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Robert Syputa  

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  • 9 Takeaways From The Verizon-AOL Deal [View article]
    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?
    May 16, 2015. 09:57 AM | Likes Like |Link to Comment
  • Sprint Is Worth More Than You Think [View article]
    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.
    May 15, 2015. 06:27 PM | Likes Like |Link to Comment
  • Say Goodbye To Your Margins: What Google Fi Means For Verizon [View article]
    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.
    May 1, 2015. 03:48 PM | Likes Like |Link to Comment
  • Say Goodbye To Your Margins: What Google Fi Means For Verizon [View article]
    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.
    Apr 29, 2015. 11:18 AM | 2 Likes Like |Link to Comment
  • VirnetX / Apple Appeal: Bad News For VirnetX And Other Patent Assertion Entities [View article]
    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.
    Apr 27, 2015. 11:30 AM | Likes Like |Link to Comment
  • AT&T: The Die Has Been Cast [View article]
    The net neutrality issue is not so easily construed as being for or against government control. From the get-go, mobile operators are dependent on government grants of exclusive rights to licensed spectrum. Combined with marketshare and capital requirements, this helps erect barriers to competition unlike that of software, automobile, pharma and other industries. Thus, if you wanted to eliminate government involvement in the private sector, why not start with eliminating licensed spectrum?

    Many companies, industry segments and public groups depend on communications or compete for marketshare against the licensed monopolies/duopoly and are opposed to control over broadband Internet access in the hands of AT&T, Verizon, Sprint, T-Mobile and other operators.

    If you want less government involvement, why not ask government to open up more unlicensed spectrum? Wi-Fi uses a scant 50MHz of 'junk' 2.4GHz spectrum deemed unsuitable for mobile use yet conveys over 50% of 'mobile' bandwidth with almost no involvement of the FCC or other branches of government. If you think free enterprise works, ask your government officials to open up more and longer range spectrum (lower frequency and higher power limits). If you want constricted use governed under regulatory control, then ask for what we have now - bureaucracy by design..
    Apr 15, 2015. 07:26 PM | 13 Likes Like |Link to Comment
  • Why Sprint's Guidance Could Be Ugly [View article]
    Nice article.

    Sprint will need much more capital than outlined:

    Sprint needs at least $3 billion more just to fund operations. If Sprint goes ahead with the expansion of about 7,000 base stations, although many are conversions rather than new locations, they will need an additional few billion in funding. The 600MHz spectrum auction, expected in early 2016, will require $8-$15 billion in additional funding. This low band spectrum is much needed to balance out the preponderance of Sprint's high frequency spectrum.

    Your article makes a point many probably have not considered - that Sprint already sold through the Radio Shack stores and RS's problems stem from lack of sales flow. The 'opening up' of 1,400 stores is an experiment in how much new pull can be achieved from the the more prominent branding of Sprint in those locations. Some consumers may see that as a more convenient Sprint service location.

    Sprint has needed for the previous cycle of replacement of 2G and 3G networks with LTE would result in a turnaround in subscribers and revenue commensurate with the expense... a ROI. Instead, Sprint continues to struggle to report significant growth while the cost of staying competitive have grown.
    Apr 13, 2015. 07:21 AM | 2 Likes Like |Link to Comment
  • Sprint: Don't Follow Executives Into Stock [View article]
    RootMetrics latest report, 4th quarter 2014, shows that Sprint has made a substantial improvement in network quality. However, as mentioned in the previous post, this is largely due to making use of the limited supply of 850 and 1900MHz spectrum. Sprint's most substantial gains in the RM survey came from voice and text coverage and quality which correlates to the use of LTE in the 850MHz band to achieve wide area coverage and in-building penetration. The problem is that the 850MHz band does not have the bandwidth of competitors Verizon and AT&T's 700MHz band to deliver the combination of bandwidth in addition to messaging and voice traffic. The only way Sprint can advance networks to be on a competitive basis across the board (the country), is to acquire 20-40MHz of 600MHz spectrum in the auction expected to occur about 1 year from now. The last auction in the sub-1GHz band was for 700MHz which came in at $24 billion for an aggregate of about 34MHz nationwide. Since then, broadband revenues have soared, fueling the 2-3X higher than expected price of the AWS-3 auction. Despite limits on 30MHz of the auction, the 600MHz spectrum can be expected to fetch a record price, perhaps $60 billion depending on how much of the spectrum is made available for auction by the broadcaster spectrum holders.

