Verizon, T-Mobile, and US Cellular lied on 4G coverage but will get away with it

Buried in the depths of a FCC press release, the authority has said Verizon, T-Mobile, and US Cellular exaggerated on 4G coverage maps but no punishments are being considered.

As part of the Mobility Fund Phase II, telcos were given federal support for rolling out 4G services to rural and underserved areas. This cash was supposed to bridge the digital divide, and as part of the agreement, the telcos were obliged to provide accurate coverage maps to ensure the cash was being spent in the right manner.

Following an investigation into the initiative, it was found Verizon, T-Mobile, and US Cellular misled the FCC on their 4G footprint. Data was presented to the Commission exaggerating the extent of 4G coverage, in other words, these three telcos were not spending federal money as promised. These telcos were effectively lying to the Commission and the general public.

Interestingly enough, the FCC does not currently have any plans to punish the trio, instead has created a new initiative to apply for federal funds. All three will be invited to apply for the Government hand-out. This is perhaps the latest example of a toothless watchdog, with the bureaucrats in charge in procession of the same spine as a lifeless slug.

The new fund will make $9 billion available to ensure 5G connectivity reaches the areas in the US which the telcos elect to ignore.

“We want to make sure that rural Americans enjoy these benefits, just as residents of large urban areas will,” said FCC Chairman Ajit Pai. “In order to do that, the Universal Service Fund must be forward-looking and support the networks of tomorrow.

“Moreover, America’s farms and ranches have unique wireless connectivity needs, as I’ve seen across the country. That’s why I will move forward as quickly as possible to establish a 5G Fund that would bring next-generation 5G services to rural areas and would reserve some of that funding for 5G networks that promote precision agriculture.”

The announcement of the 5G Fund for Rural America is the very press release the FCC decided to attempt to bury the findings of the report. Considering how much work has been done to disguise the Mobility Fund Phase II investigation, few should be surprised Verizon, T-Mobile and US Cellular will get away with ignoring rules and spending tax payer’s money in an irresponsible manner.

This is a saga which has been on-going for some time, after smaller, rural telcos complained the nationwide players were exaggerating coverage maps. These coverage maps helped the FCC determine who should get a slice of the $4.5 billion reserved for the Mobility Fund Phase II. What is being done to make sure the same abuses do not reoccur is unknown. It does appear nothing right now.

Telcos have shown on numerous occasions they cannot be trusted to act responsibly on their own, but when a watchdog ignores such flagrant disregard for the rules it simply encourages the telcos to push the definitions of right and wrong even further.

The FCC has failed the general public here, the very people it is supposed to serve.

Looking at the 5G Fund for Rural America, the objective is simple. Telcos prioritise deployment in areas which are commercially more attractive, the larger cities and major transport hubs. This is forgivable, these are commercial companies after all not charities, but the federal funds are designed to offset some of the extraordinary expense for network deployment. It is a reasonable way to spend federal dollars when managed correctly.

$9 billion will be set aside for the rural communities, which includes $1 billion which will have to be spent on delivering connectivity solutions for the agricultural industry. With an election on the horizon, this is a very intelligent move. In 2016, President Trump arguably won because he was able to mobilise communities and individuals who were feeling marginalised; in the digital world, farmers fit this description perfectly.

The question which remains is whether the same telcos can be trusted to appropriately spend their allocation of the $9 billion moving forward. Seeing as the FCC is currently proving itself as toothless, there doesn’t seem to be any deterrent to behave, which is an interesting position to be in.

No clear winners in the latest US spectrum auction

Millimetre Wave spectrum has been a polarised topic in the US, and now the results are in from the latest auctions, some interesting tales have emerged.

Two spectrum auctions have taken place so far this year in the US, with both results being announced at the same time. $2.7 billion might be a lot to add into the FCC coffers, but it is considerably short of the monstrous amount of cash which was spent ahead of the 3G and 4G connectivity euphoria. Considering the amount of attention which has been given to mmWave, some might have expected this auction to attract more attention.

