US operators belatedly act to protect user location data

AT&T and Verizon announced that they will terminate all remaining commercial agreements that involve sharing customer location data, following a report exposing the country’s mobile carriers’ failure to control data sharing flow.

Jim Greer, a spokesman for AT&T, said in a standard email to media: “Last year, we stopped most location aggregation services while maintaining some that protect our customers, such as roadside assistance and fraud prevention.” Referring to the Motherboard exposé, Greer continued, “In light of recent reports about the misuse of location services, we have decided to eliminate all location aggregation services — even those with clear consumer benefits.”

This is similar to the position T-Mobile’s CEO John Legere adopted when responding to the criticism from the US Senator Ron Wyden (D-Ore.). Verizon also announced that the company will sever four remaining contracts to share location data with roadside assistance services. After this Version will need to get customers’ explicit agreement to share their data with these third-party assistance companies. Sprint, which was also caught out by the Motherboard report, is the only remaining nation-wide carrier that has not announced its plan on the issue.

This is all good news for the American consumers who are concerned with the safety of their private data. On the other hand, mobile operators have hardly been the worst offenders when it comes to compromising the privacy and security of customer data. Earlier, Google was exposed to have continued tracking users’ location even after the feature had been switched off, while Facebook has been mired in endless privacy controversies.

Monetising user data is only a side and most likely insignificant “value-add” business for the mobile operators, because they live on the service fees subscrbers pay. But it is the internet heavyweights’ lifeline. This may sound fatalistic but it should not surprise anyone if the Facebooks and the Googles of the world come up with more innovative measures to finance the “free” services we have benn used to.

T-Mobile/Sprint merger heads towards final two hurdles

With the CFIUS giving a green light on the $26 billion merger of TMUS and Sprint, attention can now be turned to the final hurdles presented by the Department of Justice (JoJ) and FCC.

According to the Wall Street Journal, the CFIUS (Committee on Foreign Investment in the US), which has been assessing the security implications of the deal, has given the go ahead. There has been no official statement made just yet, the CFIUS has abruptly pointed out it has no legal requirement to do so, though attention has most likely be focused on the last two potential problem areas for some time.

What is worth noting is that while there are opportunities for failure at every turn in the road, the CFIUS was unlikely ever to be a massive problem for T-Mobile or Sprint.

As a bit of background, the CFIUS is a multi-agency committee which assesses the impact of foreign investment on a number of different factors, most notably national security. Although a relatively unknown council, the Foreign Investment Risk Review Modernization Act (passed in August) vastly expanded the powers and influence of CFIUS, meaning it could probe into a wider variety of acquisitions, allow it to take longer and finally, charge for the pleasure of doing so.

Thankfully for T-Mobile and Sprint, the national security threat was low risk here. Firstly, you have to consider there isn’t any Huawei or ZTE kit in the pair’s networks right now, secondly, the Defense Authorization Act prohibits the use of any of their equipment or software in the future, and finally, the pair’s parent companies have said they would back away from Huawei for future investments.

It seems the direct threat to US national security, if you are in the camp of believing there is a genuine one, was minimal. The confirmation from non-domestic private businesses that they would pander to political paranoia looks like it was enough to ensure the CFIUS have no objections. All ties to Huawei and ZTE have been severed so it seems its mission accomplished for Trump.

Now it’s onto the tough jobs; the Department of Justice and the FCC.

The FCC is digging its heels in for the moment, extending the 180-day shot clock for approval, as it searches for justification for the deal. This is where the issue may lie for T-Mobile and Sprint, as while the FCC is looking to determine whether a proposed transaction will serve the public interest, convenience and necessity, the evidence and support seems to be stacking up against the pair.

The Department of Justice on the other hand will be looking to assess whether the proposed merger would have a material impact on competition. Too much of a sway in the negative and this deal will head straight to the bin. The four to three operators shift could create monopolies in certain localities which will not be viewed favourably.

The finish line is now in sight, but it is still unclear which direction this will go. While the signs have been positive, the FCC has proven to be a surprise package while there are certainly warranted competition concerns for the DoJ to ponder.

T-Mobile/Sprint edge towards finish line following Huawei snub

T-Mobile US and Sprint are reportedly rubbing regulators the right way, in the continued effort to get the prolonged merger approved, by overtly shunning Chinese kit vendor Huawei.

