US cellcos all weigh their LTE options
AT&T could buy Dish, says analyst, while Verizon faces probe of cableco deals and LightSquared runs short of cash
Published: 20 December, 2011
Verizon may have convincingly outmanoeuvered its rival AT&T in the LTE wars this year, but it is not home free with its series of spectrum and cross-selling agreements with four cablecos. These are being investigated by the US Department of Justice to see whether they may raise issues of restraint of trade, a source told Bloomberg.
Verizon has agreed pacts with SpectrumCo - a joint venture of Comcast, Time Warner Cable and BrightHouse Networks - and separately with Cox, to purchase their AWS licences and to cross-sell broadband, mobile and pay-TV services. If the transactions are approved, it will have 56% more 4G spectrum than AT&T in the top 10 markets and 46% more in the top 100, giving it a "meaningful competitive advantage", wrote John Hodulik of UBS in a research note.
If the agreements are permitted, they will rob Sprint of the heart of its MVNO business and its partners in the Clearwire WiMAX venture. The third US cellco appeared to retaliate this week when it filed patent suits against three of its long standing partners - Comcast, TWC and Cox - as well as CableOne, alleging infringement of a dozen VoIP-related patents. The three MSOs have been customers of Sprint for CDMA services, and Comcast and TWC are fellow shareholders in Clearwire. Some of the patents involved were previously asserted by Sprint against VoIP specialist Vonage, which ended up paying $80m to license the technology.
Having called off their merger, AT&T and T-Mobile USA parent Deutsche Telekom will be assessing their options. DT has at least bought itself some time to work out a plan B for TMo, getting $3bn in cash and $1bn in spectrum, plus a seven-year roaming agreement, as a break-up free from AT&T. Indeed, DT CEO Rene Obermann told reporters that the real value of the package is as high as $6bn, with AWS frequencies in 128 markets. This could give TMo the beginnings of the capability to build out its own LTE network, though DT will be keen to avoid that expense and seek a new acquirer or network partner.
Dish Network was quickly placed in the frame as a possible new partner for AT&T, and one analyst even thinks the cellco might be bold enough to attempt another major acquisition and purchase the satellite TV provider, with its holdings in mobile satellite spectrum. Dish is waiting for FCC approval to run LTE in those frequencies. Christopher King of Stifel Nicolaus told Bloomberg AT&T was now "desperate for spectrum" because it had not only lost TMo but will be forced to give up airwaves to its former prey. A Dish purchase would be less controversial with regulators than the TMo plan as it would not remove a national cellco and, as King said, "Dish and AT&T aren't direct competitors, and at the end of the day, the government wants to see spectrum used. It's highly unlikely regulators would block two AT&T deals in row."
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