AT&T and Verizon Wireless have the largest share of wireless customers. (Wall Street Journal)

The Department of Justice has recommended the Federal Communications Commission promote competition by setting aside certain future low-frequency wireless spectrum for auctions open exclusively to smaller wireless carriers including Sprint and T-Mobile USA.

“Today, the two leading carriers have the vast majority of low-frequency spectrum whereas the two other nationwide carriers have virtually none,” the Department of Justice wrote in comments to the FCC. “This results in the two smaller nationwide carriers having a somewhat diminished ability to compete, particularly in rural areas where the cost to build out coverage is higher with high-frequency spectrum.”

The Justice Department’s antitrust division has monitored the wireless industry with increasing concern consumers are not getting benefits from a robustly competitive marketplace increasingly concentrated in the hands of two wireless giants: AT&T and Verizon Wireless.

That dominance is made possible, in part, from the control of lower frequency spectrum, particularly in the 600-800MHz range that easily penetrates buildings and delivers a more reliable signal over longer distances than frequencies counted in the gigahertz. Verizon and AT&T control large swaths of these lower frequencies that work well indoors and provide longer distance coverage in rural areas. Conversely, Sprint and T-Mobile, among other smaller carriers, rely heavily on higher frequencies that need a larger network of cell towers to support good signal levels.

It often means rural customers may find reception with AT&T or Verizon Wireless but end up with a roaming indicator or no service at all with smaller providers.

The Justice Department worries that auctioning off future prime 600MHz spectrum carved out of the UHF television band reallocated for wireless services will end up in the hands of the deepest pocketed providers — AT&T and Verizon Wireless, and further hamper the ability of Sprint, T-Mobile and other small carriers to compete.

“Due to the scarcity of spectrum, the Department is concerned that carriers may have incentives to acquire spectrum for purposes other than efficiently expanding their own capacity or services,” writes the DoJ. “Namely, the more concentrated a wireless market is, the more likely a carrier will find it profitable to acquire spectrum with the aim of raising competitors’ costs. This could take the shape, for example, of pursuing spectrum in order to prevent its use by a competitor, independent of how efficiently the carrier uses the spectrum. Indeed, a carrier may even have incentives to acquire spectrum and not use it at all.”

The Justice Department echoes critics’ contentions that given a chance, large wireless carriers will “warehouse” acquired spectrum, unused, denying it from the competition. Carriers object to that claim, calling it baseless. But incentives remain for providers to drag their feet: spectrum warehousing forces competitors to pay even higher prices for other scarce spectrum, the necessity of constructing a larger network of costly cell towers to offer robust coverage, and fighting customers’ perceptions of inferior quality indoor phone reception.

In response, AT&T sent a multi-page, thinly veiled threat to sue if the Commission adopted the recommendations of the Justice Department.

“The Department is quite candid about its motive for this blatant favoritism: it hopes that reducing competition for the spectrum may enable Sprint and T-Mobile ‘to mount stronger challenges’ to AT&T and Verizon,” AT&T wrote in response. “Picking winners and losers in this fashion would be patently unlawful.”

AT&T also claimed the Justice Department’s recommendations were specifically tailored to help the two competitors, despite the fact neither company has shown much interest in acquiring low-frequency wireless spectrum, much less further expand the reach of their wireless networks:

“It is especially puzzling that the Department feels the need to help Sprint and T-Mobile in particular. Sprint already has by far the largest nationwide portfolio of spectrum, and holds vastly more spectrum than either AT&T or Verizon. It will also have ample financial resources at its disposal, as the Department has already approved Sprint’s purchase by Softbank, a financially strong Japanese company, and Dish Network has now made a competing offer for Sprint, citing the financial and strategic advantages of its own proposed combination.

Regardless of how this bidding war turns out, Sprint will receive a sizable infusion of cash, spectrum or both. T-Mobile, which is owned by Deutsche Telekom, one of the largest telecommunications companies in the world, just recently acquired substantial amounts of spectrum from both AT&T and Verizon, and is on the verge of completing a merger with MetroPCS that will add another trove of spectrum. So it is surely not for a lack of spectrum resources or financial backing that the Department needs to propose a financial giveaway to these companies.

Moreover, neither company even chose to bid at the Commission’s last auction of low-frequency spectrum, nor have they availed themselves of opportunities to acquire such spectrum in secondary markets. If low-frequency spectrum was critical to their business plans, as the Department simply assumes, someone should have informed their management, which has, instead chosen to acquire deep holdings in [higher frequency] PCS, AWS, and BRS/EBS spectrum.”