Strictly speaking, mmWave spectrum should be considered way above what we are talking about here, though the industry seems to have adopted anything above 26 GHz. Here, the two auctions are dealing with assets in the 24 GHz and 28 GHz spectrum bands.

Telco 24 GHz licences Total spend 28 GHz licences Total spend
AT&T 831 $982,468,996 N/A N/A
T-Mobile 1,346 $803,212,025 865 $39,288,450
Starry 104 $48,462,700 N/A N/A
US Cellular 282 $126,567,813 408 $129,404,200
Windstream 116 $20,439,360 106 $6,170,990
Verizon 9 $15,255,000 1,066 $505,733,170

The list of companies who have actually won spectrum assets through the auction is quite extensive, many are regionalised, rural telcos. We’ve only included the big ones here, and some interesting also-rans.

Although there still has been a considerable amount of cash spent during the auction period, the results do seem to imply mmWave might not be as crucial as previously believed. These assets might well be able to transmit huge amounts of data, but shorter ranges in comparison to the low- and mid-band bands, and the risk of signals being easily blocked, perhaps have telco fearing to dig too deep into the pockets.

Starting with Verizon, the telco now owns 65% of the available assets in the 28-31 GHz band. Through this auction and previous acquisitions of XO and Straight Path, Verizon has worked up quite a holding, though considering how much it has been beating its chest in the mmWave debate, it is perhaps surprising it low-balled the 24 GHz auction. Here, the firm only owns 1% of the total assets available.

From T-Mobile US’ perspective, the firm has shored up its spectrum breadth. Previously, the firm had not owned any licenses in the mmWave bands and has been the most critical of the potential of the assets. Spending the most in total across the two auctions, it seems the team is attempting to cover all bases, adding to the 600 MHz assets it has accumulated and plans to launch 5G on later this year.

AT&T’s focus was exclusively on the 24 GHz auction, where it spent the most cash, building out its portfolio in the higher spectrum bands.

Sprint is perhaps the biggest omission from the list, not winning any licenses across the two auctions, though it has previously aired its own criticisms of the potential of mmWave. The firm has started its 5G rollout, primarily using its 2.5 GHz spectrum for the launch. Whether its anonymity in this auction is evidence of its confidence in the success of the T-Mobile US merger we’ll leave you to decide.

There is of course life beyond the four major providers, and there have been some interesting wins across both the auctions.

FWA start-up Starry is an interesting one, winning 104 licenses in the 24 GHz auction. At the Big 5G Event in Denver this year, Starry COO Alex Moulle-Berteaux suggested the business was able to operate at such low prices while scaling in new regions was down to making best use of unlicensed spectrum assets. Spending $48 million this time around suggests a slightly new approach to delivering connectivity for the start-up.

These licences are now owned by Starry in 51 Partial Economic Areas (PEA), suggesting the business could be on the verge of much more aggressive geographical expansion. Details of where in the US Starry has won are not available just yet, but soon enough there will be much more colour on the plans. The assets might be used to shore-up performance in existing markets, or fuel geographical expansion.

US Cellular is another interesting case from the auctions, spending more than $250 million on 690 licenses. The telco currently has a presence in 23 markets across the US, with more than six million subscribers. It certainly isn’t going to challenge on a nationwide scale, however, with a stronger presence in the mmWave segment it could prove to be a worthy pain in the side to the big four telcos.

Windstream is the final ‘also-ran’ which we want to look at here. Spending just over $25 million on 222 licenses across both of the auctions, the team appear to be targeting the emerging FWA segment in some of the regions which are often overlooked in the US.

The firm launched a fixed-wireless access to business customers several years ago, and more recently has added products for consumers. In states such as Nebraska and Iowa, Windstream has pointed out signals can travel further thanks to “fairly flat topology”, while the mmWave assets will help the firm achieve the higher speeds demanded by enterprise and consumers alike.

What is worth noting is this is not the end of the spectrum auction bonanza. Over the next couple of months, the hype will start building for a combined auction in the upper 37 GHz, 39 GHz and 47 GHz bands.

That said, at the moment, the mmWave euphoria is appearing to be somewhat of a let-down.