Verizon Super Bowl ad called out for hypocrisy

The purpose of Verizon’s ad at this year’s Super Bowl is not entirely clear, but the stick it has taken is very obvious, especially following the California wildfires blunder.

The advert, which you can see at the foot of the article, seems to be an attempt to emotionally blackmail the audience by highlighting everything 5G won’t be able to do in place of humans, but it has not been particularly well received. The message seems to be little more than a cheap attempt to secure favour, and it does appear the audience has seen through it.

At the time of writing, the one-minute video has been viewed over 57,000 times on YouTube, not a particularly high-number for a Super Bowl ad, being ‘liked’ 287 time and ‘disliked’ 563 times.

Comments have been switched off on the video, though judging by the reaction of the Twitter universe, this was an intelligent decision. Several posters paid homage to Verizon’s decision to throttle firefighter’s data during the 2018 California wildfires, which saw 8,527 fires burn an area of 1,893,913 acres, the most damaging fire season on record.

Again, aside from tapping into a sense of patriotism, a common play for US advertisers, the objective of undermining the role of 5G is not entirely clear. More than anything else, it looks to be a superficial approach to make use of the Super Bowl pandemonium and tug on the heart strings of the US general public.

Ever the opportunist, T-Mobile US CEO John Legere and the Magenta army took the opportunity of one of the worlds most popular sporting events to throw a few digs at Verizon:

The rise of T-Mobile US and the deployment of its 600 MHz 5G spectrum across the US has seen a conflict emerge. Without access to the valuable C-Band spectrum, 3.5 GHz, like the rest of the world, high- and low-band spectrum are forming the foundations of the US telco’s 5G plans.

AT&T, Verizon and Sprint have been aggressively pushing forward with mmWave assets, while T-Mobile US has put the 600 MHz spectrum at the centre of campaigns. Neither will deliver an effective 5G experience which ticks all the promised boxes, mmWave will fail on coverage and propagation while 600 MHz will fall short on speed, but T-Mobile US is making the most of the difficulty by producing very attractive coverage maps if you don’t know what 5G actually is.

It is difficult to pick a winner in the US 5G race right now, but the T-Mobile US team are certainly better at gaining attention and PR inches. Perhaps this explains the misguided attempt at patriotic advertising from Verizon, an alternative approach to gain public credibility which looks to be nothing more than a swing-and-a-miss right now.

RootMetrics US numbers indicate TMUS/Sprint merger is a good idea

The performance metrics of the four US MNOs confirm a significant gap between the big two and the other two.

RootMetrics did a deep dive into the networks of Verizon, AT&T, T-Mobile and Sprint over the second half of last year. In the customary way it then published top-line performance numbers and ranked the networks according to a few sub-criteria. As you can see in the first table below, Verizon comes top in nearly all categories, with AT&T close behind and the other two lagging considerably. We’re not sure why AT&T isn’t number one in any of the speed categories but it’s presumably explained somewhere in the methodology.

The report also takes a specific look at 5G and finds some pretty major variations in performance. Verizon got so excited about the finding that ‘Verizon’s 4G LTE speeds were faster than the low-band 5G median download speeds of T-Mobile in Chicago and Los Angeles and identical to AT&T’s low-band 5G median download speed in LA,’ that it published a special press release. This doesn’t come as a massive surprise since TMUS is devoting so little spectrum to its 5G right now.

The more significant issue raised by this report is how far behind TMUS and Sprint remain on most key metrics. This would seem to support the case for their merger, since the resulting economies of scale, buying power, etc, would allow greater investment in the network. Whether or not that would actually come to pass, or whether shareholders would trouser the cash instead, is hard to predict. But it seems counter-productive to insist they continue to struggle as second-tier MNOs.

T-Mobile/Sprint merger may increase ARPU – what’s wrong with that?

On the first day of the TMUS/Sprinter merger antitrust trial it was revealed that a Sprint exec thinks the merged company will be able to raise prices.

Reuters reports that the prosecution presented WhatsApp messages from Roger Sole, Sprint’s CMO, to his former CEO Marcelo Claure, sent in 2017, that speculated Sprint’s ARPU (average revenue per user) could increase by five bucks after the merger. Sole is insisting this was just conjecture about some distant possible outcome, but it’s nonetheless being used as evidence against the merger.