The statement should be viewed as more symbolic than anything else, as considering the clauses which have been inserted into the Defense Authorization Act during August, it would have been highly unlikely the pair would have considered Huawei for any meaningful work in US networks. What this could be viewed as is a PR move from the pair, allowing the US to demonstrate to the world how serious it is about the espionage claims.

According to Reuters, Deutsche Telekom and Softbank, parent companies of T-Mobile US and Sprint respectively, have confirmed they will not be working with Huawei moving forward. Neither US telco currently has any Huawei kit in its network, though it is hoped this statement from the international telcos will have the bureaucrats hand edging closer to the green button for the $26 billion merger.

For the US government, this is somewhat of a PR win. The Trump administration has been incredibly aggressive in making moves against the Chinese, and this could be viewed as a medal credited to the crusade. Not only can the US government effect change in its own telcos and other governments around the world, it can also influence non-domestic private firms. The long arm of the Oval Office is tickling opinion in places it really shouldn’t be able to.

Unfortunately for the US, each incremental step taken in the trade war against China seems to question how dearly the White House holds principles and values. All of these individual circumstances are starting to look like pawns in President Trump’s game of chess against Beijing. Trump is living up to his reputation as a deal-maker, with the promise of aiding the battle against the Chinese enough for the President to make concessions elsewhere.

The evidence being stacked up against the T-Mobile/Sprint merger was starting to climb pretty high, though perhaps this might be enough of a ‘concession’ to twist the White House’s perspective on the transaction. Trump has already shown he is capable of looking at the big picture, with the recent arrest of Huawei’s CFO another excellent example.

Having been arrested in Canada while in transit back to China, Trump promised to intervene in the court case should it help his pursuit of a more favourable trade relationship with China. This statement from Trump makes somewhat of a mockery of the whole arrest and demonstrates how little he thinks of the Canadian judicial system. If there is a benefit to the US economy, Trump can talk to the right people and make the whole saga disappear. It questions the validity of the arrest in the first place, but also the credibility of the Canadian courts; why does Trump believe they can be convinced to drop the case so easily?

Trump is starting to show his heritage; anything for the deal. This is a businessman in control of the White House, and his ability to ignore small print give the impression of a wheeler-dealer.

Sprint partners with Qualcomm and HTC on new 5G device

Sprint has announced a new partnership with Qualcomm and HTC to develop a mobile ‘smart hub’ that will run on 5G next year.

Details are relatively thin for the moment, though the term ‘smart hub’ perhaps suggests it will be some form of mobile hot spot. This is the second 5G-specific partnership Sprint has announced in the devices realm, after partnering with LG to develop a 5G-compatible smartphone for its in-progress network. This device might be one of the first to reach the market next year.

“We’re excited to continue building our 5G device portfolio and announce another way our customers can be among the first to experience Sprint 5G next year,” said John Saw, Sprint CTO. “This innovative product will allow customers on the go, at work or at home to enjoy Sprint 5G on multiple devices with incredibly fast connectivity for content sharing, mobile gaming, entertainment and so much more.”

“We are thrilled to be working closely with Sprint on this innovative new design,” said Cher Wang, HTC CEO. “This collaboration brought our cutting-edge technology together with Sprint’s industry-leading 5G network to create the next generation smart devices.”

With Sprint’s 5G network set to launch in the first half of 2019, we might not have to wait long to find out more details. What we do know right now is the data device will be powered using Qualcomm’s Snapdragon X50 5G modem, allowing it Gigabit LTE and 5G capabilities.

Mobile data could get even costlier after T-Mobile and Sprint merger

Report by Rewheel showed Americans already have the most expensive mobile data among all four-operator markets. A move to reduce the number of them could make it worse.

According to the 2H2018 release of its mobile data price monitoring report, the Finland-based research firm Rewheel focused on the US market, which is likely to see the proposed merger of T-Mobile and Sprint closing in the first half of 2019. The report showed that among the 41 countries it analysed (OECD34 + EU28, with seven EU countries not being OECD members), the median gigabyte price of a smartphone deal (nominal price + VAT) in the US is among the highest. Rewheel told Telecoms.com that Greece and Cyprus topped the table, followed by Korea and Canada. The median gigabyte price of a mobile broadband deal in the US is the most expensive among all.

Rewheel mobile data prices

The research compared two groups of markets, those with effectively four mobile operators and those with three. The mobile data price in the four-MNO markets is shown to be about half as expensive as the three-MNO markets, but the US is an outlier. The median US mobile data price per gigabyte is four times higher than the EU four-MNO markets, and sixteen times higher than the big EU markets with four MNOs.

