DoJ doesn’t share FCC enthusiasm for T-Mobile/Sprint – report

The FCC might have a skip in its step after securing concessions from T-Mobile US and Sprint ahead of the proposed merger, but the Department of Justice is not convinced.

Following the approval from FCC Chairman Ajir Pai, and the vote of support from Commissioner Brendan Carr, Sprint share price rose almost 19%. The long-awaited merger to create a genuine challenger to AT&T and Verizon on a national scale looked to be heading in the right direction, only for the DoJ to be the fly in the ointment.

According to Bloomberg, the DoJ believes the concessions made by the pair do not go far enough. This is a move which breaks with tradition, generally the FCC and the DoJ sing from the same hymn sheet when it comes to acquisitions and mergers, though it appears antitrust investigators are still concerned over the threat to competition.

This is perhaps the nuance between the two departments. The DoJ, and various Attorney Generals throughout the US, are primarily concerned with competition, while the FCC rhetoric has been more focused on securing a more efficient and broader 5G rollout.

The concessions have taken the form of three commitments. Firstly, T-Mobile suggests 97% of the population could be covered by 5G within three years. Secondly, Sprint’s prepaid brand Boost would be sold to preserve competition. And finally, there would be no price increases while the 5G network is being deployed.

Of course, there is a very real risk to competition. Taking the number of national telcos from four down to three will mean less choice in the market. Less choice means less opportunity for disruption, even if the hatred from T-Mobile US CEO John Legere towards AT&T and Verizon is effectively teemed from his ears. There are too many examples through history of abuses when it comes to competition for some to be completely comfortable.

You also have to weigh up the current cost of mobile connectivity in the US. Although much has been done to help the consumer, ARPU is still notably more than in Europe, where competition is significantly higher. According to Moneysavingpro.com, the average postpaid contract in the US is as much as $80.25 compared to $30.06 in the UK. US consumers are already feeling the sharp end of the competition stick, and few would want to risk this difference to increase further.

The question is how much pain the consumer can tolerate in pursuit of leadership in the 5G race. Carr has spoken of his primary role at the FCC being focused on creating a leadership position for the US in the 5G era and part of this will depend on getting 5G in the hands of the consumer as quickly as possible. The sooner consumers have 5G, the sooner US firms can scale new services and products before assaulting the international markets. This is a playbook taken from the very successful 4G era.

With the US taking a leadership position in the 4G world, companies like Google, Amazon, Uber, AirBnB and Lyft thrived. These are companies which would have existed without the 4G euphoria, but success was compounded because of the connectivity gains. We are likely to see the same trend in the 5G world, with new products and services being designed for 5G connectivity. The question which remains is where they will call home.

This is the equation the FCC and the DoJ have to balance. The need to protect the consumer against the drive towards future economic success on the global stage. There is not going to be a perfect answer for this one, the US is gambling on the future success of the economy after all.

FCC Chairman convinced by T-Mobile/Sprint concessions

FCC Chairman Ajit Pai has publicly stated he believes the concessions made by T-Mobile US and Sprint are enough to ensure the merger would be in the public interest.

Over the course of the weekend, rumours emerged over concessions the pair would have to make to get the support of the FCC, though rarely are sources so spot on. The merged business will now have to commit to a nationwide 5G deployment within three years, sell Sprint’s prepaid brand and promise not to raise prices during the rollout years, if it wants the greenlight of the FCC.

What is worth noting is this is not a greenlight just yet. Pai has said yes, though he will need a majority vote from the Commissioners. Commissioner Brendan Carr has already pledged his support, and we suspect Michael O’Reilly will in the immediate future also. The Democrats might want to throw a spanner in the works, but this would be largely irrelevant with O’Reilly’s support.

“In light of the significant commitments made by T-Mobile and Sprint as well as the facts in the record to date, I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it,” Pai said in a statement.

“This is a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans. We should seize this opportunity.”

As you can imagine, T-Mobile US CEO John Legere certainly has something to say on the matter.