The fundamental assumption underlying this is that consumers are always best served by lower prices, but is this necessarily the case? Sole also testified that even lowering prices had proven ineffective at luring and retaining new subscribers because as soon as they experienced how rubbish the Sprint network is, they left before you could say ‘churn’.

Sole is effectively highlighting the Catch-22 position MNOs always claim to be in when restricted by operators. If their ARPU is too low then they won’t have the cash to invest in the network, and then everyone loses out. Regulators will typically say ‘that’s your problem mate, we’re just worried about prices’, which is also a valid position, and one used to push back whenever consolidation threatens to take the number of MNOs in a given market below four.

There is little hard evidence, however, that three MNOs constitute insufficient competition and that a reduction from four to three necessarily increases prices. Moreover, the merger of the third and fourth players would presumably improve the network for customers of both, which could be viewed as justification for raising prices by itself.

As we’ve seen with the disappointing early showing from TMUS’s 5G network, MNOs will have to spend a lot of money to deliver on all the promises mad on behalf of 5G. That cash has to come from somewhere and it seems only fair that subscribers contribute. It is, of course, possible that any increase in ARPU just gets trousered by senior telco execs and investors, but that’s not reason enough to automatically oppose any attempt to do so.

AT&T is the latest to make a curious ‘nationwide’ 5G promise

Like T-Mobile US, AT&T has somehow figured out a way to deliver 5G at nationwide scale over the next six months.

For those who sit in the rural locations where 4G signal is still somewhat of a gamble, the claim from AT&T must come as a surprise. But it seems AT&T has taken the bait and is following T-Mobile US down the 5G rabbit hole with an absurd claim it will deliver nationwide 5G in the first half of 2020.

“When we introduced the U.S. to 5G last year, we started with a business-first and experience-based strategy to lay the foundation for innovation to come,” said Thaddeus Arroyo, CEO of AT&T Consumer. “We’re now introducing consumers to the future of wireless with broad 5G service included in our best unlimited plans for 5G devices like the Samsung Galaxy Note10+ 5G.”

The Samsung device is the first in the AT&T portfolio which will make use of low-band spectrum, explaining how the glorious ‘nationwide’ claim can be realised. The expansion of the 5G network using the enhanced coverage airwaves will focus on the larger metropolitan areas over the next couple of months.

What remains to be seen is whether this can be justified as delivering on the 5G promise. Both AT&T and T-Mobile US will make use of low-band spectrum in an attempt to meet the nationwide claim, though these airwaves will not be able to deliver the eye-watering speeds many are expecting in the 5G era. Both could be setting themselves up for considerable criticism with brash promises.

Interestingly enough, despite 5G not being a reality just yet AT&T has decided to launch a ‘5G+’ service. It might sound like an interesting proposition, but once again AT&T is stretching the truth in pursuit of an advertising tagline. 5G+ is 5G making use of mmWave spectrum. It will be faster, but it is still 5G.

Once again, the US telcos are making some ‘creative’ claims to compensate for a tricky situation. The European telcos are surging forward with 5G deployments in the mid-band spectrum, a much more attractive compromise between speed and coverage, while the US telcos struggle to make 5G work appropriately in the mmWave airwaves.

US telcos need to access the valuable mid-band spectrum frequencies, but these have been allocated elsewhere over bygone years. The FCC perhaps needs to take a more proactive stance, as 5G delivered over the low-band frequencies will not create the connectivity euphoria which has been promised.

Another petition appears to delay T-Mobile/Sprint merger

Nine organizations have come together to petition the FCC to delay any permissions to approve the T-Mobile US and Sprint merger until a fraud investigation has been completed.

The petition is focused on a Sprint probe, relating to alleged Lifeline fraud. The under-fire telco has been accused of collecting subsidies from the FCC even though many of the subscribers through the initiative were inactive and not using the service.

