Robert Syputa

Robert Syputa
Contributor since: 2013
Not necessarily the case.
More than 2/3rds of device bandwidth is consumed using Wi-Fi not the mobile network while people are at home, work, meeting areas, etc. Part of the '5G' effort is to make more use of unlicensed bands including upcoming and additional 150MHz of the 3.5GHz band which the FCC designates the 'Innovation Band'. Additionally, 4GHz, 5GHz and higher bands will be used, although the higher up bands will tend to be used mostly for back-haul and PAN, personal area networking due to short range, difficulty penetrating through walls/barriers, and straight-line properties of signal propagation.
For starters, what is being termed 5G is part of the same evolutionary tract as current LTE and LTE-Advanced networks and devices. Much of the technologies being lumped together to be called 5G were anticipated 5+ years ago as being part of the Long Term Evolution, LTE, of networks. These include 1. Higher order MIMO. 2. Multiple-carrier path MIMO and AAS beamforming methods. 3. Co-MIMO, coordinated MIMO, CoMP, coordinated multiple-point, and MU-MIMO, multiple user MIMO/signaling.
The use of spectrum has evolved as well: Multiple in-band and out-of-band carrier aggregation is coming into use now and can be seen as being used in increasingly 'smart' ways: network architecture is evolving to tiered network topologies that make use of spectrum adaptively. Devices might make use of high and low-band multiple carrier aggregation in ways that yields overall better reliability/consistency while delivering 'just what the client needs' at the time - from highly persistent instant messaging and low-resolution video to 4K or 8K resolution video content.
Another element in video delivery is reducing the amount of wide-area traffic through the use of two basic methods: use of high-efficiency codecs and use of local network and on-device pre-fetch storage.
The H.265 HEVC, High-Efficiency Video Coding standard has been in place but remains far less used than H.264 and other predecessors. HEVC provides about 50% more efficiency - About 66% visual appearance improvement, thus, the same resolution can appear to the eyes as appealing as an additional ~16% higher resolution. That can allow sending a down-converted 4K video that appears as good as 4K but uses less bandwidth because the human eye can't tell the difference. Because small screens on devices cannot benefit from full 4K-8K resolutions due to eye acuity, the resolution may be offered to users as scaled to suit the environment. That would be along the lines of T-Mobile's 'Gorge-on' but with tailoring to the connection. Gorge-On simply down-scales to 480p. A '5G' approach might similarly give users an option but one in which the link determines the resolution: if connected to a wide-area tower the resolution might be lower depending on the quality of the signal and network congestion. If the user wanted full HD/4K, they can opt to get hit for higher bandwidth use.
Using localized data storage/pre-fetch/cache is the other major way traffic can be accommodated. This includes a wide range of user and network device options from the 'Sling' type storage box that have become common, to the use of much larger memories in handheld devices. SSD memories have entered the '3D-stacked generation' which can provide 3X now to 10x+ future density improvement over current chips. The cost/bit has come down already to a point that larger memories are feasible. We expect the cost to see a dramatic shift over the next five years, partly driven by high capacity HD replacements in servers and PC/laptops and by increased memory use in mobile and in-line network devices.
Peering back to SEP 2014 we see that Sprint (S) did rally in the following months to a near double. However, the factors that I stated have borne out: Sprint has sunk to 4th place in marketshare behind T-Mobile as it has remained in 4th place in network performance nationwide.
That has led Sprint to embark on, yet again, a revamp of their networks in order to improve performance and reduce costs. The new attempt will be to work with local governments to deploy base stations on government assets including properties and along rights of way and facilities including lamp posts.
We have been advocating the distributed smallcell/C-RAN type network architecture since before Sprint began deployment of WiMAX. WiMAX would have been a stop-gap alternative that would have been transitioned to LTE once available. The purpose was to leap into the fourth generation network technologies such that LTE could use the then established smallcell/C-RAN base station locations. Other elements of this alternative architecture were required, including a level of user deployed 'home cells' or, in more recent 4G-LTE parlance, 'Home eNodeB' network nodes. Other approaches may have supplemented: nearby 2.4Ghz WiFi may have been complimented by using a common multi-mode PHY or, as has evolved, seamless handover between 3G or LTE to and WiFi or LTE-U.
What is Sprint's vision of the future? Whatever it is, it must include the following:
a. Increased commoditization of broadband services due to market saturation and technology and industry maturity.
b. Constrained capital markets that shy away from junk bond rated debt as overly risky. This limits Sprint's ability to maneuver into a position to float additional bonds or rollover existing debt.
c. A device market that is mature. This makes cutting exclusive deals or innovating in devices similar to what Softbank Japan's mobile unit was able to do impossible.. particularly considering that competitors are initiating more device innovations.
d. Deploying and densifying networks using higher frequency bands only deliver benefits by spending more money. Dense base station nodes (smallcells or C-RAN) requires dense backhaul which geometrically increases operating costs. 'Old Sprint' had not built a distributed backhaul/fronthaul network similar to what Softbank has done in island country Japan. As a result, Sprint's cost structure is hard-wired.
The only miracle that can save Sprint is what we have prescribed for over 12 years: a bottom up user-deployment model using 4G. This concept is now part of the LTE-Advanced standards that is being pursued by competitive operators. It includes LTE-U and WiFi-first. It is too late to effect the lower cost of densification that could save Sprint's fortunes because the lending limit has already been spent.
Sprint's new CFO recently remarked that Sprint has its work cut out for it to do deep cost cutting. He admits the company cannot consider a merger with T-Mobile, often stumped as a solution to the company's problems, until it fixes its financial problems. I think it is much too late to fix the situation in time to preserve common shareholders relative position in the equity. Along the way to some form of financial restructuring or a fire sale, common shares must be devalued/diluted.
Sprint, or any other major US wireless network, or cable operator for that matter, will go out bankrupt in a way a maker of non-essential consumer goods or another firm might normally be expected to do so.
For starters, telecommunications is considered an essential service that is governed and also protected by the regulatory apparatus and legal framework in which it operates. Some fellow analysts point out that no major US utility has ever gone bankrupt in the way some think - the breakup and selling off of assets. Some parts of the business might be downsized and/or restructured. About 2/3rds of Sprint's Band 41 2.5-2.6GHz spectrum is leased from the EBS license holders. Clauses in most lease arrangements normally include a default termination clause. Even if the contracts do not contain such a clause, unused portions of the EBS spectrum would likely be contested as being up for grabs. In any case, sub-leases on EBS spectrum have attracted very little interest among competitors because they are 'site licenses' given to religious/educational institutions to cover from local campuses or a wider range of patchwork sites that makes it difficult to deploy on a national basis needed for competitive operation.