To look at it from another angle, a 30€ monthly deal comes with unlimited data plans (and at least 1000-minute talk time) on smartphones in 13 markets (Korea, Mexico, and 11 EU countries) but can only buy 6GB in the US. Similarly, a 30€ monthly wireless broadband deal can buy unlimited data in 11 EU markets but can only get 40GB in the US.

The effect of the “magic four” driving price down is most telling in Italy: after Iliad launched its mobile service, the price per gigabyte fell by 70% in half a year. On the other hand, the research showed data price stopped falling in the Dutch market after the announced merger of T-Mobile and Tele2, and the price drop has visibly slowed down in Austria after it became a three-MNO market.

The researcher therefore argued that the Americans are already paying more than other four-MNO market users, it could get even worse if the US market became a three-horse race. However we can see in the data that North America is generally more expensive, with Canada, a four-MNO market, is as expensive as the US. Admittedly though, Freedom Mobile is still weak.

An additional angle to examine data price is to look at what is offered to contract users vs. prepaid users, which is excluded from the Rewheel research. The discrepancy is probably most obvious in Africa. According to the analysis published by the research firm Ovum, South Africa’s mobile data is among the highest in the world. This is largely down to the high prices PAYG users face when buying smaller data packages. Rob Shuter, the CEO of MTN, corroborated with his comments at the recent AfricaCom that, despite the average price per gigabyte for postpaid users in Africa is comparable to that of the US (around $3), data prices for prepaid users are prohibitive. The large majority of mobile users in Africa and other emerging markets are on prepaid services.

T-Mobile/Sprint merger finds a new enemy in mysterious lobby group

A new non-profit organization called ‘Protect America’s Wireless’ has emerged, seemingly with the sole objective of hurling spanners at the T-Mobile US and Sprint merger.

Details on the group are relatively thin at the moment, it was only founded last month, though a press call introducing the group and its mission statement on the website both seem to give the same message; the T-Mobile US and Sprint merger will be bad for the national security of the US.

“We must protect our networks from foreign spying,” the team announces on the websites homepage. “Our greatest concern is the pending Sprint T-Mobile merger, which could give countries like Saudi Arabia, China, Germany, and Japan direct access to our networks through the use of foreign-made networking equipment and billions of foreign money. We call on President Trump, Congress, and the FCC to protect American national security by denying these foreign interests access to America’s wireless communications.”

On the press call, David Wade, Founder of Greenlight Strategies, suggested a merger of the two telcos would open up the US to a Chinese ecosystem, while also suggesting any business working closely with Chinese vendors would effectively handover data to the Chinese government. While it is true Sprint owner Softbank has collaborated closely with Huawei and ZTE in the 5G R&D journey, this seems to be taking the conspiracy theory up another level. Deutsche Telekom, parent company of T-Mobile US, also has ties to Chinese vendors, but there aren’t many telcos who don’t.

The theory here is a merger between the two telcos would be bad for national security, effectively handing China a key to the backdoor. There have certainly been objections from a competition perspective, but this is the first we’ve seen with this angle. It’s difficult not to be suspicious about who the puppet master actually is.

Interestingly enough, the group has declined to discuss where funding is emerging from. As a 501c4 non-profit, the team do not have to disclose funding or ownership details, though they are permitted to attempt to influence politics as long as it isn’t their main area of focus. While the groups attempt to tackle US security is a thinly veiled attempt to demonstrate ‘social welfare’, as long as the group isn’t spending more than half of its funds on political-related activities, it can continue to operate half-hidden by shadows.

Finding out who is funding this organization is key to figure out what the angle is and whether this is yet another example of propaganda, though it is not necessarily a simple task. 501c4 non-profits have to complete a Form 990 for the IRS, on which any donations above $5,000 have to be disclosed. Unfortunately, due to the efficiency of the IRS, there is usually a 12-18 month lag on this information being made publicly available.

Until the influencers and donors of this group have been identified, this could be a very dangerous source of misinformation. Statements being made might very well be true, but without transparency it would be safe to be suspicious.

New York wades in to the T-Mobile/Sprint debate

New York Attorney General Barbara Underwood could prove to be another hurdle for T-Mobile and Sprint to overcome in their headache-inducing merger.

The problem for the pair is there seem to be a lot more objections surrounding the tie-up than there has been support. After T-Mobile CEO John Legere seemingly got little response from his appeal to MVNOs to support the transaction, the wild-eyed leader has opened up to opinions from staff; a dangerous move considering some would certainly be under threat of redundancy.

