APRIL 4, 2011 Skepticism Greets AT&T Theory Telecom Giant Says T-Mobile Deal Will Improve Network Quality, but Experts See Other Options
By SPENCER E. ANTE And AMY SCHATZ Wall Street Journal http://online.wsj.com/article/SB10001424052748703806304576236683511907142.html One of AT&T Inc.'s chief justifications for its proposed takeover of rival T-Mobile USA is that the combination would quickly improve network quality and help solve a looming shortage of wireless spectrum in some cities. Spencer Ante discusses why there are doubts that buying rival T-Mobile USA will really improve the quality of AT&T's network, including reception issues in major markets such as New York and San Francisco. If regulators clear the $39 billion transaction, AT&T executives say the denser cellular network would improve voice calls and data communications in urban areas and speed the construction of its faster fourth-generation data network. But some industry executives and former FCC officials are skeptical the merger is the best way to address AT&T's network needs. Instead, they say AT&T could add capacity to current cell towers or purchase under-utilized spectrum in a government-led auction, or from other companies. "Putting the two networks together does not create spectrum," said Gerald R. Faulhaber, a former chief economist of the Federal Communications Commission, who has worked as a consultant for AT&T and its rivals. Underlying the debate is the explosive growth of data usage on wireless networks as more Americans purchase smartphones and tablet computers, which allow consumers to more easily surf the Web, watch videos and download applications and games. AT&T says its mobile data traffic jumped 8,000% over the past four years. That growth has strained AT&T's network in some cities like New York and San Francisco. Consumers and regulators have dinged AT&T for dropped phone calls and spotty coverage since Apple Inc.'s iPhone was launched on the network in 2007. Currently, in New York City, AT&T says it has a dropped-call rate in aggregate of more than 1.5%. But if it could add T-Mobile's network, AT&T could lower the dropped-call rate in New York over the course of two years to 1%, which is the company-wide target, said John Stankey, president of AT&T's business unit and the company's former operations chief. Mr. Stankey also said the combined network, which would be 30% more dense, would allow T-Mobile customers to receive better service inside buildings and elevators. With T-Mobile, AT&T would gain access to cell towers that would have taken over five years to build absent the transaction, he said. "The fastest way to get a denser grid is through a transaction," Mr. Stankey said. With its current spectrum position and company usage projections, Mr. Stankey said it wouldn't be possible to hit the 1% target. But James Taiclet, chief executive of American Tower Corp., a large independent owner and operator of cell sites, said AT&T and other wireless operators could double the amount of capacity they supply with current spectrum by investing more in new wireless equipment on existing cell towers. "Our tower sites are about 50% loaded on average," said Mr. Taiclet, whose company operates around 38,000 towers and counts AT&T as its biggest customer. In big cities such as New York and Boston, tower sites are loaded 60% to 75% on average, and capacity upgrades cost more and take longer than in less crowded areas. But Mr. Taiclet said the capacity of cell towers can still be substantially increased with a reasonable investment. "There are many ways to improve a wireless network," he said. In response, AT&T's Mr. Stankey said, "That view certainly doesn't account for the additional benefits gained from combined spectrum efficiency or providing an LTE path to more subscribers." He said adding T-Mobile's spectrum assets would double the spectrum in New York available for its fourth-generation, or 4G, network. Current and former regulators say another option is for the federal government to more quickly free up under-utilized spectrum. Last winter, the FCC began a process to examine the prospect of reallocating some TV spectrum for wireless broadband services. The idea would be to create a voluntary auction in which the TV industry sold off the spectrum to bidders operating in the wireless industry. David J. Farber, a former chief technology officer of the FCC and a professor at Carnegie Mellon University, said there are swaths of valuable yet underutilized spectrum being used by the TV industry and the federal government that the government could repurpose for wireless use. "The correct way to do it is to change policy and release a huge amount of spectrum," said Mr. Farber. "Spectrum is in short supply where you want it and plentiful where it's inconvenient to use it. If the FCC changed the rules things would get better." AT&T's Mr. Stankey said the government is moving too slowly, and that if it freed up spectrum today it would take five years before wireless operators could have devices up and running on it. Broadcasters are resisting the proposal, arguing they already gave back a large swath of airwaves when the U.S. switched to digital-only TV broadcasts. They also worry the plan isn't as voluntary as the FCC has advertised. Station owners have suggested the FCC look at taking away airwaves from companies which are "hoarding" airwaves for themselves or trying to keep them out of the hands of competitors. Some companies are sitting on swaths of spectrum that they aren't using. Comcast Corp. and other cable operators paid $2.4 billion to buy valuable airwaves licenses in New York, Chicago, Los Angeles and other large markets in 2006. The companies aren't using the airwaves now. Wireless broadband provider Clearwire Corp. said it has explored selling some of its large 4G spectrum holdings to raise money for its operations. Comcast and the other cable providers said they are still clearing users off those airwaves and haven't yet announced their plans for them. Under FCC rules, the companies have until 2021 to provide "substantial service" over those airwaves. Read more: http://online.wsj.com/article/SB10001424052748703806304576236683511907142.html#ixzz1IawF9Cc6 _______________________________________________ Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
