Sidecut Reports

LAS VEGAS, NEV. — CTIA — I know it’s March Madness time, but a hoops analogy just doesn’t work to accurately describe the size of the can of whoop-ass that Sprint and Clearwire opened up on AT&T and Verizon here Tuesday at CTIA.

This wasn’t a Northern Iowa getting hot at the right time and busting brackets by sinking some gutsy 3-pointers. Instead, it felt more like the Tampa Bay Rays coming into the Bronx and scoring 10 runs while tossing a no-hitter at the Yankees in Game 7 of the World Series. This was an upset built over time, with some big bets on long-thought strategies finally coming to fruition. And it may not be the last time this happens, either.

For longtime industry observers, it was simply shocking and amazing to see the No. 3 wireless carrier — one long percieved as struggling — and its upstart WiMAX partner garner all the headlines, all the buzz and even talk some
serious smack about AT&T and Verizon at what is traditionally the two telcos’ big Vegas party.

It wasn’t just that Sprint and CEO Dan Hesse (left) announced the coolest phone of the year, a device made more impressive because of the high-speed WiMAX network it can run on; it wasn’t just that Clearwire announced a bunch of new markets for 2010 launches, including Los Angeles and Miami; and it wasn’t just that AT&T and Verizon basically had nothing new to say, in front of the biggest yearly gathering of U.S. wireless industry insiders.

It was all of that together, and how it produced a day that saw the big carriers acting timid and cautious while Sprint and Clearwire were openly gloating about their new devices and their fast, high-capacity network.

Mike Sievert, Clearwire’s chief commercial officer, capped off a day of panels and discussions on the future of 4G by basically calling BS on most of the things Verizon and AT&T had to say during the day, whether the topic was network speeds, spectral capacity, or just the ability to tell users that an “unlimited” wireless contract meant exactly that: Use all the network you want, as much as you want. “We say, use the service — you’re paying for it, so enjoy it,” said Sievert (left), in a not-so-subtle dig against AT&T and Verizon’s recent public calls for the end to all-you-can-eat pricing.

Sievert’s comments followed similar put-downs from Sprint execs made during their splashy introduction of the HTC EVO 4G, a phone whose networking and video capabilities, if they perform as advertised, put anything else on the market to shame.

After comparing the EVO 4G’s download speeds to a Verizon Droid “and the sub-par network it runs on,” Sprint execs later wowed the fanboy blogging throngs by showing the EVO acting as a Wi-Fi hotspot supplying 4G bandwidth to several devices including an iPhone 3GS, noting that their new toy “can power other smartphones of lesser capability.”

Zang! All this followed Sprint’s saucy make your iPhone 4G ad from the weekend, and a Clearwire press release that detailed how you could use Clearwire’s portable WiMAX/Wi-Fi router to make your new iPad connect in a 4G fashion. How did all this happen? The simple answer is that by combining WiMAX with an unmatched depth of licensed spectrum, Sprint and Clearwire were able to leapfrog the incumbent giants, whose bet on a still-developing technology and some poor network management are now coming home to roost.

While LTE is still a work in progress — even AT&T, which plans to use LTE eventually, slammed Verizon this past weekend for moving too quickly to deploy it — its trailing status doesn’t mean that companies aren’t busy trying to build LTE products as quickly as possible. Over the long run, any oddsmaker in Vegas would still give the edge to AT&T and Verizon, since their sheer size means that any technology they pick — like LTE — will eventually succeed in some fashion, either by performing well or through the brute force of massive marketing campaigns that Sprint and Clearwire can’t match. And while the big incumbents may be spectrum-constrained for the next few years, after that the FCC’s recent plan to free up more wireless airwaves for broadband use should allow them to build a portfolio as big as or bigger than Sprint and Clearwire’s current holdings.

But for the near-term future, you may hear a lot more from Verizon and AT&T about the need to manage networks more efficiently, or about how unlimited contracts are unsustainable. Sprint and Clearwire, meanwhile, will be busy trying to find more ways to load up their network, with no end in sight to their unlimited data, high-speed connection plans. Acting like the bold mouse who isn’t afraid of the elephant, Sievert commented near the end of his talk that when it comes to price and performance value, in the near-term future “I have a hard time imagining our competitors offering what we offer today.”

Double zang! The party here should continue Wednesday, when Sprint CEO Dan Hesse (whose boarder shoes are pictured below) and Clearwire CEO Bill Morrow share the stage for a morning keynote. Expect some more gloating, at the big carriers’ expense. And don’t expect it to stop anytime soon.

(all photos by Paul Kapustka, (c) Sidecut Reports, 2010. Dan Hesse’s shoes, below, by Vans)

LAS VEGAS, NEV. — CTIA — In two completely news-free keynote presentations here at CTIA Tuesday morning, AT&T Mobility CEO Ralph de la Vega and CEO Randall Stephenson both made a call for additional wireless spectrum — so that future mobile networks in the U.S. don’t run out of breathing room before they even get off the ground.