Perhaps what the duo didn’t need are objections from the New York Attorney General Office over fears the consumer might get screwed. According to the New York Post, the objection is relatively simple. T-Mobile runs a prepaid service called MetroPCS, while Sprint has Boost and Virgin Mobile. Bringing all three into the same business could lead to one or more being scrapped, reducing competition. Secondly, all three are incredibly aggressive on pricing, but again, bringing all three into the same business could end this trend of undercutting, and an increase in price. The New Yorkers are concerned tariffs could become too expensive for some.

While objections from a few lawyers might not be the worst thing in the world for T-Mobile and Sprint, it seems there is a queue forming. In fact, the FCC released a notice last week which stated the Attorney General Offices of Alabama, Connecticut, Florida, Hawaii, Mississippi, Tennessee, Virginia, Washington, Wisconsin and the District of Columbia have all requested information to assist their own investigations into the merger. The lawyers are lurking, and the more who gather around the fire, the less pleasing the situation appears for T-Mobile and Sprint.

This of course might mean nothing. All major parties in the US are perfectly entitled to do their own due diligence surrounding the deal as transitioning from a market with four major telcos down to three is a massive move. Considering there will be regions across the country where this transaction effectively creates a communications monopoly, every chance to scrutinise the deal should be taken.

As it stands, the self-appointed shot-clock on approving the deal at the FCC is on hold. This again is simply down to the magnitude and the potentially significant consequences of the deal, and should not be surprising at all, but the longer it stands still, we suspect the more nervous executives will become. Mergers of this nature have already been shot down in the US, and this deal does seem to be hanging in the balance.

FCC drafts in external opinion to figure out the T-Mobile-Sprint conundrum

Perhaps realising the gravity of the situation, the FCC has drafted in outside help to assess the impact of the T-Mobile-Sprint merger on the US economy.

David Sibley will help the team as an outside consultant reporting into David Lawrence, who is leading the merger taskforce. This should not be seen as an unusual move from the FCC, though perhaps such external opinions should have been brought in earlier considering the impact this merger will have on the telco landscape and competition.

“We are fortunate that Professor Sibley is bringing his considerable economic experience and expertise to bear in this review,” said FCC Chairman Ajit Pai. “Rigorous economic analysis plays an important role in all of the Commission’s work and will be essential to a thorough investigation into whether approval of this transaction would be in the public interest.”

This is the big question. The merger will bring the number of national telcos down from four to three, but is this a good or bad move. There are arguments on both sides.

The bad side of the argument is a simple one. Removing one of the major telcos from the ecosystem will reduce competition and hurt the consumer through higher pricing due to a lack of choice. This is not a complicated point to make and a genuine concern, especially in a country like the US which where telcos do not operate everywhere. The risk of monopolies or duopolies in certain areas increases.

On the positive side, while the number of massive telcos decreases, competition increases as the merged entity would offer a more valid threat to AT&T and Verizon through the combined scale. T-Mobile US CEO John Legere often refers to AT&T and Verizon as the duopoly, and while this is an exaggeration, they are miles ahead of T-Mobile and Sprint in third and fourth place. T-Mobile and Sprint are not at the right scale to compete with the leaders individually, but together the merged organization would offer greater scale. The theory here is reducing competitors would make the market more competitive, therefore better for the consumer.

This is the conundrum which the FCC needs to decide on. Evidence and experts will be aplenty on both sides of the argument, though Sibley certainly adds some expertise to the team.

Sibley is currently the John Michael Stuart Centennial Professor of Economics at the University of Texas at Austin. Prior this role, Sibley worked Head of the Economics Research Group at Bell Communications Research, as well as the Deputy Assistant Attorney General for Economic Analysis in the Antitrust Division of the US Department of Justice. He also represented the US in OECD discussions.

As it stands, the merger shot clock is currently on pause, with the FCC deciding it does not want to be rushed. The approval or rejection of mergers and acquisitions are targeted to be completed within a 180-day window, though the FCC is offered the luxury of taking longer if it is a particularly complicated case. This is proving to be one, with the FCC requesting input from competitors of the pair recently, most notably from players outside the mobile ecosystem, suggesting it is investigating the impact on such segments as broadband.

Sprint asks under-threat employees to support redundancies

In a move which perhaps indicates the Sprint/T-Mobile team is starting to get nervous, Sprint CEO Michel Combes is rousing employee support for the very merger which could potentially make them redundant.