What is more likely to happen if Sprint fails to rise in meteoric fashion to recoup past losses, is that the company will head into a court-regulator-Softbank plus other vested interests managed debt and company restructuring. This has looked increasingly likely for some time. As further results have shown no reversal in fortune is in sight, this looks more likely than not IMO. As mentioned I project Sprint (S) will head into managed insolvency restructuring in the 2017-2018 time period. That could be stretched out, but it is unlikely to be prevented.. and it is not a bad option for Softbank or Sprint customers given the situation. Shareholders would get the same deal as Softbank: devaluation of current stake with more money being put up under the restructuring in return for a new class of shares or that dilutes current holders.
That, of course, is speculation. The options are narrowing.
Everything you said ignores one basic fact: High band spectrum costs 2x-3x more to deploy into to reach the same level of coverage and building penetration. This raises the cost relative to competitors who are using a higher degree of low and mid-band spectrum.
Spectrum has a value based on a. what someone is willing to pay for it, or b. what it generates in profits. Any other valuation placed on spectrum is speculative. Common stock shareholders are not Sprint. They hold a subordinated paper position in the highly regulated company. If Sprint goes into financial reorganization, stockholders likely retain no value derived from the spectrum. The majority of the 2.5GHz-2.6GHz Band 41 spectrum is sub-leased from license holders. So long as investors are inclined to wild speculation about unaccomplished prospects for profiting from spectrum and valuations, if Sprint goes into financial reorganization the contracts Sprint holds for sub-leases may become void or contested in court or by the FCC, resulting in the spectrum being put up for grabs by competitive operators.
Sprint has had access to the LTE Band 41 spectrum for several years, borrowing billions of dollars to put it to use which has resulted in a higher cost, lower coverage competitive position. The formula you describe has not changed over the past seven years. It has proven to be in error because it fails to overcome the inherent obstacle it is had from the start, high density is required which costs more to achieve a national footprint. Current Sprint-Softbank efforts have shown only that improvements using LTE-Advanced methods are possible that allow catching up in major metro areas. However, it costs more than competitors, resulting in losses. The resulting improvement in network performance fails to take back market share from competitors.
Doing more of what has proven to fail in the past, coupled with bone-deep cost cutting provides, at best, a pathway to operate a downsized operation that focuses on urban settings.
Many of you have your heads stuck in the sand and fail to understand how Sprint's situation has evolved. Sprint's overriding concern for stock investors is its debt obligations and the impact on competitiveness that is having.
Sprint has nearly run out of money and the ability to get additional financing. Sprint must pay back about $17 billion of the principal on the over $33 billion in junk bond rated debt over the next six years. To do that, the company must cut costs and stimulate sales to keep from dropping further in market share, resulting in spiraling downward in profit/loss.
Sprint has been engaged in leasing and competitors have joined them. Leasing is a form of financing the cost of devices. If handled internally it ties up billions of dollars in capital. Sprint has about $3billion tied up in lease arrangements. Third party leasing reduces the amount of capital by the amount of internal leases transferred less a discount. It does not 'save' Sprint money as many have erroneously reported. It does not create new sales. All leasing does is pull in the receipt of the sales in return for what amounts to a finance charge paid to the leasing company. Nobody pulls free money off of a tree named 'the leasing/lending tree'.
Sprint has been losing money DESPITE what should be a period of profiting from past years of network disruption for LTE deployments and past sales campaigns that repeatedly promised to have reached a turnaround in subscribers and sales. Sprint was promised, repeatedly, to be on an upward trajectory.
The problem has come home to roost; Sales declined while losses increased last quarter. The meager gain in subscribers due to price competition, or the 'buying of customers', failed to lift Sprint's fortunes.
To avoid default on debt starting to come due in 2016, Sprint must a. Cut costs to the bone. This must/is going beyond the normal 'trimming the fat' measures. b. Increase sales. c. Pull in every bit of cash flow and push out payments.
Third party leasing is a form of short-term borrowing. That is exactly how debt holders and credit ratings will analyze it. If it generates incremental profits, then its positive, if used to 'buy customers' and the customers do not buy in sufficient numbers, then lease borrowing accelerates losses. Its very much 'a numbers game' that can flip either way.
What has financial markets understandably concerned is that Sprint has a poor tract record. Selling at a lower price only makes sense if you can build your product at a lower cost. Sprint has a higher cost of building networks due to the predominant use of 2.5-2.6GHz spectrum and lack of innovation in how they go about doing that.
Sprint's future needs the miracle of innovation, not out of sync cutting of prices to buy customers. The most likely outcome is that Sprint will head into some form of court-regulator managed bankruptcy within three years.
The math is not so simple.
Sprint has built up deficits that must be replenished by earnings. These include deficits in the competitive mix of spectrum needed to build today's 'network of networks' that span low-mid-high band spectrum to achieve a competitive level of bandwidth-to-coverage. Sprint ranks in a distant 4th place in this key network performance metric.
Sprint is forced to do deep cuts in spending because repayment of long term loans/bonds is coming due starting in 2016. The capital spent over the past decade+ has resulted in accumulation of losses since 2007. Capex spending in the wireless industry occurs in waves as more spectrum is made available and each new generation of network equipment is deployed, replacing the last and requiring the population of a new generation of devices as well. If that has not resulted in, at least, paying off the last generation/wave of debt, the tank is empty for the move into the next generation of networks and services.. as is very much the case with Sprint.
There is a disconnect in thinking that cost savings returns to the bottom line. Over the next six years, about $29 billion in cost savings will be used to repay the principal and ongoing interest on past generation of indebtedness. ($17B in principal repayment and $12B in interest payments on the ~$34B debt, which is, at this point, still growing).
Verizon is taking very cautious steps.. it is not pushing out a widescale LTE eMBMS technology video service as was on-again, off-again planned. The acuisition of AOL made sense - Although AOL's business has languished for years, it holds a fair number of patents and technical expertise in addition to an service platform for content that Verizon can, at least, see a payback on its investment. The longer term potential is in the advertising and content delivery platform AOL can help to build.
The less risky approach represented by go90 is to offer ad based service that can build into a scaleable platform for future services. It is risky in that if it is a success it can become something like YouTube or NetFlix growth period.. requiring capital to deal with the growth before it nets positive results in ad, premium content or mobile payments revenues. However, that is the nature of the beast.. you either do it or fail by being too conservative as has been typical of mobile operator's ventures into direct and OTT of video services.
Verizon might have led into video services with eMBMS platform that would attempt to directly compete with cable and satellite TV with a lineup of competitive TV and movie content. That requires devices that work using the eMBMS AWS frequency channels which would take time and money to scale. It also would only apply to saturation of VZ's customer base.
Verizon is being calculating/cautious in their approach.. if it builds legs they can then migrate toward the eMBMS as aggressively as that makes sense from a risk/reward perspective.
Understand what likely makes up the short interest: Sprint has had from about 60 million to 145 million shares short. Historically the number had dropped to the low end of the range when Sprint (S) stock price dropped. The core holding probably contains 30-50 million shares shorted as a hedge against the debt position. What helped spur the buy of an additional 5% holding was further short selling as S reached the low water mark in the price range. Put is simply, Sprint's stock was under attack and that threatened any attempt by Softbank to refinance some of its debt or offload long term debt requirements for short term lease and vendor finance arrangements.
