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The AT&T/Verizon Wireless Duopoly: “Humpty Dumpty Has Been Put Back Together Again”

Phillip Dampier September 26, 2012 AT&T, C Spire, Clearwire, Competition, Public Policy & Gov't, Sprint, T-Mobile, Verizon, Wireless Broadband Comments Off on The AT&T/Verizon Wireless Duopoly: “Humpty Dumpty Has Been Put Back Together Again”

AT&T and Verizon: The Doublemint Twins of Wireless

Wireless carriers other than AT&T and Verizon Wireless have joined forces asking federal regulators to help level the playing field in wireless competition.

At this week’s convention of the newly-relaunched Competitive Carrier Association (CCA), Sprint, T-Mobile USA, Clearwire, C Spire, and more than 100 other small regional rural carriers joined forces in Las Vegas to sound the alarm about a wireless duopoly restraining competition and raising prices for consumers.

“Humpty Dumpty has been put back together again,” said C Spire CEO Hu Meena. “And while the identical twins sometimes agree to meet and discuss industry issues with other industry players, they seldom, if ever, support action that might better the industry as a whole.”

C Spire should know. The company filed a lawsuit against AT&T earlier this year claiming the phone giant manipulated its 700MHz band allocation to lock C Spire customers out of getting access to the latest smartphones.

“At some point, and that time is coming, regulators and politicians are going to have to acknowledge they have a choice to make: they are going to have to decide whether the communications industry, the fundamental driver of the information economy, is going to be regulated by true, healthy competition or by the government,” Meena said.

In the last 20 years, rampant consolidation has reduced the number of national wireless carriers down to four — Verizon Wireless, AT&T, Sprint, and T-Mobile. Filling in the gaps are various regional providers, all who depend on one of the major four to provide reasonable roaming service for customers traveling beyond the service areas of smaller companies. Without reasonable roaming, competitors are left at a serious disadvantage.

Another major problem is access to the latest smartphones. Major manufacturers largely design and market cell phones for the largest four companies, often relegating smaller providers to sell older or less prominent phones to customers. When phones do not work on the spectrum acquired by smaller competitors, roaming becomes a problem.

But beyond those issues is the question of wireless spectrum. Traditionally sold in competitive auctions, the deepest pocketed companies traditionally win the bulk of frequencies, leaving competitors with less desirable spectrum that has difficulty penetrating buildings or requires a more robust cell tower network.

Meena

Members of the CCA recognize that mergers and consolidation can bring costs down through economy of scale, but in their eyes, AT&T and Verizon’s actions have promulgated a new paradigm for wireless on Wall Street: consolidation around a handful of wireless carriers is healthy; having too many competitors is inefficient.

“Consolidation can introduce business efficiencies,” said Michael Prior, CEO of Atlantic Tele-Network. “But government has a role in making sure that infrastructure is used in a way that works for the entire country. All we’re asking the FCC to do is to make sure there is a level playing field.”

Observers expect the CCA to ask the FCC to set aside spectrum in future wireless auctions exclusively for smaller carriers to help protect what competition still exists.

“There used to be dozens of railroad companies,” Prior noted. “But the government didn’t allow certain companies to develop rails that wouldn’t allow trains to interconnect to rails run by other companies.”

Meena warned the same thing could happen in the wireless industry.

“We know what happened in the first 20 years of the industry where we have had many healthy competitors,” Meena said. “There remains a false hope among too many carriers that the duopoly will one day become reasonable. But, we all know, whether we choose to admit it or not, that until all competitive carriers become fully committed to work together for open competition, the wireless industry playing field will remain harmfully tilted toward the duopoly. They will never give an inch unless and until they have to do so.”

AT&T & Verizon’s Artificial Wireless Fiefdoms: Interoperability is the Enemy

Phillip Dampier June 5, 2012 AT&T, C Spire, Competition, Consumer News, Editorial & Site News, Public Policy & Gov't, Verizon, Wireless Broadband Comments Off on AT&T & Verizon’s Artificial Wireless Fiefdoms: Interoperability is the Enemy

The arrival of the LTE/4G wireless standard in the United States, and its adoption by the country’s two largest super-carriers AT&T and Verizon was supposed to open the door for true equipment interoperability, allowing customers to take devices purchased from one carrier to another. In the past, incompatible network standards (GSM – AT&T and CDMA – Verizon Wireless) made device portability a practical impossibility. The arrival of LTE could have changed everything, with device manufacturers using chipsets that would allow an iPad owner to switch from Verizon to AT&T without having to purchase a brand new tablet.