“Let me be clear,” Legere stated in a blog entry. “These aren’t just words, they’re verifiable, enforceable and specific commitments that bring to life how the New T-Mobile will deliver a world-leading nationwide 5G network – truly 5G for all, create more competition in broadband, and continue to give customers more choices, better value and better service.”

The first commitment made by T-Mobile US and Sprint is a nationwide 5G network. Considering Legere has been claiming his team would be the first to rollout a genuine 5G network for some time, it comes as little surprise the FCC will want to hold him accountable.

Over a three-year period, presumably starting when the greenlight is shown, the new 5G network will cover 97% of the population. 75% of the population will be covered with mid-band spectrum, while the full 97% will have low-band. This is a very traditional approach to rolling out a network, as it meets the demands of capacity and efficiency, though there is a sacrifice on speed.

Perhaps more importantly for the FCC, the plan also covers objectives to bridge the digital divide. 85% of the rural population will be connected during this period, increasing to 90% after six years. This is not to say all the farmers fields will be blanketed in 5G, though it does help provide an alternative for the complicated fixed broadband equation in the rural communities.

Moving onto the divestment, selling Sprint’s Boost prepaid brand seems to be enough to satisfy the competition cravings of Pai. What is worth noting is this will not be a complete break-away from the business as it will have to run on the T-Mobile US network. Unfortunately, MVNOs in the US are not as free to operate as those in Europe, as switching the supporting network would mean have to change out all the SIM cards.

This becomes complicated as you do not necessarily know who your customers are in a prepaid business model. The situation certainly encourages more competition, it will after all not be part of the T-Mobile US/Sprint family anymore, but it is far from a perfect scenario.

Finally, Legere has promised tariffs will not become more expensive during the deployment period, another worry for the FCC should the duo want to meet the ambitious objectives to compete with AT&T and Verizon. However, it does appear Legere is promising 5G tariffs will not include a premium either.

And now onto the other side of the aisle. Commissioner Jessica Rosenworcel has tweeted her opinions on the concessions and it appears she is not convinced.

“We’ve seen this kind of consolidation in airlines and with drug companies. It hasn’t worked out well for consumers. But now the @FCC wants to bless the same kind of consolidation for wireless carriers. I have serious doubts.”

Rosenworcel has also suggested the decision should be put out for public consultation. We suspect Pai will want to avoid this scenario, as it would be incredibly time-demanding; the Chairman will want the merger distraction off his desk as soon as possible.

Commissioner Geoffrey Starks is yet to make a comment, but DO NOT, I repeat, DO NOT go on his Twitter page if you haven’t watched the latest Game of Thrones episode.

We understand the Democrat and Republican Commissioners are going to be at each other’s throats over pretty much every decision, however trolling any innocent individual with a GoT spoiler is a low blow.

Starks and your correspondent are going to have some issues.

T-Mobile and Sprint ponder concessions to force through merger

T-Mobile US and Sprint are weighing up the sale of one of the pair’s prepaid brands in an attempt to woo decision makers into greenlighting the divisive merger.

Dating back to April 2018, you will be forgiven for forgetting this saga is still an-going debate in the US. With privacy scandals, the Huawei drama and BT’s dreadful logo stealing all the column inches, the debate over whether T-Mobile US and Sprint should be allowed to merge their operations has been relegated below the fold. But it is still a thing.

The countdown clock, the 180 days the FCC gives itself to approve mergers, spent a lot of time on pause, though the longer the process takes the more likely it appears the answer will be no. If the relevant authorities were looking at the information in front of them, an answer would surely have been given by now, but sceptics might assume the FCC is desperately searching for a reason to say no.

According to Bloomberg, the duo is prepared to make concessions to force through the deal. These concessions include the sale of one prepaid brand, a pledge to finish the rollout of a 5G network in three years and promises not to raise prices during this deployment.

In terms of the timeline, crunch day is fast approaching. The FCC 180-day review is set to come to a close at the end of June, though the deal also has to be signed-off by the Department of Justice. With decision time on the horizon, egos will have to be stroked and arguments set in stone.

