Did Sprint+Network Vision-Lightsquared = Sprint+Clearwire+Softbank?

I’ve been thinking about why Sprint has now decided to sell itself to Softbank.

It seems to me that one possible answer would be to blame Clearwire and then LightSquared.

Clearwire was to be Sprint’s first (but not last) 4G answer, but WiMax never took off.  In fact, the only thing about Clearwire that took off were some of its major investors, like Google looking elsewhere to invest and actually make money on the investment.

Comes then Lightsquared, with its grand plan to deploy 4G services to various existing carriers using a very odd frequency band adjacent to the widely-relied upon GPS downlink band.   Sprint loved its new 4G provider, especially since Lightsquared was to pay $9 billion-ish to Sprint to use the new Network Vision platform.  While Lightsquared would be free sell its services through other carriers, it would be in a sense captive to Sprint since it would be a major network platform provider for Lightsquared’s services.  It seems clear that Sprint’s Network Vision project moved forward, certainly in significant measure because of Lightsquared’s funding commitment.

Then came that nasty little GPS interference problem and sunk Lightquared, and resulted in a bankruptcy filing.

Sprint was left holding a $9 billion bag looking for another funding source for Network Vision.  Before Softbank, no major replacements had stepped up.  Sprint began shuttering Nextel sites as quickly as they could to reduce that ongoing lease load while pushing new Network Vision sites out into the field.

Not fast enough, apparently.

Now comes Softbank to offer up a huge capital infusion and other goodies for a 70% stake in Sprint.  And, Softbank is eyeing Sprint’s nearly-kaput first 4G love, Clearwire.  Word on the street is that Sprint, tracking Softbank’s longing eye, will try to take actual control of Clearwire, which was something denied it by the original investment agreement that kept Clearwire as a separate entity from Sprint.  That would certainly make Sprint’s current love very, very happy.

One thing for sure: The T-Mobile+MetroPCS and Softbank+Sprint+Clearwire equations equal big trouble for the rapidly-disappearing smaller regional wireless carriers.

It would not surprise me to see virtually no regional carriers, and only four major wireless carriers in the U.S.: Verizon, AT&T, T-Metro, and SoftSprint.  Following, I envision a T-Metro split-up shortly after it figures out that all it did was to replicate the dumb Sprint Nextel technically incompatible deal that started Sprint’s slide into the current Softbank sale.

Then there would be 3.   Then you’ll hear the pin dropping on the table.

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Jonathan Atkin on the pending T-Metro marriage

Jonathan Atkin analyzes the wireless sector for RBC Capital Markets, LLC.

Better put, Jon dissects the wireless sector, looking at the players, numbers, and technologies in multiple contexts and from multiple angles spotting nuances leading to a much deeper and more complete worldview of wireless.

I have had the pleasure of hearing Jon present at several AGL regional conferences, and I always walk away from his presentations with a much keener view of the wireless industry and its direction(s).

Jon released a research report a few days ago on the pending T-Metro marriage that is well worth reading and understanding. He summarizes his research this way:

Our initial take is that a potential business combination between T-Mobile and MetroPCS is of dubious merit for Deutsche Telekom under business conditions and public-market valuations. We expect few regulatory barriers to such a deal, and believe Sprint could benefit competitively.

Jon points out that the proposed T-Metro intermarriage is one of different transmission technology religions. This rules out quick systems’ integrations and synergies as each partner will continue to practice its own signal transmission religion for for foreseeable future. He cites Sprint as a much more suitable marriage partner for MetroPCS given that both of them practice the same signal transmission technology religion. (Hey, it’s my metaphor…go with it.)

Not mentioned in Jon’s analysis is that with Sprint’s deployment of its Network Vision project, that firm will be in a much better position to rapidly deploy MetroPCS services from the new Network Vision sites. This would allow Sprint to shutter some/many MetroPCS sites quickly, substantially reducing site lease rental costs, especially at existing collocated Sprint/MetroPCS sites.

The funny thing is that a Sprint+MetroPCS marriage would be much more likely to succeed compared with the disastrous Sprint+Nextel marriage, which, like the pending T-Metro marriage, is based on each marriage partner practicing a different and incomparable signal transmission religion.

Jon notes that even if the T-Metro marriage is consummated, the new shared life of those partners will be distracting early on in their new union, opening the door for Sprint (and Leap Wireless) to push forward. My gut feeling is that a consummated marriage between T-Mobile+MetroPCS will prompt a Sprint+Leap marriage.

Read Jon’s report by clicking here: Hello, Hello, Hallo – Thoughts on Potential DT/PCS Tie-Up.