A new lawsuit filed by a small regional cell phone company alleges AT&T conspired to create their own wireless fiefdom that would not only discourage their own customers from considering a switch to a new carrier, but also locked out smaller competitors from getting roaming access.

C-Spire, formerly Cellular South, filed suit in U.S. federal court accusing AT&T and two of their biggest equipment vendors — Qualcomm and Motorola, of conspiring to keep the southern U.S. carrier from selling the newest and hottest devices and hampering their planned upgrade to LTE. The company also accuses AT&T of blocking access to roaming service for the benefit of C-Spire customers traveling outside of the company’s limited coverage area.

According to the lawsuit, the interoperability benefits of LTE have been artificially blocked by some of America’s largest carriers that force consumers to only use devices specifically approved for a single company’s network.

Divide Your Frequencies to Conquer and Hold Market Share

The Federal Communications Commission licenses wireless phone companies to use specific frequencies for phone calls and data communications. An industry standard group, the 3rd Generation Partnership Project (3GPP), is largely responsible for defining the standards of operation for wireless technology networks like LTE. In the United States, the group is dominated by the two largest cell phone companies and the technology vendors that make their living selling chipsets and phones to those major carriers.

Smaller carriers specifically bought spectrum near frequencies used by larger companies AT&T and Verizon with the plan to sign roaming agreements with them. But now Verizon is selling off its "Lower A, B and C" spectrum and intends to focus its LTE network on Upper C "Band 13," which it occupies almost exclusively. Meanwhile, AT&T has carved out its own exclusive "Band 17" for its Lower B and C frequencies where it will be able to effectively lock out other carriers. (Cellular South is now known as C-Spire).

It is 3GPP that elected to organize wireless spectrum into a series of frequency “blocks” and “bands” that different companies utilize to reach customers. Verizon Wireless, for example, has its 4G LTE network on a large chunk of the 700MHz band known as the “Upper C-block” or “Band 13.” Verizon earlier won control of some frequencies on the lower “A and B blocks,” which gave smaller companies the confidence to invest in adjacent frequencies, believing they would be able to negotiate roaming deals with Verizon.

Verizon has since elected to mass its 4G LTE operations on its “Upper C block,” and is selling off its lower “A and B block” frequencies. That leaves Verizon with overwhelming control of “Band 13.” The companies manufacturing equipment sold by Verizon are manufacturing phones that only work on Verizon’s frequencies, not those used by Verizon’s competitors. This effectively stops a Verizon customer from taking their device (and their business) to a competitor’s network.

This limitation comes not from the LTE network technology standard, but from the wireless companies themselves and equipment manufacturers who design phones to their specifications.

It would be like buying a television set from your local NBC station and discovering that was the only station the set could receive.

Verizon effectively created its own wireless “gated community” comprised of itself and a single tiny competitor still sharing a small portion of “Band 13.” AT&T was stuck in a considerably more crowded neighborhood, sharing space with more than a dozen smaller players, some who have a clear interest in being there to coordinate roaming agreements with AT&T to extend their coverage.

Regional cell phone companies could not exist without a roaming agreement that lets customers maintain coverage outside of their home service area. Without it, customers would gravitate to larger companies who do provide that coverage.

But large companies like AT&T and Verizon also have a vested interest not selling access to the crown jewels of their network, giving up a competitive advantage.

AT&T noticed its larger competitor Verizon Wireless had effectively segregated its operations onto its own band, and if that worked for them, why can’t AT&T have its own band, too?

Using a controversial argument that AT&T needed protection from potential interference coming from television signals operating on UHF Channel 51, located near the “A Block,” AT&T managed to convince 3GPP to carve out brand new “Band 17” from pieces of “Band 12.” Coincidentally, “Band 17” happens to comprise frequencies controlled by AT&T.

C-Spire alleges AT&T has since asked manufacturers to create devices that only support “Band 17,” not the much larger “Band 12,” effectively locking out small regional phone companies from LTE roaming agreements and the latest phones and devices.

