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 Channel Futures

People on the Move


Spectrum and Post-Network Realities: AT&T, Verizon, Sprint, T-Mobile CEOs Talk Top Priorities

  • Written by Tara
  • May 9, 2012
It's crystal-ball time in New Orleans, as CEOs from the top four wireless companies in the United States took the stage at CTIA Wireless 2012 to lay out the priorities for each of their companies and take a look at what they think will be important ahead.

Tara Seals
CTIA WIRELESS 2012 Verizon Wireless is focused on spectrum availability. Sprint is concerned about privacy and security issues, and the industry’s reputation among consumers. T-Mobile is looking to make a fresh start with its LTE network after the AT&T merger fell through. And last but certainly not least, AT&T is thinking about what’s next to compete on after all players have LTE and similar networks.

AT&T Wireless CEO Ralph de la Vega’s prediction? Value-added services like the all-digital home security and control application that AT&T just launched will lead the way.

Yes, it’s crystal-ball time in New Orleans, as CEOs from the top four wireless companies in the United States took the stage at CTIA Wireless 2012 to lay out the priorities for each of their companies and take a look at what they think will be important ahead.

“A lot has happened in our industry since we were last here in New Orleans in 2005,” noted Verizon Wireless CEO Dan Mead. “Back then there were no smartphones, no tablets. Phones were primarily for voice calls, and those on the cutting edge used text messages.” He added, “Things that seemed to be out of a sci-fi movie, like video chat and public-safety notifications, are now so common we almost take them for granted.”

Since then, the carriers have collectively invested hundreds of millions of dollars in networks to support new devices and applications that have created new markets, new jobs and supported new industries.

Verizon: The Coming Spectrum Crisis?

“This is one of the country’s greatest economic engines,” Mead said. “Unfortunately, it is at risk because of the spectrum shortage.”

Echoing the sentiments of CTIA chief Steve Largent from earlier in the day, Mead highlighted spectrum availability as the No. 1 priority that the industry, and in particular Verizon Wireless, is facing today.

“If additional spectrum is not made available, mobile data demand will exceed capacity by 2014,” he said. “Our traffic has more than doubled in each of the last three years. And with LTE, after the first six months it had already reached traffic levels that it took 3G years to reach.

The carrier plans to have LTE rolled out in 400 markets by the end of the year. “To manage the coming spectrum crunch, we have implemented new hardware and software technologies to make more efficient use of our spectrum,” Mead said.

Verizon’s top exec also said that a secondary spectrum market will be key in the future apropos since the carrier is seeking approval to buy AWS spectrum from SpectrumCo, the airwaves consortium that four cable companies jointly operate.

That spectrum, he noted, is not being used now, but would be put into use by Verizon Wireless. “This would be good for Verizon Wireless customers and good for the entire broadband economy,” he said, making his case for the controversial deal by noting that the sale of Verizon’s 700 A&B spectrum is contingent on acquisition of the AWS spectrum. “We’re not interested in warehousing spectrum and for the record no one is forcing us to sell that spectrum. It’s the right thing to do.”

A healthy secondary spectrum market, he said, is “a market that is sorely needed. We need to get unused spectrum into the hands of those that can engender more innovation.”

Sprint: Wireless Carriers Need to Fix a Bad Reputation

Dan Hesse, CEO at Sprint, took his time on stage to highlight a big problem for wireless carriers: when it comes to reputation and gaining consumer trust, the cable, and even the oil industry, ranks ahead of the mobile segment. And trust has never been more important, considering that there has never been a more personal device than the smartphone.

“There are issues lying ahead on both financial and regulatory fronts that are crucial to gain subscriber trust,” he noted. “Our investment in networks and product innovation have added billions to the U.S. GDP and we have regained wireless leadership. Mobile devices are a critical tool in how we conduct day-to-day lives, drive productivity and create innovation, whether it’s in Silicon Valley or on Main Street.”

However, he said, “Our reputation falls woefully short, especially compared to how the public sees Apple, Microsoft, Google and Amazon.”

The “over-the-top” companies are called such “because of their over-the-top margins,” he joked, referring to Internet companies’ lack of a capital-intensive business mode. “Actually, they ride on the top of our enormous capital investments,” he went on to say, alluding to the fact that carriers are ceding subscriber brand loyalty and face a dumb pipe value prop when it comes to subscriber relationships.