The Justice Department filing did not name Sprint or T-Mobile directly, but both companies are the only remaining national competitors to both AT&T and Verizon Wireless.

Spectrum set-asides are not unusual in telecommunications regulation. The Canadian Radio-television and Telecommunications Commission set aside significant wireless spectrum exclusively for new entrants to promote competition. Ultimately, the new competitors had little impact with less than a 10 percent market share and all three are now considered up for sale. That spectrum may eventually end up in the hands of the largest Canadian wireless companies regardless of the CRTC’s original intentions when license transfer restrictions expire in 2014. All three could be acquired by one or more of the major providers.

Other stories of interest:

1. FCC on Verizon-Big Cable Spectrum Deal: Sure, Why Not?; But Justice Dept. Thinking Twice
2. Wall Street Wants Two Wireless Carriers for Americans: AT&T and Verizon
3. Moody’s Declares AT&T and Verizon the Winners — Sprint and T-Mobile Can “Never Catch Up”
4. Breaking: Justice Dept. Files Suit to Stop AT&T/T-Mobile Merger
5. The AT&T/Verizon Wireless Duopoly: “Humpty Dumpty Has Been Put Back Together Again”

Sprint will focus its postpaid wireless business on profitability in 2013, with reductions in customer discounts and a tighter upgrade policy that will raise prices for some and slow down others seeking new subsidized smartphones.

CEO Dan Hesse today told Wall Street investors Sprint will be leveraging its upgraded LTE network to help hold the line on discounts and early upgrades, reminding customers Sprint’s Network Vision plan is delivering better service with faster speeds and fewer dropped or blocked calls.

Sprint released its 1st quarter 2013 earnings this morning, showing the company reduced its quarterly losses from $863 million in the same quarter last year to $643 million. The company spent $1.4 billion during the first quarter on network upgrades, primarily on forthcoming 4G LTE network roll-outs.

Steve Elfman, Sprint’s president of network operations reported the company activated more than 12,000 LTE-upgraded cell towers by the end of the quarter, slowed only by inclement weather. This year will see a massive increase in those numbers.

“We now have zoning complete on over 32,000 sites and leasing complete on over 31,000 sites. More than 25,000 sites already or have already begun construction,” Elfman reported. “Our weekly construction starts are now at a level to achieve our goals for the year. There are over 600 cities under construction and we have now launched 4G LTE in 88 cities with over 170 expected to launch in the months to come.”

Hesse

While Elfman oversees LTE upgrades, Sprint is also busy working towards decommissioning its Nextel network on June 30. Despite repeated warnings Nextel’s demise was close at hand, at least 1.4 million Nextel customers, nearly all business accounts, are still active on that network. Sprint is focusing most of its promotional budget again this quarter on convincing those customers to convert to Sprint service. But only 46 percent of Nextel customers took Sprint up on their repeated offers during the first quarter. Many others left for Verizon Wireless, switching off not only their Nextel commercial phones, but also those on Sprint’s network as well.

Sprint expects to hold on to a declining number of its Nextel customers as the second quarter progresses, until the network is switched off for good at the end of June.

That hurts, because Sprint has also been losing customers due to “pardon our dust” construction-related service interruptions as part of LTE 4G upgrades. Those disruptions are expected to accelerate  as more cities are prepared for LTE service.

Sprint’s Lifeline cell phone service for the poor, Assurance, also took major hits during the quarter after the FCC tightened eligibility requirements for the free/low-cost cell phone service. The company switched off 224,000 accounts in the last three months that either failed to re-certify eligibility or were never qualified in the first place. Sprint’s wholesale customers, which resell access on the Sprint network, are also busy deactivating unqualified Lifeline wireless lines, so Sprint expects a similar number of disconnects during the second quarter as those accounts are dropped from the network.

As Sprint turns its attention to profitability, revenue numbers at Sprint improved slightly. Sprint’s prepaid division added 568,000 net prepaid customers, and Virgin Mobile raised its minimum top up amount for 90 days of service to $20 (up from $15 with a credit card). As customers upgrade their Sprint postpaid phones, more customers are also encountering Sprint’s $10 “premium data” surcharge.

Customers will also discover a tightening of Sprint’s discounts and upgrade promotions. Among the efforts underway:

• curtailing or eliminating certain customer credits and discounts;
• tightening device upgrade policies to end early upgrades, although Sprint still retains its 20 month upgrade policy for now;
• holding the line on phone subsidies for increasingly expensive smartphones.

Sprint’s prepaid mobile division

Slowing phone upgrades is particularly important for Sprint’s bottom line.