As the float narrows towards the 15% target short interest becomes more vulnerable. However, Softbank, a foreign company, is very unlikely to be allowed to acquire the remaining 15% stake in the US company. The premise for short sales remains untouched: Sprint is unprofitable and must increase its pace of capex investment in order to keep up with competition. If the long term prospects improve, short interest may drop over time. For now, it remains a hedge against dilution of the stock and reorganization of the debt instruments.
Softbank's buying came in response to increased short selling at a time when the stock had dropped to near long term lows. This was an 'offensive defense' strategy and can, until the fundamentals change significantly, will remain so.
That little birdie sounds like so much uninformed bullshisa heard over the years. Yahoo, Google, and Alibaba try to do as much business as they can with all operators. I have followed the operators and the Internet services providers for over 15 years, interviewing and meeting with them during which I have repeatedly asked about their positioning on services between operators and service suppliers. They are in business to work with operators but very seldom do exclusive deals because that would jeopardise their relationships with others in the broader market.
The broad statements are meaningless: what does it mean in the unlikely event that the rumor were true? What financial benefit can Sprint receive from Yahoo, Alibaba that will not similarly be available to all others?
That is likely the case. However, the chain of events was very untypical of short selling in general and Sprint in particular: Short interest has continued to rise over the last two reporting periods. The SI data is the reported for the previous two week period with some of that data being dated by the time it is compiled and reported 2-5 days latter. Nonetheless, the increase was sustained through the period of the decline. Near 3.10 the stock began a technical bounce and was on the way up when Softbank initiated buying. That very likely led to some short covering that added to momentum and Softbank's buy volume.
Sprint must increase the number of subscribers in order to make their network capex spending work. A basic problem with using higher frequency 2.5-2.6GHz Band 41 spectrum is that it requires higher density to achieve coverage and in-building penetration. That comes at a proportionally higher cost that creates a supply vs. demand ROI problem for Sprint that has persisted over the past 15 odd years they have held amounts of the spectrum. "If we build it, we must fill it" is a warping of the 'if you build it, they will come' axiom that fits.
That is hardly so obvious: Sprint could be viewed as spiraling out of control financially despite the yet figurative degree of 'turn around'. Sprint has a $35 billion+ debt. Because of the much worse credit rating than Verizon or AT&T, Sprint pays about 4 points higher interest rates. Unable to borrow to the degree needed to remain long-term competitive in networks, the near term improvement in network performance as reported by RootMetrics and other surveys, can be seen as a cyclical stage of competitive improvement that will pass.
RootMetrics most recent report continues to show that Sprint lags in bandwidth-to-coverage. What that means: Sprint uses 2.5-2.6GHz extensively. While that provides high bandwidth where it covers, penetration into buildings and less urban areas is lower. The average service quality must be understood based on a further read of such reports. Both Sprint and T-Mobile have less robust and deep service capacity than VErizon or AT&T.
I and other analysts have asked the questions about the rationale and impacts of Softbank's buying of Sprint shares:
Sprint's stock was under attack by short sellers: for the first time in over 10 years, short selling in Sprint (S) increased as the stock plunged down to long term lows near $3.10. Short interest during that period shot to the last reported level of 143 million shares which was at the time Softbank began acquiring the additional ~5% to bring their total, if fully executed, to 85%. Sprint had previously announced an outline of a plan to deploy about 70,000 additional or updated smallcell multiple-band base stations. Vendor financing would provide a form of a short term loan that pays for equipment, leaving the larger expense of site and deployment expense yet unaccounted for. Short sellers, including hedge funds and probably debt holders, surmised that Sprint would be forced to dilute the shares with an inconveniently timed equity offering. Financial analysts, including Moffett forecast that Sprint would run out of financial rope sometime in 2016. A financial analysis showed that Sprint was vulnerable to a financial spiral that would drive down the stock in the face of inability to borrow to keep up the pace of industry network improvements and expansion into mobile media. Therefore, a prime motivation was to reverse the bear raid by short sellers that was helping to drive the stock price down to $3 and possibly lower. Softbank saw the combined threat and opportunity: an investment at the time of higher short interest could drive short coverage and bullish short-term trend buying. Due to circumstances, an investment of 'just' a few hundred millions could improve the value of Softbank's stake by billions of dollars. The recent reports show valuation has increased by about $7 billion since Softbank initiated the increase in position. Overall increase from the low is higher, at about $11 billion as a technical bounce was underway.
Investors who know enough, soon enough, can ride the trends. The trends in the stock caused by technical trading dynamics, (a technical bounce for example), or by a corporate stock accumulation do not have direct impact on the fundamentals of network competitiveness or cash flows. A probably rationale was to prevent further deterioration in ability to finance network improvements needed to step up and maintain competitiveness long enough for it to matter, i.e. pay off some of the massive debt, refinance at more favorable rates to reduce debt service under the current $0.45 billion per quarterly drain.
The FCC and DOJ want Sprint to innovate competitively using LTE-Advanced technology. Sprint's spectrum is suited to smallcells similar enough to 2.4GHz WiFi that borders the 2.5GHz band. There is no excuse for being out of date in the approach to network design and deployments.
FCC+DOJ won't allow Sprint to merge with T-Mobile despite having already been headed toward bankruptcy at the time Softbank, a foreign company, was given the highly unusual, (first and only time), to acquire over 80% of Sprint. Softbank/Masa Son, at that time, promised to turn Sprint into an engine of technological and market innovation that would show competitors to have been moribund in their ways. It was not part of the bargain that we now ignore the promises of innovation as a customary lie. Masa Son's feet should be held to the fire to, instead, innovate enough to become profitably competitive in networks and services. Our, government should not now allow yet another national carrier to be acquired by Softbank, a foreign entity, with no clear plan to do more than strip out costs in order to become more useful to our society.
Innovation requires fresh methods, not just layering of marketing approaches on top of bankrupt networks. Integration of network and business approaches that results in more competitive network is feasible but requires disruptive innovation. Or Sprint can go out of business by attrition of networks and subscriber base to competitors over several years and billions of additional losses that Softbank must shoulder.
Innovate or die.
The question of the timing of the offer is misplaced: Sprint and all mobile operators are in the business of spending multiple billions of dollars up front on networks, services, device development and fielding, and operations that must result in requisite gains in subscription revenue. Sprint's market position, along with T-mobile, forces them to compete based on price and creative packaging of services if they hope to capture share from market leaders Verizon and AT&T.
