AT&T’s Ralph de la Vega at CTIA keynote. Credit: Sidecut Reports
Editor’s note: The following is the first in a series of major U.S. market cellular provider “status updates” from the recent CTIA Wireless show in Orlando, Fla. First up is Ma Bell, no surprise given the $39 billion headline-grabbing acquisition announcement AT&T made last Sunday.
So Now You Tell Us There’s A Spectrum Crisis?
It was just about a year ago — roughly the time that we put out our Sidecut Report about Clearwire’s spectrum advantage — that AT&T and Verizon participated in a very friendly press call together where they sang the praises of LTE and pooh-poohed any claims that the country’s two biggest cell service providers might be a bit hamstrung when it came to licensed wireless airwaves. Our favorite quote from that call came from AT&T senior VP of architecture Kris Rinne, who forcefully said that Clearwire didn’t have a spectrum advantage over AT&T, which would be able to, y’know, refarm its current cellular airwaves to take care of LTE. No worries, right?
“You need to make sure you count all of our spectrum when you make these comparisons,” Rinne said at the time. Though we openly asked for the chance to count the available spectrum, that plea fell on deaf ears.
Now fast forward to the T-Mobile acquisition announcement and all of a sudden, AT&T has a spectrum crisis. Everyone from top mobile honcho Ralph de la Vega to Chief Technology Officer John Donovan was stopping random strangers in Orlando, even the bike rickshaw guys, to tell them that Hey! We’ve Got a Spectrum Crisis! You’ve got to wonder, what exactly changed between last spring and now? Did AT&T go looking in the spectrum barrel only to find it empty? Or is it some other combination of factors, not the least of which is that by admitting to a spectrum shortage, AT&T can gain more regulatory favor for its market-consolidating purchase?
Karl Bode over at DSL Reports is doing a good job of disbelieving that there is an actual spectrum shortage at AT&T, with his take bolstered by some typically solid in-the-weeds analysis from our old pal Dave Burstein. Our take here at Sidecut Reports is somewhere between the no-shortage-at-all view and AT&T’s new official line about looming spectral exhaustion: After watching AT&T somewhat unsuccessfully try to move heaven and earth to improve its network performance, it is easy to believe that our initial take on AT&T’s guessed holdings — remember, big carriers have so far blocked any attempts for a true spectrum inventory, guess why — is that AT&T is still feeling the effects of selling way too many iPhones for its network to support, and that its plans for future 4G rollouts were shaky at best.
Hence the deal for T-Mobile, which essentially we see as a buy for a customer-upgrade list and spectrum and tower assets, and not much more. As we said at CES, T-Mobile’s claim to 4G status seemed like a house of cards and by selling out to AT&T it’s obvious that T-Mobile’s self-proclaimed “renegades” were smart enough to take the money and run instead of trying to fight on their technical and marketing merits.
So while the deal works itself out — we should post a betting line soon here on what AT&T will give up to win its inevitable approval — what does the industry do with AT&T in the meantime? The company is in the middle of one of the strangest rollouts of a new architecture ever — Rinne confirmed for us at at CTIA that AT&T will soft-announce the availability of HSPA+ services not via a press release or an announcement… but by making the cities covered a darker shade of blue on the AT&T 4G map. So if you want to know exactly where that Motorola Atrix or HTC Inspire will get you up to 6 Mbps — well, you better bookmark the AT&T maps page, cross your fingers and maybe buy a Butler Bulldogs jersey for good luck.
And when it comes to if and when AT&T will actually launch its LTE services — which Rinne said were now in trials in Baltimore and Dallas — remember it was also only a year or so ago that CTO Donovan was claiming that LTE devices shipping before 2012 would be fat bricks that chewed through battery life. I guess if you can change your mind so quickly about spectrum, you can reverse field on the viability of LTE handsets too. But at what point do we simply stop and say we don’t believe the messengers anymore? Deal or no deal, AT&T has a lot of proving left to do in the rest of 2011 and beyond.