“I think the policy shifting is important in the industry because subsidies just keep going up and I think from the economic model perspective of the carriers we just can’t afford to upgrade as often,” said Sprint CEO Dan Hesse. “We’re not seeing any evidence yet that customers are interested in upgrading less often if they see less difference or improvement year-over-year in terms of what’s going on with these devices. In fact the opposite might be true which means these policies are really quite important for the industry.”

Hesse admitted that the drive to increase profits could cost Sprint some of its postpaid business, and probably already has over the last three years. But Hesse noted many of those contract customers have migrated to the company’s prepaid service, which keeps revenue in-house. Hesse expects as long as popular phones are available on prepaid plans, price-sensitive customers will continue to migrate towards prepaid service.

“I think what you are seeing is maturing of the U.S. markets beginning,” Hesse noted. “The U.S. has always been or traditionally been almost exclusively postpaid and it’s beginning to look like other markets that have a higher prepaid mix in terms of the number or percentage of customers.”

Other stories of interest:

1. Sprint’s Dan Hesse Complains About Wall Street’s “Disconnect” Over Investment
2. Wall Street Attacks: Sprint CEO in Big Trouble for Plans to Upgrade Sprint’s Network to LTE
3. Sprint Moves To Launch Its Own LTE 4G Network; WiMax? Not So Much Anymore
4. Verizon Wireless Eliminating “New Every Two” Program; Other Upgrade Discounts Being Phased Out
5. Sprint CEO Says Provider “Could” Discontinue Unlimited Pricing, But Not Now

Another reason to keep your landline. During major events, cell phone networks are quickly overwhelmed while wired phone lines still work.

The Associated Press is reporting minutes ago that a law enforcement official has ordered all cellphone service in the Boston area temporarily suspended to prevent any possibility of remote detonations of any other improvised explosive devices. But we have our doubts and in fact was able to reach one of our Boston readers by cell phone in downtown Boston just a moment ago.

“I can’t make calls on Verizon without getting a fast busy signal, but I am getting calls regularly at the moment,” reports Jim, one of our regular readers. “The cell networks are totally jammed with everyone on the phone in this city.”

Jim says a number of his co-workers had no idea there were two explosions at the finish line of the Boston Marathon this afternoon, but word-of-mouth office gossip spread the news over the last hour or so.

“Landlines are working fine, which is another reason you cannot and should not rely on cell phones alone during a major news event or disaster, because they are highly vulnerable to capacity crushes,” Jim said. “Our Internet access at work has also slowed to an absolute crawl and you cannot access a lot of local news websites, so we’ve watched the coverage on over the air television.”

Numerous press reports speculate the two explosions that killed two and injured at least two dozen were the result of some type of explosive device, but law enforcement officials have refused to confirm those reports so far.

As of 5:15pm EDT, Sprint and Verizon Wireless reported they were attempting to maintain service as best as possible despite the flood of wireless calls, and no carrier has confirmed they have been asked to switch off service.

“We are experiencing call blocking due to what’s happening,” Mark Elliott, a Sprint spokesman told the Boston Globe. “The network is blocking calls because the number of calls coming in exceeds the capacity. There’s no way the network can handle that kind of traffic.”

Elliott is asking cell phone users to text messages to friends and loved ones and avoid voice calling until capacity improves. This can keep lines open and clear for emergency and law enforcement officials.

Verizon Wireless, meanwhile, issued a statement, saying: “Verizon Wireless has been enhancing network voice capacity to enable additional calling in the Copley Square area of Boston. Customers are advised to use text or email to free up voice capacity for public safety officials at the scene. There was no damage to the Verizon Wireless network, which is seeing elevated calling and data usage throughout the region since the explosions occurred.”

Update 5:54pm EDT: The Associated Press has officially retracted their earlier story. There has been no request to suspend cell phone service, but carriers are impacted by heavy call volumes.

Other stories of interest:

1. Cell Phone Industry Considers Imposing Expensive ‘Unlimited Voice Calling’ Plans
2. AT&T Scores Last (Again) in Consumer Reports’ Ratings; Oddly AT&T Reseller Scores Highest
3. Cable Cut Ruins AT&T Cell Phone Service for Northern & Central Florida
4. When Broadband Fails… Emergency Officials Disconnected by Windstream Service Outage in Chama, New Mexico
5. AT&T Cell Towers in Connecticut Damaged by Winter Storm: 152; Verizon Wireless: 0

Satellite television provider Dish Network today offered $25.5 billion for Sprint Nextel Corp., in an unsolicited bid that surprised the wireless industry.