Jonathan

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T-Mobile and MetroPCS to Merge (“T-Metro”?)

[Updated: Some clever person registered T-Metro.com in May of 2012! jlk]

Merger announced today. T-Metro (my name; not theirs…yet) will be the 4th largest carrier after Sprint Nextel.

According to Fierce Wireless, the deal is structured as a recapitalization. MetroPCS will perform a reverse stock split (1 new share for every two existing shares), and make a $1.5B payment to MetroPCS stockholders. MetroPCS will then buy all of T-Mobile’s stock from T-Mobile’s parent, Deutsche Telekom for 74% of MetroPCS’s common stock. Deutsche Telekom will roll the debt owed to it by T-Mobile into $15B of new senior unsecured notes of the merged company. The result is that T-Metro will have an unsecured credit line of $500M, and $5.5B of additional loan commitments.

T-Mobile and MetroPCS site landlords: Expect tons of collocated/nearby sites to be shuttered. Let’s talk now.

More detail shortly.

Leap/Cricket Wireless…Are you next to go?

Jonathan

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Nextel kick’n ‘um on the way out…

As you may have heard, Sprint Nextel is shuttering a substantial number of its legacy Nextel iDEN tower sites.  These sites are no longer necessary in light of Sprint decommissioning of the Nextel iDEN service and combining technologies through its grand Network Vision Project (for more on Network Vision, click here).

For impacted Nextel tower site landlords, lease terminations translate to the loss of anticipated lease income.  This is why I tell my landlord-clients that they should always view most wireless leases as being enforceable for only months on the tenant side, but for decades on the landlord side.

Getting back to Nextel’s current round of terminations, to add insult to injury Nextel has employed third-party vendors to call and ‘convince’ landlords why, on the way out, they should execute a novel “Lease Termination Agreement and General Release” document.  I first heard about this from my peer, friend and trusted colleague, Mike Ritter, Esq. of TowerSeekers, a firm specializing in serving wireless landlords in the religious and non-profit segment.

So it seems that Nextel, when terminating a lease, would prefer to save lots of money by not removing most of the equipment, wiring, conduits, cables, and other things it installs.  Removal of these items is typically required by most wireless leases, as is returning the leasehold to the landlord in the same basic condition that existing just prior to the lease.  Nextel’s preference now seems to be to abandon the equipment in place and transfer title of the abandoned equipment, with no warranties whatsoever, to the site landlord.  With the abandonment goes all of the legal liabilities, as well, which may include liabilities imposed by the local governments on Nextel, but transferred by this agreement to the landlord.

Just sign right  here on the dotted line and YOU get to take on all of OUR discarded stuff and legal risks, and you save us a boat-load of money, too!‘ is just one way to think about this proposed deal.  Such a deal!

What’s even better is that BlackDot suggests in writing–but does not guaranteey–that they can find a replacement carrier quickly because these decommissioned sites will be “plug and play” solutions for other carriers…IF…the landlord will give up a 25% commission for the life of the revenue stream BlackDot can negotiate. Such a better deal!

‘Plug and play?’  Huh?   I’m a radio frequency engineer as well as an attorney. I don’t think much of the pitch is remotely believable.  By the way, if you’re interested in this deal, give me a call: I have a famous New York bridge for sale that’s priced for quick sale.

Take a look at a redacted copy of the Agreement document, here’s one.   If you’re half-a-lawyer, you’ll see why this deal is no deal at all.

If you are a Nextel landlord and you’ve received a notice of termination (as have some of my clients), go back and pull out your lease documents, including amendments.  Look at the termination terms and restoration terms.  (They may be in several places in the lease.)

Even if you don’t get the follow-up sales pitch call to do the exit agreement, do talk with your attorney.  If you don’t have one, I happen to know of some good ones!  Just call me on 310-405-7333, or give Mike a call on (760) 917-1123.

Jonathan

 

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I’ve Just Completed my LL.M Dissertation

As some of you know, I’ve been enrolled at the University of Strathclyde in its LL.M Internet and Telecommunications Law program.

After two years of coursework, and some 24 separate research papers regarding Internet and Telecom law (spanning some 45,000 words), I’ve just completed and turned in my 25th and final paper: my 42-page dissertation on the skimpy 145 words contained in Section 6409(a) of the Middle Class Tax Relief and Job Creation Act of 2012 and its expected impacts on wireless siting jurisprudence in the Ninth Circuit.

My dissertation supervisor has been very positive about my work on this project.  It’ll be next year before I hear whether my dissertation is judged to be worthy of awarding me the LL.M degree, but I’m hopeful.

