Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
What a week for spectrum news. For those of you not amazed by talk of billions of dollars worth of charged air currently running through your body, you may want to click on one of the other interesting stories we pump out each day here at RCRWireless.com. But, for those that can’t get enough of that “Wonderful Duff,” read on.
One of the biggest spectrum news items of the week came from Sprint, which announced at an analyst conference that it had no interest in participating in the Federal Communications Commission’s plans to auction off the H-Block spectrum in the upper 1.9 GHz band. This was sort of big news as most had expected the carrier to be the most aggressive bidder for that 10 megahertz of spectrum adjacent to the 10 megahertz of G-Block spectrum powering its under-megahertzed LTE network.
Sprint’s reasoning for sitting out the H-Block was that it was more interested in acquiring spectrum lower down the totem pole, a move that from an operational point of view makes a hell of a lot of sense. For those that may have missed it, Sprint’s recent Spark network announcement touting network speeds that some think may need to be called into question*, is based on the abundance of spectrum Sprint controls in the 2.5 GHz band, or basically at the top of the totem pole.
*(That person questioning Sprint’s claim was none other than Verizon Communications CFO Fran Shammo, who at an investor conference claimed all LTE networks are sort of capped at around 12 megabits per second down to the end user, or basically the speed Verizon Wireless claims for its LTE service. Shammo did relent that you can get higher speeds if the network was “not loaded,” which is both true and a nice dig at its rivals. Of course, getting a piece of that Verizon Wireless service could be a bit of a challenge in some markets … more on that later.)
Sprint has just a handful of spectrum in the sub-1 GHz band, which as has been described way, way, way too many times as “ocean front” spectrum.
(I have always found this description sort of funny as every time we see some sort of weather-related natural disaster, beach front is the last place you want to be.)
Of course, I think we all know that the real reason Sprint is opting out of the H-Block is that its nemesis Charlie Ergen at Dish Network has proposed to the FCC that it would bid a minimum of $1.5 billion for that spectrum, which was sort of pried out of Dish Network’s hands last year. Dish Network has sort of worked up a reputation as someone that is eager to pick a fight, but not likely to finish a fight.
With Dish Network already costing Sprint a couple billion dollars related to its purchase of Clearwire, I would think that Sprint has no interest in getting involved in anything Dish-related. This would include eating off of a dish or dishing on any rumors.
By backing out of this auction, Sprint has now left Dish having to fork over $1.5 billion for this spectrum – should no one else step up. It should be noted that T-Mobile US also backed out of bidding on the H-Block, which would make sense as the carrier would seem to have a greater interest in the AWS-3 auction that would better align with its current AWS-based LTE network plans, as well as the 600 MHz incentive auction.
With Sprint and T-Mobile US now out of the running, perhaps smaller operators looking to launch LTE services in the 1.9 GHz band might now have easier (cheaper) access to some spectrum, though the fact that the license size is of the “Economic Areas” variety could limit that participation if previous grievances are to be believed.
Another interesting spectrum story came from Verizon Wireless, which admitted that its LTE network was running out of the valuable resource in a handful of markets. Carriers running out of spectrum is not really anything new, but the fact that a carrier as “network focused” as Verizon Wireless admitting to such an impact on its network is sort of a big deal.
Verizon CFO Shammo noted that the issue was related to the stronger-than-expected demand and usage of LTE services shown by consumers, which has stretched to the limit the 20 megahertz of 700 MHZ spectrum the carrier is using to support its LTE network.
Verizon named just three markets as being impacted by the spectrum crunch, but of course as with everything related to admitting to something that may harm one’s reputation, numbers rarely reflect the real world. But, just the fact that Verizon Wireless has admitted to this issue would seem to me that this is a serious issue that other carriers with smaller spectrum portfolios (and perhaps fewer LTE customers) have to be worried about.
Luckily, Verizon Wireless has a nice bucket of other spectrum resources that it is now throwing at the problem, noting the issues should be all cleared up by year end. Or at least until the insatiable consumer demand for LTE again outstrips the latest band of spectrum used to handle the problem.
Of course, all of this will be handled over the next 18 months as the FCC is set to conduct three spectrum auctions (no laughing) and likely approve just about any carrier inside the nation’s four largest operators to acquire any carrier outside the four largest operators. This spectrum of excitement is sure to provide months of continued focus and fun on spectrum.
OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:
–Ericsson this week released its Mobility Report attempting to forecast what the mobile space will look like in 2019, as well as provide the basis for “cited” forecasts that will populate the most number of PowerPoint presentations over the next year.
The main number from the report, and the one you will see a thousand times during presentations, is that worldwide mobile subscribers will hit 9.3 billion customers by 2019, with 60% of those customers using a smartphone. More concerning for carriers, and a better statistic for use by equipment providers and those looking for more spectrum resources, is that smartphone traffic will increase 10-times between 2013 and 2019.
I will only guess that all of this increase will come from the new smartphone customers coming online as I can’t see any way in which current smartphone users can increase their use of those devices.
As someone who will likely be putting together a presentation at some point over the next 12 months, thanks Ericsson!
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