The industry has matured and become saturated. Systemic of that, Sprint recently reported their lowest rate of churn in company history. While that signals a probable end to the damaging period of network disruption caused subscriber churn, it also signals that it has become difficult for operators to take share from each other. Networks have gravitated towards use of the same core technology platforms, coverage and service quality metrics, and devices... i.e. service has become more a commodity with narrower differentiation between operators. In this competitive climate every significant shift among major operators in their networks and service offerings, particularly those which are disruptive to current customer relationships, must be pursued. Sprint is seizing on the obvious:
AT&T's acquisition of DTV creates a decision point for a large portion of DTV's 20.3 million subscribers who must choose whether to stay with one of AT&T's competitors, including Sprint's subs, or take advantage of a discount offered for AT&T+DTV and the convenience of a single bill.
In a low churn environment, the time to strike is when a significant slice of the market faces a decision.
Sprint's decision to offer DTV customers a free year of service makes good sense: The cost of acquiring new customers (rather than add-on subscriptions) equates to several hundred dollars. It has proven very difficult for Sprint to take back some of the greater than 11 million subs lost
over the past few years, making this a lesser of evils marketing attempt.
Another aspect is that Sprint must rebuild while carving out a new image based on the more mature carrier environment. While not likely to call it such, Sprint must present the image of the "Un-Carrier" operator alongside T-Mobile. While these two spar with each other, the main message is that they are willing to fight against the BORG Empire established by their nemesis Verizon and AT&T. Sprint must break the mold in respect to how the company has come to be perceived: holding on for too long to past networks that caused too little gains compared to pain for customers.
This move does come with a cost. However, Sprint does not have the luxury of having accomplished the goal of 'best network', coming from behind VZ and T in coverage and bandwidth-to-coverage metrics in most markets. Even while S has made improvements, the brand perception lags, making the give away of service to fill up the network a good move.
Furthermore, in a low churn, mature market, the decision point for gaining new subscribers has narrowed. That focussing of opportunities down to the choice moments when customers are making decisions places more emphasis on overcoming barriers to change: since operators look more alike in network quality and coverage and devices offered, the chrysalis of the decision hinges more on user device-dependent usage habits. users have become more attached to their devices rather than the network it runs on. At the point they are faced with a decision that otherwise forces them to change the device is the exact time to strike with aggressive marketing offers.
Sprint's Direct 2 You personal sales campaign helps to transition customers to new devices by porting over setup, contacts and applications. While not avilable everywhere, it fits in well with the free year of service offer.
Sprint has remaining issues of higher cost-to-coverage of network deployments that plague the bottom line. This sales offer is not aimed at a quick fix to the miserable cash flow situation but is on target for the dynamics of the market environment.
Mobile tying up with content and invading the broadband Internet space is a fact of life: the 'XYZ Generation' is coming up using only mobile devices for everything outside of school or workplace broadband connections. And while many typical households retain cable, fiber or DSL connections and a VoIP or wireless phone connection, the usage has been shifting to the point that cutting the cord becomes an easier choice. That leaves the cablecos in a market that is destined towards shrinking. While that has long been talked about in the past, it is now the reality of the business environment.
The shift to mobile networks is not something that has been figurative.. just a concept that never happens: The technology shift to MIMO-OFDMA based LTE wireless and IP networks has been long in development for a reason: the capacity and cost factor had to reach a crossing point where it could replace cable and fiber for all but the highest capacity requirements. It has reached that point... but that is an oversimplification. It is not wireless networks per se that have reached a crossing point with wired networks but ICT, Internet and Communications Technology, industry which is a convergence of wired and wireless transport. To deliver high wireless capacity at low latency for video, VoLTE and cloud applications requires hybrid wired-wireless networks. That makes the merger of wireless and cable companies potentially more profitable and, certainly, more survivable for the cablecos.
Will Comcast try to acquire T-Mobile or basket case Sprint? That remains unclear. Deutsche Telkom is rightly in no hurry to sell T-Mobile. Comcast might use advances in WiFi and more unlicensed spectrum to push their own form of near-mobile or what used to be called 'nomadic' wireless experience. Thus far that does not appear to show much promise. T-Mobile may, on the other hand, wait for mobile broadband to erode marketshare from cable while giving away more WiFi routers to provide indoor WiFi-to-4G coverage for mobile devices. With DISH running into its own paradox about what to do with spectrum, T-Mo may find it is in a better position to pick up assets and gain share as cable and satellite head into steeper decline.
A combination with DISH Network would be a fair choice. However, Comcast is better imo:
A frequent assumption is that the combined spectrum of DISH plus T-mobile would catapult the combined company to a leadership position. That may not be quite so: the FCC guidelines calls for no operator to hold more than 1/3 of a bandwidth category of low, mid, or high frequency band spectrum. TMUS+DISH would go very close or over that limit in the mid-band. That might cause the FCC to force a portion to be sold or exchanged with another carrier for low (unlikely) or high band spectrum (more likely as Sprint would likely be willing to swap some of their messy LTE Band 41 for mid-band).
The combination with DISH would make sense regardless of possibly being required to divulge some mid band. However, DISH has no terrestrial network, no base stations, no backhaul network or fiber optic grid network.
Comcast does not have spectrum. However, it has capital and borrowing capacity and has the benefit of being preferred by Deutsche Telekom according to their CEO. Importantly, Comcast and other cablecos have the most extensive networks of fiber optic and broadband cable that can serve as fronthaul/backhaul to the 'massively densified' mobile network envisioned for the future. The combined Comcast+T-Mobile could build upon the combined infrastructure that exploits convergence of mobile broadband and cable/fiber assets.
What's more, DOCSIS 3.1+ provides a path to increase the cable plant to ~750Mbps now to over 1.2Gbps over the next five years with the lower latency needed to support VoLTE and real time video services. Comcast/cablecos bring content services to the table that can be sold as a combined part of quad-play fixed-mobile services starting now.
Telecommunications companies in general get much scorn from consumers. However, both of these companies have tens of millions of customers.. the market votes with their wallets every day and they pass well enough.
Cable companies have among he worst consumer opinion ratings of all service businesses. The jokes about 'the cable guy' showing up at the wrong time if at all is common lore. Wireless users typically have a love-hate relationship with their service providers.. they complain and complain but, in the end, continue to buy the service.
That is not what this merger is about: the coming together of cable and wireless is inevitable because broadband usage is converging.
Comcast is a cash-cow business that has complementary infrastructure and content delivery assets that can be leveraged over wireless networks. Cable is at a stage of saturation with decline in the offing as wireless broadband eats into traditional wired services. So, the logic that Comcast is the best suitor for T-Mobile is a no brainer.
This question is the whimsy of stock or industry newbie speculators . Google will never buy a major mobile/ICT operator because that is a basic conflict with their business model. This speculation misconstrues Google's tinkering around the edges of the various bit transport media and technologies that are intended to spur industry innovation and adoption of technology towards open, high-bandwidth pipes. Google's business model must have access to all major transport media with least amount of walling off of media/content, advertising, payment platforms, and, or course, search in all its forms.