The bid, announced by CEO Charles Ergen, is $5.5 billion higher than that offered by Japan’s Softbank, which already had a pending deal to take a 70 percent stake in the third largest wireless carrier.

The bidding may not yet be over if Softbank decides to counter with a higher offer or if other bidders emerge in the coming weeks.

Ergen has signaled his interest in entering wireless markets to compensate for slowing earnings in the satellite television business.

“He is trying to transform his own business,” Vijay Jayant, an analyst at International Strategy & Investment Group in New York told Bloomberg News. “He’s trying to reinvent himself, moving from satellite to wireless.”

Ergen’s vision would include a bundled package of satellite television, broadband wireless Internet and cellular telephone service. Providing suitable wireless broadband Internet in rural areas may be the biggest challenge because of Sprint’s more limited network coverage, but a marketing deal combining satellite television from Dish and Sprint cell phone service would be easier to carry out.

Ergen’s offer includes $8.2 billion in stock and $17.3 billion in cash. Ergen’s company has stockpiled at least $10 billion from selling bonds over the last year. He intends to borrow the rest.

Ergen earlier had attempted to disrupt a deal that would have consolidated Clearwire into Sprint. Ergen offered $3.30 a share for Clearwire, 33 cents higher than the $2.97 per share offer from Sprint. Ergen also reportedly approached both MetroPCS and Deutsche Telekom’s T-Mobile USA looking for a deal to no avail.

Some analysts question whether Ergen has enough experience to manage a major wireless company with only his past involvement selling satellite TV subscriptions. But he arrives with more than just cash and stock options. Ergen has acquired mobile spectrum from bankrupt TerreStar Networks and DBSD North America. Ergen says he has no interest in building his own wireless network, but a combined Sprint/Dish could manage the spectrum through Sprint’s existing operations.

Ergen told Bloomberg News combining the spectrum Dish owns with the spectrum owned by Sprint and Clearwire would assure Americans of a robust wireless data platform that will not have capacity constraints or require individual device fees. That is in keeping with Sprint’s existing marketing as a provider of truly unlimited wireless data plans.

Several Wall Street analysts told CNBC and Bloomberg News the deal with Softbank may be more ideal for shareholders and consumers, because it would strengthen Sprint’s leverage with equipment manufacturers to offer cheaper and more robust devices.

Consumer advocates have mixed feelings. Dish has no prior association to the wireless industry so the deal does not represent direct, competitive consolidation. It also would boost Sprint as a more formidable competitor to AT&T and Verizon Wireless. But it could also further orphan T-Mobile USA.

“Right now, we have two giants and two also-rans, and now you’re getting potentially three giants dividing up the American market place, with T-Mobile lagging far behind,” Susan Crawford told the New York Times.

Bloomberg News explores what Dish sees in Sprint that is worth a bid of $25.5 billion to acquire the country’s third largest mobile company.  (2 minutes)

http://www.phillipdampier.com/video/Bloomberg Dish Bids 25-5 Billion for Sprint to Challenge Softbank 4-15-13.flv

Bloomberg says Dish has been stockpiling $10 billion in cash for new acquisitions to transform its business away from a satellite TV-only company.  (2 minutes)

http://www.phillipdampier.com/video/Bloomberg All Things Are on the Table for Sprint 4-15-13.flv

Christopher Marangi, of Gabelli Asset Fund talks with Bloomberg’s Erik Schatzker about Dish Network’s unsolicited $25.5 billion offer for Sprint and what options are available to Sprint with the offers it has on the table. (2 minutes)

http://www.phillipdampier.com/video/Bloomberg Dish Bid for Sprint Lacks Capital Chaplin Says 4-15-13.flv

Jonathan Chaplin, an analyst with New Street Research LLP, thinks Softbank’s original offer is superior to the one from Dish.  (6 minutes)

http://www.phillipdampier.com/video/Bloomberg Bidding for Sprint Is Not Over Fritzshe 4-15-13.flv

Jennifer Fritzsche, Managing Director of Equity Research at Wells Fargo Securities, discusses the likelihood of other players making bids. (2 minutes)

http://www.phillipdampier.com/video/Bloomberg What Did Dish CEO Ergen Say About Sprint Bid 4-15-13.flv

A Bloomberg News reporter interviewed Charlie Ergen about why he wants to enter the wireless business.  Ergen’s vision includes no nickel and diming customers with monthly device fees and usage charges. (4 minutes)

Other stories of interest:

1. Dish Network Wants to Convert Satellite Frequencies to Add Voice, Broadband Services
2. Dish Network Planning Nationwide 5Mbps Satellite Broadband Service
3. Emboldened Sprint Seeks Controlling Interest in Clearwire; Will Pay $100 Million for Co-Founder’s Stake
4. Wall Street Goes for Another Round of Sprint-Bashing: Why Are They Still in Business?
5. Wall Street Wants Two Wireless Carriers for Americans: AT&T and Verizon

FreedomPop, which offers 500MB of free wireless data service a month via Clearwire’s WiMAX service on a range of devices, has a better offer for tablet owners coming in the second half of this year.