Jonathan

PS: Now I move on to my next goal, which I’ll announce in a follow-up post in a few days.  It’ll surprise most of you. -j

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9/11/01: I was in the middle of having breakfast.

On this important day, like many others, I offer my ‘where were you on 9/11?” story.

I was having a quiet breakfast when I first became aware of something quite out of the ordinary.

As I recall, the main course of my breakfast consisted of a cheddar cheese omelet. On the side were home fries potatoes and tomatoes. A small breakfast roll, butter and jam, water and orange juice rounded out the meal.

I never got to finish breakfast.

As I was eating, I the public address system came live with the following message: “All flight attendants to the intercom!”

A minute later, the public address system crackled alive once more with the additional even more ominous message: “Chief Purser to the Cockpit.”

As you’ve no-doubt figured out, I was having my breakfast eleven years ago this morning while sitting in a United Airlines Boeing 777. I was, at that moment, at about 35,000 feet en-route from Miami, Florida to Denver returning home to Los Angeles from a conference I had been attending in Miami Beach.

At the time of the Captain’s announcements, the GPS screen showed the aircraft to be approaching the western edge of the Florida panhandle, just where it meets the Gulf Shores area of Alabama.

Moments after the twin announcements, the cabin crew reemerged and silently started what can only be described as a frenetic meal service clearance and cabin preparation for what we all feared would be a crash landing. The flight attendants said they didn’t know what was happening but that they had to do their emergency clear per the Captain’s order.

About this same time, the giant plane began a series of less-than-gentle S-turns, first left, then right, then left again, and right again. While this was happening, the plane was also shedding altitude at a serious clip.

Finally, while the plane was making its turns, the Captain came on the public address system once more, now directly addressing all of the passengers. He told us that as we all suspected, our plane was going to make an emergency landing, but in the very same breath he made it clear that the problem was not with our aircraft. He continued saying that ‘Air Traffic Control was going down all over the East Coast’ and we had no more than 15 minutes to get on the ground somewhere.

Anywhere.

Anywhere turned out to be Birmingham, Alabama, at Birmingham-Shuttlesworth International Airport, some 200 miles north of what was our present position. If you do the math, to be on the ground 200 miles away in 15 minutes would require the plane to travel at faster than speed of sound, and as good as Boeing 777s are, they aren’t that good. It was closer to half-an-hour before we landed in Birmingham.

Why Birmingham, Alabama?

The Birmingham airport had an unusually long runway at 10,002 feet (since increased by another 2,000 feet), and a shorter runway of 7,100 feet. Because our aircraft was carrying unspent fuel to travel all the way across the country (including the safety reserves), the aircraft needed a long runway to land with its heavy load.

When we landed in Birmingham and rolled to a stop, the first thing I did was to pull down my carry-on bag and call my wife on my cell phone.

As she started talking to me, I repeated out loud to the passengers and crew around me everything she was saying:

Two planes had crashed into the World Trade Center towers…

…another plane had just crashed near Washington, D.C…

…the Air Force was trying to shoot down two more planes…

I remember feeling disembodied while I was repeating what she was telling me. I was the observer of my own person. Never before, nor since, have I felt this nearly indescribable sensation.

The cabin around me was silent. The faces of the passengers and crew were drained of all blood. We stared into each others eyes not knowing what to say, what to do.

It turned out that we didn’t have much to do for quite a while.

This was the first time a United Airlines Boeing 777 had ever landed at Birmingham. United had no way to actually get us off of the aircraft. All of their airstairs were were for much smaller aircraft, and every Jetway was occupied by other aircraft of all types, sizes, and livery.

About 90 minutes after landing, United was finally able to secure portable airstairs from the UPS freight terminal at the airport. We made our way down the airstairs with all of our carry-on bags, but we were told that there was no way for them to unload our containerized luggage. We would have to do without our luggage for the duration, however long that might be.

Inside the terminal, there were no TVs so we still didn’t know what was happening in the larger world.

United’s small staff was furiously registering passengers and handing out hotel, food, and taxi vouchers. I was so impressed to see that United’s staff was being assisted by staff from many other airlines who were helping out in the process. On that day eleven years ago, you worked for the airline industry, not for any particular airline.

The airline hotel vouchers being handed out were for local airport-area hotels. It occurred to me that the no one knew what was really happening, and it might not be the best of ideas to stay at a hotel next to an airport that also happens to be a military base used by the Air National Guard.

Having worked in the Birmingham area over the years, I knew of a very nice Holiday Inn about 7 miles and several ridges away in Homewood, Alabama. Yeah, that would work just fine for me. After a few quizzical looks, the person issuing vouchers gave me one marked for the Holiday Inn in Homewood.

