CTIA Updates: The Curious Case of AT&T’s Disappearing Spectrum

March 27, 2011

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?

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AT&T: Spectrum Needs Drove T-Mobile Deal

March 22, 2011

ORLANDO, Fla. — According to AT&T Mobility CEO Ralph de la Vega, one of the “big drivers” of his company’s proposed purchase of T-Mobile was simply “the need for more spectrum.”

Though Ma Bell has been mum in the past when asked whether or not it had enough spectrum to support its current and future network plans, with its pending deal headed toward intense regulatory scrutiny AT&T is now playing the “we need spectrum” card as a pitch to help it provide better service to its wireless customers.

De la Vega made his spectrum-crunch comment as part of a three-CEO panel that opened this spring’s CTIA wireless show here, a gathering that also included Sprint CEO Dan Hesse and Verizon Wireless CEO Dan Mead as well as bombastic TV personality Jim Cramer as the Red Bull-powered moderator. Though Cramer noted that the New York Times among others had found reasons to criticize the pending deal, De la Vega said the combination of AT&T and T-Mobile spectral assets would help prevent what the company now describes as a pending “spectrum exhaust” for many U.S. markets.

Spectrum, the licensed wireless airwaves used to transmit cellular signals between consumer devices and antennas on towers, is typically obtained by companies like AT&T in auctions authorized by the government. Though FCC Chairman Julius Genachowski used his keynote speech here Tuesday to pitch his agency’s idea for voluntary auctions for existing spectrum holders such as television broadcasters, any such transactions are years away in producing usable spectrum, making commercial transactions such as AT&T’s pending purchase the only fast way for companies to obtain more wireless airwaves quickly.

“It’s in the public interest to solve the [pending] spectrum exhaust,” said De la Vega, trying to put a bigger-picture spin on AT&T’s planned acquistion.

AT&T’s $39 Billion Admission That Yeah, We Have a Spectrum Problem

March 20, 2011

Since Sidecut Reports is en route to Orlando today for the now supremely interesting CTIA show, this missive will be short but there is no small amount of news and analysis of AT&T’s stunning plan to acquire T-Mobile USA for $39 billion. (The best take we’ve seen so far not surprisingly comes from our old pal Om Malik who doesn’t see a happy future for the mobile ecosystem or customer base).

Though nobody can claim that they saw this particular move coming, readers of Sidecut Reports know that we have for a long time now pointed out that AT&T did not have a spectrum position that suggested it could build out a network worthy of the term 4G. And though over time AT&T executives have always professed nothing but confidence for their spectrum holdings, you don’t have to read very far into the interview Ina Fried had today with AT&T Mobility CEO Ralph de la Vega to hear him cite “spectrum exhaust challenges” as a primary motivation for the deal.

Obviously we will write more about this proposed deal in the days ahead but we can’t help but wonder whether or not Clearwire’s spectrum holdings all of a sudden just got more valuable. And of course we also can’t wait to see the next T-Mobile TV commercial, and how the relationship between the T-Mobile girl and the AT&T guy might change.