Thus, safety, security and privacy should and must be top-of-mind for the industry going forward. To that end, Sprint has launched a mobile security council and several new security suites. It also will launch a new mobile ad policy that offers education on what subscriber information is gathered by carriers and how subscribers can control that with opt-in and opt-out opportunities.

“We will offer clear, concise and upfront notification of our policies through information pushed to new devices/lines of business within 24 hours of activation, with the option to opt in or out,” he noted. “This has to be well-executed out of the gate.”

He added that Sprint will enlist an outside firm to provide verification that it is living up to its commitments.

T-Mobile: Getting Back in the Game

“We’re back competing aggressively in wireless,” said T-Mobile USA CEO Phillip Humm, noting that the carrier’s just-announced LTE deployment will allow it to take the role of aggressive challenger to the Big Three.

“We have a reinvigorated challenger strategy and brand with a plan to return T-Mobile to growth,” Humm noted, saying that it is already making great progress, to be reflected in the Q1 numbers being released this week. In light of the LTE plans, the company is “re-launching T-mobile to focus on affordability but also the cutting edge 4G technology. We are now making cutting-edge 4G affordable.”

He also intimated that the move was necessary given the data tsunami. “The question is, how the industry can meet ever-growing demand for data in a 4G world,” he said. The answer? “Intelligent unlimited rate plans, more spectrum and innovative technology to manage capacity.”

He said that T-Mobile is seeing firsthand the explosion in data consumption. The carrier now sees 146 times more data traffic than 5 years ago. And, T-Mobile smartphone customers use 760MB of data every month, which is 30 times more than in 2009.

For its part, it is offering unlimited data use on 2.5G technology, but allocates 2MB on HSPA+ service which he called “intelligent, unlimited data plans.” Also, video accounts for half of the HSPA+ data use, so predictive delivery of data to bring content to users at off-peak hours when capacity is less constrained is another approach.

On the spectrum front, “our industry is spectrum-constrained,” he said. “Exhaustion estimates range from the very near future to 2020. So we need to be as smart as possible as an industry to make the most of our capacity.”

T-Mobile is re-farming a large part of its 1900 3G voice spectrum to use for 4G data, for example, as part of its planned LTE build. It is also installing IMS-based Wi-Fi clients on its devices, and is mulling private network utilization. About 70M households, or 61 percent of American homes, have a Wi-Fi network, according to Strategy Analytics. Why not provide incentives to share that resource, he said.

AT&T: Beyond Speed

For AT&T, the issue now and tomorrow is the fact that very soon, the U.S. will find itself in a post-networks world. The way for operators to get around the dumb pipe and disintermediation issue is to focus in on how consumers and businesses actually use mobility.

“We are all investing heavily to make sure we can deliver super-fast connections,” said de la Vega. “I am confident that we will have the speed that our customers need.  But our customers need more than speed. They are looking to make their quality of life better.”

To that end, AT&T has undertaken what he called “smart, careful research” into new ways to meet those needs. A study into how consumers feel about digital technology shows a shift in consumer attitudes that is “absolutely profound,” he said, surrounding the value of a connected life. The two top benefits are digital kinship or discovering new shared interests that keep people connected, and digital guardianship, where people use mobility to keep track of or keep watch over their families. “It means never being out of touch,” de la Vega noted.

AT&T is being extremely innovative in how it applies these insights, he said. The company has “dramatically changed how we think about innovation. We don’t wait for great ideas to come to us anymore.”

To wit, AT&T has launched The Innovation Pipeline, or TIP, which is a crowd-sourcing exercise across the company’s 120,000 employees. The project has generated 17,000 new ideas for digital life services, resulting in a $27 million commitment to 50+ ideas so far. Meanwhile, the AT&T Foundry is making a $90 million investment with other technology leaders to set up think-tank assets in Silicon Valley, Israel and Dallas.

“We can do really very cool things together with the power of research and the potential for collaborative innovation together,” he said. The guiding principle? “It’s what you do, with what we do.”

Looking for more? Click here for B/OSS’ ongoing coverage of CTIA Wireless 2012 and here for V2M’s coverage of the event. And check out V2M Editor-in-Chief Tara Seals’ Twitter feed for her take from New Orleans.

Tags: Agents Mobility & Wireless People on the Move

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