    Thus the big question is how can Sprint turn from losses to a money printing machine in order to afford to balance their spectrum portfolio with at least a modest (20-30MHz) of 600MHz spectrum, or, using the alternative theory of network building, build out the largely unused 2.6GHz spectrum in tiered smallcell network architecture multiple-carrier networks. Either approach to network-service gains is more expensive that Sprint looks internally capable of accomplishing as a long term strategy. Short term/patch work improvements are certainly possible and that can send the stock higher... it all comes down to whether Sprint can show 'meaningful' improvement in subscriber growth.. at least several 100,000 gains in core postpaid subscribers imo.
    Mar 19, 2015. 11:40 AM | 1 Like Like |Link to Comment
  • Sprint: Don't Follow Executives Into Stock [View article]
    Googe article.

    The assessment of financial analysts has come after years of failures and half-hearted efforts to acquire spectrum and build networks that have ended in failure. The causes for this run deep: mis-matched spectrum portfolio acquisition tied to inappropriate use of network technology has led to sub-par ROI on network capex. Sprint has come to rely on marketing to portray their latest network efforts as showing greater improvement than the quarterly results suggest.

    Let's chunk this down so even the gadfly 'believers' in Sprint might digest it:

    If we look at each of Sprint's spectrum bands in which they are converting or deploying new networks, we see that while 850MHz and 1900MHz appear to show a positive ROI, the conversions are far enough along that future gains will diminish. The contribution to the overall operation has not offset losses due to a) loss to competitors who have better quality, bandwidth and coverage, b) the 'price war' which is more a reaction to losses in subscribers than a pro-active campaign based on more efficient networks. Sprint can ill afford to wage a price war while having the 4th ranked network in terms of performance and customer service quality according to two recent surveys. c) The 3x-4x higher cost of deployment into 2.5GHz LTE band 41 spectrum than competitor's 700MHz, and 1.5X-3X higher than mid-band AWS spectrum.

    Sprint has laid tentative plans to deploy up to 9,000 retrofit and new base stations with the majority being in the 2.5GHz band. Retrofits are normally 1/2 less expensive than new deployments. However, Sprint must use the spectrum they have, namely 2.5GHz which requires dense base stations. Many of these can be smallcells but require new sties. The net impact of greater use of 2.5GHz is higher cost per coverage and building penetration... a factor that has plagued Clearwire-Sprint over the past several years.

    If you look at Sprint's options from an ROI perspective, a viewpoint that is required due to Sprint's nearly exhausted financial options, you see that while the company might build improved competitive service in targeted metro areas, the overall service will continue to lag behind competitors who continue to keep ahead with their own improvements and network expansions at a lower cost.

    The 'net analysis' is that Sprint's competitive ROI produces sub-par gains during a period in which the company should be able to reap the rewards of past capex to replenish the financial coffers. Not only is Sprint failing to show the dramatic improvement in cash flows expected after a major phase of capex investment, its future plans call for spending that results in falling further behind.

    The way out of this rests in the hope that marketing magic can pull out a miracle: If Sprint can wage a 'street fight' for marketshare based on improvement in localized networks and mirages, then Sprint, or so the fantasy plot goes, can turn strongly cash flow positive. However, this looks so far away from recent results that it looks unrealistic.

    Other hopes rest in Google bringing magic to the situation: I may write on this latter.
    Mar 13, 2015. 10:17 AM | 2 Likes Like |Link to Comment
  • Sprint Earnings Review And The Way Forward [View article]
    Fairly even and well written article.

    However, Sprint has not experienced growth in core postpaid subscribers. Outside of 30k core subs, the growth appeared in add-on data subscriptions for pads/laptops. Add-on sub growth has become prominent growth vehicle among US mobile operators owing to the level of feature phone and SmartPhone penetration having reached near saturation. Add-on subs is going through a growth phase due to uptake in pads and otehr devices. However, that trend is unlikely to continue as it will most likely comprise only a portion of overall subscribers.

    In past years Sprint lost millions of core postpaid subscribers and has yet to solidly show a turnaround. Meanwhile, it continues to draft behind T-Mobile and marketshare leaders Verizon and AT&T when what is needed in order to say Sprint has turned around is growth that is substantial.. at a level it is proven to not be just a ripple. Ripples can be tradeable... but hardly reliable. A showing of around 200k+ net postpaid additions with solid guidance that the trend will likely continue would be more meaningful.
    Feb 10, 2015. 06:11 AM | Likes Like |Link to Comment
  • Update: Verizon Raises $15.5 Billion Through The Monetization Of Assets [View article]
    Thanks for the article and comments. This helps answer concerns over Verizon payment for recent AWS-3 auction and debt position. The trend for among the large wireless operators, both in the US and abroad, is to divulge themselves of or enter into shared infrastructure deals. The business model is migrating towards broadband based services that will require a shift in emphasis. Various operators, including Verizon, say this allows corporate management to focus more on emerging areas of revenue generation. I expect Verizon to keep on top of network infrastructure development, however, towers are one aspect of networks that makes sense to sell-leaseback.
    Feb 6, 2015. 01:55 PM | Likes Like |Link to Comment
  • Update: Sprint Is On Its Way For A Rebound [View article]
    The name is Syputa and I do the research.