Google went to great lengths to assure mobile/ICT operators around the world that their Project Fi efforts aspirations are limited to pushing the edges of interworking between WiFi and WRAN, Wide-area Radio Access Networks that would not much compete with their mobile industry partners.
Name one Google effort that has grown to compete with major network operators. Name one technology project that has changed the industry.
Google helped develope White Spaces technology which was lame by design.
Google's fiber optic project remains limited to a few metro areas... and has 1% of the US population as subscribers.
Project Fi presents a similar intentionally castrated adoption model: While it shows promise as an example for how current technologies and standards can be put to service as a 'best connected network of networks', it is being offered to a limited number of users, using one mobile device (for now anyway).
Mobile operators remain in strong control over their environment: WiFi is limited in range by regulation of the spectrum it rides on: the frequencies made available are 'junk spectrum' once deemed unsuitable for mobile use. What makes it suitable is that individuals and companies (the public) deploy hundreds of millions of WiFi routers at there cost with a few million (a few percent) deployed by operators or partnering HotSpot operators. WiFi will remain castrated by design with the primary choice for widespread connectivity remaining the use of WRAN networks.
I agree with your general thinking: Wireless technologies have evolved over the decades to avail a broader vision for how universally it can be used. At the dawn of the wireless age, before the FCC was established by the US Congress, spectrum use was pretty much a land grab. According to the legal definition of spectrum rights, it is owned by US citizens, managed on our behalf by the FCC and other branches of government. Operators are granted licensed monopolies over parts of it under the mandate to make best use of it in the public interest. That concept has morphed recently more into "make the most money for government to be spent elsewhere" or replenish the national debt. That somewhat distorts the avowed purpose to use it in the best interests of all citizens and industry toward use in the interest of those who have the most marketshare to afford spending billion$ on auctions. The justification is that capital formation allows nationwide networks and services to be built. However, a counter argument is that managed mobile networks are 3x-5x less efficient use of national wealth, delivering fewer/slower innovations.
As a means of deployment, mobile networks have up to twenty times the cost per bit than primarily self-managed WiFi networks. That is not an entirely fair assessment because WiFi networks have limited coverage and service is ad hoc.. at the discretion of the chaotic environment of citizen installers.
However, a major reason WiFi has limited coverage is because it has limited, high frequency spectrum, very restricted power levels, and was designed to have short range and to, inadvertently, cause interference between users due to the approach to spectrum sharing.
What if instead of licensing spectrum just for mobile use it was licensed as a tiered, common technology platform using adaptive modulation and spectrum access based on converged 802.11ax and LTE-A technology?
That is technologically possible and market momentum and critical mass makes it within the realm of commercial feasibility. However, it is unlikely to happen as orchestrated in a logical fashion by the FCC and with cooperation of mobile and Internet industries (ICT).
The reason why WiFi spectrum was once thought to be unusable is because the technology was unsuited for its use. Frequency domain technologies have (begun) to change the limitations into somewhat of an advantage over lower frequency bands because shorter range of signal propagation allows higher spectrum reuse via MIMO-OFDMA, CoMP, Co-MIMO/MU-MIMO technologies. The reason why it was made available was because mobile and other industries thought it less useful... when evolution of technology changed that, mobile operators coveted its use.
WiFi has been both a phenomenal success, achieving use in over 11 billion devices worldwide including some 6 billion mobile phones and tablets... it has become the most universal connectivity technology. WiFi also ranks 3-10 times the data density of 4G because 'cells', i.e.. WiFi coverage areas are small, providing area to area reuse of the same, primarily 2.4GHz, spectrum band.
Despite this huge popularity, WiFi has also served as a great boon to mobile operators: Instead of cannibalizing mobile revenue, WiFi allows operators to offload over 60% of bandwidth needs. Most of the offload capacity is provided by consumers at home, work and meeting places. Operators, despite having some HotSpot availability, get a free ride on WiFi connected to cable or other broadband Internet connection. What is there not to like about that equation? What was considered to be a threat to mobile operators mostly has turned out to be a highly cost effective way to achieve extended coverage and capacity.
T-Mobile has been the most aggressive US operator to seize upon WiFi's capabilities. The company sends contract subscribers, upon request, a free 802.11ac (Asus) router that has a customized operating system ROM that enables relatively seamless handing off of calls and data connections between the local wifi and 4G LTE network. Google's Project Fi is based more on the model called "WiFi First" which puts emphasis on the WiFi connection, offloading that connection only when a WRAN, wide area radio access network, connection is not available.
Is Project Fi participation profitable to mobile operators? T-Mobile and Sprint are the underdogs with combined marketshare about equal in subscriber numbers to either Verizon or AT&T. However, the difference in customer mix and profitability widens the overall gap between the two bottom feeders and the larger fish. S and TMUS have lower ARPU/ARGU, profit margins, and net profits. In fact almost all industry profits are enjoyed by VZ and T. As such, the two 'junk yard dogs' must be disruptive players, taking advantage of every available means to improve coverage and capacity while lowering costs.
An analysis of giving away extended coverage 802.11ac WiFi routers with voice and data handover capabilities on a ROI basis looks like a sound investment: The landed cost of the .11ac router is about $50. Including shipping and customer service cost, say $100-$150. The units smartly increases in-door coverage and bandwidth with very little additional network infrastructure, maintenance or operation costs. The customer even pays for the electricity. No local permits, environmental clearances, truck rolls of installation crews, etc. are necessary.
What the operator keeps out of this self-instigated 'WiFi First' approach is another layer of customer stickiness/loyalty.
What is the threat that Google Fi or Apple's rumored but unlikely similar effort? It is limited because neither want to threaten among their primary customers, the operators. When announcing Project Fi, G purposely made it very clear they have no intent to compete on a large scale. Google posits the effort as pushing technology forward, giving it the ability to try new things such as media content, edge network delivery, and improvements in seamlessness between WiFi and 4G and beyond networks.
T-Mobile and Sprint must pursue this and should do so despite potential for disruption. There is a term to describe disruption in less efficient business models: competition.
Despite being in an exciting industry that impacts much commercial, government and individual activity, I agree that Verizon is a nicely boring investment.
