SPRINT NEXTEL CORP. AND CLEARWIRE CORP.’S CAMPAIGN to win government approval of a their national WiMAX plan is drawing static from AT&T Inc. and rural cellular operators on key unsettled wireless policy issues, but the deal has picked up backing from many educational and religious groups.
The proposed merger, announced in May, would combine the 2.5 GHz wireless holdings of Sprint Nextel and Clearwire and be padded with $3.2 billion
in investments from Intel Corp., Google Inc., Time Warner Cable, Comcast Corp. and Bright House Networks.
“AT&T submits that the commission’s prior treatment of mergers and competitive combinations in the mobile services market compels the application of the initial spectrum screen to the New Clearwire applications. And, in so doing, consistency and logic dictate that the BRS/EBS [broadband radio service/educational broadband service] spectrum held and controlled by the applicants must be considered,” stated the parent company of the No. 1 mobile-phone operator in its request to kill the transaction.
The FCC, which eliminated the spectrum cap in 2003, currently applies a spectrum screen in wireless transactions to assess any potential anticompetitive problems in markets where combined wireless assets exceed 95 megahertz. But the agency – when it crafted the policy – decided to not count advanced wireless services and BRS frequencies toward the spectrum screen because airwaves in both areas are not significantly available throughout the country due to relocation and band realignment issues.
AT&T insists the rationale underlying the exclusion of BRS spectrum from the spectrum screen count is no longer valid. The FCC said it can still examine AWS and BRS spectrum holdings on a case-by-case basis in situations where the 95 megahertz-per-market limit is exceeded, but doing so is discretionary.
“[T]he applicants themselves have positioned their company as the single largest holder of broadband mobile spectrum in the country, and stated their intent to apply those assets to competing with traditional mobile carriers such as AT&T [Mobility],” stated the company. “While AT&T does not fundamentally oppose the underlying transactions, the regulatory process must be consistent for all entrants, including New Clearwire, and regulatory parity therefore requires an examination of the reformed company’s spectrum aggregation.”
Problems of their own?
At the same time, AT&T Mobility and Verizon Wireless, the twin towers of the mobile-phone industry, have themselves come under scrutiny by some in Congress and smaller carriers because they are said to exceed the 95 megahertz threshold in at least a dozen markets.
“We are pleased with the overwhelming support for our pending WiMAX transaction, which amplify the broad support and commendations the transaction has received since it was announced in early May,” said Scott Sloat, a Sprint Nextel spokesman. “Through the combination of Clearwire and Sprint’s WiMAX businesses, the new independent company intends to build and operate the nation’s first nationwide true broadband mobile network that will increase competition in a consolidating industry, make broadband available to consumers who are outside of the reach of existing broadband networks, increase the speed and quality of broadband connectivity, offer consumers more choice, stimulate innovation and enhance the U.S. leadership position in the global wireless industry.”
Rural concerns
Rural wireless providers also raised competitive concerns in a separate petition to deny the Sprint Nextel-Clearwire tie-up, but their agenda is much different and broader than AT&T’s.
Noting another major transaction pending before the FCC – Verizon Wireless’ $28 billion offer for fellow CDMA carrier Alltel Communications L.L.C. – the Rural Cellular Association said that under “these unique circumstances there is a manifest need for the commission to recognize the impact of both transactions upon consumers and act to promote carrier-to-carrier network interoperability, including automatic roaming for voice and data, notably for wireless broadband services.”
RCA continued: “Automatic roaming alone, as important as it is to consumers and carriers, does not do enough to provide consumers with continuous service as they travel between wireless carriers’ service areas. Competition is promoted through interoperability because it allows small and regional wireless carriers to offer the public a service that is not interrupted by unsuccessful inter-carrier handoffs, and because consumers can make full use of their wireless devices regardless of which carrier is their serving carrier whenever the networks are technically compatible. And public safety is an extremely important benefit of interoperability agreements between wireless carriers. E911 Phase II location accuracy is more likely to be available if a subscriber’s home carrier and the away-from-home, serving carrier have an interoperability agreement in place.”
SouthernLINC Wireless also flagged roaming – particularly with regard to data – as an issue necessitating close FCC examination.
“If the applicant’s statements in fact mean only that they will allow only select entities to have wholesale access, the commission should refrain from acting on the application until the commission puts in place mandatory data roaming obligations to redress the significant market concentration in the wireless sector.”
Support from some
The Wireless Communications Association International said the Sprint Nextel-Clearwire venture presents the FCC “with a unique opportunity to maximize the benefits of its new 2.5 GHz band plan and to spur widespread deployment of WiMAX technology by New Clearwire and others.”
The Catholic Television Network said the grand WiMAX deal “will benefit EBS licensees by facilitating the deployment of advanced wireless broadband networks on EBS spectrum.”
FCC Chairman Kevin Martin is anxious to see a wireless alternative to the telephone-cable TV broadband duopoly, with the agency and the Bush administration subject to regular criticism from Democrats for lagging behind other countries in high-speed Internet penetration.