The issue at the heart of this debate is focused on competition. Critics of the deal suggest consumers who are at the low-end of the tariffs scale will effectively be punished with higher prices in a market with only three providers. T-Mobile US and Sprint have suggested prices would be kept down in an attempt to compete with AT&T and Verizon, though more than paper-thin promises will be needed.

Selling off one of the prepaid brands would help to preserve competition in this segment, offering more choice for those consumers who do wish to, or cannot afford to, invest in postpaid contracts. It is believed Sprint’s Boost brand is the one facing the chop, with the Virgin Mobile and Metro brands to remain in the potentially merged operations.

Peter Adderton, who sold Boost to Sprint in 2006, has previously stated he would invest in the divested brand. Adderton has been a critic of the T-Mobile/Sprint merger, though if there is a chance to make money entrepreneurs have a way of changing their tune.

Reports have been emerging over the last couple of weeks suggest regulators are still concerned over competition despite assurances made by executives. The Wall Street Journal suggests the deal would not go ahead with the proposed structure of the company, a claim which T-Mobile US CEO John Legere rejects, suggesting there is still some stroking to be done.

Although trying to figure out which way this deal will go is little more than guess work at the moment, there is a feeling it is not going the way T-Mobile and Sprint would want. Rumours are only rumours, but the familiarity of the reports is starting to add weight. It does sound like T-Mobile and Sprint will have to make some considerable concessions to get the greenlight.

We’re in last place but we’re actually leading 5G race – T-Mobile US

T-Mobile US is currently in last place for the 5G race, but if you listen to the magenta tinged spin, its actually in first place.

Right now, AT&T and Verizon have hit the on-switch for their 5G networks. Sprint is moving forward with its own plans, leaving only T-Mobile US floundering on 4G. That said, the purplish-red twist on the state-of-affairs is one of irrelevance.

“With early 5G launches there have been disappointed customers and we don’t want to launch anything until we can delight out customers,” said Ulf Ewaldsson, SVP of Technology Transformation at T-Mobile US, speaking at Light Reading’s Big 5G Event in Denver.

According to Ewaldsson, T-Mobile US could switch on its networks now, if it wanted, and it could even offer services on the mmWave spectrum. The team is ready to go, it just doesn’t want to at the moment.

The depth of truth on this statement depends on where you sit. Some might believe T-Mobile US claims. It only wants to launch 5G when it is a service which delivers on the lofty promise, and at a time where the telco can deliver a nationwide proposition. It doesn’t want to dupe the customer into an expensive contract and limited coverage.

This is a perfectly reasonable approach, and the option to bide one’s time might be completely justified if a nationwide 5G network is launched, crushing the feeble attempts from competitors. It is a sensible business strategy. However, it might also be the case that rivals were more successful in the early days and stole a march on T-Mobile US. This is just clever spin and nuance.

Both explanations are probably true to a degree, and it may not even matter that much. The winner when it comes to 5G in North America is not going to be the first to market, but the delivery of the best performing network.

And of course, in the pursuit of delivering the best performing 5G network Ewaldsson managed to plug the promise of the Sprint transaction.

hdrpl

The image above is an interesting one. This is what T-Mobile US claims its 5G coverage would look like by 2024, if the team is allowed to combine the spectrum assets from the two businesses.

With a blend of low, mid and high spectrum assets, Ewaldsson is claiming T-Mobile US is in the strongest position to deliver on the 5G promise. By the end of next year, the executive has promised it will launch a nationwide 5G network, making use of the 600 mhz assets which it currently has. A network which is worth waiting for, as Ewaldsson puts in.

However, what is also worth pointing out is the contradiction from the very same conference stream.

On a panel session following Ewaldsson’s remarks about the importance of delivering a nationwide 5G network instead of the current pockets of connectivity, John Baker of Mavenir said there was no need for such widespread coverage, while Mishka Dehghan, VP of 5G Deployment at Sprint, also contradicted Ewaldsson.