“Specifically, the public interest, rural wireless, and labor organizations ask the Commission to pause its review of the merger while important issues related to Sprint’s apparent Lifeline fraud are more fully investigated by the Commission, and also urge the Commission to seek public comment on the DISH waiver requests, the July 26 Dish commitments to the Commission, and related developments, including the DOJ Consent Decree,” the petition states.

The petition has been filed by the Rural Wireless Association, the Communications Workers of America union, Consumer Reports, The Greenlining Institute, the Institute for Local Self-Reliance, New America’s Open-technology Institute, The Rural Broadband Association, the Open Markets Institute and Public Knowledge.

Should the FCC agree with the petitioners, the completion of the merger would be paused until the end of the investigation.

Although T-Mobile US and Sprint have been making progress towards completing the merger, there are still numerous hurdles which will have to be negotiated. The FCC and Department of Justice have green-lit the deal, with concessions to be fulfilled, though that does not mean the law suits will disappear.

Aside from this petition, 16 State-level Attorney Generals have banded together to file a lawsuit against the merger. Led by the ambitious New York Attorney General Letitia James, the lawsuit questions the validity of the merger on the ground of competition. James has argued that with the presence of four MNOs, tariffs are becoming less expensive and coverage is improving; connectivity is getting better for the consumer with the status quo, so why should this be changed?

The nine organizations filing this petition to the FCC are demanding the merger be delaying which the fraud investigation into Sprint is on-going.

The Lifeline Program is designed to offer subsidies to telcos to enable free tariffs for low-income consumers across the country. Participants receive $9.25 a month on average, though Sprint is accused of collecting the pay-out for 885,000 inactive Lifeline customers. This number represents 30% of the Lifeline subscribers Sprint supports.

“It’s outrageous that a company would claim millions of taxpayer dollars for doing nothing,” FCC Chairman Ajit Pai said at the time. “This shows a careless disregard for program rules and American taxpayers. I have asked our Enforcement Bureau to investigate this matter to determine the full extent of the problem and to propose an appropriate remedy.”

Under the rules of the programme, providers of the service may only be reimbursed for a Lifeline subscriber if that subscriber has used the service at least once in the past 30 days. The onus is placed on the telcos to de-enroll inactive subscribers, though it does appear something went very wrong at Sprint.

Considering the investigation is being powered by the FCC, the petitioners might find some joy with this latest effort to de-rail the merger. It might be nothing more than a pause on developments, but it does afford more opportunity for other opponents to gather momentum.

Pai gobbles up Sprint and T-Mobile US merger

After months of headaches and sleepless nights, the tides of favour seem to be turning for Sprint and T-Mobile US as the FCC chief gives his blessing for the union.

254 days into the 180 days the FCC gives itself to approve mergers, FCC Chairman Ajit Pai has officially confirmed his position. It is still not quite 100% guaranteed for the two telcos, however with Pai’s recommendation, the future is looking very rosier.

“After one of the most exhaustive merger reviews in Commission history, the evidence conclusively demonstrates that this transaction will bring fast 5G wireless service to many more Americans and help close the digital divide in rural areas,” Pai said in a statement.

“Moreover, with the conditions included in this draft Order, the merger will promote robust competition in mobile broadband, put critical mid-band spectrum to use, and bring new competition to the fixed broadband market.”

Suggesting this was a protracted and painful process might be one of the biggest understatements of the year. However, it might have been necessary considering the significant impact a merger of this scale could potential have on competition, diversification and network deployment across the US.

Above all else, the US is a monstrous market with an incredibly small number of nationwide telcos. This does of course offer economy of scale to improve investment capabilities, though there is a risk of regional monopolies due to the sheer size and geographical variance across the country. Proposed mergers which would take the number of national telcos from four to three has been extinguished in the past, though this one has passed almost every test.

The greenlight from the FCC Chairman is an important step, adding momentum to positive news from the Department of Justice in the last few weeks. At the end of July, the DoJ’s antitrust division gave the thumbs up, assuming Sprint’s prepaid brand Boost is divested, and Pai has made the same demands.

This is one concession which many expected, but we have major issue with. Dish will acquire the Boost brand, allowing it to make use of its horde of valuable spectrum, satisfying the demands, though will this be enough to maintain the current levels of competition, the objective of both the FCC and DoJ? We do not believe so.