The FreedomPop Clip is designed to attach to Wi-Fi only tablets and provides wireless Internet connectivity when away from Wi-Fi. Better still, the service will be free for the first 500MB of usage each month and will support Sprint’s up-and-coming 4G LTE network for faster browsing. The add-on hardware only weighs 2.5 ounces and has its own built-in rechargeable battery estimated to last up to six hours.

Tablets enabled with support for mobile data networks have never sold particularly well because of the added cost and expensive two-year contract required to maintain the service. Instead, some customers tether their tablets or enable an add-on Mobile Hotspot feature on their smartphone, which can cost $30 extra per month. The new FreedomPop Clip does not come with a contract or a monthly fee when users keep browsing to under 500MB each month. The forthcoming device will also support up to eight extra connections, in case you want to share.

Those who want more data, and around 30 percent of FreedomPop’s customers reportedly do, they can buy it on-demand without any contract or commitment. If you bug your friends to also buy the device, you can earn additional free browsing. In fact, FreedomPop will try and encourage sharing by including a new “open Wi-Fi” Internet service on a separate SSID. Those connecting through the open feature will likely get a marketing message encouraging them to get their own FreedomPop device, and their usage won’t count against your allowance.

FreedomPop Clip supports Sprint’s up and coming LTE 4G network.

Stop the Cap! has FreedomPop’s $99 iPod Touch add-on device, which works exclusively on Clearwire’s network. We’ve used it for about five months and can report the device works well whether you actually have an iPod or not. It is simply a portable hotspot shaped to clip to the back of the 4th generation iPod Touch (it won’t fit ours). But even if it cannot clip on, it still delivers excellent signals up to 12 feet away from the MP3 player.

Its biggest weakness is Clearwire’s hit or miss network. Here in suburban Rochester, N.Y., Clearwire provides service through a nearby cell tower about a mile away. At home, the device works with fair reception indoors, but really needs to be near a window to perform reliably. Outdoors, the device works much better. We found more trouble trying to use the device in a nearby restaurant and while in downtown Rochester because Clearwire reception proved spotty. When it does work, it provides an average of 800kbps-1Mbps downstream speeds, which is superior to most 3G networks, but does not come close to what Verizon’s LTE network can deliver. But then, FreedomPop data comes free.

Just remember to keep usage at 400MB or less every month. As you approach 500MB of usage, FreedomPop will “conveniently” bill you for additional usage it anticipates you will use unless you remember to shut this auto top-up feature off on FreedomPop’s website control panel. You must also use at least 5MB a month to keep the device active, so remember to power it up at least once a month and do some browsing.

The FreedomPop LTE-capable Clip will also reportedly work with 3G service, according to Forbes. This is an important consideration because Sprint’s 4G LTE network is still in its infancy and not yet available in most major metropolitan areas. But if it relies on Sprint’s overwhelmed 3G network, expect much slower performance.

The selling price for the device itself has not yet been announced, but we expect it will be available later this year at $99 or slightly higher.

Thanks to Stop the Cap! reader Jerry for sending this news tip.

Other stories of interest:

1. Initial Impressions of FreedomPop’s $99 iPod Sleeve – 500MB Clearwire 4G for Free Each Month
2. FreedomPop Threatens to Tear Up Wireless Data Business Model With Free GB of 4G
3. Updated: Stop the Cap! Helps Verizon Wireless Customers Sign Up for Unlimited Data Through Loophole
4. Amazon Slaps 50MB Usage Cap on Kindle Browsing Over AT&T’s 3G Network
5. NetZero’s “Free Wireless Internet Access” Comes With Catches

AT&T has once again received the dubious distinction of being America’s worst cell phone company, according to ratings (sub. required) from Consumer Reports.

AT&T’s bottom-of-the-barrel status has become something of an annual tradition in the consumer magazine’s ratings, as the company remains in last place year after year for dreadful performance, poor value, and downright lousy customer service. Its one bright spot: the company’s new 4G LTE service, which gets top marks for speed, although that rating comes before the majority of its customers are on the new network.