Baker suggested 4G and 5G can co-exist for the foreseeable future, suggesting you only build 5G where you actually need it, like AT&T and Verizon have done today. Dehghan’s contradiction was perhaps more worrying considering the two telcos are supposed to be singing from the same hymn sheet. Like Baker, Dehghan suggested 5G should be deployed as necessary, focusing on specific usecases.

Ultimately there isn’t necessarily a right answer. Ewaldsson pointed out at the beginning of his session that there will be multiple deployment strategies, each of which would be tailored to the organization. Being last to launch 5G in the US certainly won’t hurt T-Mobile US in the long-run, but the anticipation will place more pressure on the team.

T-Mobile US finally makes foray into TV world

Some might have started to think it was never going to happen, but T-Mobile US has finally unveiled its own attempt to crack the content market TVision Home.

The service, which will initially be launched in eight US cities on April 14, is the re-branded and upgraded version of Layer3 TV, the platform it acquired in early 2018. It might have taken a while for the proposition to emerge, but T-Mobile US is entering the highly congested and increasingly fragmented world of content.

“The Un-carrier has already changed wireless for good, and today’s news brings us one step closer to taking on Big Cable,” said John Legere, CEO of T-Mobile. “And with the New T-Mobile, we can do more than just offer home TV service, we can offer millions of Americans more choice and competition for TV AND home broadband. I can’t wait to begin un-cabling cable and giving millions the opportunity to cut the cord with Big Cable forever.”

While this might not be the big splash some were hoping for, T-Mobile US does plan on launching a streaming service to compliment this cable offering later in the year. For the moment, this is an effort to disrupt a traditional industry, something which Legere is very good at doing, and there is of course an element of the unusual in the launch.

The TV service itself is not the Uncarrier move, but the Satellite Freedom initiative certainly is. According to T-Mobile US, 48% of US customers are locked into a contract and face paying hundreds in early termination fees. To win over customers, T-Mobile US will offer any Dish or DirecTV customers who make the switch a prepaid card with up to $500 on it.

For the moment, it looks more like a bundling service, though this isn’t necessarily a bad thing as it does address a point of irritation for the consumer. Netflix and Amazon Prime will be bundled into the service to start with, while T-Mobile US promises more third-party bundles in the future.

The service begins with 150 channels of local and national content for $99.99 a month, though existing T-Mobile US customers will get a $9.99 discount, while any premium services (such as Netflix, Amazon or HBO) will be extra. When you add everything together, it isn’t that much of a discount on the average cable cost across the US, which T-Mobile US claims is $107.30 per month.

The platform itself is simply an upgraded version of the Layer3 TV service which it acquired to $325 million last year, though considering how long T-Mobile US has kept everyone waiting, it does seem a bit underwhelming. While a lot has been promised, such as the box becoming redundant as the TVision app is installed on hardware, minimal details don’t inspire much confidence. T-Mobile US is promising to deliver on the commitments sharpish but considering how long it took to get the basic proposition to market we’re not entirely confident.

Ultimately, the success of this service will come down to two things. Firstly, pricing, T-Mobile US has been successful in the past by offering more for less, and secondly, the experience. Should the 150 channels offer good content, customers will certainly be happy, though there are plenty of examples of failed forays into TV because the content doesn’t deliver on expectations.

Another interesting development will be the personalisation features. T-Mobile US has stated each member of the household will have their own profile with the discovery engine presumably tailored to that individual. It might sound great, but we are still not convinced this is a feature which many customers will find that intriguing. It might be a nice to have, but we doubt it will be a factor in the buying decision making process.

While there is promise for the future, the launch is a bit flat. Legere has a reputation for creating innovative ideas and challenging the status quo, but this looks to be an assault on a segment which has already been disrupted. There are promises to launch a streaming service, and that might have been something more in-line with what the industry expected, but this service is attacking an industry where the revenues are already declining.

