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Policy

Spectrum Shockwaves

1/02/2012 12:01 AM Eastern

The war among wireless carriers has gained
new intensity — with cable operators getting caught up
in the melee.

Sprint Nextel on Dec. 19 sued Comcast, Time Warner
Cable, Cox Communications and Cable One, alleging
that the cable companies are infringing 12 patents
related to transmitting voice calls over Internetprotocol
networks.

That came just 17 days after Comcast, TWC and
Bright House Networks reached deals with Verizon
Wireless — a major Sprint competitor — under which
the MSOs propose to resell the carrier’s products and
services, and the cable operators agreed to sell Advanced
Wireless Services spectrum licenses to the
carrier for $3.6 billion (see “Mobile Mashup,” Dec. 12,
2011). Cox reached a similar agreement with
Verizon Wireless on Dec. 16.

Meanwhile, the Department of Justice antitrust
division said it is examining Verizon Wireless’ pacts
with the MSOs. “We’re looking at the proposed transaction,”
DOJ deputy director of public affairs Gina
Talamona said, declining to comment further.

Verizon Communications spokesman Ed McFadden
said the company was assuming that “it’s the standard
antitrust review.” Verizon Wireless, the largest mobile
carrier in the U.S., is a joint venture of Verizon and the
U.K.’s Vodafone.

Also last month, Verizon Wireless and the cable companies
applied to the FCC for permission to transfer the
licenses, arguing that the regulator’s review should be
expedient and limited since — they said — there are no
anticompetitive effects. They said the spectrum transfers
“comply with all commission rules, require no waivers, and
will not result in any violation of the Communications Act
or any other applicable statutory provision.”

T-MOBILE DEAL SCRAPPED

On another front, AT&T on Dec. 19 abandoned its $39 billion
bid to acquire T-Mobile USA, in the face of opposition
from the Federal Communications Commission and
DOJ. But three days later, the FCC approved AT&T’s proposed
$1.925 billion purchase of spectrum, covering about
300 million people in the U.S., from Qualcomm, which had
tried unsuccessfully to deliver a mobile TV service in the
700-MHz band.

Wireless operators are battling to grab more spectrum,
given the crushing demand for bandwidth expected over
the next few years. Mobile Internet data traffic will increase
at a 92% compound annual growth rate from 2010
to 2015, to 6.3 Exabytes (6.3 billion Gigabytes) per month
globally, according to Cisco Systems’ 2010-15 Visual Networking
Index Forecast
.

“Customers are going to use more and more data, and
carriers are going to need more and more spectrum,” Jeff
Kagan, an independent technology analyst based in Atlanta,
said. The availability of spectrum “is going to be a
problem going forward.”

In terms of spectrum holdings, Sprint trails dominant
leaders AT&T and Verizon Wireless, according to an analysis
by Sanford Bernstein research.

Sprint has access to 52.5 MHz of nationwide spectrum,
compared with 81.1 MHz for AT&T and 104.9 MHz for Verizon
Wireless (weighted by population, and assuming the
MSOs’ AWS deals with Verizon Wireless are approved).
Clearwire, the mobile-broadband provider that is majority-
owned by Sprint, has 133.2 MHz of spectrum nationwide,
but the spectrum is of lower quality than that of the
incumbent providers, according to Bernstein analysts.

Last week, Sprint updated its Long Term Evolution 4G
deployment plans, saying it is on track to offer LTE devices
by mid-year and to complete the majority of its Network
Vision initiative to consolidate multiple wireless technologies
in 2013. Sprint expects to make additional announcements
about the timing of LTE markets and devices early
this year.

SPRINT NOW SUING

Sprint — now that its erstwhile cable partners have linked
arms with Verizon Wireless — is pursuing legal action
against the MSOs. The carrier is seeking unspecified
damages for past infringement and an injunction blocking
them from using the VoIP patents.

“The cable companies sued by Sprint are continuing to
offer phone services that use this technology without obtaining
a license or permission from Sprint,” the wireless
company said in a statement.

The cable operators declined to comment on the
lawsuits.
The dozen patents at issue include six involved in
Sprint’s successful lawsuit against voice-over-Internet
provider Vonage. In September 2007, a federal jury found
Vonage infringed six Sprint patents, after which Vonage
agreed to pay $80 million to Sprint to settle the lawsuit and
to license Sprint’s VoIP patent portfolio.

Over the last several years, Sprint has been a strategic
partner to major cable operators. Comcast and Time Warner
Cable (along with Bright House) hold equity stakes in
Clearwire. The MSOs had been reselling Clearwire’s 4G
WiMax service, but that arrangement would end by midyear
under the exclusive deal with Verizon Wireless.

In addition, Comcast, TWC, Cox and Bright House
joined with Sprint in the Pivot joint venture, under which
the cable operators attempted to sell 3G voice and data
services provided by the wireless carrier. That partnership
ended in 2008, less than three years after its formation.

Sprint also has provided VoIP and interconnection services
to MSOs including Time Warner Cable. In 2010, TWC
announced it would phase out its use of Sprint’s services
over the next several years.


John Eggerton contributed to this report.

AS THE WIRELESS
WORLD TURNS

Sprint Nextel sued former cable partners,
including Comcast, Time Warner Cable
and Cox, alleging infringement of voiceover-
IP patents.

AT&T dropped its $39 billion bid for
T-Mobile USA.

FCC approved AT&T’s $1.9 billion acquisition
of Qualcomm spectrum in 700-MHz band.

Department of Justice said it is reviewing
cable companies’ proposed sale of AWS
spectrum licenses to Verizon Wireless.

Sprint said it is on track to offer LTE devices
by mid-2012 and complete the majority of
its Network Vision rollout in 2013.

SOURCE: Multichannel News research

September