Stop the Cap! » T-Mobile

PBS Documentary: Subcontracting Cell Tower Work Has a Human Toll

Phillip Dampier — Thu, 24 May 2012 20:58:31 +0000

Data provided by OSHA statistics

A new joint investigation by Frontline and ProPublica reveals serious lapses in safety for America’s cell tower workers, a career now considered one of the most hazardous and life-threatening in America.

In the last eight years, 50 climbers have died, with many more injured installing and servicing cell sites for AT&T, Verizon Wireless, Sprint, and T-Mobile. The investigation finds many of these deaths and injuries were preventable, but as America’s profitable cell phone companies outsource jobs to cut-rate subcontractors (and the sub-contractors they often use themselves), safety measures take a back seat to low-ball bidding and profits.

Efforts to hold companies accountable are stymied by the byzantine layers of third party companies hired to do the work, an under-equipped federal safety agency, and difficulty assessing where the responsibility lies when things go wrong.

From ProPublica and Frontline:

From their perch atop the contracting chain, carriers typically set many of the crucial parameters for work on cell sites, including deadlines, pay rates and even technical specifications, down to the exact degree an antenna should be angled. An analysis of cell tower deaths by ProPublica and PBS “Frontline” showed that tight timetables and financial pressure often led workers to take fatal shortcuts or to work under unsafe conditions.

“We’ve had a number of situations where we think that accidents were caused by companies trying to meet deadlines and … cutting corners on safety in order to meet those deadlines,” said Jordan Barab, OSHA’s deputy administrator.

But Barab said it’s difficult for the agency to hold cell companies responsible for safety violations involving subcontractors. In most cases, federal officials have interpreted OSHA regulations to mean that carriers can be held accountable only if they exercised direct control over subcontractors’ work or were aware of specific unsafe conditions.

OSHA has not sanctioned cell carriers for safety violations implicated in any subcontractor deaths on cell sites since 2003, a review of agency records by ProPublica and PBS “Frontline” found.

OSHA has made little effort to systematically connect the deaths of tower workers to specific carriers and had not known until ProPublica and PBS “Frontline” told them that there have been 15 fatalities on AT&T jobs since 2003 – more than at the other three major carriers combined over the same period.

The agency attempted to fine a carrier just once and failed, losing a nearly three-year legal battle with a regional cell company in Kentucky. The agency has never taken on the four major carriers – Verizon, T-Mobile, AT&T and Sprint – even though there have been almost two dozen fatalities on jobs done for their networks.

Most of OSHA’s enforcement efforts have focused on a transient cast of small subcontractors, though they, too, typically have eluded significant penalties. Over the last nine years, the median fine levied for safety violations linked to a fatal tower accident was $3,750, an analysis by ProPublica and PBS “Frontline” showed.

Click here to view the embedded video.

Watch this segment from PBS Frontline exploring ‘Cell Tower Deaths,’ and what can be done to stop them. (30 minutes)

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T-Mobile Nixes Family Shared Data Plan; Thinks It Will Create More Problems Than It Solves

Phillip Dampier — Tue, 22 May 2012 19:18:20 +0000

Foreshadowing Bill Shock?

T-Mobile is suspicious about the value of forthcoming family shared data plans likely to be introduced by its larger competitors AT&T and Verizon Wireless later this year.

Andrew Sherrard, senior vice president of marketing for T-Mobile announced the company would not jump on the family data bandwagon, preferring to leave the current model of individual data plans for each device in place:

Some of our competitors are backing away from simple, unlimited data and moving to family shared data plans. But would this approach actually deliver a better value to consumers? Do families really want to keep track of each others’ data consumption? We don’t think so. Just imagine mom’s email is suddenly unavailable because her teenage son watched an HD movie on his phone, consuming the family’s data allotment.

T-Mobile believes that consumers today do not want a ‘one size fits all’ approach to shared family data plans, nor would they benefit from that model. So, what is the right way to price data for customers who want affordable, unlimited access to what, unfortunately, is a limited resource?

Here’s how we see it:

Data plans should be flexible and affordable. At T-Mobile, customers have the option of only paying for the amount of data each member of the family believes they will need. Customers can choose affordable no-annual-contract data for tablets and other data-only products they share – paying every month or buying in daily or weekly installments.

Data should be worry-free. With our unlimited data plans, there is no surprise data cap or bill shock. Customers simply pay each month for the amount of high-speed data they select and (in contrast to our competitors) T-Mobile customers can continue to use mobile data on their device at reduced speeds after they reach their limit without incurring overage charges.

Customers who pay more, should get more. T-Mobile smartphone customers with 5GB or 10GB data plans also get our Smartphone Mobile Hotspot feature included. This means, with a capable T-Mobile smartphone (most are), customers can power up to five Wi-Fi enabled devices with fast, 4G data. So rather than needing to account for each device on a shared family data plan, customers can use their existing data plan to power multiple devices, while still saving hundreds of dollars annually.

T-Mobile has adopted a traditional usage cap model that provides a set usage allowance but imposes no overlimit fees. Subscribers who exceed their allowance have their wireless data speeds reduced to levels resembling dial-up for the remainder of their billing cycle.

Verizon Wireless’ recent announcement it would kick customers grandfathered on unlimited use wireless plans to tiered data plans with overlimit fees has created controversy and has angered some Verizon Wireless customers. T-Mobile’s marketing strategy could draw some disaffected customers from larger carriers.

T-Mobile ultimately believes a shared data plan can create havoc on families trying to control their shared allotment of data for each month. Without careful coordination, consumers may find substantial overlimit fees on their wireless phone bills when they exceed their allowance.

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Bulldozing Wireless Net Neutrality: Carriers Want “Toll-Free” Data for Their Partners

Phillip Dampier — Thu, 10 May 2012 18:43:54 +0000

After intense lobbying, wireless phone companies won a significant reprieve from the watered-down 2010 Net Neutrality policies introduced by Federal Communications Commission chairman Julius Genachowski.

Now some of America’s largest cell phone companies are considering plans that would offer special “toll-free” access to favored partners’ content, while leaving everyone else subject to the companies’ usage capped data plans.

Much of the discussion about exempting certain content from data allowances is taking place at this week’s CTIA Wireless trade show in New Orleans.

Some highlights:

T-Mobile USA is planning to expand video streaming services offered to subscribers, but with a twist. Content creators could pay to have their shows streamed to customers, and in turn, T-Mobile would not charge that traffic against the customer’s monthly usage allowance. Whether T-Mobile would maintain an ownership interest in the content is unknown, but “preferred partners” would receive exceptional visibility through aggressive promotional campaigns T-Mobile would launch. So would T-Mobile, which plans advertising and promotional messages inside that content;
Verizon Wireless said it was looking to create “toll-free” data services that would be subsidized by content providers. Video, games, and even apps could be promoted to consumers as “data usage”-free, meaning it won’t count against your monthly usage allowance. But Verizon recognizes the concept would be controversial and run afoul of Net Neutrality concerns.
AT&T has already signaled its interest in creating a “content-provider-pays” model where users get free access to content if content providers pay AT&T’s traffic charges.

All three carriers earlier abandoned all-you-can-eat flat rate data plans, and Net Neutrality proponents claim these latest moves are attempts by wireless phone companies to further monetize data traffic.

The Wall Street Journal reports the plans, in some cases, fly in the face of rhetoric about spectrum shortages and a wireless data traffic crisis (underlining ours):

T-Mobile’s Mr. Duea said the goal of new video offerings that don’t count against data plans would be to get customers interested in consuming more data, and set T-Mobile’s plans apart from those of other carriers.

"Data floods" and "spectrum shortages" don't stop T-Mobile.

Current FCC Net Neutrality rules require wireless carriers to not block competing services from companies like Skype and Google, nor censor content. Both Verizon and MetroPCS are challenging those rules in federal court. But wireless carriers are already exempt from giving preferential treatment to certain types of data or traffic, which opens the door to “toll-free” data services.

Net Neutrality supporters believe these practices will uneven the playing field for content creators and innovative new online start-ups, who may not be able to afford the prices carriers charge for first class treatment. It also influences consumer decision-making by encouraging customers to use the “toll-free” services to preserve their monthly data allowance.

Companies like Ericsson and Cisco have plans to market technology that will allow carriers to divide up data traffic into different traffic lanes, some fast and free to use, others subject to a customer’s monthly data allowance, and certain undesirable traffic shunted to low priority slow lanes.

A Verizon Wireless executive ironically blamed the need for “toll-free” pricing partly on the wireless industry itself, which has almost universally abandoned unlimited data plans.

“As we move away from flat rate pricing, there is room for an 1-800-type of service where certain destinations could offset the cost of the network to get customers to those destinations,” said Verizon’s chief technology officer Tony Melone. “There are Net Neutrality issues that have to be addressed, too.”

Melone added the company wasn’t quite ready to launch the “toll-free” traffic lanes just yet, but claimed certain content providers were discussing deals with the company to participate if and when the new toll booths are opened for traffic.

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Breaking News: T-Mobile in Talks to Acquire MetroPCS

Phillip Dampier — Wed, 09 May 2012 20:21:33 +0000

Deutsche Telekom AG is in talks to acquire MetroPCS in a stock-swap transaction that would give T-Mobile USA control over the upstart regional carrier.

MetroPCS shares jumped nearly 30 percent on the news, reported by Bloomberg.

MetroPCS operates a CDMA and LTE 4G network incompatible with T-Mobile USA’s GSM service, but would be an asset to T-Mobile’s prepaid phone unit, which could co-exist with T-Mobile’s existing network. MetroPCS primarily operates in the Boston-New York-Washington corridor, Southern California, Florida, southern Michigan, northern Georgia, and northeastern Texas. It is best known for delivering aggressive pricing on no-contract service plans, much like Leap Wireless’ Cricket.

Analysts predict T-Mobile would have little trouble winning approval for a merger between the two carriers. MetroPCS maintains an inconsequential 2.7% market share in the wireless industry. Speculation immediately increased that Leap Wireless’ Cricket unit could be the next target for a merger, potentially with Sprint or T-Mobile.

If T-Mobile sought to assume control of MetroPCS’ spectrum for its own operations, it would have to supply existing MetroPCS customers with new phones that operate on T-Mobile’s network standard.

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A History Lesson: Wireless Spectrum “Crisis” Hoopla vs. Solid Network Engineering

Phillip Dampier — Wed, 18 Apr 2012 18:11:17 +0000

“Somehow in the last 100 years, every time there is a problem of getting more spectrum, there is a technology that comes along that solves that problem. Every two and a half years, every spectrum crisis has gotten solved, and that’s going to keep happening. We already know today what the solutions are for the next 50 years.” — Martin Cooper, inventor of the portable cell phone

Despite the fear-mongering by North America’s wireless phone companies that a spectrum crisis is at hand — one that threatens the viability of wireless communications across the continent, some of the most prominent industry veterans dispute the public policy agenda of phone companies like AT&T, Verizon, Bell, and Rogers.

Martin Cooper ought to know. He invented the portable cell phone, and remains involved in the wireless industry today. Cooper shrugs off cries of spectrum shortages as a problem well-managed by technological innovation. In fact, he’s credited for Cooper’s Law: The ability to transmit different radio communications at one time and in the same place has grown with the same pace since Guglielmo Marconi’s first transmissions in 1895. The number of such communications being theoretically possible has doubled every 30 months, from then, for 104 years.

National Public Radio looks back at the earliest car phones, which weighed 80 pounds and operated with vacuum tubes. Innovation, improved technology, and lower pricing turned an invention for the rich and powerful into a device more than 300,000,000 North Americans own and use today. (April 2012) (3 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

A traditional car phone from the 1960s.

The earliest cell phones have been around since the 1940s. St. Louis was the first city in the United States to get Mobile Telephone Service (MTS). It worked on three analog radio channels and required an operator to make calls on the customer’s behalf. By 1964, direct dialing from car phones became possible with Improved Mobile Telephone Service (IMTS), which also increased the number of radio channels available for calls.

In the 1970s, popular television shows frequently showed high-flyers and private detectives with traditional looking phones installed in their cars. But the service was obscenely expensive. The equipment set customers back $2-4,000 or was leased for around $120 a month. Local calls ran $0.70-1.20 per minute. That was when a nice home was priced at $27,000, a new car was under $4,000, gas was $0.55/gallon, and a first run movie ticket was priced at $1.75.

With many cities maintaining fewer than a dozen radio channels for the service, only a handful of customers could make or receive calls at a time. The first “spectrum crisis” arrived by the late 1970s, when car phones became the status symbol of the rich and powerful (the middle class had pagers). Customers found they couldn’t make or receive calls because the frequencies were all tied up. Some cities even rationed service by maintaining waiting lists, not allowing new customers to have the technology until an existing one dropped their account.

Instead of demanding deregulation and warning of wireless doomsday, the wireless industry innovated its way out of the era of MTS altogether, switching instead to a “cellular” approach developed in part by the Bell System.

Click here to view the embedded video.

In the 1970s, when the first cell phone “spectrum crisis” erupted, the Bell System innovated its way out the the dilemma without running to Congress demanding sweeping deregulation. This documentary, produced by the Bell System, explores AMPS — analog cell phone service, and how it transformed Chicago’s mobile telephone landscape back in 1979. (9 minutes)

“Arguing that the nation could run out of spectrum is like saying it was going to run out of a color.” David P. Reed, one of the original architects of the Internet

Instead of one caller tying up a single IMTS radio frequency capable of reaching across an entire city, the Bell System deployed lower-powered transmitters in a series of hexagonal “cells.” Each cell only served callers within a much smaller geographic area. As a customer traveled between cells, the system would hand the call off to the next cell in turn and so on — all transparently to the caller. Because of the reduced coverage area, cell towers in a city could operate on the same frequencies without creating interference problems, opening up the system to many more customers and more calls.

Inventor Martin Cooper holds one of the first portable mobile phones

In Chicago, Bell’s IMTS system only supported around a dozen callers at the same time. In 1977, the phone company built a test cellular network it dubbed “AMPS,” for Advanced Mobile Phone System. AMPS technology was familiar to many early cell phone users. It was more popularly known as “analog” service, and while it could still only handle one conversation at a time on each frequency, the system supported better call handling and many more users than earlier wireless phone technology. By 1979, Bell had 1,300 customers using their test system in Chicago.

AMPS considerably eased the “spectrum crunch” earlier systems found challenging, and subsequent upgrades to digital technology dramatically increased the number of calls each tower could handle and allowed providers to slash pricing, which fueled the spectacular growth of the wireless marketplace.

Yesterday it was voice call congestion, today it is a “tidal wave” of wireless data. But inventors like Cooper believe the solution is the same: engineering innovation.

“Somehow in the last 100 years, every time there is a problem of getting more spectrum, there is a technology that comes along that solves that problem,” Cooper told the New York Times. “Every two and a half years, every spectrum crisis has gotten solved, and that’s going to keep happening. We already know today what the solutions are for the next 50 years.”

Cooper believes in the cellular approach to wireless communications. Dividing up today’s geographic cells into even smaller cells could vastly expand network capacity just like AMPS did for Windy City residents in the late 1970s. Using especially directional antennas focused on different service areas, placing new cell towers, innovating further with tiny neighborhood antennas mounted on telephone poles, or building out Wi-Fi networks can all manage the data capacity “crisis” says Cooper.

New technology also allows cell signals to co-exist, even on the same or adjacent frequencies, without creating interference problems. All it takes is a willingness to invest in the technology and deploy it across signal-congested urban areas.

Unfortunately, network engineers are not often responsible for the business decisions or public policy agendas of the nation’s largest wireless companies who are using the “spectrum crisis” to argue for increased deregulation and demanding additional radio spectrum which, in some cases, could be locked up by companies to make sure nobody else can use them.

Click here to view the embedded video.

The New York Times offers this easy-to-follow primer on wireless spectrum and why it matters (or not) in the current climate of explosive growth in mobile data traffic. (3 minutes)

“Their primary interest is not necessarily in making spectrum available, or in making wireless performance better. They want to make money.” — David S. Isenberg, veteran researcher, AT&T Labs

Innovation, not wholesale deregulation, allowed the Bell System to solve the spectrum crisis of the 1970s by creating today's "cell system" that can re-use radio frequencies in adjacent areas to handle more wireless traffic.

Spectrum auctions bring billions to federal coffers, but actually deliver a hidden tax to cell phone customers who ultimately pay for the winning bids priced into their monthly bills. It also makes it prohibitively expensive for a new player to enter the market. Already facing enormous network construction costs, any new entrant would then face the crushing prospect of outbidding AT&T, Verizon Wireless, Bell or Rogers for the frequencies essential for operation.

As the New York Times writes:

When a company gets the license for a band of radio waves, it has the exclusive rights to use it. Once a company owns it, competitors can’t have it.

Mr. Reed said the carriers haven’t advocated for the newer technologies because they want to retain their monopolies.

Cooper advocates a new regulatory approach at the Federal Communications Commission — one that mandates wireless phone companies start using today’s technology to amplify their networks.

Cooper points to one example: the smart antenna.

Smart antennas direct cell towers to focus their transmission energy towards the specific devices connected to it. If a customer was using their phone from the southern end of the cell tower’s coverage area, why direct signal energy to the north, where it gets wasted? New LTE networks support smart antenna technology, but carriers have generally avoided investing in upgrading towers to support the new technology, expected to be commonplace inside new wireless devices within two years.

T-Mobile calls these technology solutions “Band-Aids” that won’t address the company’s demand for more frequencies to manage its network. But that kind of thinking applied to the mobile phone world of the 1970s would have maintained the exorbitantly expensive IMTS technology discarded decades ago, since replaced by innovation that made more efficient use of the spectrum already on hand. That innovation also transformed wireless phones from a tool (or toy) for the very wealthy to an affordable success story that now threatens the traditional wired phone network in ways the Bell System could have never envisioned.

Click here to view the embedded video.

It’s A Whole New System: AT&T and other wireless phone companies might want to learn the lesson the Bell System was trying to teach their employees back in 1979: Meet Change With Change. This company-produced video implores the phone company to do more than the same old thing. No, this video is not “PM Magazine.” It is about innovation and actually listening to what customers want. With apologies to Mama Cass Elliot, there was indeed a New World Coming — the breakup of the Bell System just five years later. Don’t miss the diabetic-coma-inducing, sugary-sweet jingle at the end. Then reach for a can of Tab. (10 minutes)

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[Updated With Video] T-Mobile’s Ad Star Drops Dress for Get Tough-Biker Leather; Wireless Competition is Back

Phillip Dampier — Mon, 16 Apr 2012 17:51:18 +0000

She's back and wants to "set the record straight."

T-Mobile’s familiar ad star is dropping her polka dot dresses for some get-tough biker leather in a new series of commercials for the wireless carrier.

Canadian actress-model Carly Foulkes has appeared in “approachable”-wear designed by Debra LeClair since 2010, mostly chiding competitors like AT&T for tricky fees and “gotchas” that T-Mobile doesn’t charge. Typically amused by the antics of other wireless carriers, she promised relief for customers switching to T-Mobile’s value-oriented wireless plans.

Nearly a year after the failed merger-buyout by AT&T was first announced, T-Mobile this week unveils a “brand refresh” that promises wireless customers it is back in the fight for their business. Traditionally, T-Mobile has positioned itself as a low-cost, value-oriented provider. Often, the company’s service plans and pricing have forced other wireless carriers to follow suit. AT&T’s buyout of T-Mobile would have eliminated that aggressive pricing.

T-Mobile will spend millions on the new ad campaign.

In the first ad in the series, Foulkes metaphorically tears up T-Mobile’s image over the past year, perceived as supine as the company waited to be absorbed into AT&T’s empire. Ripping through her closet, Foulkes emerges in black leather and hops on board a motorcycle, demanding that visitors test-drive T-Mobile’s 4G network speeds against AT&T, Sprint, and Verizon.

Before her biker phase

T-Mobile’s year-long courting by AT&T cost the company plenty.

At last 802,000 contract customers fled T-Mobile for the competition, many for Sprint and Verizon, some only to avoid dealing with AT&T.

Others left because T-Mobile is the last major carrier still not offering Apple’s popular iPhone.

The company promises to invest at least $200 million in advertising its comeback and is keeping Foulkes front and center. In fact, outside of Verizon’s “Can You Hear Me Now” campaign which ran for a decade, ending last April, no spokescharacter has proved as recognizable as Foulkes.

The motorcycle theme will focus viewers on T-Mobile’s 4G network speeds. Customers perceived that T-Mobile stopped upgrading and expanding its network while it pursued a merger with AT&T.

T-Mobile continues to claim it operates the nation’s largest 4G network, operating with HSPA+ technology.

T-Mobile’s “4G” network does deliver speed improvements over 3G, but some have dubbed HSPA+ “3.5G,” because resulting speeds usually cannot compete with 4G LTE technology.

T-Mobile plans to spend $1.4 billion to build its own LTE network to launch in 2013.

Click here to view the embedded video.

T-Mobile’s “brand refresh” starts with this ad, “No More Mr. Nice Girl.” (1 minute)

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Verizon Wireless Tops J.D. Power 2012 U.S. Wireless Network Quality Performance Study

Phillip Dampier — Thu, 29 Mar 2012 14:18:54 +0000

For the 15th time, Verizon Wireless has topped J.D. Power & Associates’ U.S. Wireless Network Quality ratings for best service. Verizon Wireless consistently achieved fewer customer-reported problems with dropped calls, initial connections, transmission failures and late text messages, compared with other carriers, with one exception — U.S. Cellular, and only in the north-central part of the country.

J.D. Power found variations in network performance regionally, with carriers changing rankings depending on their infrastructure in different areas of the country. For instance, AT&T came in second in most regions of the country, except in the north-central region where they landed third, and in the western U.S. where they ranked dead last.

T-Mobile and Sprint traded last place positions in different parts of the country as well. Sprint performed more poorly in the northeast, north-central, and southeast, while T-Mobile did worse in the southwest and mid-Atlantic regions. But the German-owned carrier achieved second place in the western states.

J.D. Power reports problems with wireless carrier quality were on the increase in 2011, driven primarily by issues with data services including mobile Web and email.

The increase in data-related problems may be attributable to shifts in where wireless customers are using their devices and in the types of services they are accessing.

“The ways and places wireless customers use their devices have changed considerably during the past several years,” said Kirk Parsons, senior director of wireless services at J.D. Power and Associates. “For instance, in 2012, 58 percent of all wireless calls are made indoors – where wireless connections can be harder to establish and maintain – compared with only 40 percent in 2003. In addition, the rapid expansion of smartphone usage has also changed the ways in which wireless customers use their devices, which also impacts network quality.”

“Based on varying degrees of consistency with overall network performance, it’s critical that wireless carriers continue to invest in improving both the voice quality and data connection-related issues that customers continue to experience,” said Parsons.

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CNN Turns Over Tech Reporting to Wireless Lobby for ‘Sky is Falling’ Scare Stories

Phillip Dampier — Mon, 27 Feb 2012 18:46:26 +0000

CNN's Scare Stories on Wireless

As part of our ongoing coverage of the telecommunications industry, I talk with a variety of reporters in both Canada and the United States. We have educated local newspapers, national wire services, local TV news, and even big national consumer magazines about the problems consumers have with the North American telecommunications industry. Whether you are a wireless customer facing eroding usage caps and increasing prices, or a wired broadband customer now being slapped with Internet Overcharging schemes that monetize your usage, the truth about why your bill has gone up isn’t too hard to find, if you bother to look.

Unfortunately, CNN-Money just published a “week-long” series on the wireless mobile phone market that might as well have been written by the CTIA, the nation’s cell phone lobby.

“The Spectrum Crunch” was supposed to be a sober and objective report about the state of congestion on America’s cell phone networks. Instead, the reporter decided industry press releases and lobbyist talking points were good enough to form the premise that America is deep in a cell phone crisis.

Sorry America, Your Airwaves Are Full

Part one of CNN’s special report is a laundry list of disaster predictions, explaining away rate increases and usage caps, and an industry-skewed view that the answer to the “crisis” is to give wireless carriers all the frequencies they want.

The spectrum crunch is not an inherently American problem, but its effects are magnified here, since the United States has an enormous population of connected users. This country serves more than twice as many customers per megahertz of spectrum as the next nearest spectrum-constrained nations, Japan and Mexico.

When spectrum runs short, service degrades sharply: calls get dropped and data speeds slow down.

That’s a nightmare scenario for the wireless carriers. To stave it off, they’re turning over rocks and searching the couch cushions for excess spectrum.

They have tried to limit customers’ data usage by putting caps in place, throttling speeds and raising prices. Carriers such as Verizon, AT&T, Sprint, T-Mobile, MetroPCS and Leap have been spending billions to make more efficient use of the spectrum they do hold and billions more to get their hands on new spectrum. And they have tried to merge with one another to consolidate resources.

The FCC has also been working to free up more spectrum for wireless operators. Congress reached a tentative deal last week, approving voluntary auctions that would let TV broadcasters’ spectrum licenses be repurposed for wireless broadband use.

[...] The bad news is that none of the fixes are quick, and all are expensive. For the situation to improve, carriers — and, therefore, their customers — will have to pay more.

The United States also covers more ground, with lots of wide open spaces where frequencies can be used and re-used without interference problems. As AT&T keeps illustrating, how you run your business has a lot to do with the quality of your service, spectrum crisis or not. AT&T customers in heavily-populated urban markets cope with dropped calls and slow data not because the company has run out of frequencies, but because AT&T has failed to appropriately invest in its own network. AT&T’s problems are generally not shared by customers of other carriers. Even T-Mobile, which has the least spectrum of all major carriers, does not share AT&T’s capacity issues.

CNN reporter David Goldman suggests mergers and consolidation have been a solution for ‘wireless shortages’ of the past. But are mergers about consolidating resources or leveraging profits?

The spectrum war’s winners and losers

AT&T’s failed $39 billion bid for T-Mobile was largely aimed at getting its rival’s spectrum. The Department of Justice and the Federal Communications Commission killed the deal, saying it would be too damaging to wireless competition.

That put the entire industry on notice: The carriers will have to solve their problems without any blockbuster takeovers.

The regulators’ main concern was that the deal would take the ranks of national carriers down from four to three. That’s why experts now expect the big players to focus instead on acquiring smaller, low-cost carriers like MetroPCS and Leap Wireless. Their spectrum could relieve capacity issues in large metro areas, which are the places most crippled by the crunch.

Industry analysts also think that Sprint and T-Mobile could gain approval to merge, though that’s a bit like two drowning victims clinging together. Sprint is losing piles of money every quarter, while T-Mobile is hemorrhaging customers with contracts.

Another possibility is that several carriers could partner in a spectrum-sharing joint venture.

But the most likely scenario is that the carriers continue fighting each other to snap up the last remaining large swaths of high-quality spectrum.

Stephenson

The claim that AT&T sought the purchase of T-Mobile USA for spectrum acquisition falls apart when you examine the record. For instance, during AT&T CEO Randall Stephenson’s presentation at the merger announcement, shareholders were told the buyout would deliver cost synergies and savings, would stabilize earnings from a more predictable mobile market (with T-Mobile’s ‘market disruptive’ pricing out of the way), and would allow the company to secure additional frequencies. However, as Stop the Cap! reported back in August, documents released by the FCC showed AT&T unprepared to specify what T-Mobile spectrum it expected to acquire, much less how the company intended to use it.

The “problem” AT&T sought to solve, in the eyes of both the Justice Department and the FCC, was pesky competition from T-Mobile and the reduced profits AT&T endured as T-Mobile forced competitors to deliver better service at lower prices.

Even Goldman admits T-Mobile had the smallest inventory of wireless spectrum among the major carriers — scant reason for AT&T to court a merger for spectrum purposes.

The spectrum winners continue to be AT&T and Verizon, who have the largest inventory of favorable frequencies, and both continue to warehouse spectrum they are not using for anything.

Your Cell Phone Bill is Going Up

Has your mobile phone bill jumped this past year?

Get used to it.

Demand for wireless data services is soaring, forcing carriers to invest massively to keep up. They have two main options: Upgrade their network technology or acquire more wireless spectrum to give them more bandwidth.

“Massively” is in the eye of the beholder. Verizon outspent AT&T on network upgrades and continues to enjoy enormous returns on that investment. Most major cell companies spend billions on network improvements, but also earn tens of billions from their customers. Yet in the midst of the “spectrum crisis,” AT&T CEO Randall Stephenson told investors revenue was up — way up:

“We’ll expand wireless and consolidated margins. We’ll achieve mid-single-digit EPS growth or better. Cash generation continues to look very strong again next year. And given the operational momentum we have in the business, all of this appears very achievable and probably at the conservative end of our expectations.”

AT&T’s chief financial officer John J. Stephens put a spotlight on it:

In 2011, 76% of our revenues came from wireless and wireline data and managed services. That’s up from 68% or more than $10 billion from just 2 years ago. And revenues from these areas grew about $7 billion last year or more than 7% for 2011. We’re confident this mix shift will continue. In fact, in 2012 we expect consolidated revenues to continue to grow, thanks to strength in these growth drivers with little expected lift from the economy.

[...] We also continue to bring more subscribers onto our network with tiered data plans, more than 22 million at the end of the quarter, with most choosing the higher-priced plan. As more of our base moves to tiered plans and as data use increases, we expect our compelling [average revenue per subscriber] growth story to continue.

That’s a story AT&T has avoided sharing with customers, because more than a few might take exception that the past year’s rate increases have more to do with the company’s “compelling growth story” than a spectrum shortage.

CNN could have reported this themselves, had they bothered to look beyond the press releases and talking points from the wireless industry. The reporter even conflated recent increases in early termination fees as part of the “spectrum shortage.”

Readers have to glean the real story by reading between the lines. Here is an example:

As Suraj Shetty, Cisco’s marketing chief, puts it: “Data caps are curbing the top 1% of users, but not the top 20%.”

For carriers, finding the sweet spot is a delicate balancing act. Heavy data consumption is costly for them. On the flip side, smartphone users, who are typically required to buy pricey monthly data plans, are their most lucrative customers.

The ideal customer is someone with a smartphone they use sparingly.

That reality could eventually be reflected in your monthly bill. All four of the major carriers declined to comment about their future pricing strategies, but analysts expect them to start experimenting with new “pay for what you consume” approaches.

The real agenda is finding customers who buy the most service and use it the least. Usage caps and throttles don’t even work, if one believes Mr. Shetty. Curbing one percent of your heaviest users does little to curtail congestion when the top 20% remain within plan limits and create an even greater strain on the network.

It’s another hallmark of Internet Overcharging — monetizing broadband usage while using “congestion” as an excuse. If a customer uses 10GB on an unlimited usage plan or 10GB on a limited use plan, the impact on the network is precisely the same. Only the profit-taking is different.

There Are Solutions

Only in the last part of the series does CNN’s reporter discover there are some practical solutions to the spectrum crunch. They include:

Splitting cell phone traffic to reduce tower load. Adding additional towers is one solution, but not all have to be huge, unsightly monstrosities. In parts of Canada and Europe, new “micro-cells” on top of traditional power poles or buildings can reduce tower load, especially in urban areas. These units, which can fit in the palm of your hand, are especially good at serving fixed location users, such as those sitting at home, work, or in a shopping center. They don’t create eyesores, are relatively inexpensive, and are effective.
Allocation of spectrum. The FCC is working on making additional wireless spectrum available. Some carriers are cooperating to alleviate capacity issues, share towers, and collaborate on new tower planning.
Consider Wi-Fi. AT&T found offloading traffic to Wi-Fi and even home-based “femtocells” — mini in-home cell towers have effectively reduced demand on their wireless 3G/4G networks. There is still room to expand.

Click here to view the embedded video.

Alcatel-Lucent has a solution to the capacity crunch — a microcell cube that can be attached to a building or phone pole. (3 minutes)

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T-Mobile: Allowing Verizon to Acquire Airwaves from Cable Industry Against the Public Interest

Phillip Dampier — Wed, 22 Feb 2012 16:15:51 +0000

...some of that juicy 700MHz spectrum Verizon is getting from the nation's biggest cable companies.

In an ironic turnabout, Deutsche Telekom’s T-Mobile USA, last year an acquisition target of AT&T, has filed comments with the Federal Communications Commission opposing Verizon’s spectrum purchase from the nation’s largest cable companies as “contrary to the public interest.”

Verizon Wireless is seeking to acquire a substantial block of unused AWS spectrum that is unlikely to provide any near-term benefits to Verizon Wireless customers (indeed, the company already holds other AWS spectrum and has not even put it to use yet). Rather, the principal impact of the acquisition would be to foreclose the possibility that this spectrum could be acquired by smaller competitors – such as T-Mobile – who would use it more quickly, more intensively, and more efficiently than Verizon Wireless. The acquisitions will limit the deployment of LTE by competitors of Verizon Wireless and the bandwidth available for such deployments.

If these transactions go forward, the end result will be less LTE capacity available overall and reduced competition in the provision of LTE, which would be contrary to the public interest.

T-Mobile, in particular, is upset because it owns no spectrum in the valuable 700MHz range — frequencies that can travel longer distances and easily penetrate buildings. Verizon Wireless does, and ~~will acquire much more if the FCC approves the deal to transfer spectrum from Comcast, Time Warner Cable, and Cox~~. [Correction: As one of our readers pointed out, the spectrum being acquired is in the AWS band, which T-Mobile argues in its filing is still suitable for a 4G network deployment.] T-Mobile argues Verizon does not need the spectrum, and will effectively “warehouse” the frequencies to keep them off the open market. Without prime spectrum, T-Mobile argues, it will be difficult for the company to deliver a 4G experience to its customers.

T-Mobile also has a bone to pick with Verizon Wireless and the cable industry over what it suspects is a non-compete agreement:

At least in effect, this has all the hallmarks of a pure horizontal allocation of markets.

From the limited information available, it appears as though Verizon, the majority owner of Verizon Wireless, has agreed (tacitly if not expressly) to halt its extensive efforts to expand into the cable business and the cable companies have, in turn, traded their control of valuable spectrum in exchange for this protection of their cable markets.

It has been publicly reported that, coincident with acquiring the cable companies’ spectrum, thereby eliminating potential new competition in mobile wireless, Verizon ended its FiOS build out plans and terminated its agreement to resell satellite television. This series of acts appears to limit Verizon’s activity as a potential competitor in the video market and limit the cable companies’ role as potential competitors in the wireless market, while at the same time foreclosing competing providers from one of the only available sources of spectrum.

As a result of this “triple play,” competition in both markets will be substantially reduced. The antitrust laws have long condemned such agreements, even among potential competitors.

Not All Frequencies Are Created Equal

USA Carrier	Voice Frequencies (MHz)	3G	4G	Notes
AT&T	850 / 1900	850 / 1900	700	Will turn over limited frequencies to T-Mobile as per failed merger agreement.
Metro PCS	1900 / AWS	1900 / AWS	AWS	Provides limited service, targeting urban markets.
Sprint	1900	1900	2500	Sprint and its partner Clearwire have some of the least valuable spectrum.
T-Mobile	1900	AWS/(1900(limited))	AWS/(1900(limited))	T-Mobile’s network was built from acquisitions like VoiceStream and Omnipoint.
Verizon	850 / 1900	850 / 1900	700	Has used 700MHz to effectively deploy the largest 4G/LTE network to date.

Will Verizon ultimately warehouse its newest acquired spectrum?

Unless you are well-acquainted with the wireless industry, all most people know about their cell phones is that they turn them on and a signal strength meter indicates what kind of reception quality you are getting. In fact, wireless companies use a range of frequencies across several different frequency bands to handle voice calls and data. As an end user, you never know the difference. But if your wireless company is forced to use higher frequencies, they often have a harder time penetrating buildings or provide only limited distance coverage. That’s why AT&T and Verizon customers have a better chance of making and receiving calls in the middle of a supermarket or office building while others lose reception.

Clearwire has an extensive holding of very high frequencies at its disposal — frequencies the company cannot effectively use because they require considerably more infrastructure (ie. more cell towers) to provide an effective service to customers. Clearwire customers already complain about poor reception inside buildings, a problem exacerbated by the very high frequencies the company has to use for its service. Verizon and AT&T collectively control the majority of the best, more robust spectrum — the 700MHz band. Verizon’s LTE network, for example, relies on spectrum that used to be used by high numbered UHF television channels.

Companies like T-Mobile rely on frequencies in the 1700MHz and 1900MHz bands. While certainly adequate in urban and suburban areas, T-Mobile has to spend more on cell tower deployment and be especially concerned with rural coverage, especially in areas where the terrain makes “line of sight” reception from cell towers more difficult.

While today’s 2G and 3G networks have made due with current spectrum, companies like T-Mobile are having a hard time finding space to launch the next generation — LTE/4G technology — on their current spectrum. Without LTE, T-Mobile (and others) will find themselves at a competitive disadvantage. The company argues it should have the right to acquire some of the frequencies Verizon intends to capture from the cable industry, especially if Verizon has no immediate plans to use the spectrum.

Some of the wrangling by T-Mobile seems especially ironic because parent company Deutsche Telekom has indicated it wants to sell T-Mobile USA and leave the American wireless market. It has shown little interest so far investing in a LTE/4G network upgrade. Additionally, as part of AT&T’s failed merger bid, T-Mobile is expecting to receive frequencies from AT&T as part of the “failed transaction” clause in the original merger proposal.

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Moody’s Declares AT&T and Verizon the Winners — Sprint and T-Mobile Can “Never Catch Up”

Phillip Dampier — Wed, 15 Feb 2012 18:39:33 +0000

Game over. In the championship of cell phone competition, Verizon Wireless and AT&T have won, and it is now too late for Sprint-Nextel or T-Mobile USA to catch up.

That is the conclusion of Moody’s Investors Service, who has determined competition in waning in the U.S. wireless marketplace.

“AT&T Mobility and Verizon Wireless have better network coverage, wider capabilities and wider profit margins which gives them a competitive advantage that smaller rivals just can’t match,” said Mark Stodden, a Moody’s analyst and author of the report. “It is too late for competitors to invest and catch up; Sprint has the willingness but not the ability, while T-Mobile’s parent Deutsche Telekom, is the opposite.”

Sprint’s ambitious plans for a new 4G LTE network have been suppressed by a lack of enthusiasm by Wall Street investors and bankers, who seem to prefer the much-larger AT&T and Verizon who can sustain increased pricing and are better credit risks. T-Mobile USA has practically been abandoned by its parent owner Deutsche Telekom, which wants to focus its investments in larger markets in Europe.

Moody’s estimates AT&T and Verizon will account for 81 percent of industry earnings in 2011. Wall Street has pressured Sprint and T-Mobile to seek consolidation to better withstand their larger competitors. Before AT&T bid for T-Mobile, rumors of an acquisition of the German-owned company by Sprint-Nextel were common, although the two companies operate with different network technology. Moody’s predicts troubled waters for Sprint if it should actually seek to acquire T-Mobile, because the FCC seems comfortable with a minimum of four national carriers.

Instead, Moody’s predicts Sprint will seek to acquire smaller regional carriers and prepaid providers like Leap Wireless’ Cricket and MetroPCS. Neither acquisition would significantly improve Sprint’s service footprint, however, as both prepaid providers operate only in larger markets where they already co-exist with Sprint.

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