The attention given to the telecom/ICT sector probably adds some volatility to an otherwise boringly efficient historical and projected cash flow scenario. For example, when fears have risen regarding T-Mobile and then Sprint's 'price war' this may have contributed undue volatility in VZ. As quarters have thus proven, the impact of the alleged price war has been minimal. Largely this is due to the fact that prices trend down as a matter of course. Since the first cellular voice networks, unit prices have trended down while subscriber penetration and broadening out into new services has grown. What now adds to the fears of price erosion of income/cash flows and profits is that the saturation of subscribers will result in a net collapse of service revenues. However, this fails to account for two sustained factors: 1. New and expanded services continue to emerge. Primary among these are multiple attach rates among existing subscribers and evolution of mobile content, ie. video services and advertising. 2. The operator's unit cost per bit of providing network services is seeing a decline roughly attuned to 'Moore's Law'... or "Moore-Alamouti's Law" of wireless which sees a rough doubling of capacity at the same unit cost about every 18 months. This shifts the scenario from Verizon being the victim of aggressive pricing to being the champion of the game: By having the most efficient set of networks, VZ is able to offer highly competitive coverage, bandwidth, and quality of service at a lower price. What makes VZ the champion rather than the victim is their marketshare and qualitative position allows Verizon to stay competitive while not being forced to use price as the lowest common denominator. In other words, Verizon can shift pricing lower while keeping margins higher than competitors. They are not forced to offer the lowest price. Rather, the perceived value to subscribers includes breath of services, coverage, network quality and the brand image factor... thinking VZ is likely to continue to improve to keep ahead or at least up with competition and with less disruption than has been historically seen among competitors.
The chance for competitive upset could become a factor in the future: this is an industry in which change is the status quo. VZ could get lazy and fall off of their game. Its been known to happen among the best of companies in maturing industries. However, the boring repetitive nature of VZ's results indicate that while investors should periodically perform a fresh review, they can take actions to invest based on an expectedly boring outcome.
One way to increase the benefits of the relatively tight range of swings in VZ is to buy at times of market or sector distress , such as now, then sell slightly out of the money covered calls when VZ rises to near cyclic highs.
Your comment is naive fantasy.
Softbank is not known for throwing money down the drain willy nilly. They obviously expected Sprint to be turned around and got blindsided by the surge in fortunes of closest rival T-mobile. So, the decision to acquire floundering Sprint was flawed. Now that they own it and its continued to underperform, Masa Son stated that he would not invest in a bottomless pit. That SB would invest in Sprint if the prospects showed a favorable ROI. That is pragmatic thinking opposed to retail investors like yourself who think that Softbank will plow money into Sprint ... apparently justified only by the fact that they are already on the hook for 81% of the company at a higher price. Bunkus interuptus.
The other buffoonery is this oft repeated statement that Sprint's spectrum is worth $70B. I do analysis of value of spectrum as an industry analyst. At the peak of the outlook for 4G when Sprint was the only operator with such wideband spectrum (over 20MHz channel capacity) the 2.5-2.6Ghz band was estimated to be worth between $20 and $30 billion IF Sprint's plans at the time panned out. They did not meet, by a long shot, expectations at the time. The value of Sprints spectrum if calculated on the basis of comparative ROI generated by competitors bands of low and mid band spectrum might, euphemistically, be worth minus $20 billion! While that is in jest, the point is that spectrum is most directly valued based on how it is used to generate revenue and profits. Sprint has failed to make a profit using it, so its value is negative as an ongoing business value.
The spectrum obviously does have a value because other operators probably can make money using it at some point. Trouble is that a large amount of mid band spectrum has opened up and has gone into use recently with more slated over the next 1-3 years. More is coming available in the 3.5 and 5Ghz bands and 60-120MHz in the 600-700MHz band.
Sprint has to make a go of what they have. Failing to make the business profitable using the much hyped 2.6GHz band 41 spectrum has led to its value being discounted. Competitors will not pay Sprint $20 billion for the whole of it. Its foolish fantasy for investors to peg their investments on unfulfilled promises and fairy tale valuation of spectrum.
Wall Street/the market is down on Sprint because their performance is under par with its competitors to the point of threatening its long term structure. Sprint almost certainly won't be allowed to go bankrupt, but as analysts peer into the future they see that something has to give/change: either Sprint makes what now looks like a miraculous recovery or shareholders will see their shares get diluted.
Take a look at Sprint's performance in meeting its goals for new networks, subscriber and sales growth, etc. Then look at the financials. If you look at Sprint as if it were a company selling corn flakes, ie as if you do not own it, you might decide not to touch it with a ten foot pole.
Industry analysts learn to look at companies mostly devoid of passion. They try to teach that in the MBA program but it doesn't always stick. Investors like to own things.. like owning a new car, they are vexed with falling into the ownership mode until the thing is falling apart.
Individual experience is, as you all know, anecdotal. The wireless market is not nearly as simple as all that:
Wireless coverage is no longer viewed as one homogenous attribute that is was: coverage is made up of voice connectivity which itself breaks down into a few components including in-building, rural/outbound, connectivity and reliability of connections (drops). Operators analyse their networks using both sophisticated measurement tools indicative of the Verizon ads depicting specialized equipment vans that tour the country looking for weaknesses, and 'crowd sourced' applications that run on SmartPhones that can perform measurements based on devices used in the field. The latter allows up to hundreds of thousands of points to be measured directly between actual devices and base stations to capture closer to the real world experience of subscribers.
Figuring out how an operator ranks has become more complex: Wireless used to be all about voice connections with measurement of call setup times, drops, call quality that can be related to signal measurements including latency, jitter, call setup and impacts of various legs in the network. Now it has become multi-dimensional tests and analysis of the results. Voice coverage still ranks at the top of requirements with text messaging coming in second. However, text messages can be cued and transmitted when a good connection is made... a delay or momentary drop is not so upsetting as with voice. With web, video and broadband use gaining in popularity, the coverage measure has shifted to 'broadband-to-coverage'. Sites like RootMetrics must distill their measurements down to a few easily understood metrics such as average bandwidth. However, the user's experience may not be correctly reflected in that smoothing of the data. What is now important is bandwidth-to-coverage which can be summed up as the user experience of bandwidth. Due to the mix of spectrum Sprint has available they rank a distant number 4 behind AT&T, T-Mobile and Verizon in relative order because Sprint tends to have high bandwidth in areas of dense urban deployment and lower bandwidth where the service relies on the broader coverage that narrower band lower frequencies provide. These factors cannot be wished away and will be expensive and time consuming to change.
However, the network can be made roughly competitive such that perceptions of how well an operator is delivering on user's needs takes over in the picture of how well they rank. The facts are that all operators have migrated to use 4G and B4G, beyond 4G or 5G class networks. All operators are migrating to use multiple-band/multiple... networks and HetNet smallcell+macrocell network architectures. Their efforts differ by vendor, degree, mix of smallcell,Wi-Fi, and macrocell components but the end result is bound by the generation that uses the same basic set of technologies. That puts pressure on operators to differentiate based on perception of performance and image that can vary between the top four roughly based on market position: the dominant top two, VZ and T 'wage war' based on scale of operations and less as a 'price war' or more selective so. S and TMUS must wage war based on being renegades willing to fight for the sake of customers over price and accommodation of device and service offerings.
The real world operation of networks matters because it closely defines the user's experience where they live, work and travel. Price and 'Un-Carrier' image is more important for 'the young and the restless' and other higher churn segments of the market. Therefore, perception has been shown to have a major influence on subscriber growth and flux. However, even so, it must be backed up by that real world network capability. T-Mobile has gained subs both due to the perception it is pursuing what users want and its investment in spectrum and networks that reasonably have delivered on the promise of better service across the board.