Verizon Wireless also took a tumble in the ratings published in the January 2013 issue. Verizon got downgraded for its new Share Everything plan, rated as only a fair value. Verizon’s vaunted customer service also declined significantly.

The highest ratings went to companies many never heard of:

• Consumer Cellular: This company resells AT&T service. The disparity between this top-rated, no contract provider and AT&T demonstrates that a bad customer experience with AT&T’s high prices and poor customer service can topple your ratings across the board. Consumer Cellular will face the same growing pains AT&T’s customers do in congested cities, but their customers seem to tolerate them better;
• U.S. Cellular: Top rated last year, this regional carrier provides service in the Pacific Northwest, Midwest, parts of the East and New England. The carrier, like the southern U.S. provider C-Spire, would probably have been acquired by one of the top-four carriers if the Justice Department seemed willing to accept further market consolidation. Its customers benefit from the company’s independence.
• Credo Mobile: Resells the Sprint network, but delivers superior customer service, which boosts its overall ratings. Formerly known as Working Assets, this progressive organization also enjoys loyalty because customers approve of the political and social causes with which it affiliates.

Overall, the magazine increasingly recommends consumers investigate no-contract or prepaid service plans before signing an expensive 2-year contract with the major four carriers. Pricing changes in 2012 have caused many subscribers to see bills rise, even as perks and benefits continue to erode. Device activation fees, upgrade fees, limits on early upgrades, restricted data plans, and all-or-nothing offerings that deliver (and charge) for features many consumers don’t use much have all reduced the value of contract service.

What keeps most customers coming back to another two-year contract is the chance to grab the hottest new smartphone at a discount. But consumers ultimately pay back whatever they have saved in higher fees over the life of the contract, which may make buying your own device at full price a better value with a no-contract plan.

Other stories of interest:

1. AT&T Scores Last (Again) in Consumer Reports’ Ratings; Oddly AT&T Reseller Scores Highest
2. Senator Amy Klobuchar To Introduce Cell Phone Consumer Empowerment Act: Protects Consumers from Excessive Cancel Fees
3. Canadians Trash Their Cell Phone Options: Bad Service, Worse Value; Koodo Rates Highest
4. Verizon Targets Frontier, AT&T and Cable ‘Digital Phone’ Landline Customers in Rochester, N.Y. and Conn.
5. Cell Phone Companies Back for More: Price Hikes, Mandatory Data Plans, Huge Bills

Phillip “Do you want to depend on AT&T for phone service that could be gone with the wind for weeks?” Dampier

Superstorm Sandy is getting credit for exposing the thin veneer of the “wireless future” some phone companies want to give their most rural customers after disconnecting their home phone lines in favor of wireless service.

Unfortunately for the providers selling you on the wireless revolution, reality intruded last month when Category 1 Hurricane Sandy arrived. In its wake, the storm obliterated a significant amount of wireless phone service for weeks in some of the most urbanized sections of the country, while leaving underground, traditional wired phone service largely untouched.

The storm that blew into the northeastern U.S. Oct. 29 left a legacy of interrupted or inadequate cell service that lasted more than two weeks. AT&T and Verizon Wireless reported their networks were not fully restored until Nov. 15. Sprint and T-Mobile are still addressing some issues with their networks as of today.

Although the storm was enormous in scope, it was only a Category 1 hurricane. It could have been much worse.

So where did things go wrong?

Although some sites lost their wired backhaul connection which connects the tower to the provider, the biggest problem was commercial power interruption. Without power, many providers were caught flat-footed with inadequate on-site backup plans to keep cell towers up and running until regular power could be restored.

The wireless industry fought tooth and nail against common sense regulations proposed by the Federal Communications Commission after Hurricane Katrina devastated infrastructure and power facilities in southern Louisiana and Mississippi.

The FCC proposed that every cell tower be equipped with on site battery backup equipment that could sustain service for a minimum of eight hours — sufficient time for power to be restored or company engineers to arrive with more robust generators.

Providers howled about the cost of outfitting the nation’s 200,000 cell sites with even a conservative amount of backup power. The cellular industry lobbying group and Sprint sued, calling it a wasteful and unnecessary mandate. The Bush Administration eventually dropped the whole matter in November 2008 as part of its war on “burdensome” regulation.

Since then, providers have been free to design their own emergency backup plans, or have none at all. Few have made those detailed plans public, giving customers information about how likely their cell phone will work in the event of a disaster.