By this time, all of the ATMs inside the airport had their dispersing needles all the way in the red area below “E” and I only had about $20 in my wallet.

With no luggage, and only with the cloths I was wearing and my carry-on bag, I took a taxi to the hotel. Upon entering, I spied an ATM machine in a corner of the lobby. Before even checking in, I drained the hotel’s ATM. Then I checked in.

I entered my hotel room, turned on the TV, and joined the rest of the civilized world watching the uncivilized horror and carnage of that day play out over-and-over a hundred times; a thousand times.

I made it back to Los Angeles some four days later.

Like I said, I was having a quiet breakfast just four days before on 9/11/2001.

Today is a day of remembrance for all of us on a personal basis, and on the much larger basis of uniting all against evil.

Jonathan

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Section 6409(b)(1): Mandatory Wireless Siting on Federal Property?

I’ve spent a lot of time and spilled a lot of ink writing about Section 6409(a) of the Middle Class Tax Relief and Job Creation Act of 2012 (H.R. 3630).  That’s the poorly conceived and equally poorly written section addressing wireless collocations at some existing wireless sites.

This posting is not about 6409(a).

Rather, in this post I turn my attention to Section 6409(b)(1) of the Middle Class Tax Relief and Job Creation Act of 2012.  That section sets out a new federal policy regarding wireless siting on federal property and federal buildings.  As we all know, there’s a lot of federal property, and a heck of a lot of federal buildings.

Let’s start with a quick review of 6409(b)(1), which is the meat of the section:

Sec. 6409
. . .
(b) FEDERAL EASEMENTS AND RIGHTS-OF-WAY.—

(1) GRANT.—If an executive agency, a State, a political subdivision or agency of a State, or a person, firm, or organization applies for the grant of an easement or right-of-way to, in, over, or on a building or other property owned by the Federal Government for the right to install, construct, and maintain wireless service antenna structures and equipment and backhaul transmission equipment, the executive agency having control of the building or other property may grant to the applicant, on behalf of the Federal Government, an easement or right-of-way to perform such installation, construction, and maintenance.

I’ve recently heard that some members of the public are looking at Section 6409(b) as some sort of Congressional mandate requiring the federal government property be made available for the installation of wireless sites.

Not so.

Section 6409(b) of the Middle Class Tax Relief Act does not require that federal agencies lease their property, buildings, roads, waterways, etc. to anyone, much less to wireless entities.   Section 6409(b)(1) makes it clear via one very important word (“may”) that the approval is not mandatory; rather it is permissive and approval may be withheld.

The discretion the federal government reserves to itself is perfectly logical when you think about it.  Consider, for example, national security and operational reasons why Congress would not want 6409(b) to require wireless siting on federal property.

Look at who is permitted to apply for such an easement under 6409(b)(1), including any: “…executive agency, a State, a political subdivision or agency of a State, or a person, firm, or organization”.  Virtually anyone (and I mean anyone) can apply to access federal property to install a wireless site.

Yet, would anyone with a straight face suggest that a foreign government (an “organization” within the meaning of the Section) could compel the National Security Agency to allow it to put equipment and antennas on top of the NSA headquarters building at Fort Meade?

Similarly, would anyone reasonably suggest that a secured research facility operated by a federal agency must open access to its property to allow for the installation and operation of antennas that might cause facility security concerns, or interfere with sensitive experiments?

To torture this discussion just a bit more, would anyone actually believe that Section 6409(b) would compel the installation of wireless antennas within the National Radio Quiet Zone at the National Radio Astronomy Observatory (NRAO) in Green Bank, WV or at the radio receiving facilities for the United States Navy in Sugar Grove, WV?

(Huh? You didn’t know there was a place in the U.S. where the only public telephones are pay telephones, and where government agents will hunt you down for installing a Wi-Fi at your home or for using a cell phone? See: http://www.gb.nrao.edu/nrqz)

To all of the above, the rational answer is an obvious, ‘Of course not.’

At the end of the day, the federal government has created a general policy…but absolutely no requirement…that wireless facilities be allowed on federal property and buildings on a fee-basis, and within reasonable limits to be determined by each agency and at each location.  Logically, this would also allow the federal government the right to exclude wireless facilities at any federal location for practically any valid reason.

Here’s an interesting question and wrinkle regarding wireless siting outside of the U.S. territorial limits.  Does Section 6409(b)(1) allow a wireless firm, whether foreign or domestic, to apply to siting on U.S. federal lands and buildings physically located  in other countries?  For example, would 6409(b)(1) open the door for Vodafone U.K. to apply put a cell tower on the grounds of the U.S. Embassy, located on prime real estate at 24 Grosvenor Square in  London?