That said, you can’t ignore that this is an opportunity for Legere to make more money for T-Mobile US. The cable segment is declining, but it isn’t dead. The service is not necessarily anything new, but T-Mobile US does have an existing customer base to leverage. This might dictate the quality of content on the platform, possibly the decided factor for success or failure, and we already know Legere is a cunning businessman. Content owners will be intrigued by what he can offer.

Whether it was unreasonable to expect more remains to be seen, though this service doesn’t necessarily look any distinguishable from others on the market.

T-Mobile merger will help us defeat China – Sprint CTO

The propaganda assault to validate the T-Mobile US and Sprint merger shows no signs of slowing, and now Sprint is suggesting it will help the US defeat those pesky communists.

Fear is tried and tested strategy to accomplish one’s ambitions, and Sprint is stirring the xenophobic pot. Just as President Trump used fear to justify his wall, and UKIP roused curtain twitchers to abandon the European Union, Sprint CTO John Saw is leaning on the Chinese threat as a means to legitimise the proposed merger between his firm and T-Mobile US.

“We are proud that the 5G potential of our proposed merger with T-Mobile has already spurred progress in the US, but China remains the clear leader in the race to 5G with a number of critical advantages,” said Saw in a blog post. “Multiple independent reports show that without aggressive action, the US will not overcome China’s progress.”

Saw is not implying any threat directly, but the world has already been done for him. Such is the intensity of the anti-China sentiment over the last couple of months, the mere mention of the country will get patriotic and paranoid US citizens and politicians fidgety. China is the enemy, or so the rhetoric tells us, they can’t win the 5G race, that would be un-American.

Whether a merger between T-Mobile US and Sprint would bridge the chasm which has developed between the two nations is slightly contentious, though Saw does have some valid points when it comes to the readiness of the US in comparison to China.

From a spectrum perspective, Saw claims no US telco has sufficient access to all three layers of spectrum (low, medium and high) for a genuine nationwide mobile 5G network, though Chinese telcos do. Some suggest China effectively gives spectrum away for free, as theoretically this encourages network rollout as there are more funds available. Sceptics will undermine this theory, though as Saw points out, China’s operators have large amounts of unencumbered 2.6 GHz, 3.5 GHz and 4.5 GHz spectrum for 5G.

Of course, should the merger be approved, the new T-Mobile company would be able to ride to the rescue, combining the spectrum holdings of the two organizations into a portfolio which can deliver nationwide 5G.

In terms of network densification, this is another area where the US is behind the Chinese, and a critical issue if 5G is to deliver the promised results. China currently has approximately 1.9 million sites, compared to 200,000 across the US, having built 350,000 over the last three years whereas the US has constructed 30,000 new sites.

Some might point to the difference in population the two countries, 327.2 million citizens in the US vs. 1.386 billion in China, though network density is certainly better in the far East. As it stands, the US has 4.7 cell sites per 10,000 people, while this number is 14.1 over in China. A merged T-Mobile business would have access to 3.3 sites per 10,000 POPs, compared to an average of 4.7 for Chinese telcos. This does not create parity, but according to Saw it is a better position.

Saw points towards regulatory difficulties in the US in slowing down progress being made. Merging two of the telcos would reduce the bottleneck, therefore allowing greater freedoms to the telco to roll out 5G infrastructure.

This also leads onto the investment case. A merged T-Mobile and Sprint business will be able to more efficiently invest a promised $40 billion to scale the network. China has been leaps and bounds ahead of the US when it comes to capital investment for years, this is no surprise.

While some of the statistics being put forward by Saw are interesting, there is nothing new being presented and we are sceptical a merged T-Mobile and Sprint business would counteract these points in any notably manner. It does seem to fit in quite well to the lobby mission to get the merger approved, though we hope people don’t get too distracted by the PR plug here.

Bringing China into the equation is an excellent move from Sprint. All the hard work of making China the bad guy has been done, and Sprint is exploiting this position perfectly. The telco is not over-egging the pudding, but enough of the arch-enemy has been mentioned to get people thinking.