Not surprisingly, Qualcomm and Motorola, who depend on AT&T for a considerable amount of revenue, fully supported the wireless company’s plan to create a new band just for itself. C-Spire’s lawsuit claims the resulting anti-competitive conspiracy has now graduated to foot-dragging by those manufacturers, reluctant to release new phones and devices that support the greater “Band 12” on which C-Spire and other smaller carriers’ 4G LTE networks reside. That is particularly suspicious to C-Spire, which notes companies manufacturing devices supporting all of “Band 12” would have automatically worked with AT&T’s new “Band 17.” Instead, manufacturers chose to create equipment that only worked on AT&T’s frequencies.

C-Spire says both AT&T and Verizon have once again managed to lock customers to their individual networks, have created artificial barriers to block roaming agreements, and have pressured manufacturers to “go slow” on new phones and devices for smaller competitors.

Driving the Competition Out of Business

LTE: Required for future competition.

Smaller carriers have always been disadvantaged by manufacturers’ exclusive marketing agreements with AT&T and Verizon that bring the hottest new devices to one or the other, leaving smaller players with older technology or smartphones with fewer features. Even worse, both AT&T and Verizon have forced manufacturers to enforce proprietary standards that make it difficult for consumers to leave one company for another and take their phones with them. C-Spire and other regional companies have primarily managed to compete because they often sell service at lower prices. They have also survived because roaming agreements allow companies to sell functionally equivalent service to customers who do not always remain within the local coverage area.

But recent developments may soon make smaller competitors less viable than ever:

  1. AT&T’s spectrum plans make it difficult for smaller companies to use their valuable 700MHz spectrum, the most robust available, for LTE 4G service. Instead, companies like C-Spire will have to use less advantageous higher frequencies at an added cost to remain competitive in their own local markets.
  2. Equipment manufacturers, who answer to the billion-dollar contracts they have with both Verizon and AT&T, remain slow to release devices that work on smaller networks, leaving companies like C-Spire without attractive technology to sell to customers.
  3. The ultimate refusal by AT&T and Verizon to allow LTE roaming or make it prohibitively expensive or technologically difficult to access could be the final blow. Why sign up for C-Spire if you can’t get 4G service outside of your home service area? C-Spire admits in its lawsuit it cannot survive if it cannot sign reasonable roaming agreements with AT&T or Verizon.

Cspire complaint filed against AT&T, Qualcomm and Motorola

Cellular South Becomes C Spire Wireless: Offers Unlimited Data Plans, Sort Of…

Cellular South, a regional wireless provider serving Mississippi, western Tennessee, and parts of Florida and Alabama, relaunched operations this morning as C Spire Wireless.

Company officials claim C Spire will be the first carrier to offer “personalized wireless services” that will adapt to customers based on how they use their phones and other  devices.

“We have entered a new era in wireless – an era centered on broadband networks, mobile computing devices and now personalized services. Completing calls is only a small part of what we deliver our customers,” said Hu Meena, president and CEO of C Spire. “Since 1988, our main focus has been on providing exceptional service for our customers and their wireless needs. Those needs have changed dramatically and will do so at an even more rapid pace in the future.”

Among the changes underway across the mobile industry is an effort to end unlimited wireless data plans for smartphone customers, but that won’t be the case at C Spire, which is retaining unlimited smartphone data usage for many of its service plans, sort of.

“C Spire understands that when customers have to measure and limit their data, they aren’t getting the optimal experience with their wireless provider. That’s why the company is introducing Individual and Family Choice Plans that offer customers the ultimate in choice and flexibility, and access to infinite data,” the company said in a statement.

But there is a major catch — that “infinite” data usage does not include streaming multimedia content.  That comes extra: priced free through October 29. Then 2 hours for $5, 5 hours for $10, or unlimited usage for $30.

How many "percs" can I win picking out the sloppy spelling errors on C Spire's website?

C Spire does away with counting megabytes or gigabytes and asks customers to guess how many hours they expect to use streaming media applications on their phones. That means customers will pay $50 a month for C Spire’s Choice D 500 plan, which includes unlimited web browsing and e-mail, plus 500 talk minutes per month.  But if you want to listen to unlimited online radio or stream video, that price increases to $80 a month.  But that $80 does buy an unlimited experience at that point.