De la Vega, the incoming chairman of the wireless industry association, identified additional wireless spectrum as one of the necessary pillars to continue the growth of wireless broadband, an industry that he said increased by 28 percent in 2009 to $41.3 billion in overall revenue. His boss Stephenson followed by praising the FCC’s recent call in its National Broadband Plan to free up as much as 500 MHz of new spectrum over the next decade, introducing a video visit from FCC chairman Julius Genachowski, who — guess what? — said he would do all he could to make more spectrum available.

While both de la Vega and Stephenson talked about the need to build a robust infrastructure to support the expected wireless growth, neither presented any specifics about AT&T’s plans to make its own networks more reliable — perhaps missing the chance to tell wireless industry insiders that Ma Bell was leading by example.

Clearwire, the owner of the largest amount of wireless spectrum for broadband use, kicked off CTIA by announcing additional markets for its WiMAX services in 2010, including Los Angeles and Miami. As our most recent report details, Clearwire is the one provider who isn’t facing a spectrum shortage. Stay tuned for more CTIA updates throughout the week!

Editor’s note: The following is an excerpt from our latest free report, Clearwire’s Spectrum: The 4G Advantage, which takes an in-depth look at the wireless spectrum holdings of national WiMAX provider Clearwire Corp. (Nasdaq: CLWR), and how those holdings give Clearwire a market advantage in the race to build “4G” wireless networks. In this excerpt we explain the meaning of spectrum “depth,” and compare Clearwire’s depth of holdings to those of major telcos. To download our report for free, click on this link.

SPECTRUM DEPTH: WHAT IT MEANS, WHY IT MATTERS

When it comes to talking about spectrum holdings, the most-often overlooked or misunderstood element of the discussion is the idea of spectrum “depth.” The “depth” of a provider’s spectrum holdings comes from the fact that the shorthand used to describe the different “bands” — as in 700 MHz or 2.5 GHz — doesn’t fully explain that each “band” contains many different frequency channels of varying size; the 2.5 GHz band, for example, actually includes frequencies from 2496 MHz to 2690 MHz, while the recently auctioned bandwidth in the 700 MHz band includes frequencies from 696 MHz to 806 MHz.

Depending on how the spectrum was sliced for distribution, in each band there is only a certain amount of spectrum “depth” — as in chunks of those frequencies — available for their delivery portfolio. The spectrum depth matters most when it comes time to bring bandwidth to users — simply put, the more spectrum you have, the bigger “pipes” you can provide.

For the historic cellular bands, the amount of spectrum depth provided by the government was sufficient for the technical needs of the time — providing voice phone calls. The advent of “digital” voice technology made cellular systems more efficient, allowing for more calls to be made over the same amount of cellular bandwidth.

As technology advanced rapidly, more types of digital communications started leaping onto cellular networks, from text messages to email to full Internet access, albeit originally at transmission speeds reminiscent of the earliest dial-up modems. But by the end of the decade, wireless data services were reaching mainstream at the so-called third generation or “3G” level, where the major providers were promising speeds of a megabit per second or more, good enough even for limited forays into streaming video as long as your connection stayed solid.

The big problem was — as technology advanced rapidly, producing such wildly accepted phenomena as YouTube and the iPhone, spectrum assets in use remained largely the same, leading to some predictable dropoffs in service as the available airwaves all got snapped up.

While some of the woes plaguing AT&T and its iPhone dilemma were due to network infrastructure issues — such as the lack of robust “backhaul” connections from the wired Internet to many of AT&T’s cellular towers — spectrum shortages undoubtedly contributed to some of the dropped calls and interrupted web surfing, as AT&T tried to handle its “unprecedented” wireless-data growth with the same spectrum depth it used for cellular voice calls.

In a recent report released publicly to the Internet, Morgan Stanley and analyst Mary Meeker assembled what many observers believe to be a fairly accurate tally of the spectrum depth for each of the country’s major wireless providers: In the original (~800 MHz) cellular bands, Meeker said Verizon and AT&T each had 25 MHz of spectrum “depth.” At the PCS or higher-frequency cellular band, AT&T has an additional 34 MHz of spectrum depth, while Verizon has another 21 MHz, Meeker said. Most of this spectrum, however, is being used for the telcos’ cellular voice and 3G data services.

For future networks, AT&T and Verizon have assets in the AWS spectrum band as well as at 700 MHz — but in total, the AWS and 700 MHz assets, when combined with historic cellular spectrum, give the two phone giants each roughly only 91 MHz of total spectrum depth in most markets. That is the total split up amongst the four different frequency ranges, and with more than half of each carrier’s portfolio already in use.

Clearwire, by comparison, has an average of 150 MHz of contiguous spectrum depth in most major markets across the U.S., at the 2.5 GHz band, all available for 4G — a spectrum position that will theoretically allow Clearwire to more easily and more cheaply offer high-speed broadband services to a far greater number of customers than its spectrum-constrained competitors.