Verizon Wireless has been the most aggressive, voluntarily adopting the proposed FCC standards and outfitting all of their cell sites with a minimum of eight hours of battery backup power. Other providers have backup facilities at some sites, often with lower capacity batteries that won’t last as long.

Sandy illustrated that even eight hours might be inadequate. Many cell sites were on generator power for more than a week, assuming engineers could regularly reach each tower with equipment and fuel.

Other cell sites could not be returned to service immediately because of major wind damage or flooding. Those that were in service were often overburdened by enormous call volumes.

Meanwhile, unless your landline provider’s central office was flooded, your phone line kept working during and after the storm, especially if your neighborhood wiring is buried underground.

In many cases, it was the only thing working, because traditional phone lines are independently powered and not dependent on electric service in your home to operate. That is what kept your dial tone humming even as your smartphone’s battery ran out.

Ironically, the network that performed the best through the storm is the same one AT&T and Verizon would like to phase out, starting in rural areas. AT&T wants to completely abandon wired service in its most rural service areas, where calling and waiting for emergency assistance is already a hindrance. AT&T plans to spend billions to bolster its rural cell tower network to cover the landline areas it wants to abandon, but those communities would be entirely dependent on the reliability of that network, because AT&T’s competitors are unlikely to build additional infrastructure to compete.

As Sandy just demonstrated, if high-profit Manhattan customers could not be assured of reliable cell phone service from any company that provide service there, how likely is it that a customer in rural Kansas will be in real trouble summoning help over AT&T’s wireless infrastructure in the event of a cell tower failure, wiping out the only telecommunications service available in nearby towns?

Other stories of interest:

1. AT&T Cell Towers in Connecticut Damaged by Winter Storm: 152; Verizon Wireless: 0
2. Hurricane Sandy’s Wrath on Telecommunications Extends Beyond the Hardest Hit Areas
3. Verizon Making Storm Preparations for Sandy’s Impact on Landline/Wireless Network
4. Mid-Atlantic Storm Damage Shows Big Telecom Unprepared for Bad Weather
5. Hurricane Irene Did Its Worst in North Carolina, Upstate NY, and New England

Hurricane Sandy’s destructive forces of wind and water, combined with extensive electrical outages has wreaked havoc with telecommunications services from Maine to Virginia, leaving some customers potentially without service for weeks.

The storm has flooded Verizon‘s central switching offices in New York City, did extensive damage to Sprint’s wireless network and infrastructure, has left large sections of upstate and downstate New York without cable service, and clocks ticking for wireless cell customers using cell sites currently running on battery backup power.

Some of the worst problems are affecting Verizon’s landline and FiOS networks after the company lost two critical switching centers in Manhattan to extensive flooding. That has contributed to significant problems for Verizon customers across Manhattan, Queens, and Long Island. Further afield, Verizon customers without service can blame power outages and fallen trees that took out overhead wiring. Together, Verizon customers are experiencing significant problems with landline, broadband, and FiOS TV and Internet services in some areas.

Many Verizon Wireless cell sites are operating on battery backup units which maintain service for only a limited time. New York, New Jersey and Connecticut customers report increasing difficulty maintaining cell service signals as those battery backup units start to fail. Verizon engineering crews can restore undamaged cell sites with backup generators once permitted into storm-ravaged areas.

One of the hardest hit wireless carriers

Cablevision‘s business largely depends on areas that took a direct hit from Hurricane Sandy. Cablevision repair crews are encountering extensive power outages and damaged overhead wiring brought down during the storm in Connecticut and Long Island. Its service area closer to New York City has been primarily affected by power outages. Comcast said it was still starting an assessment process and was not prepared to report on the current state of its network, which operates in cities north and south of the New York City metro area.

While Time Warner Cable spokesman Alex Dudley reports little damage to Time Warner Cable’s systems, many remain offline from power interruptions, and Time Warner’s Twitter feed for upstate New York reports isolated outages in Portland, Maine and across upstate New York, primarily due to power losses or damage to infrastructure.

Sprint appears to be the hardest hit wireless carrier with widespread service outages, interruptions and call completion issues throughout the states of New York, New Jersey, Connecticut, Pennsylvania, Washington DC, Maryland, North Virginia and New England. Some customers far away from the worst-hit areas report trouble making and receiving calls on Sprint’s network. Many cell sites are also damaged.

AT&T is assessing damage to its landline operations in Connecticut, where it is the dominant phone company. Many AT&T cell phone sites, like Verizon, are operating on battery backup in power outage areas until AT&T can bring generators online to maintain service.

T-Mobile and MetroPCS report damage and service outages to their cellular networks as well, mostly from power outages.

