The biggest news for 2011 in this sector was AT&T’s $39 billion bid to buy T-Mobile. And when the deal was announced in March, AT&T seemed confident it could make it happen. So confident in fact, that it agreed to one of the biggest break-up fees ever. But as we all now know, regulators didn’t like AT&T’s plan and put a kibosh on its plans.
AT&T could have failed to nab T-cell and its wi-fi spectrum, however that doesn’t imply that the deal-making frenzy is over. AT&T still needs wi-fi spectrum and T-cellular still needs a beneficiant figure to stay its community afloat and aggressive.
And as all wireless operators jockey for more valuable wireless spectrum, I expect more wheeling and dealing in 2012. Below are my five predictions for what could happen in the coming year.
AT&T makes play for Dish Network
The Department of Justice and the Federal Communications Commission have put the kibosh on an AT&T and T-Mobile tie-up. But AT&T still needs spectrum. So what about AT&T and Dish Network?
Paul Gallant an equities analyst at Guggenheim Partners in Washington, D.C., believes AT&T thinks a deal with Dish Network could be a good fit for the No. 2 wireless operator. And he thinks such a deal may have a great opportunity of getting approved by regulators, in step with one in every of his contemporary analysis notes. at the same time as AT&T and Dish compete for tv customers, they are simplest the 3rd and fourth position competitors in markets where they overlap. And there’s no question that AT&T may use Dish’s spectrum on the wireless aspect of its industry.
Dish could benefit from a deal with AT&T, too. Dish is currently trying to get its new wireless spectrum repurposed by the FCC. This is not typically a quick process and the FCC may ask Dish to adhere to quick build-out requirements for the new spectrum. AT&T, which is the second largest carrier in the U.S. and still has plenty of cash despite paying $3 billion to T-Mobile for its break-up fee, could put that spectrum to good use quickly.
Still, it’s hard to know if AT&T would be gun-shy about committing to another merger so soon after the T-Mobile debacle. But I don’t expect it to sit quietly for too long.
Sprint makes a play for T-Mobile
Before there was any notion of AT&T buying T-Mobile, there had been talk for years that Sprint wanted to buy T-Mobile. And now that talk is surfacing again. Conventional wisdom holds that if the FCC is unwilling to allow AT&T to buy T-Mobile, it certainly would have to oppose Sprint Nextel’s acquisition of the player, right? But Gallant says that may not be the case.
The most effective–and we believe winning–argument in favor of approval is that the combined Sprint/T-Mobile would be a stronger counterweight to AT&T and Verizon than Sprint and T-Mobile would be separately, Gallant said in a research note published recently.With Verizon and AT&T proceeding to pull away from the p.c., we consider policymakers’ overarching marketplace construction objective is preventing a wi-fi duopoly, not maintaining 4 nationwide wi-fi players.
Of course, any such deal would be vigorously opposed by AT&T. And Sprint Nextel knows this. So i’s difficult to say whether the company would have enough guts (or cash) to attempt such a purchase. What’s more, Sprint has been down the acquisition path before and hasn’t exactly been a smooth one. It’s still coping with the fallout from its 2005 merger with Nextel. just like that deal during which dash and Nextel used other community technologies, the same is right of T-cellular and dash. T-mobile is a GSM provider and sprint is a CDMA provider. but sprint’s commitment to install 4G LTE over the next few years might imply much less bother with regards to future integration.
Even if Sprint doesn’t make a play for T-Mobile, I expect some sort of deal announced with T-Mobile in 2012. There’s no indication that its parent company Deutsche Telekom would like to invest more in the carrier. And the $4 billion consolation prize it received from AT&T is probably still not enough to sustain the company indefinitely. So my prediction is that Deutsche Telekom will continue to shop around T-Mobile until it finds a buyer. Which company that will be is still the big question.
Spectrum crunch comes to a head
Wireless spectrum is the No. 1 policy issue for big lobbying spenders, AT&T and Verizon Wireless. And I expect that in 2012, these D.C.-heavyweights will work their magic to start getting something done in this area. These companies, along with the entire wireless industry, say they need more wireless spectrum.
The FCC has been harping in this factor for more than a year, as smartly. And it’s been pushing Congress to pass legislation granting it authority to carry auctions to sell unused wi-fi spectrum that it’s getting from television broadcasters. however efforts to authorize those auctions at the side of provisions that would allocate 10MHz of spectrum for a new public protection community have stalled in both the house of Representatives and the Senate.