    Sprint's backing by Masa Son isn't without bounds and a fresh staunch of investment from Softbank will not come without cost to present investors. The company certainly has many positive aspects, however, in a nutshell, it has fallen behind in networks due to a basic flaw: mis-matching of spectrum folio and of spectrum to deployment methodology. Softbank's Japan mobile operations were gone about much differently than Sprint. I won't go into the analysis here and, rather, suggest you do your own bottom up research.
    Feb 6, 2015. 01:41 PM | 1 Like Like |Link to Comment
  • Update: Sprint Is On Its Way For A Rebound [View article]
    I beg to differ with the recasting of the company pablum: Sprint has made incremental improvements that fall short of the goal for a 'turnaround' in subscribers, sales, margins, and network competitiveness. Sprint's results leave many unanswered questions about how the company is going to build a competitive position against a field that will step up deployments into their own recently acquired wideband spectrum.

    Sprint's once exclusive position in 2.6GHz band 41 spectrum has eroded over time due to lack of a robust deployment strategy. Band 41 now resides alongside existing and recently auctioned, easier and cheaper to deploy mid-band AWS spectrum. What stands between having spectrum and using it is a) a cost effective deployment strategy, and b) sales momentum that rolls up revenues from existing and new clients into fresh billion$ needed for the next round of deployments without dilution of current shareholders in the bargain.

    Sprint's recent results fail to demonstrate the sales and capital momentum needed to keep up with competitors, let alone make up lost ground.
    Feb 5, 2015. 08:34 PM | 1 Like Like |Link to Comment
  • Patent stocks rally after Supreme Court's Teva ruling [View news story]
    Here we go again: many are jumping to conclusions of the impact of the US Supreme Court ruling on Teva. The ruling is specific to CAFC's deference to district court interpretations of patent claim construction and not to all evidence or legal proceedings. In some cases, this ruling does either nothing or can enhance the defendants case against the assertion of patents.

    Take Parkervision (PRKR) vs. Qualcomm (QCOM) for example: The district court under Judge Dalton has overturned the jury's finding that Qualcomm had infringed. It did not find for Qualcomm on the JMOL for invalidity. Under the new SC ruling, CAFC is inclined to consider Parkervision's appeal based on the Judge Dalton's MARKMAN ruling on claims interpretation. That had, for the most part, gone along with Parkervision to interpret the patent claims very broadly, thus allegedly casting Qualcomm (and many other potential defendants) into infringement. Parkervision's patents are being challenged in PTAB IPR proceedings and in the appeal to CAFC on the grounds that the broad claims construction is invalid as anticipated by multiple prior art.

    CAFC might otherwise have narrowed the MARKMAN to exclude some prior art. Although that might also have further excluded PV's patents from covering Qualcomm's products, the impact of the Supreme Court ruling is to assure that Parkervision's patents will be declared invalid.
    Jan 20, 2015. 08:06 PM | 1 Like Like |Link to Comment
  • Updating My Outlook For AT&T And Verizon [View article]
    I agree with your revised view. Concerns about inflation has eased due to macroeconomic events: the rising supply of oil and gas alternatives has driven down the inflationary pressures that might otherwise arise as US economy growth takes a firmer hold. Growth in China has moderated downward. Much has been made of slowing growth in the China and the BRIC countries - while I do not think this is as precipitous or has as much influence on how the US economy will do than some analysts suggest, it does take pressure off of supply of raw inputs and lowers consumer goods inflationary pressures. The rapid decline in oil prices has led to a swing in the pendulum from concerns of inflation to concerns of deflationary price spiral. I don't think either is the case due to the more complex, international spread of markets that has balanced these factors in the past decade. Remember the saying "When America sneezes, the world economy catches a cold"? That has not been the case since the dramatic rise in the BRIC economies has occurred to the point that what happens in the USA, Europe or any single major economic block has become muted by offsets elsewhere.

    That has helped balance out domestic concerns about impacts of inflation - the US can continue to see growth because this is muted by slowing or declines in pricing of raw economic inputs and can contribute to a better and more sustainable balance of exports vs. imports. Domestic industries that are highly debt leveraged thus benefit from both a growing economy, in some cases expanding exports, and, meanwhile, low costs of borrowing. In the case of the leading ICT/mobile companies, Verizon and AT&T, the picture looks pretty darn good: Low interest rates to afford expansion into new spectrum-networks and bringing up of video/TV services and 'personal broadband' into the home and on mobile devices at a pace that outstrips what Sprint or T-Mobile can now afford.

    Jan 9, 2015. 12:34 PM | Likes Like |Link to Comment