Section 6409(a) is a mess.

Section 6409(b)(1) joins the ranks of 6409(a).

Jonathan

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Time Warner Making a (Wireless) Ruckus

Ruckus Wireless ZoneFlex 7761-CM installed by Time Warner in Los Angeles, California.

In the midst of its deployment of WiFi (and likely more) in Southern California, Time Warner has started to install WiFi nodes manufactured by Ruckus Wireless, specifically the Ruckus ZoneFlex 7761-CM.

Previously, Time Warner has been widely deploying Belair Networks gear.

The Ruckus 7761-CM is an intriguing node, supporting “8 downstream and 4 upstream bonded channels with theoretical data rates of up to 340 Mbps (downstream) and 130 Mbps (upstream).”  Okay, those are theoretical data rates, but even if they can only achieve half that, this is still a box to be contended with by competitors, and enjoyed by users.

The Ruckus gear, like Belair’s equipment, is plant-powered and strand mounted.  This means that TW (or any cable operator using this configuration of equipment) can often deploy WiFi without going through the joint pole committee for permission, and likely permissibly…or not..bypassing the local cable franchising authority.

An interesting use for the 7761-CM is delivering broadband services from outdoors to extend managed wireless LANs (WLANs) locations and where Ethernet cabling is not feasible.  In English, this means that these boxes can be used to provide point-to-point Ethernet (10, 20, 100 Mbs etc) which would have typically required fiber extension.

In states like California, which restrict how non-cable services are provided via cable plant, this box continues TWs apparent encroachment outside the bounds of its state-issued cable TV franchise and its CPCN restricting deployment of business services to cable users.

For an interesting map of TW’s current deployment, check out Time Warner’s WiFi/3G/4G map here.

WiFi (and 3G/4G) node deployment is something that should be carefully evaluated by governments, and by the DAS industry.

For governments, the questions center around about who regulates what services, permitting, and proper compensation for the use of the public rights-of-way from local users, hourly users, and users from other cable systems and operators granting access on a reciprocal basis.  I’m working with several of my government clients crafting language in their new wireless ordinances to address these issues.

For the DAS industry, its single greatest threat is cable TV’s deployment of wireless nodes using the existing CATV plant for backhaul, and the overhead strand and pedestals for radio mounts.  The cable TV industry beats DAS hands down every time for deployment economics and time-to-market.  For more on this, see my article in the April 2102 edition of AGL Magazine.

Jonathan

PS: I snapped the photo for this article just 1/2 block south of my office here in Los Angeles. -jlk

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Lease Optimization – that old familiar story

Increasingly, wireless telecommunications landlords are being approached by firms representing their wireless carrier tenants for the purpose of securing a reduction in the rent and/or rent escalator the carrier pays to the landlord. Sometimes the demand is for a ‘rent vacation’ for up to several years.

Generally, the process described above is called, “Lease Optimization.”

Two well-known firms that perform Lease Optimization on behalf of the wireless carriers are Blackdot Wireless, and MD7.

In fact, Blackdot states on its website that it “pioneered the first expense reduction” program, also known as lease optimization. Lease optimization may seem innocent enough. After all, Blackdot is “substantially reducing carrier and tower company operating cost, while securing billions of dollars in rent guarantees for landlords.”

Securing billions of dollars in rent guarantees for landlords?

Lease optimization though results in substantially under market rents for unsuspecting landlords.

The approach is generally the same, as a landlord, you may be told that the wireless carrier is reducing the number of sites it operates and it has been determined that your site is one of those sites the carrier can live without.

That is, unless the landlord is willing to substantially reduce the monthly rent, and skip rent increases for some number of years, or even waive rent payments altogether for a period of years.

What’s in it for the landlord? Not much in reality. The usual ‘carrot’ is that if the landlord complies with the tenant’s demands, he or she will receive a ‘rent guarantee’ that will run for a few years. This is interesting, since the lease is the best indication of the rent that the landlord is supposed to receive.

I can see that a landlord is generally unwilling to lose all the rental income from the site and buys into the lease optimization story – at least there’s still some income, right?!?

If you are approached by a company interested in ‘optimizing’ your lease (and you), be suspect. Discuss the proposed terms with an attorney who is knowledgeable in the area to determine what the best step is forward for your situation. If you need a referral to a knowledgeable attorney to advise you, why not contact us.

In the end, don’t be afraid to trust your instinct: It’s usually the case that if a proposal doesn’t feel right to you, then it’s not right for you.

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