Most recently, Senate leaders did not include spectrum policy legislation in either their two-month extension of the existing payroll tax cut or the $1 trillion omnibus spending bill. And things don’t seem to be moving in the House either.
That said, hope is not lost. I know that Washington, D.C., is more dysfunctional than a family on Dr. Phil, but now that AT&T and Verizon Wireless are clearly on the hunt for more wireless spectrum, I expect some inside the Beltway negotiations to kick into overdrive to get something done.
The fact that AT&T was not able to buy T-Mobile and its valuable spectrum, means that the carrier needs spectrum and it needs it fast. What’s more, Verizon’s willingness to enter into a reseller deal with some of its biggest rivals in cable as part of a broader deal to get its hands on more wireless spectrum is another indication that these heavyweights will do what it takes to get the resources they need.
My prediction is that the TV broadcasters dragging their feet and trying to trip up this legislation are no match for the telcos and their thirst for more wireless spectrum. So a bill authorizing incentive auctions will happen in 2012.
Lightsquared gets sold
The year started out upbeat for LightSquared, a company backed by hedge fund manager Philip Falcone that plans to build a nationwide wireless 4G LTE network using spectrum originally allocated for satellite use. In January, the FCC granted it permission to operate its network in the so-called L-band, which sits next to GPS frequencies. The company additionally granted LightSquared a waiver so that it would it build its carrier for terrestrial use simplest.
These actions not only increased the value of LightSquared’s 56 MHz of radio spectrum, but also upped the ante in terms of competition for major wireless companies, such as AT&T and Verizon Wireless.
Since then, the GPS industry and the other wireless providers have gone on a massive Washington, D.C., lobbying campaign to make sure the LightSquared network isn’t built. At the heart of LightSquared’s troubles is the assertion by the GPS industry that the network will interfere with already deployed GPS receivers, particularly high-precision receivers such as the ones used in farming equipment and aviation. Of course, it doesn’t matter that LightSquared’s transmitters aren’t the problem and that it’s the GPS receivers that are listening to too wide a band of spectrum that causes the interference.
In a recent Forbes article, Daniel Fisher details the historical past of the LightSquared saga, and he does a very good process of explaining why this network is doomed not as a result of technical problems that may’t be resolved, however because of politics. His prediction is that LightSquared’s major investor hedge fund supervisor, Philip Falcone, gained’t be able to come up with the money to build the community or pay off the GPS trade. And he speculates that LightSquared shall be compelled to promote its spectrum. keep tuned. The drama will no doubt continue in 2012.
Verizon takes a bold step into video
Verizon Wireless took a bold step earlier this month when it announced a deal with some of the largest cable operators in the U.S. For $3.6 billion, Verizon will get access to about 20 MHz for unused wireless spectrum that a consortium of cable companies bought in 2006.
Also, as part of this deal, Verizon has agreed to resell cable broadband and TV services through its Verizon retail stores. And it will allow cable operators, such as Comcast, Time Warner, and Cox Communications, to resell Verizon Wireless service as part of a quadruple play bundle. And best it off, it’ll eventually allow those cable operators to promote their very own branded wi-fi service the use of Verizon’s community.
Wait a minute. Hasn’t Verizon Communications, Verizon Wireless’s parent company, been waging a bloody war against cable in the TV and broadband markets? Indeed, it has.
But as Verizon winds down the deployment of its Fios fiber-to-the-home broadband and TV network, it looks like the company may be gearing up to compete in a slightly different market.
Following the frenzy of the cable deal announcement, Reuters reported that Verizon is considering getting into the online video market to compete with Netflix and Hulu Plus. The company hasn’t announced anything officially, but such a plan to stream video service over a broadband network, anyone’s broadband network, could be a smart idea.
Much like Hulu Plus and Netflix, the service could be available via a Roku box or video game consoles like the Microsoft Xbox or Sony PlayStation 3. And it could give Verizon a way to reach customers who live outside of the Fios TV footprint. Delivering video over-the-top on someone else’s broadband connection sure beats the heck out of spending billions of dollars more to expand its existing Fios footprint.
So my prediction for 2012 is at the very least, Verizon will start testing one of these provider. And my wager is that by yr’s finish, it is going to even be to be had in a few markets.