For US Wireless Carriers, a Summer of Discontent

Seems like nobody in the wireless space is where they want to be right now. The summer season has seen a whole series of contentious issues go unresolved, or in some cases get worse:

AT&T/T-Mo: You’d think by now we’d have a better idea what the status of this merger is than back in March when it was announced. But if anything, we know *less* now than we did about how this will change things. The DOJ is suing to stop the merger, AT&T is not backing off but is readying a multitude of divestment options, and we’re surely in for a long season of very public multi-sided whining. DT clearly hates the status quo, but they can’t change gears now and may be angling for that juicy breakup fee later on even though it’s not clear what they would do with it. Sprint finally has something to cheer about in all this, but it’s not enough to make all their other unresolved issues go away.

Sprint: Still no clear 4G path, unresolved funding issues with Clearwire and the future WiMAX/LTE transition – how long have we been talking about all this?  They’ve finally stopped the worst of the bleeding from the Nextel integration disaster and should be able to improve from here now that they’ll have the iPhone available in Q4, but so much time has gone by that their strategic position is obviously shaky at best.  They will be offering more details on their future direction in a few weeks, but I get the feeling they’re still doing a whole lot more work on it than putting the finishing touches on a streamlined master plan.  Their deal with LightSquared just confuses things even more, because it still isn’t clear that LightSquared will ever actually build anything.

LightSquared: After six months of GPS wrangling, three proposals, and lots of heated press releases, we still have no idea if the FCC, the GPS industry, and Phil Falcone’s big bet will come to terms and let the big wholesale LTE build-out actually start. I’d say that this can’t go on much longer, but we’re talking about the FCC here – which still hasn’t figured out USF reform or intercarrier compensation – debates that would be old enough to vote if they were human.  LightSquared comes out with another wholesale agreement every week, but until they get past this it’s just vaporware.

Clearwire: The company is screaming around a blind operational curve, hoping that on the other side its EBITDA will turn positive before it runs out of road. Who knows, it just might, but it’s got so many moving parts that I’d rather try to predict next year’s hurricane season.  They’ve got LTE buildout/transition plans they can’t fund without help, a majority owner (Sprint) that doesn’t know what it wants, and a whole flock of vultures watching and waiting for them to stumble.

MetroPCS and LEAP: Both companies have been reeling since Q2 earnings came out, as they have had a rough time competitively of late. One analyst suggested they might wind up buying pieces of T-Mo in order to expand into new markets, but they don’t look like they’re in a position to do much of anything right now except merge with each other – which they have somehow managed not to do for years now.

Verizon/Vodafone: If there’s anyone that’s sitting pretty right now, it’s Verizon now that it has the iPhone and its LTE network rollout well underway.  But they still own just 55% of their wireless division, and there is clearly friction going on. Just this week CEO Lowell McAdam ruled out a regular cash dividend for Vodafone, which is an obvious move to try to pressure their minority partner into selling out to get that cash.

Add it all up, and pretty much nobody’s happy right now with where they are. Nobody knows quite what to expect, both from themselves and their neighbors.  It’s a rather unstable situation.  You’d think with all the hype this industry gets right now, at least someone other than China Mobile would be happy…

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Categories: Wireless