Firstly, instead of having four established telcos in the US, consumers will now have to choose from three telcos and a newbie with zero experience of effectively running a mobile business and network. Dish does not have the competence, experience, infrastructure, processes, billing systems or supply chain to run a mobile business, and it will take years to build these elements to the degree expected.

Secondly, Dish is now an MVNO. It will be able to make use of the T-Mobile network, but the FCC and DoJ has replaced a functional MNO with an MVNO and expects no-one to notice the difference. Both of these agencies expect Dish to have its own network up-and-running in a few years, but this is another ridiculous ambition.

As mentioned in the first point, this is a company which is not practiced in the dark arts of mobile. The three remaining traditional players took decades to rollout their own networks, and they are still not genuine nationwide telcos (there are still network gaps across the country). How is Dish expected to create a nationwide, 4G and 5G, network across a country of 9.8 million km2, with an incredibly variety of different urban densities, geographical landscapes and economic societies.

If anyone thinks Dish is going to be a replacement which can maintain the current status quo, they are quite frankly fooling themselves.

What is worth noting is that this is not the end of the road for Sprint and T-Mobile. It might have secured the relevant regulatory approval, but now it will have to combat the various legal challenges.

Led by New York Attorney General Letitia James, a coalition of State Attorney Generals have filed a lawsuit to block the proposed merger. The lawyers are arguing the merger would harm competition, and it should be blocked to maintain the status quo. As it stands, with four separate MNOs challenging each other, prices and mobile experience is improving for the consumer; the lawyers are arguing that the situation is not broken, it is in fact improving, so why should the FCC and DoJ try to fix an imaginary problem?

Although the approval process from the DoJ and FCC might have been considered a significant problem, the telcos will not have to face legal heavyweights from more than a dozen States. Lawyers have a way of being very difficult when they want to be, so there might well be a few more twists and turns in this saga.

Europe not happy about Czech network sharing arrangements

The Czech Republic’s two dominant mobile operators are sharing one network and the European Commission thinks this is taking things too far.

When the EC thinks something might be dodgy, but hasn’t totally decided yet, it likes to kick things off by sending a statement of objections to all concerned. This puts them on notice that it’s looking into the situation and initiates an investigation. Hence the network sharing arrangement between the Czech versions of O2 and T-Mobile is now under the EC microscope.

“Operators sharing networks generally benefits consumers in terms of faster roll out, cost savings and coverage in rural areas,” said Commissioner Margrethe Vestager. “However, when there are signs that co-operative agreements may be harmful to consumers, it is our role to investigate these and ensure that markets indeed remain competitive. In the present case, we have concerns that the network sharing agreement between the two major operators in Czechia reduces competition in the more densely populated areas of the country.”

This is an intriguing conundrum; how can something good suddenly become bad when it’s done too much? To be fair, between them T-Mobile and O2 account for almost three quarters of Czech subscribers. If the only other MNO of note – Vodafone – is frozen out of this arrangement that would appear to put it at a massive disadvantage. The EC is also concerned that their collective dominance means they have a disincentive to provide a decent service.

T-Mobile/Sprint merger approval is still hanging in the balance

The US DoJ’s anti-trust chief has not made up his mind on the T-Mobile/Sprint merger case, saying the deal must meet key criteria.

Speaking on CNBC (see below) Makan Delrahim, Assistant Attorney General for the US Departments of Justice’s Antitrust Division, said he has not made up his mind yet. Although he refused to comment on if his staff resisted the deal, as was reported by the media, Delrahim did allude to more data being requested from the two parties.

Delrahim also dismissed the notion that there is any magical number of competitors to deliver optimal competition in a regulated market like telecom. Any proposed deal needs to deliver efficiency, but the efficiency needs to be both merger specific, that is the efficiency cannot be achieved through other means, and verifiable.

With regard to the effects of the merger on consumers, Delrahim listed two items, price effect and coordinated effect. The first is related to the potential price move up or down after the merger. The second refers to if the merged company has the incentive to continue to compete with the existing competitors on price, in this case AT&T and Verizon. 5G will also factor in the DoJ’s decision making consideration, Delrahim said. But, instead of being positioned as a counteract against China, in this interview Delrahim was treating 5G in the framework of service offer to consumers, and the merger’s impact on it.