T-Mobile US ditches streaming for aggregator TV play

After T-Mobile acquired Layer123 back in 2017, the US has been holding its breath for another Uncarrier move to disrupt the content world, but its not going to be as glitzy as some would have hoped.

Speaking on the latest earnings call, the management team indicated there will be a foray into the content world, but it appears to be leaning more onto the idea of aggregation than creation and ownership.

“It’s subscription palooza out there,” said COO Mike Sievert. “Every single media brand is, either has or is developing an OTT solution and most of these companies don’t have a way to bring these products to market. They’re learning about that. They don’t have distributed networks like us. They don’t have access to the phones like we have.

“And we think we can play a role for our customers as I’ve been saying in the past at bringing these worlds of media and the rest of your digital and social and mobile life together. Helping you choose the subscriptions that makes sense, building for those things, search and discovery of content. We think there’s a big role for our brand to play in helping you.”

The T-Mobile US management team might be antagonistic, aggressive and disruptive, but ultimately you have to remember they are very talented and resourceful businessmen. A content aggregation play leans on the strengths of a telco, allowing the business to add value to a booming industry instead of disrupting themselves culturally trying to steal business.

Content streaming platforms have been an immense successful not only because of our desire to consume content in a completely different way, but also due to the companies who are leading the disruption. The likes of Netflix, Hulu and Amazon are agile, creative and risk-welcoming organizations. Such a disruption worked because the culture of these businesses enabled it. Telcos are not part of the same breed.

However, this is not a bad thing. The basic telco business model is connecting one party to another and this can be of benefit to the content segment. Telcos own an incredibly valuable relationship with the consumer as most people have an exclusive relationship with a communications provider (not considering the broadband/mobile split) and a single device for personal use. The telcos own the channel to the consumer.

Sitting on top of the content world, providing a single window and, potentially, innovative billing services and products could be immensely valuable to the OTTs, as well as securing diversification for the spreadsheets internally. The content aggregation model is one which is functional and operational, perfectly suited to the methodical and risk-adverse telcos.

Specifics of this Uncarrier move are still yet to emerge, but the T-Mobile US management team are promising to do something with the Layer123 acquisition sooner rather than later. It might not just look like what most had imagined initially.

Legere and T-Mobile running riot again

He might be wild-eyed, egotistical and unconventional, but you can’t argue with the results T-Mobile US CEO John Legere is delivering shareholders.

Reporting 2018 full year financials, T-Mobile US has continued the rip-roaring success of the last few years. Total revenues for 2018 finished at $43.3 billion, up 7% year-on-year, alongside 7 million net customer additions, 4.5 million of which were in the lucrative branded postpaid segment.

“This never gets old,” Legere proclaimed. “T-Mobile finished another year with record breaking financials and our best-ever customer growth. Record revenues, strong net income, record Adjusted EBITDA, our lowest-ever Q4 postpaid phone churn that was better than AT&T for the very first time.

“T-Mobile is competing hard and winning customers – and we continue to deliver results beyond expectations. Our 2019 guidance shows that we expect our incredible standalone momentum to continue.”

All this, and the telco still hasn’t launched the much-anticipated TV offering.

When Legere first walked into the room as CEO in September 2012 investor jaws must have hit the floor. This is not a man who looks like a business leader in one of the most risk-adverse and stuffy industries on the planet, and when the first Uncarrier move was announced in 2013, a few must have been close to passing out.

Going against everything which everyone knew in the industry, March 2013 saw the introduction of the first Uncarrier offer. A new streamlined plan for customers which dropped contracts, subsidized phones, coverage fees for data, and early termination fees. This was certainly a break from the status quo and since this point numerous new Uncarrier moves have been introduced almost doubling revenues (2012 full year was $22.5 billion). It might not be traditional, but this is a success story like few others.