Sprint lacks both the real world experience that pans out to be a better across the board experience and also a lagging perception that they are chasing rather than leading the way forward in the never ending race to deliver better quality and more and better services.
I continue to see nothing on the near term horizon that shifts Sprint from a 4th place position in the race to a clear, momentum building 3rd or better position. Sprint has to deliver the broad improvement in performance that overtakes the damaged public perception of coverage and quality.. and do that in a way that gain improvement in overall ROI against the field of competitors. Otherwise, Sprint's network improvements will be, as in the past, for naught - improvements behind that of the field and at a higher per sub net cost that results in losses, rising debt, and decline in long term competitive position.
The rankings of carriers is much of a misnomer: Third at what" Subscriber count obviously. However, considering devices relatively equal among competitors, sub counts are paid for by capex spending on networks, marketing including discounts and contract buyouts and other customer acquisition costs.
A true ranking of operators must factor in profitability of each operator to some degree. However you might weight that 'sustainability factor', Sprint ranks in 4th place behind T-Mobile and "worlds apart" from Verizon and AT&T. Indeed, the two leaders appear to be on a different planet in terms of financial position.
Claure appears very frustrated having lost not just in terms of subscriber position relative to two years ago but recognition as being the consumer friendly 'Un-Carrier" that is fighting for 'the little guy'. There is hype in all operators sales pitches... if not so, then user satisfaction would not be rated consistently low for the sector. Some of that dissatisfaction comes with the territory - customers will never be entirely satisfied because service will remain a moving target in which yesterday's very good is today's so-so or poor satisfaction rating. Sprint is in the throes of playing catchup in networks and in market image. Neither is an easy or inexpensive proposition.
Good article.. I like your general thinking.
DISH has requirements to start deploying in a portion of its spectrum within about nine months, but there will be a few years over which to deploy on a larger scale depending on the specifics of the license and when it will be cleared.
The other way that the release of an aggregate of over 250MHz of overall spectrum will have is it will allow mobile network operators to push into home/business broadband services, TV/movie and new forms of video services that will be available in more places and devices than fixed and satellite networks. That won't come overnight but will start to come more quickly starting this year. Part of the equation for paying for the spectrum and cost of building on it is to absorb broadband and media under the same umbrella to increase ARPUs to an average of over $200/month.
You are right that Charlie has to sell this to Deutsche. The pitch is not what the combining of current spectrum, network and content assets would be. It is the carrot and the stick between not doing the deal and then facing better financed Verizon and AT&T who are soon to launch their quad-play services, and the way out of becoming the sheep led to slaughter by building a quad play network-of-networks using the combined spectrum. In essence, the pitch is part "Join with me or get crushed as the competitive landscape shifts and go on to build on the best array of spectrum (minus the 600MHz piece) and most creative combining of competitive assets."
My personal opinion since reading Parkervision's D2D patent applications around fifteen years ago prior to being awarded patents by PTO was that the technology was invalid due to basic flaws:
a) They do not teach a mechanism for energy transfer from the carrier wave to construct the baseband signal that is in keeping with limits established by Shannon-Hartley. The carrier wave signal upon which the baseband transits contains no data itself. As the name implies, it carries the information-bearing baseband signal. PRKR has failed to show a clear method that performs as claimed in the patents or in external literature. Despite belated attempts, such as documents of expert witnesses in the ongoing IPRs, Parkervision fails to describe/teach the alleged 'energy transfer sampling' method of generating the baseband. That is because the noise impacts are only suggested and not 'computed'.. ie. are failed to be shown by mathematics or in practical application. Expert testimony that includes an alleged modeling of conventional and Parkervision circuits leaves out vital information. While purporting to show the alleged patented circuit, it appears to be no different than prior art sample and hold circuits. And while extraordinary gains in SNR are alleged, the modeling and other testimony fails to follow through with the mathematical support of the theory/methods for such such claims. This leaves the late-in-the-game effort at expunging Parkervision's D2D from what Judge Dalton has conferred as the lack of evidence of the theory of operation as a red herring that exposes the basic weakness of the patents: they do not teach a method that can be shown/proven to work under exposure to critical review. This new 'evidence' cannot be brought forward in the CAFC appeal of the DC court decision and I expect IPR panel to see through it. Mike Farmwald/RPX will be deposing PV's expert on the 29th/tomorrow... it will be interesting to see how that goes.
Long about way to answer your question.. I am piling up stuff that dovetails into this. The oral arguments at CAFC gave good indications that the judges were not going down the path of accepting Parkervision's only viable position, that the jury had enough evidence upon which to base their decision. Instead, it appears they are in general acceptance of Qualcomm's position as supported by admissions of PV's expert, Dr. Prucnal and chief technologist, FD Sorrells that Q's circuit is a conventional mixer, that the TX filter capacitor does not function as a part of the alleged energy sampling process and that there is, in any case, no proof that PV's patents are infringed in generating the baseband signal.
Parkervision is going down the expected path: lacking proof that their energy sampling method is used while having to admit that baseband is generated at the output of what is admitted to 'look like' a conventional mixer, they were forced to come up with an explanation that would require a second generation or cogeneration process. Since that is not the theory used in Judge Dalton's DC, this shows up as a 'second signal theory'. The oral arguments show PV's attorney stumbling around the issue... trying to say there is not a second theory but that energy sampling of the carrier wave using TX cap is involved. CAFC asked for an explanation of what mechanism is shown, and PV's answer appears much like 'trust us. its in there'... ie. no valid response. While I may be reading into CAFC judges thinking, I got a sense of scoffing at the arguments.
Let's get back to the primary issue that has always faced Parkervision: the patented method is vague, misrepresents itself as novel by using new terms to describe prior art methods, and, if the claims for improvement over prior art is to be half believed, violates basic laws of signaling, namely Shannon-Hartley. One plus one does not equal three... if a patent claims extraordinary benefits compared to the relatively modest gains that have been achieved by refinements and stacking up of prior art methods, then science requires at least a reasonable degree of proof that can be tested to validate the alleged method. I made a statement 15 years ago that Parkervision could never prove D2D works as claimed. That is proving out because their claims cannot.
Great article. This: "7. Home Run: ... but no one has figured out how to hit a home run. Triple Play strategies - landlines, wireless and video/Internet - have dominated, but are now multiply challenged by everything from Google Fiber to HBO Now. OTT both offers a big headache and a potential new place to play, with AOL offering what may be an on-ramp."
Hitting the 'home run' has been difficult because the game has been changing. Some of that comes down to fully understanding market needs and being willing to transform from what had worked in the past. Asking the question: "Why didn't Yahoo! or AOL become the next big thing, Social Networking, giant... why did they not transform to become FaceBook (by offering similar ease of use social platform)?" AOL seemed to be heading towards the social and media platform over a decade ago. Yahoo!'s far flung portal efforts were even more in disarray but have embraced, particularly in Japan, innovations in social networking and media. Hitting the 'home run' to morph into social networking platforms that might then aspire to take part in the long heralded 'Triple/Quadruple play' platform services requires willingness to instigate changes that uproot and either transform or replace what was established.