When being asked on the timeline, Delrahim said there is no deadline on the DoJ side, except that the deal cannot be completed before a certain date. This timeline can be extended if more deliberation is needed.

On the FCC front, another hurdle that the two carriers need to overcome before they can become one, they continued to play the offensive. Last week representatives from the two companies, including John Legere, the CEO of T-Mobile, and Marcelo Claure, Executive Chairman of Sprint, called on the FCC commissioner Jessica Rosenworcel and her Legal Advisor. The team presented the updated merger case, including their pledge to deploy home broadband, drive down prices, deliver more benefits to prepaid customers, and create, instead of cutting, jobs.

FCC’s unofficial 180-day consultation period was reopened early this month, after being halted three times, and is now on day 147.

Makan Delrahim’s CNBC interview is here:

 

 

AT&T will stick with 5GE after settling with Sprint

US operator Sprint has settled the case it brought against AT&T for unfair competition with the 5GE marketing gimmick with apparently little to show for it.

The legal trade publication Law360 reported that Sprint and AT&T have reached a settlement of the case Sprint brought to a federal court in New York in February. A short statement was mailed to the media, “The parties have amicably resolved this matter,” it said. A source told Law360 that AT&T will continue to use “5G Evolution” or 5GE in its marketing and ads materials. No details on the terms of settlement have been disclosed.

In the court case, Sprint complained that AT&T was conducting false advertising, therefore misleading consumers, and in turn, directly harming Sprint’s business interest. In addition to the law suit, Sprint also took out a full-page ad in the New York Times in March to warn consumers “Don’t be fooled. 5G Evolution isn’t new or true 5G. It is fake 5G.”

The other big US operators were not holding back from attacking AT&T’s antics either. Verizon’s CTO wrote an open letter calling on the industry “to commit to labeling something 5G only if new device hardware is connecting to the network using new radio technology to deliver new capabilities,” as well as promised that Verizon “won’t take an old phone and just change the software to turn the 4 in the status bar into a 5.” T-Mobile, on the other hand, in keeping with its CEO’s maverick spirit, uploaded a video showing someone taping over the LTE indicator on the phone with a sticker labelled “9G”.

Even the OEMs would not let go the chance to mock AT&T’s shenanigans. Xiaomi, when launching its 5G smartphone before MWC in Barcelona, pointedly highlighted the 5G network by Orange it used for the demo was real 5G, “not fake 5G”.

A few days before the announcement of settlement AT&T defended itself at the court that consumers were not fooled into believing the 5GE is actually 5G. On the other hand, for the purists like the EU-backed 5G Infrastructure Association or Qualcomm, none of the 5G networks launched so far in Korea and the US can be called “real 5G”.

T-Mobile Sprint merger cast into doubt once more

The US Department of Justice might not let the merger go through in its current form, according to reports.

The WSJ has the scoop, citing those handy people familiar with the matter once more, who also seem to have been chatting to Reuters. According to the latter, which isn’t paywalled, the DoJ has concerns about the deal as it’s currently structured. The news caused shares in both companies to fall and their respective CEOs to tweet coded dissent.

Both John Legere and Marcelo Claure said the article is, respectively, untrue and not accurate. While on the surface these might appear to be absolute rebuttals, it’s actually a bit more nuanced than that. Legere says the premise of the article is untrue without detailing what he thinks that premise is, while any small part of the piece could be inaccurate without the overall claim being so.

Here’s the opening paragraph of the WSJ story: “Justice Department antitrust enforcement staff have told T-Mobile US Inc. and Sprint Corp. that their planned merger is unlikely to be approved as currently structured, according to people familiar with the matter, casting doubt on the fate of the $26 billion deal.”

There’s not much else to say at this stage but the process certainly seems to be dragging on. Presumably there has been some discussions between the two companies and someone on the DoJ side decided to up the pressure on TMUS and Sprint to compromise via this mini-leak. Let’s see.