At the end of the three-month period, T-Mobile had a total of 79.6 million customers and a postpaid churn rate of 0.99%. This is still a company which should be considered a challenger, but T-Mobile US is making steady progress. It is not accelerating towards the leadership duo of Verizon and AT&T, but it certainly is not slowing up either. The big question is whether this momentum can be maintained.

With 5G on the horizon, the team certainly have the raw materials to create another few Uncarrier plays. Deployment of 600 MHz is setting the scene for a launch, with the team promising the network will be ready for the introduction of the first standards-based 5G smartphones in 2019. By the end of 2018, T-Mobile US claims to have cleared spectrum for approximately 135 million POPs and with the ambition to clear spectrum covering 272 million POPs by the end of 2019.

All this and the team still hasn’t done anything with the Layer123 purchase of December 2017. Alas, a TV Uncarrier move is just something we’ll have to look forward to over the next couple of months.

US charges Huawei with a litany of crimes

The US Department of Justice has hit Chinese telecoms vendor Huawei with a 23-count indictment, covering allegations ranging from bank fraud to theft of trade secrets.

This dramatic move is the culmination of a process that was publicly initiated when Huawei’s CFO Meng Wanzhou was arrested in Canada at the behest of the US in early December 2018. It was soon revealed that the reason for the arrest was suspected fraud related to attempts to conceal business being done with Iranian companies in violation of US trade sanctions.

The Iran stuff constitutes the majority of the charges filed in New York against Huawei, Meng and its alleged unofficial Iranian affiliate company Skycom. Specifically they are charged with bank fraud and conspiracy to commit bank fraud, wire fraud and conspiracy to commit wire fraud.

In addition Huawei and Skycom are accused of violations of the International Emergency Economic Powers Act (IEEPA) and conspiracy to violate IEEPA, and conspiracy to commit money laundering. On top of that Huawei and Huawei USA are charged with conspiracy to obstruct justice related to the grand jury investigation in the Eastern District of New York.

It seems a bit redundant to come up with a separate charge of conspiracy to do the crime you’re also accusing someone of doing, but there you go. Maybe conspiracy is the consolation prize if you fail to make the main charge stick.

Bank fraud is fairly self-explanatory; it concerns attempts to commit fraud to a bank. Wire fraud seems to be an archaic way of describing fraud committed by electronic means. The IEEPA is the process through which the US was able to impose the trade sanctions on Iran. Money laundering concerns financial transaction with proceeds that were generated from certain criminal activities, among which some or all of the above presumably are.

But that’s not all. In a separate rap sheet the DoJ announced ten additional charges filed against Huawei Device Co and Huawei Device Co USA. They consist of theft of trade secrets conspiracy, attempted theft of trade secrets, seven counts of wire fraud, and one count of obstruction of justice.

According to the accusation Huawei started trying to steal information about a T-Mobile US phone-testing robot called ‘Tappy’ in 2012. This allegedly included violation of NDAs,. Taking illicit photos of it and even nicking bits of it so they could do a bit of good old fashioned reverse engineering back in China. Apparently TMUS caught them in the act and Huawei claimed it was down to ‘rogue actors’ rather than a corporate thing. The US reckons it has evidence to the contrary.

“As charged in the indictment, Huawei and its Chief Financial Officer broke U.S. law and have engaged in a fraudulent financial scheme that is detrimental to the security of the United States,” said Secretary Kirstjen Nielsen of the U.S. Department of Homeland Security. “They willfully conducted millions of dollars in transactions that were in direct violation of the Iranian Transactions and Sanctions Regulations, and such behaviour will not be tolerated.”

“The charges unsealed today clearly allege that Huawei intentionally conspired to steal the intellectual property of an American company in an attempt to undermine the free and fair global marketplace,” said FBI Director Christopher Wray. “To the detriment of American ingenuity, Huawei continually disregarded the laws of the United States in the hopes of gaining an unfair economic advantage.”

A bunch more officials got to make statements on how out of order Huawei has been, which you can see in the video below. Huawei, unsurprisingly, doesn’t see things in quite the same way. It gave Telecoms.com the following statement.