That remains a question for big mergers between industry segments: how well can AT&T+DTV, Verizon+AOL (or new deals between DISH, Sprint, T-Mobile, and cablecos) transform themselves into a simpler/easier to use, integrated platform rather than pounding of square pegs into round holes?
This article makes nonsense of mobile/ICT business. Spectrum is important if it can be used cost effectively. It is nonsense to measure spectrum in these gross terms as equal with other bands.
Spectrum is much like the business case for real estate: Vacant land can have a value but until it is able to be put to use it costs money to hold onto it. Sprint only 'owns' ie. directly licenses about 1/3 of the 2.5-2.6GHz band 41. The rest is sub-leased at a cost of hundreds of millions whether it sits idle as it has or not.
Sprint business has run nearly out of borrowing capacity. Its credit rating is sub-investment grade despite the support of the patent company. And Sprint continues to lose money while not gaining the subscribers expected following a major upgrade under Network Vision/Spark.
Perhpas the "Sprint Next Generation Network" plan that is being worked up by Softbank-Sprint will provide additional funding of a plan that promises to make Sprint more competitive so that the company gains millions of new subscribers needed to generate the cash flows and profits to pay back huge debts and fund ongoing capital requirements. However, there is no bananza likely from profitless spectrum. The new plan must show new ways it can be used.
Google has some impact on developments, mostly in impacting regulators, Congress and the White House to push in a direction favorable to their goals.
"For instance, Comcast recently abandoned their "we're halting infrastructure development" posturing over the FCC's net neutrality ruling in order to compete with Google's Fiber's rollout in new areas."
... I don't think Comcast's, (Verizon, or AT&T's for that matter), decision to go ahead, they never really stopped, capex investments is mostly attributed to what Google Fiber is doing to deliver service to <1% of the US populace . The cablecos and ICT, Internet and Communications Technology Companies, must continue with prudent investments in infrastructure due to competitive pressures regardless of the FCC's Title 1 ruling (net neutrality by treating ICT as a communications utility under Title 1 laws). Fiber optic is a very small part of direct connections to consumers. Moreover, all wired broadband is being either forced into sharing marketspace or being displaced by mobile broadband. Fiber optic and cable will be eventually resigned to a supplementary role for use with wireless connectivity... a long sustaining piece of a larger pie. Cablecos are now starting to transition to DOSCIS 3.1 which can hit fiber optic speeds of 1Gbps with longer term upgrade to 1.5Gbps. That puts cable on a practical footing with fiber in terms of both ability to support the end-user bandwidth with metro to regional grid and longline networks and the supporting content infrastructure including increased VOD and other services. Cable companies are forced to up their game because it they stay near the relatively low 30-60Mbps US bandwidth rates they will be overtaken by wireless broadband over the next several years.
What Googley can do is, perhaps, push the technology down the pike a bit more rapidly. However, the more dramatic way they have in the past and might now influence the ICT industry is to push how the business is organized: G's orchestration of municipalities to streamline and lower costs of rights of way, permitting, network node facilities site leasing, etc. raises the bar for community involvement and expectations for service that can impact fiber, cable, and wireless providers.
An important goal is for Google to gain favor with local, state, regional and national government entities and shift the public's image favorable to their position as the ruler of the data search and knowledge gateways. That role will become increasingly important and controversial as we become even more connected and reliant on the interacting ICT environment.
Google Project Fi is similar to other Google efforts: It is partly just a limited market experiment. The details of how open the sales will become remain sketchy. However, we know that it will be available on only one device, the MOTO/Google Nexus 6, that has been equipped with the antennas etc. to support operation on bot T-Mobile and Sprint networks. That limits the appeal of the service to those wanting that one device. It also begs questions about whether Google, TM and S will work on making more devices available and working on multiple screen applications. Thus for starters the impact of the project has to be scaled back from what it attempts to do in terms of changes to rate plan structure and network service implementation to the extent it is likely to be offered across devices and retail availability. At least for the near term, Google Project Fi is more an experiment than a serious threat to Verizon or AT&T. It might best be viewed by them as another wake up call that speeds innovations in networks, devices, and service plans that expands the potential markets in which they operate.
Google put up a combined 'network-of-networks' coverage map for Project Fi Sprint+TMobile coverage. Without knowing how far the collaboration between the two junior players will go, from the initiation it will provide increased coverage using common 3G-4G voice-message-data capabilities. The details must be worked out, however, core and wireless networks of the two operators is similar enough to provide handoff of voice calls and data. Text messaging should have no problem across the multiple networks.. that is low bandwidth, discontinuous data transmission. The toughest service issue is call continuity... handoffs can be accomplished. However, fully seamless handoff does not occur with any operator.. there are locations/times where calls are dropped with them all. How well the quality measures up will depend on details that similarly have to be worked on whether transiting from one frequency network on Verizon to another or from between T-Mobile and Sprint networks.
How far will this collaboration extend? According to TM, it does not initially include VoLTE. For full voice-messaging and Internet integration to occur, operators must shift to VoLTE. That is where voice will get more interesting and what posses problems and opportunities for S and TM to either work together and with outside parties on a more integrated basis or prove that the collaboration is more figurative than real. Voice-messaging will become more integrated with social, media, and eCommerce applications. For this to reach its potential it must be seamless and 'effortless'... users should be able to post something onto FaceBook, sending a text message to a group(s) of contacts, and place a group call out to a different set of friends, family or associates. If they can do that regardless of what physical network they are on, unbeknownst to them, then Project Fi will be more than just a sharing of networks or rolling over of data .. it will be a shift in how the currently disjointed world of communications shows up.
However, much hype can appear that distorts real impacts. Google Fiber, for example, is used by about 0.5% of the US population yet is tends to show up in the media as a giant aimed to crush its competitors. Will Google Project Fi be a 0.5% marketshare participant... a monster only in the way it's perceived rather than real world impacts? A lot will depend on what T-Mobile and Sprint do to take the experiment beyond what Google is likely to do directly. As the starting point for more innovations all that can be said is that it has potential.
R.S. Analytics, good clarification of issues.
Besides invalidation of patents, PTAB can invalidate specific claims or cause the patent holder to drop or change claims in order to avoid overall invalidation. For example, if the claims as interpreted through the Markman is overly broad such that it is anticipated by prior art, some claims may be invalidated or the patent holder may try to save the patents by removing or changing the claims to apply narrowly.
One thing that distinguishes cases like Virnetx (or Parkervision), is the amount of the awards that are sought. This can stem from how these firms developed their capital structure, forcing the companies to pursue outside awards or they would otherwise collapse under the weight of their financial requirements.