatory approval it needs to move forward. In a letter sent on Wednesday, The National Telecommunications and Information Administration updated the FCC on its latest independent evaluation of the negative impact of LightSquared on GPS services.
“We conclude that the LightSquared mobile broadband network will impact GPS services and there is no practical way to mitigate the potential interference at this time,” wrote Lawrence Strickling, NTIA assistant secretary for communications and information.
Last July, LightSquared entered into an agreement with Sprint where it promised to pay the carrier $9 billion to deploy its nationwide LTE network over the Network Vision infrastructure and would have received credits valued at $4.5 billion. In October, Sprint accelerated deployment of Network Vision, which consolidates multiple network technologies into one seamless network. The demise of LightSquared leaves Sprint’s pocketbook quite a bit lighter and its spectrum-hosting business without an anchor tenant.
The FCC’s International Bureau, which had issued a conditional waiver order prohibiting LightSquared from operating until harmful interference issues were resolved, immediately released a statement that appeared to bow to the will of the NTIA.
“The NTIA, the federal agency that coordinates spectrum uses for the military and other federal government entities, has now concluded that there is no practical way to mitigate potential interference at this time. Consequently, the commission will not lift the prohibition on LightSquared,” said FCC spokesperson Tammy Sun.
The FCC is releasing this week a Public Notice seeking comment on the NTIA’s conclusions, proposing to vacate the conditional waiver order and suspend indefinitely LightSquared’s ancillary terrestrial component authority.
The FCC faced monumental challenges in attempting to allow terrestrial mobile communications on the satellite spectrum. Especially frustrating for the commission were the GPS receivers that pick up signals from uses in adjacent bands.
“There are very substantial costs to our economy and to consumers of preventing the use of this and other spectrum for mobile broadband,” Sun said. “Congress, the FCC, other federal agencies and private sector stakeholders must work together in a concerted effort to reduce regulatory barriers and free up spectrum for mobile broadband.” She called for better receiver performance standards as a way to more efficiently use spectrum.
Federal agencies decided earlier this week that they will develop new GPS spectrum interference standards for future proposals for non-space commercial uses of adjacent bands.
“NTIA recognizes the importance that receiver standards could play as a part of a forward-looking model for spectrum management even beyond the immediate use of GPS,” Strickling wrote.
In a sure sign that the end is nigh, Bloomberg Businessweek reports that Phil Falcone, whose hedge fund Harbinger Capital Partners invested $3 billion in LightSquared, is attempting to swap the spectrum, valued at $500 million by Skyterra, with the U.S. Department of Defense to salvage some of his investment. Since its subprime loan investments paid off handsomely five years ago, Harbinger’s capital has dropped from $26 billion to $4 billion.
Opening the way for wireless communications on the so-called TV white spaces, the FCC’s Office of Engineering and Technology has authorized Spectrum Bridge’s TV white spaces database system and okayed the first TV whitespaces device.
The authorized database, which may provide service beginning on Jan. 26, consists of all the channels in the TV spectrum (television frequencies between 54-698 MHz) occupied by authorized radios. The database is necessary because the FCC requires that unlicensed TV band devices contact an authorized database system to obtain a list of channels that are available for their operation at their individual locations. The devices are only allowed to operate on those channels not occupied by authorized radio services.
TV white spaces are unused spectrum between TV stations, which the FCC has allocated for the unlicensed provision of broadband data at higher power levels than Wi-Fi (nicknamed Super Wi-Fi)..
A Koos Technical Services wireless device, the first product cleared to operate on the TV white spaces, will be used as an unlicensed microphone at event venues.