C Spire’s pricing reflects the failure of strong Net Neutrality protection, allowing carriers to charge extra for different types of content on its network.

Wireless mobile broadband customers still face a cap on C Spire’s data-only plans: 1GB for $19.99, 3GB for $29.99 or 5GB for $49.99.

Users must spend at least 50 percent of their usage during the month within a C Spire service area.  Excessive roaming can get your service suspended.  As a regional carrier, that means “home usage” is limited to a handful of southern states.

But company officials are spending little time discussing their pricing and plans, instead focusing on how C Spire will “personalize” the wireless experience.

No other wireless provider understands its customers and adapts to their wireless needs like C Spire. Customers will see this unique personalization in apps and content that fit who they are, services that anticipate their needs, and rewards they’ll get just for using their phone in new ways. C Spire’s industry-leading personalization capabilities are powered by Pulse, a proprietary system that enables the company to understand and develop a closer relationship with its customers. In turn, C Spire recommends and provides the right selection of technology experiences tailored for each customer – giving them unmatched wireless personalization.

C Spire offers what they are calling “percs” — points that customers can collect based on interacting with the company’s website and social media platforms, the number of years they remain loyal to C Spire, and opting into company research programs including their Scout Program, which track apps usage.

The rewards on offer at the moment are not impressive — waiving late bill payment fees, priority access to customer service, feature upgrades, and discounts on accessories and shipping.

The company’s website has been unresponsive at times this morning and customers on C Spire’s Facebook page are complaining they are confused about pricing and plan changes, particularly those related to streaming data usage.

C Spire's Rewards Program

Magic Sparklies: The wireless company’s new advertising campaign introduces Cellular South’s new brand: C Spire Wireless (1 minute)

Cellular South Offers AT&T Customers Up to $300 to Throw the Carrier Under the Bus

Phillip Dampier December 9, 2010 AT&T, C Spire, Competition, Consumer News, Data Caps, HissyFitWatch, Public Policy & Gov't, Rural Broadband, Verizon, Video, Wireless Broadband Comments Off on Cellular South Offers AT&T Customers Up to $300 to Throw the Carrier Under the Bus

While America’s largest cell phone companies battle over map coverage and work towards limiting wireless data usage, one super-regional wireless carrier is willing to pay customers to dump their old carrier and switch.

Privately owned Cellular South, which delivers home coverage over its own network in Memphis, the Florida Panhandle, Rome, Georgia, and parts of Mississippi and Alabama, is offering $100 to hand over your AT&T iPhone and get a brand new Android phone.  The company will even cover up to $200 of any early termination fees charged by AT&T or other carriers.

The company offers smartphone plans starting at $50 a month that includes unlimited mobile web access.  Customers with two or more smartphones on one account can get “unlimited everything” service for $59.99 per line.

Cellular South, virtually unknown outside of its service areas, has gained wider attention in recent days because of its stand against Verizon Wireless’ LTE network policies and an unrelated total meltdown of a Lauderdale County, Mississippi Board of Supervisors meeting that began with a debate about switching away from AT&T.

An ad for Cellular South promotes the fact its smartphone data plan delivers unlimited usage.  (1 minute)

The company is planning its own LTE network for its local coverage areas and got into a major dispute with Verizon Wireless, a fellow CDMA carrier, over the LTE standard’s roaming capabilities.  Wireless providers who belong to the Rural Cellular Association are disturbed that without interoperability requirements from the FCC, big national carriers will be able to exclude small players from their networks.  Even worse, companies like Cellular South may have trouble finding affordable wireless equipment that works on the frequency bands they are allocated to use.  What this means for consumers is that equipment purchased for Cellular South’s LTE network may not function while roaming.  The carrier told the FCC:

Lack of interoperability in the 700 MHz band will impose significant costs and burdens upon A Block licensees, which will competitively disadvantage smaller and regional carriers and their consumers. By delaying a decision on interoperability, the FCC is denying rural America access to 4G service. Cellular South paid $192 million dollars for licenses in Auction No. 73 and for months has been prepared to immediately put available capital to work to deploy its 700 MHz network in compliance with the FCC’s build-out requirements and for the benefit of its rural and regional consumers. But, without the certainty of interoperability across the 700 MHz spectrum, Cellular South’s capital will remain on the sidelines – unable to create jobs or increase economic activity within its 700 MHz license area.