On Friday 5 October, Combes is inviting as many employees as possible to a special edition Town Hall which will feature John Legere and Mike Sievert, who will take over as CEO and COO of the combined company should the merger be given the go-ahead. The attendees will be able to ask questions and air their grievances, with perhaps a couple of brave souls condemning the merger due to the number of jobs it will sacrifice to the gods of profit making.

“Speaking of, it was five months ago when Sprint and T-Mobile announced our intentions to merge,” said Combes in the email, which was later filed with the SEC. “Since then, you’ve heard from me and Marcelo – along with much commentary in the media – about why this is such a good deal. Together we can build the best network across the U.S., including rural areas – and establish global leadership in 5G; offer unprecedented products and services at lower prices for consumers and businesses; and create thousands of jobs.”

How many jobs accountant Combes and his psychotic-eyed colleagues can create is questionable, though what is almost certain is redundancies. There will be cross-over when it comes to internal service departments (such as HR and IT) but the majority will most likely come from the retail side of the business, those in the field interacting with customers. In many cities across the US there will be areas which both a T-Mobile and Sprint presence; these will have to be rationalised.

But perhaps this is where Combes is playing his masterstroke. Those who can attend the meeting will be those who work at the HQ in Kansas, these people are less likely to be at risk from redundancies. Combes can have photographers and camera men capturing the happy faces at the event, while the people who are genuinely under threat can’t afford to fly out to Kansas with a weeks’ notice, or have work in the retail stores all around the country. Combes is essentially herding all the happy people together, while the ones who actually have something to object about are left in the cold, voiceless.

Perhaps Combes should be congratulated on his ability to present the concept of democracy while simultaneously silencing any objections through absence.

Maybe this is an indication the team aren’t getting the support they believe is necessary to force the hand of watchdogs approving the deal? The FCC has hit pause on the 180-day shot clock to approve the deal, not necessarily a good sign, industry groups have slammed the merger, customers offered a mixed-bag of feedback and as far as we can tell, Legere’s plea for support from the MVNOs of the US only brought about one proclamation. Asking employees for their approval is certainly risky, there is as much an opportunity for negative feedback as there is for the managers to be strong-armed into shallow, PR-riddled statements.

Despite seeing a few nerves between the lines, the team has hired an integration team, T-Mobile hired Sunit Patel to lead their merger and integration strategy while Kevin Crull leads efforts at Sprint. Vonya McCann and the Government Affairs team are working hard in the lobby front in Washington, while numerous executives from T-Mobile, Softbank and Sprint will be lending their weight to the effort.

Guessing which way the FCC is going to lean on this deal is almost 50/50 according to many of the people which we have spoken to, but with this move perhaps the mood in the merger camp isn’t as positive as some would let on.

FCC says new material means it needs more time to assess TMUS/Sprint merger

The US Federal Communications Commissions has indefinitely extended the amount of time it will take to sign off the country’s operator mega-merger.

Referring to an ‘informal shot clock’ of 180 days in which to assess the pros and cons of T-Mobile US and Sprint permanently hooking up, the FCC announced in a letter that it is being paused. The only stated reason is the submission of new material from TMUS that significantly alters the criteria by which the FCC will make its assessment, thus requiring more time.

“Today we are pausing the Commission’s informal 180-day transaction shot clock in this proceeding,” opens the letter. “Additional time is necessary to allow for thorough staff and third-party review of newly submitted and anticipated modeling relied on by the Applicants.

“Each of three separate developments require more time. First, on September 5, 2018, the Applicants submitted a substantially revised network engineering model… The newly-provided network engineering model is significantly larger and more complex than the engineering submissions already in the record.

“Further, in an August 29, 2018 exparte meeting, T-Mobile executives Mike Sievert and Peter Ewens described T-Mobile’s reliance on a business model, titled Build 9,’ which apparently provides the financial basis for the projected new network buildout. The Commission did not receive Build 9, and third parties did not have access to it, until September 5. Build 9 therefore requires further review.

“Finally, T-Mobile recently disclosed that it intends to submit additional economic modeling in support of the Applications, beyond that strictly responsive to the various economic analyses in the Petitions to Deny. This new economic modeling will also require additional time for review.”

So, in essence, TMUS recently decided to offer up a bunch more material in support of the merger and the FCC needs more time to review it. Seems fair enough. “The clock will remain stopped until the Applicants have completed the record on which they intend to rely and a reasonable period of time has passed for staff and third-party review,” concludes the letter. How long that reasonable period of time will be is unclear.