Verizon, Sprint: U.S. Tops in Wireless, But Spectrum, Trust Issues Loom

 
 
By Jeffrey Burt  |  Posted 2012-05-09
 
 
 

Verizon, Sprint: U.S. Tops in Wireless, But Spectrum, Trust Issues Loom


NEW ORLEANS €” The United States is back in the leadership spot in the highly competitive wireless market, thanks in large part to the billions of dollars that the industry has poured into expanding wireless networks across the country, according to the heads of the top four largest carriers.

However, that standing is not guaranteed, and during a panel at the CTIA Wireless 2012 show here, the executives said they see a host of challenges ahead, from finding more spectrum to handle the rapidly growing amount of data that is crossing the networks to an apparent gulf in trust between the carriers and their customers.

The executives€™ statements echoed comments made earlier in the day by Julius Genachowski, chairman of the Federal Communications Commission (FCC), who said that mobile broadband will be a key economic driver worldwide.

€œThe U.S. is leading this revolution,€ Genachowski said. €œWe have now regained our leadership in mobile.€

Dan Mead, president and CEO of Verizon Wireless, agreed, noting that his company and others have spent billions of dollars upgrading their networks and lead the world in the race toward 4G networks. Mead called the wireless industry €œone of the country€™s greatest economic growth engines.€

However, he echoed a familiar warning about the €œlooming spectrum crunch€ that is threatening the growth. The adoption of mobile devices€”in particular, smartphones and tablets€”is driving the skyrocketing growth of traffic that is running across the wireless networks. The FCC has said that network traffic by 2015 will be 25 to 50 times that of 2010, and Mead said that without more spectrum, demand will exceed capacity by 2014.

Wireless Industry Sees Spectrum Crunch as Threat to Its Growth


The issue of spectrum has been a point of contention between the U.S. government and the wireless industry. During his talk, Genachowski said that over the last three years, the FCC has made much more spectrum available, and that he expects to make 500MHz more available by 2020. He also noted some steps the commission has taken€”such as spectrum auctions€”that have created more capacity.

There also are other efforts under way throughout the industry, from building more efficient infrastructures to looking for ways to offload traffic onto WiFi networks.

However, the government has drawn criticism for certain actions, such as questioning AT&T€™s failed $39 billion bid to buy T-Mobile and putting Verizon€™s efforts to spend billions of dollars to buy spectrum from companies like Comcast and Time-Warner Cable under greater scrutiny, a move that rankles Mead.

He said the secondary market, where carriers can buy unused spectrum from other companies, should be a key tool in creating more capacity. Mead also noted that as part of the effort, Verizon is willing to put up some of its unwanted spectrum for sale, proof that Verizon isn€™t looking to €œwarehouse€ spectrum.

In a panel discussion, Mead bristled at the criticism that Verizon already has the most spectrum, and that being able to add capacity would give it an unfair advantage over its competitors.

€œIt€™s not true,€ he said. €œWe don€™t have the most spectrum. We have the most efficient spectrum.€

Sprint-Nextel CEO Dan Hesse, during his keynote address, agreed that the carrier€™s efforts have keyed the United States€™ re-emergence as the world€™s wireless leader, but warned that the companies needs to find a way to reclaim the trust of customers if the success is to last for the long term. Hesse noted that an annual survey from the Reputation Institute found that the reputation of the wireless industry among consumers has tanked over the past year.

€œEven cable and gas companies rate higher with customers,€ Hesse said. €œThat€™s a bummer. €¦ It€™s very troubling.€

His comments echo the findings of a survey that Juniper Networks released May 9  that found that even as more people are using more devices for more personal and business-related activities, 63 percent are unsure whether they can trust that their devices and their data are secure.

He said a greater emphasis on security€”not only of mobile devices, but in particular the personal data that customers entrust the wireless carriers with€”will be the key to regaining the lost trust. Hesse noted steps that Sprint is taking to address the issue, including Sprint Guardian, a collection of apps aimed at family safety and device security that was announced at CTIA.

Hesse and the other CEOs also were asked whether that lack of trust was exacerbated by the declarations of each carrier that their service and speed are the best. A new television ad by T-Mobile depicting the Apple iPhone running much faster on its networks rather than AT&T€™s was used as an example of the disconnect.

Philipp Humm, president and CEO of T-Mobile USA, and Ralph de la Vega, president and CEO of AT&T Mobility, during the panel disagreed on the legitimacy of the claims in the ad, though they and the other CEOs said that it was expected that in such a competitive industry, every competitor was going to make itself look good.

Last year, AT&T€™s bid to buy T-Mobile was announced right as CTIA got under way, and because of this, Humm was unable to sit in on the CEO panel. He said his challenge over the next year will be to show that T-Mobile €œis back and competing as a wireless challenger.€

He said that despite the months of uncertainty brought about by AT&T€™s attempt to buy the company, T-Mobile was able to continue earning money, though he admitted that the company lost subscribers to its rivals.

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