Collectively, the rural and regional carriers holding Lower A licenses do not have the scale or scope to attract equipment manufactures making Band Class 17 or Band Class 13 equipment to produce Band Class 12 equipment at reasonable costs. Even where Band 12 equipment can be made available, the costs are unnecessarily inflated by the limited scale resulting from the lack of interoperability across the 700 MHz bands. If such equipment were produced, it would not be technically capable of roaming outside of Band Class 12 deployed networks. Nevertheless, rural and regional carriers like Cellular South may have no choice but to reduce the speed and size of their 700 MHz deployment and pay the unnecessarily inflated costs of Band 12 equipment and devices if it wants to compete with Verizon Wireless and AT&T in the 4G market.

The Rural Cellular Association noted the FCC inquired whether or not rural carriers could simply rely on the good will of Verizon Wireless, which is running its own private interoperability initiative, the Rural American Partnership Program.  Verizon says it will work with rural carriers and sign roaming agreements with participants to help ensure equipment was standardized across multiple carriers.  But the Rural Cellular Association claims Verizon’s offer was akin to a digital Trojan Horse — a gift to rural operators on the outside, but one that benefits Verizon far more than rural carriers on the inside.

“Verizon’s Plan provides a limited number of rural carriers with nominal opportunity to add or extend their 4G coverage in a way that only fills Verizon’s coverage gaps. Additionally, Lower A licensees paid a significant amount of money for their spectrum, more than Verizon paid for the C block per MHz/pop, and have stringent geographic-based build-out requirements,” Rebecca Murphy Thompson, the rural carriers’ general counsel wrote the Commission. “Considering these strict build-out requirements, Cellular South will focus on building its own business, not helping Verizon expand its network.”

The Rural Cellular Association (RCA) also continued its campaign against what it sees as anti-competitive behavior on the part of AT&T and Verizon.

“In addition to interoperability, RCA described how its members have limited options to obtain nationwide data roaming, but their customers still expect nationwide coverage and comparable services to their urban counterparts. Larger carriers are blocking rural and regional carriers from obtaining data roaming with reasonable terms and conditions because there is no regulatory mandate. RCA plans to supplement the record to provide examples of how AT&T and Verizon have blocked rural and regional carriers from negotiating data roaming agreements with reasonable rates. After a year of negotiations, Cellular South now has a data roaming agreement with one of the larger carriers.”

Lauderdale County, Miss.

For rural America, unaccustomed to getting good cellular coverage, the presence of rural carriers specifically targeting underserved communities as their main business function is a welcome change from “extended service” provided by larger carriers, mostly for travelers, as an afterthought.  These smaller carriers also often deliver savings in the communities they serve.

In Lauderdale County, Mississippi, the Board of Supervisors met earlier this week to review potential savings of at least $10,000 a year for the county sheriff’s department, just by ditching AT&T for Cellular South.  While Sheriff Billy Sollie had no objections to that, a follow up discussion about what to do with the savings started an on-camera debate that quickly descended into personal attacks and traded accusations.

District 5 supervisor Ray Boswell and Sheriff Sollie turned the meeting into a spectacle with allegations of drug and alcohol abuse, illegal use of county property, culminating in claims the sheriff was a “crybaby” and “a disgrace.”  A sheriff’s deputy even joined in at one point, yelling at Boswell for making unsubstantiated allegations and suggesting Boswell was arrested on felony charges but had his record expunged.

While other members of the board, including its president, sat stunned into silence, no one bothered to gavel the shouting match out of order.  The resulting 15 minutes of fame has created a sensation, and many area residents are embarrassed and upset.

Cellular South will probably win the county’s business, but heaven help the customer service representative that takes a call from Ray Boswell about a service problem.

Watch for yourself as a county meeting descends into chaos.  As it goes from bad to worse, nobody bothered to intervene to stop the escalating accusations and counter-accusations that have since become an embarrassment for residents of Lauderdale County, Miss.  (18 minutes)

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