Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
I believe I have mentioned before that I would rather get punched in the stomach than give a wireless carrier a compliment, but this week it looks like I am going to have to toughen up and take one in the gut.
This week’s gut-punching props go to Verizon Wireless, which managed to get a pair of pretty significant spectrum deals past government regulators. (Perhaps you read that somewhere?) This deal basically allows Verizon Wireless to snap up a whole-mess-of 1.7/2.1 GHz spectrum licenses (also known as AWS for you acronym-lovers) for the paltry sum of $3.9 billion. Verizon Wireless is going to use this spectrum to fortify its already vitamin-packed LTE network.
While getting the deal done – with just a handful of small concessions – was pretty impressive, the best part is that the deal came just months after rival AT&T was denied its attempt to stuff its spectrum portfolio by taking out smaller competitor T-Mobile USA.
Sure, both deals are of a significant different magnitude ($3.9B vs. $39B, but what’s a couple of “zeros” between friends). But, with the way Verizon Wireless handled its proposed deal, I suspect it could have sweet talked that T-Mobile USA deal out of government regulators. Good on you Verizon Wireless in showing AT&T how to debate.
Here’s an example of just how smooth Verizon Wireless was in getting these deals passed. This is what Federal Communications Commission Chairman Julius Genachowski said regarding the AT&T/T-Mobile USA deal:
“Competition is the engine of our free market economy and a cornerstone of the FCC’s mandate. Our review of this merger has had a clear focus: fostering a competitive market that drives innovation, promotes investment, encourages job creation, and protects consumers. These goals will remain the focus if any future merger application is filed.”
Cold. Calculating. To the point. There was no love anywhere in that statement, and in fact I would venture to guess that this statement was not made by the living, breathing Genachowski, but instead made by his robot double.
Now, get a load of the love letter Genachowski wrote about the Verizon Wireless spectrum deal. (Be warned, it gets sort of steamy. Cue Barry White music … now.):
“By advancing U.S. leadership in 4G LTE deployment, the transaction marks another step in our effort to promote the U.S. innovation economy and make state-of-the-art broadband available to more people in more places. The transaction will preserve incentives for deployment and spur innovation while guarding against anti-competitive conduct. And vitally, it will put approximately 20 megahertz of prime spectrum – spectrum that has gone unused for too long – quickly to work across the country, benefiting consumers and the marketplace. I look forward to working with my colleagues toward a final Commission vote in the near future.”
I mean, get a room.
Of course, looking back at how each carrier handled their respective deal also provides some insight into the “right” way to woo government regulators, and the “wrong” way.
In general, AT&T took what was an attempt to merge the markets No. 2 and No. 4 operator to form some sort of Octopus/ice unicycle concoction and tried to ram it down the throat of regulators.
There was never really any attempt, at least publicly, by AT&T to sweeten the deal with comments about possible divestitures or side deals that would take the sting out of removing a rival. Also, there was nothing in the deal that would allow regulators to save face by proclaiming that they only approved the deal by “forcing” AT&T to make significant concessions.
For contrast, Verizon Wireless almost from the get go seemed to have its finger on the pulse of public, industry and regulator sentiment, and deftly threw out bones to all involved. Once it saw that regulators were going to combine the deal with Comcast, Time Warner Cable and Bright House (affectionately known as SpectrumCo), with the deal with Cox, Verizon Wireless began laying out all sorts of goodies in order to soothe concerns that it was not just looking to take the spectrum and run.
Instead, Verizon Wireless let everyone know that if the deals were approved, it would be willing to auction off some of its 700 MHz spectrum assets, which for those who care about invisible airwaves know, is the dope stuff. Sure, those A- and B-Block spectrum licenses may have some interference issues that could take some time to iron out, and sure that spectrum would not really help Verizon Wireless enhance its LTE network, but all the same the offer was smooth.
Then, Verizon Wireless increased the lather by announcing a deal with T-Mobile USA that would see the carriers swap/sell/exchange a number of spectrum licenses. This would be the same T-Mobile USA that regulators sort of left hanging by not letting AT&T acquire it, thus playing to a possible guilty conscience. In addition, T-Mobile USA was originally opposed to the Verizon Wireless/cable spectrum deals even taking to the still odd corporate blog to voice its opposition. This deal, however, seemed to show T-Mobile USA the light, and it was willing to no longer oppose those deals.
Of course, Verizon Wireless always being a step ahead in this game, included a number of licenses from the proposed cable deals in the T-Mobile USA deal, thus requiring regulators to approve the cable deals in order to in turn throw T-Mobile USA a desperately needed spectrum lifeline. The move also showed, and Verizon Wireless was sure to point out, that it was not interested in “warehousing” spectrum and instead was doing something that was good for everyone.
And those concessions that were agreed to? A well designed move by Verizon Wireless to throw in some parts of the original agreement that it probably knew would not get by regulators, but would allow the government to force those side deals out and thus look like it was really in control. Brilliant!
All deft maneuvers by Verizon Wireless that in the end managed to garner it a nice haul of spectrum with none of that icky-ness that comes with looking like the bad guy. Well played.
Even better, it showed AT&T how it’s done. And there is nothing better than accomplishing something a rival could not pull off. That’s the way you debate!
OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:
–Following the traditional summer lull, the wireless industry is set for the second half of trade-show season. (Trade Show Fever! Catch It!) With a trio of events set to take place in consecutive weeks beginning in late Sept., there is sure to be plenty of time to actually catch Trade Show Fever, or Convention Center Pneumonia or at least Dingy Hotel Rickets.
Unlike the early season events, the fall schedule includes more intimate affairs targeting a more select audience. Speaking as someone covering such events from a news perspective this is a great thing. There is nothing like trying to cover a trade show that spans two counties and what seems like three lifetimes.
Sure, these events might not garner as much attention as those earlier events, but
–Speaking about trade shows. Wireless trade association CTIA this week again attempted to make a case for having two trade shows just four months apart by renaming its fall event “MobileCON.” (That is their emphasis on the “CON,” which I am only guessing is an accidental play on words.)
The new show name replaces the previously dubbed “Enterprise & Applications” title that seemed to just cause confusion amongst both the enterprise and applications crowd, resulting in no one walking away happy.
The new title and emphasis is on “integral components of the enterprise ecosystem, including security, cloud, m-commerce, M2M and enterprise applications at a deeper breadth and depth than other user conferences.” All that at just one event? Amazing!
Thankfully, if past experience is any indication the new focus will have very little to live up to as most conversations at past CTIA fall events have at some point included the phrase: “Why are we at this show again?”
–Nothing propels a new service like competing standards. So with the announcement this week by a handful of retailers that they are working on their own mobile payment solution that I am guessing will compete with the 39 other mobile payment solutions, this whole mobile payment “thing” ought to be part of our everyday lives by around 2145.
–I know IBM is a somewhat conservative company, a trait that has for the most part served it well over the years. But, its claims this week at an event in Brazil that it was too early to tell how mobility will change people’s lives seems a tad bit conservative even for Ronald Regan.
I am no Nostradamus, but I am going to stew up my wing-of-bat and eye-of-newt and guess that mobility will likely have at least a minor impact on people’s lives. Mostly when it comes to having their mobile devices adopted into their families and/or grafted to their bodies.
–A Beverly Hills restaurant is reportedly offering 5% discounts for customers that leave their cellphones with the staff rather than bringing them along for a meal. Not that I am anti-cellphone, but I am pro-eating in peace. Now to make this somehow work with motorists.
–The Internet rocks!
I welcome your comments. Please send me an email at dmeyer@rcrwireless.com.
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