Sprint fights FCC spectrum plan; Magic Quadrant reveals telecom trends

In telecom news, Sprint contests proposed changes to the FCC spectrum screen and Gartner's Magic Quadrant reveals telecom trends and leaders.

Sprint fights proposed FCC spectrum screen changes

Sprint is objecting the Federal Communications Commission's (FCC) proposed update to the spectrum screen, saying it would make it harder for the carrier to do spectrum deals and would put it at a disadvantage to Verizon Wireless and AT&T.

The FCC uses the spectrum screen when reviewing spectrum deals like carrier acquisitions because it accounts for the spectrum holdings of operators. If a carrier acquires too much spectrum -- usually when a carrier holds one-third or more of available spectrum in a market -- the FCC examines the deal more closely.

The FCC proposed adding about 101 MHz of Sprint's 2.5 GHz spectrum to the spectrum screen. According to Fierce Wireless, Sprint controls about 120 MHz of 2.5 GHz spectrum in 90% of the top 100 U.S. markets. This addition would put Sprint above the one-third limit in most major markets.

The FCC proposal would not distinguish between low-band and high-band spectrum, even though low-band spectrum travels farther and is more penetrable than high-band spectrum. Low-band spectrum is most desirable for carriers.

Treating all spectrum as equal "undermines the consistency and sustainability of a 600 MHz auction reserve and the overall spectrum holdings package," