Deutsche Telekom AG, parent company of T-Mobile USA today confirmed it was in talks with MetroPCS Communications, Inc., to merge their two wireless businesses to achieve the greater scale both need to compete with Verizon Wireless and AT&T.

Bloomberg News reports DT’s supervisory board will meet tomorrow to approve the transaction.

The sixth largest wireless company in the U.S. is about to merge with the fourth largest, according to news reports.

The combination would inject an additional 9.3 million current MetroPCS customers (the sixth largest wireless carrier) into the T-Mobile USA family. That would more than make up the 2.76 million former T-Mobile contract customers that fled the carrier during the last two years, especially after learning the company was planning to merge with AT&T.

But some challenges are likely to remain after the merger gets government approval:

• T-Mobile remains largely a postpaid, 2-year contract-oriented company while MetroPCS operates a no-contract, prepaid offering. T-Mobile could transition its prepaid division to MetroPCS’ branding, or fold MetroPCS into T-Mobile and eventually discontinue the MetroPCS brand;
• MetroPCS operates a CDMA network incompatible with T-Mobile’s GSM network. Both carriers are moving towards adopting 4G LTE service, but legacy customers will not be able to use existing phones on each other’s networks.

MetroPCS currently offers home coverage in 19 metropolitan markets and surrounding areas including New York City/Northern New Jersey, Atlanta, Bakersfield, Boston, Dallas, Detroit, Jacksonville, Las Vegas, Los Angeles, Miami, Orlando, Philadelphia, Providence, Riverside, Sacramento, San Francisco, San Bernardino, San Jose, Shreveport, and Tampa.

[flv]http://www.phillipdampier.com/video/CNBC T-Mobile Deal For PCS in the Works 10-2-12.flv[/flv]

CNBC reports on the planned merger of MetroPCS and T-Mobile USA, the first major wireless merger deal since the rejected merger of T-Mobile USA and AT&T.  (3 minutes)

Apple’s iPhone 5 Wi-Fi bug is showing up on several wireless networks.

Wireless companies with usage caps are in the money — your money — if you happen to own Apple’s iPhone 5. A serious bug afflicting the phone’s ability to connect and hold a Wi-Fi connection when using certain wireless security protocols is chewing up customers’ data allowances and exposing them to overlimit fees, even when they think the phone is connected to a free use Wi-Fi network.

So far, Verizon Wireless has confirmed the problem is impacting their customers, but our readers report problems with AT&T and Sprint iPhones as well.

“Under certain circumstances, iPhone 5 may use Verizon cellular data while the phone is connected to a Wi-Fi network,” said Torod Neptune, a spokesman for Verizon. “Apple has a fix that is being delivered to Verizon customers right on their iPhone 5. Verizon Wireless customers will not be charged for any unwarranted cellular data usage.”

Stop the Cap! reader John Pozniewicz thinks that is nice of Verizon, and wonders when AT&T will start dealing with the nearly $100 in overage fees he has already run up on similarly afflicted iPhone 5 smartphones he bought just last week.

“As best as I can tell, the problem seems to relate to the type of Wi-Fi security protocol your router has enabled,” Pozniewicz reports. “Many in the Apple community forums and I both agree the most likely culprit is AES encryption.”

Sprint customer Halle Thompson also wrote Stop the Cap! yesterday reporting her Sprint iPhone 5 was unable to hold its Wi-Fi connection either, forcing her to deal with Sprint’s slow 3G network, even when at home.

“Thank goodness Sprint doesn’t have a usage limit and overage fees or they would own my house by now, because I use my phone for everything,” Thompson says.

Thompson switched off her router’s wireless security and the problem disappeared, but now her Internet connection is open to everyone in her apartment complex. Pozniewicz spent the weekend experimenting with wireless security protocols and quickly found AES caused his Wi-Fi connection to become unstable.

If your readers are having the same problems I am, here is a workaround that will keep your router reasonably secure and accessible until the pointy heads at Apple figure out this disaster:

Recommended Security Settings:

• WPA only (least secure)
• WPA2 only
• WPA or WPA2 with TKIP

Not recommended:

• AUTO – AES
• WPA or WPA2 with AES enabled
• WPA or WPA2 with both TKIP and AES enabled

Verizon Wireless has told customers it will credit back any overage fees incurred as a result of the bug, but only if they ask. Customers should also demand Verizon reset their allowance or at least note their account regarding the problem. Customers should request credit for overlimit fees for both September and October, because early reports indicate the software update designed to fix this problem has not worked in all cases.

Pozniewicz is having much less success with AT&T which so far has refused all comment on the debacle and has been unwilling to issue any service credits for overages. Pozniewicz is upset, noting he has only had his iPhone 5 for a week and it has already cost him and his company an extra $100.

“I am extremely careful about only using Wi-Fi for anything that will consume a lot of data, but my only clue there was a problem was when I noticed how slowly my so-called ‘Wi-Fi’ connection was performing at home and work and that is when I discovered it was not actually using Wi-Fi at all,” Pozniewicz says. “What is insidious about this is that the Wi-Fi connection is still showing on the phone display, even when I am actually using AT&T’s network.”

Thompson reports her phone does seem to initially connect to Wi-Fi, but then loses the connection seconds or minutes later, eventually switching to Sprint’s 3G or 4G cellular networks. Sprint’s unlimited data plan makes the issue just an inconvenience. For Pozniewicz’s company, which has a contract for a dozen iPhones 5’s with AT&T, the overlimit fees are really adding up. His employees are also quickly burning through their own monthly data allowances.

“AT&T is a pack of vampires and they don’t care about anything other than my money, even after talking to two supervisors, one of which implied I was either lying about the problem or an idiot,” he said.

Here is how iPhone 5 customers can check their data usage: Select Settings, then General, then Usage, then Cellular Usage to see what your phone reports you have used thus far. If the numbers seem wildly out of whack, contact your wireless carrier and let them know you may be afflicted with the iPhone 5 bug and have them note your account for future credit for any subsequent overlimit fees.

Verizon customers should have already received a software update in an effort to correct the problem. You can verify this by following these steps:

1. Select Settings, then General, then About.
2. Wait for the message “Carrier Settings Updated,” then touch OK.
3. Allow the update (if any) to install.
4. If your phone does not automatically restart after the update is complete, turn the phone off and then on again to complete the update.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/iPhone 5 Wifi connection issue.flv[/flv]

iPhone 5’s Wi-Fi problems documented by YouTube user “MNeuenswander,” who found changing the security protocol on his router seemed to resolve the problem.  (2 minutes)

Verizon Wireless is dealing with the appearance of fraudulent “look-a-like” websites purporting to offer special discounts and features for customers willing to give up account information that could expose them to future fraud.

In the most recent examples, “VZ for Me” and “It’s Fall at Verizon,” customers are asked to give up their Verizon login and phone information that could result in phone cloning and service theft.

The latest generation of phony websites are virtually indistinguishable from legitimate ones, with fully functioning web pages and depth of content. The only two giveaways:

1. The website does not use the appropriate URL (vzforme.com and itsfallatverizon.com vs. verizonwireless.com);
2. Once logged in, the website cannot actually divulge any account information it never had access to, unless the customer supplies it themselves.

News reports about the sites have triggered actions ranging from browser blocks, which warn about potentially fraudulent sites and Verizon Wireless’ own successful takedown campaign.

Consumers are advised to avoid any links found in e-mail messages or web pages that offer to take you to a company’s website. The safest way is always to type the web address yourself.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KIFI Idaho Falls Investigation Fake Verizon Wireless site targets S-E-I-D 9-23-12.mp4[/flv]

KIFI in Idaho Falls reports on its special investigation of phony Verizon Wireless websites phishing for customer data.  (3 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Sprint Liquidity Doesnt Fix Company 9-26-12.mp4[/flv]

Sanford Bernstein’s Craig Moffett is back on Bloomberg News dismissing Sprint’s business strategy and lamenting the cost of subsidizing Apple’s iPhone 5 for existing customers who don’t really ‘need’ a new phone. Moffett sees all downsides for America’s third largest carrier (in May he gave the company a 50-50 shot of landing in bankruptcy court), trying to compete against a virtual duopoly successfully maintained by AT&T and Verizon. He thinks iPhone subsidies and purchase guarantees cost Sprint too much, their 4G LTE network is too little, too late (and will never perform as well as larger competitors who have lower frequency spectrum available for better reception), and their stock is overvalued. Wall Street routinely brings out analysts cheerleading additional mergers and acquisitions for further consolidation in the wireless market. By cutting down Sprint, Wall Street continues to emphasize it has already picked winners (AT&T and Verizon) and losers (Sprint, T-Mobile, everyone else).  (6 minutes)

AT&T has secured support from the Federal Communications Commission for authority to deploy 4G LTE service within a 20MHz portion of the 2.3GHz WCS band after cutting a deal with a next door neighbor especially sensitive about potential interference.

WCS spectrum holders have fought for years to develop commercially viable wireless service, but faced regular opposition from the satellite radio industry concerned that interference problems would result from using the band for mobile data. Right in the middle of the WCS band is Sirius XM, which depends on sensitive receivers to pick up the company’s satellite signal.

But now AT&T and Sirius XM have worked out a compromise both companies believe will protect mobile data and satellite radio. AT&T has conceded 10MHz of its total WCS spectrum for two 5MHz guard bands, devoid of signals, around Sirius XM’s frequencies. Sirius XM signal engineers believe this, combined with power limits, will protect radio receivers from overloading whenever near AT&T’s ground-based LTE cell towers.

In August, AT&T announced its intention to acquire WCS spectrum from NextWave Wireless, a spectrum-squatting holding company, for $600 million. The phone company is also attempting to acquire the remainder of WCS spectrum from the last two significant holders — Comcast and Horizon Wi-Com, which both have between 10-25MHz of spectrum in 149 and 132 communities respectively.

When the acquisitions are complete, AT&T will have WCS spectrum covering virtually the entire nation.

Frequencies in the 2.3GHz band are best received outdoors. Signals crossing windows and walls lose potency. (Courtesy: Greenpacket)

AT&T says it needs the spectrum to further deploy 4G LTE data service across the country. But the company admits it will take up to five years before it can switch on the new frequencies — no current smartphones support the 2.3GHz WCS band.

AT&T has also included provisions to ensure fixed wireless base stations will be able to utilize AT&T’s WCS spectrum, within reasonable limits to protect Sirius XM radios from harmful interference. That has important implications for AT&T’s long-term view that rural landline and broadband service is best delivered over a wireless network.

A major limitation of spectrum in the 2GHz band is the quality of indoor coverage it can deliver. As many Clearwire customers can attest, these frequencies suffer from high transmission loss, poor ability for diffraction, and most importantly, poor building penetration — especially in urban and suburban areas. Tall nearby buildings, homes, and even trees all impede WCS reception. According to Andrea Goldsmith in her book Wireless Communications, there is also a 6dB penetration loss when 2.5GHz signals cross un-insulated glass windows and a 13dB loss for concrete walls, with wood falling somewhere in-between.

But rural areas do better, in part thanks to the higher likelihood of unimpeded line-of-sight access between a cell tower and receiver. AT&T’s fixed wireless solution would place a small antenna on the roof or side of a home, positioned for maximum reception from the nearest cell tower. The signal is then brought indoors through cabling (or in some cases Wi-Fi) and available to customers, comparable to a home broadband connection.

AT&T’s strong spectrum position in WCS gives the company an opportunity to construct a robust, near-nationwide wireless network suitable for rural wireless communications. In more urban areas, WCS could operate seamlessly with AT&T’s lower frequency holdings and offer an extension of its current LTE service.

AT&T’s acquisition of WCS has several important implications for the wireless marketplace:

2GHz signals travel the least distance in urban and suburban areas, often blocked or degraded by buildings or trees. But better results in rural areas suggest AT&T’s WCS spectrum could partly be deployed as a fixed wireless broadband solution, if enough towers are available to support it. (Courtesy: Greenpacket)

1. It proves AT&T never needed to acquire T-Mobile USA. Through spectrum acquisitions like WCS, AT&T can still find relatively inexpensive spectrum suitable for mobile broadband use, without spending tens of billions to acquire a competitor just to poach its spectrum and eliminate a competitor.

2. The Competitive Carriers Association worries AT&T’s acquisition of secondary spectrum holders is allowing the company to gather a massive amount of spectrum.

CCA President & CEO Steven K. Berry said, “Allowing the largest carriers to obtain unlimited amounts of  spectrum on the secondary market raises serious competitive concerns.  The only way for the FCC to truly see the devastating consequences of further spectrum aggregation is by consolidating the proposed applications.  On their own, AT&T’s proposed license acquisitions may not seem significant, but when added together, it totals to a significant amount of spectrum.”

Berry continued, “Should the FCC decide to approve the transactions, it must impose conditions to ensure interoperability across the Lower 700 MHz band and to ensure data roaming – both are absolutely essential ingredients to a healthy, competitive marketplace.  Competitive carriers need access to usable spectrum, and I urge the Commission to carefully review the negative impact these transactions will have on the wireless marketplace.”

3. Clearwire’s 2.5GHz spectrum could become more valuable if AT&T can demonstrate its 2.3GHz service can deliver robust service, if provisioned adequately for customers. Clearwire’s capital investments and overall performance of its limited coverage WiMAX network have been deemed inadequate by its biggest partner Sprint, now constructing its own 4G LTE network to replace Clearwire’s WiMAX network.

4. Credit Suisse analyst Jonathan Chaplin notes Verizon will still have a better standing in spectrum even with AT&T WCS: “AT&T will have the following available for LTE: 20 MHz of 700 MHz nationwide; 20 MHz of WCS nationwide; a few AWS licenses (5 MHz on average). With Verizon’s deal with large cable companies, Verizon will have: 20 MHz of 700 MHz nationwide; 20 MHz of AWS nationwide; another 10 MHz of AWS in 60 percent of the country (13 MHz on average). In addition, Verizon’s spectrum is usable immediately, while AT&T’s WCS will take three to five years to deploy.”