Lyndhurst, NJ

Even old style communications networks were not spared from Hurricane Sandy. The Northeast Radio Watch reports a large number of broadcasters across the region off the air as of this morning:

• Outside of WOR (710), most New York City area AM stations are off the air. WOR survived the storm with its recently built three tower site located just above the flood waters. Chief engineer Tom Ray told NERW the water is 10 feet deep at WOR’s transmitter site in the Meadowlands. Many AM stations in New York favor transmitter locations in now-ravaged Lyndhurst and the Meadowlands. The result: indefinite absence of all-news WINS (1010) (it’s now back up — thanks to an update from Scott Fybush), which is now being heard on WXRK (92.3). Also missing: WLIB (1190), WSNR (620), WMCA (570), WNYC (820), WPAT (930), WNYM (970), WADO (1280) and WWRV (1330). FM outlets favor much higher transmitter locations, usually atop large skyscrapers, that escaped flood damage.
• WABC continues to air the audio portion of its broadcast on WEPN-AM (1050) and FM (98.7) for the benefit of those without power. WCBS studios are currently powered “by candlelight.”
• The Jersey shore’s FM outlets are mostly silent. Atlantic City was among the hardest hit, and some stations may be off the air for some time while rebuilding.
• Connecticut stations are also off the air. Powerhouse WICC (600) in Bridgeport has transmitters on Long Island Sound — a poor choice to withstand Sandy. It is likely underwater. Also gone: WGCH (1490 Greenwich), WAXB (850 Ridgefield) and WSHU (1260 Westport) and WALK-FM (97.5 Patchogue).

Repair crews for all concerned will likely only start assessing damage later today, but many will have to wait for power crews to complete work — they have first priority. Those lucky enough to see service restoration once power returns will be in far better shape than others who could wait weeks to get their Internet, television and phone service back.

Correction: Original story included reference to studio power knocked out at WOR-TV. That should have said WOR-AM (radio). 

Other stories of interest:

1. Hurricane Irene Did Its Worst in North Carolina, Upstate NY, and New England
2. AT&T Cell Towers in Connecticut Damaged by Winter Storm: 152; Verizon Wireless: 0
3. Goodnight Irene: Some Customers Will Have to Wait Until October for Restored Internet Service
4. Major Earthquake Overwhelms Southern New Zealand Telecommunications Networks
5. Time Running Out on New England Cable/Phone Customers Seeking Storm-Related Credits

AT&T says this deal was no problem, but ponders whether Sprint-Clearwire is.

AT&T, the company that tried and failed to buy Deutsche Telekom’s T-Mobile USA, is sounding the alarm, urging regulators to carefully review any deal between Sprint, Softbank, and Clearwire.

“Softbank’s acquisition of Sprint and the control it gains over Clearwire will give one of Japan’s largest wireless companies control of significantly more U.S. wireless spectrum than any other company,” Brad Burns, an AT&T vice president said in a statement released late Wednesday. “We expect that fact and others will be fully explored in the regulatory review process. This is one more example of a very dynamic and competitive U.S. wireless marketplace, which is an important fact for U.S. regulators to recognize.”

AT&T claims its primary concern is the growing foreign control of America’s wireless carriers. That did not seem to bother AT&T from doing business with Germany-based Deutsche Telekom. Verizon Wireless has not been the recipient of any AT&T complaints either, and it is jointly owned by Verizon Communications and London-based Vodafone Group Plc.

Sprint bankrolled an opposition campaign against AT&T’s 2011 attempt to buy T-Mobile in a $39 billion dollar deal that failed after regulators objected to its impact on marketplace competition.

AT&T’s concerns about spectrum control may be an attempt to lobby the FCC for more leniency in approving future spectrum acquisitions. But industry analysts note that while a combined Sprint-Clearwire network may control more spectrum than others, much of it occupies less-favorable, very high frequencies that have trouble delivering robust service indoors. AT&T maintains a considerable amount of prime spectrum most sought by carriers, some of it yet to be used.

Other stories of interest:

1. Emboldened Sprint Seeks Controlling Interest in Clearwire; Will Pay $100 Million for Co-Founder’s Stake
2. Sprint Files Its Own Lawsuit Against AT&T/T-Mobile Merger As the Bickering Begins
3. Wall Street Hates Softbank’s Acquisition of Sprint; “Competitive Headache” for Wireless Duopoly
4. The Fat Lady Sings: What Happens Next Now That AT&T-Mobile Merger Deal is Dead
5. Moody’s Declares AT&T and Verizon the Winners — Sprint and T-Mobile Can “Never Catch Up”