The Sidecut Reports Clearwire’s Spectrum: The 4G Advantage takes a deep-dive look into the wireless spectrum holdings of the provider of the nation’s nascent WiMAX network, examining its historical roots, how Clearwire came to control the spectrum, and how its depth and breadth gives Clearwire a U.S. market advantage in the race to build 4G wireless networks. To read the full report, download your free copy today!

We’re just starting to scratch the surface of the FCC’s National Broadband Plan, but from our limited-view vantage points we’ve already identified a few flash points that will no doubt be the center of much discussion at next week’s big wireless trade show in Las Vegas — including a call for freeing up 300 MHz of wireless spectrum by 2015, with 120 MHz coming from over-the-air broadcasters; and a huge move toward gathering and exposing more data about spectrum license holdings and actual wireless-service metrics, which with any hope will put a welcome end to stupid Map Wars TV ads that mess up our sports viewing.

On the spectrum front — hey we told you this stuff was important! — the battle for licensed airwaves is likely to make any past wrangling over tedious topics like net neutrality look like a preschool playground when you forsee a lobbying smackdown between the big telcos (who want more spectrum) and the broadcasters (who will fight to not give their airwaves up). Attention recent law school graduates! Best to bone up on spectral-rights history, because your billable hours will soon be needed.

More importantly for the rest of us is the plan’s welcome focus on a topic we’ve long been sore about, the fudging and obfuscating that is the norm when it comes to wireless service plans. Our quick summation of the FCC’s well-reasoned quest to standardize, collect and expose wireless service parameters: When you buy a gallon of gas, you are somewhat assured you are getting the octanes you paid for thanks to government regulations and standards on weights, measurement and quality of fuels. Consumers can choose their provider based on standardized data and pricing, market forces at their best.

In the current iteration of wireless services, we are at the stage of Put a Tiger in your tank. Cloudy descriptions of “peak” service levels and confusing data/minutes/messaging plans purposely make it almost impossible for consumers to compare services or providers. Under the Plan, the FCC would change that by establishing “technical broadband measurement standards” and by publishing actual broadband delivery data — maybe even a label (see below), like the ones that tell us how many calories are in that “healthy” toaster pastry — make it so, make it so!

We also like the bit in Chapter 5 of the report where the FCC calls for the establishment of an online spectrum license search tool (unauthorized PDF grab below) that would make our lives, and the lives of telecom researchers everywhere easier by actually letting the public know who is in control of those most precious of national assets, our electromagnetic airwaves. For this bit alone, hell yes we like the plan. As Eric Schmidt says, Onward!

(image of a proposed FCC “label” for accurate broadband service data. Slap that on yer iPhone!)

(bad fuzzy image of the proposed online spectrum license search tool)

“I believe that the biggest threat to the future of mobile in America is the looming spectrum crisis.”
– FCC Chairman Julius Genachowski, October 2009

Is the wireless world running out of available airwaves? From a certain perspective, it might seem that way. The struggles of AT&T’s attempts to keep its iPhone customers happy have become a national news story, and government officials are already working on plans to free up more wireless spectrum for use by mobile broadband providers, anticipating an industry-wide need in the near future.

And though Verizon Wireless is quick to tout its network’s strengths over that of its main competitor, even Verizon’s chief technology officer is already talking publicly about how scarce network resources may soon put an end to all-you-can-eat wireless data pricing. At the center of these concerns is wireless spectrum, specifically the licensed, regulated airwaves over which wireless providers send their signals — and what will happen if the largest wireless networks run out of room.

This week, the FCC is expected to announce a National Broadband Plan that will in part include some provisions for freeing up more spectrum — but even the most optimistic projections don’t see any new spectrum coming on the commercial marketplace anytime soon, given the years-long legal wranglings that any spectrum switches will entail. So for many providers and their potential users, the spectrum crisis is looming and real.

Standing aside from this quandry, however, is nascent national WiMAX provider Clearwire Corp. (Nasdaq: CLWR), which is now in its second full year of mobile-WiMAX market launches. Unlike the country’s cellular giants, Clearwire actually possesses a wealth of spectrum riches. In many major population markets in the U.S., Clearwire has at least two to three times as much spectrum “depth” as AT&T and Verizon, holdings that will allow Clearwire to provide high-speed data to millions and millions of new customers, without having to rely on the government or industry to re-allocate airwaves anytime soon.

In our latest report, titled Clearwire’s Spectrum: The 4G Advantage, we cover in detail the historic underpinnings of the 2.5 GHz band that Clearwire uses, the business decisions and events that put the company in control of the spectrum, and how its breadth and depth give Clearwire a market advantage over its wireless-provider competitors. In a nation facing a “spectrum crisis,” Clearwire stands alone in having enough available airwaves to build a “network of networks,” both now and as far into the future as its builders can see. Download our free report and learn why.