“We are disappointed to learn of the charges brought against the company today. After Ms. Meng’s arrest, the company sought an opportunity to discuss the Eastern District of New York investigation with the Justice Department, but the request was rejected without explanation.

“The allegations in the Western District of Washington trade secret indictment were already the subject of a civil suit that was settled by the parties after a Seattle jury found neither damages nor wilful and malicious conduct on the trade secret claim.

“The company denies that it or its subsidiary or affiliate have committed any of the asserted violations of U.S. law set forth in each of the indictments, is not aware of any wrongdoing by Ms. Meng, and believes the U.S. courts will ultimately reach the same conclusion.”

That remains to be seen, but at least the process is likely to be public and transparent. The Chinese state reckons this is just an extension of US President Trump’s trade war with China. Uncharacteristically the Donald has yet to tweet on the matter but even if he does it will presumably be to echo the DoJ position. He is apparently meeting Chinese trade officials tomorrow, so that should be an interesting chat.

The US isn’t playing around here. By charging Huawei with most known crimes short of cattle rustling it’s demonstrating an unflinching determination to defend itself regardless of (or perhaps encouraged by) the political implications. It’s not yet clear what the consequences of guilty verdicts would be but the US is seeking Meng’s extradition and she would presumably do some time.

ZTE nearly got driven out of business by the US for violating its Iranian trade sanctions. It follows therefore that the US would apply a similar level of punishment to Huawei if it found it guilty of committing the same acts. Huawei is a much bigger company and is working hard to minimize its reliance on US suppliers, but it would surely at least be severely diminished by such an outcome.

 

T-Mobile US won’t be rushed on TV proposition

The T-Mobile US TV launch has been anticipated for some time now, but we’ll have to wait until at least mid-2019 for this dream to become a reality.

After closing the Layer3 acquisition at the beginning of this year, it was assumed T-Mobile US would sharply enter the TV market with another ‘Uncarrier’ move. These disruptive plays have formed the foundation of T-Mobile US’ rise through the ranks in recent years, luring customers away from the still dominant duo of AT&T and Verizon.

But for those who were eagerly anticipating the launch of a TV service, don’t hold your breath. The launch has been kicked back, with no concrete commitments made. Why? Because CEO John Legere has high standards.

According to Bloomberg, people working on the project have suggested the wild-eyed CEO has set the bar so high, the team are struggling to meet expectations. This is not necessarily a bad thing and demonstrates Legere has the patience to produce a good product instead of being rushed to market due to the pressure of other players.

The first moments of life for this product could be the beginning and the end. Such is the competition in the ‘cord-cutter’ space, bringing a poor product to market could result in the venture failing before it has even started. If T-Mobile US wants to make a splash in this pond, he’ll have to meet consumer expectations, most of whom are dissatisfied at the moment.

While cable has had a place in the hearts of consumers for years, this trend is ending with the cord-cutting generation of today. Digital alternatives are wanted by the consumer, though with expensive and sub-standard options on the market as it stands, there is the opportunity for disruption. This is a perfect storm for Legere and the magenta army, but only if the proposition is right.

It’ll have to be cheap enough to attract interest, expensive enough to allow for future content investment, stylish enough to meet the visual and experience demands of the digital natives and have the content depth to attract a broad range of customers. This is a complicated equation to get right, but the rewards are potentially massive. We’re pleasantly surprised the team is taking its time and getting the proposition right.

Another factor to consider is the increased competitive threat from Disney. Disney has already shown its intention to go toe-to-toe with Netflix on the content battlefield, though should this entertainment heavyweight get its own OTT service right upon launch next year, the content gains for everyone else will get considerably smaller.

With a host of services already on the market, and more to come in 2019, T-Mobile US will have to make this Uncarrier move perfect if it wants to cash in on the content bonanza. Consumers are fickle and un-loyal enough to mean late-comers to the market can make a splash, so don’t expect Legere to be rushed with this challenge to the status quo.