@ CTIA: Breaking down the Day 1 keynote

ORLANDO, Fla. – AT&T Mobility’s plans to acquire T-Mobile USA Inc. for $39 billion overshadowed most news at this year’s CTIA event in Orlando, Fla., and definitely had an impact on the opening day keynote that was to include the CEO’s of the nation’s four top wireless providers, a number that was clipped by one at the last minute.
While the deal played an important part in the keynote’s proceedings, Weston Henderek, principal analyst of consumer services at Current Analysis, noted that it was what was not said that could be the most interesting aspect of this deal going forward.
Henderek, speaking at the RCR Wireless Newsdesk live from the show floor shortly after the keynote noted that the stiff nature of AT&T Mobility CEO Ralph de la Vega, and to a lesser extent of Verizon Wireless CEO Dan Mead stood in stark contrast to the looseness of Sprint Nextel Corp. CEO Dan Hesse.
“Dan Hesse livened things up at the keynote,” Henderek said.
That energy was probably a good move by Hesse, who Henderek noted most thought was in a good position to be working on a deal with T-Mobile USA.
With those hopes dashed, Henderek explained that Sprint Nextel is now in an odd position in the mobile space.
“Sprint has been trying to move up-market, but now Sprint may have to move in to fill the value void which could be left by T-Mobile,” Henderek said. “The $30 to $40 segment may be on Sprint’s horizon.”
That could put additional pressure on the pack of smaller, regional operators that have so far established a strong position in that value space.
“How does loss of T-Mobile impact regional players Leap and Metro PCS?,” Henderek wondered. “ There have been a couple of flirtations merger wise but nothing has happened to date. Perhaps if they added U.S. Cellular to the mix, perhaps they could merge to form a more major competitor into the market.”
The move could also pressure Sprint Nextel to more rapidly clear up its current disagreements with Clearwire Corp. that provides the network assets used for Sprint Nextel’s “4G” service.
Henderek noted that Sprint Nextel and Clearwire did have a lead with their WiMAX offering in the mobile broadband space, but questioned what they have done with it. “They had the lead and they squandered it,” Henderek said.
As for the impact on Verizon Wireless, which is set to lose its position as the nation’s largest operator should the AT&T Mobility/T-Mobile USA deal get approved, Henderek didn’t see the deal really impacting operations.
“Short term this will have little effect,” Henderek explained. “Verizon for now is in a reasonably good position from a spectrum point of view, their network has held up reasonably well. Everyone is going to have spectrum issues, obviously Verizon will try to add spectrum.”
And that need for spectrum is probably the biggest reason for the deal in the first place. If approved, the move would provide AT&T Mobility with much needed spectrum and a relatively smooth integration path that should position the carrier well going forward.
“AT&T and T-Mobile are a ‘natural fit’ tech wise,” Henderek noted. “They have different frequencies, but those are all issues that can be worked out.”
Henderek added that it was a positive move for AT&T in the long run in that they now have enough spectrum to roll out LTE covering 95% of the nation’s population.
Henderek did add that the deal could run into some regulatory hurdles, with the proposed one-year for approval perhaps being a bit optimistic. Henderek cited comments prior to the CEO roundtable where Federal Communications Commission Chairman Julius Genachowski made claims of the agency trying to cut the red tape in the mobile industry when it comes to gaining access to new spectrum assets. Henderek noted that the comment was sort of an “oxymoron” as the FCC is the definition of red tape.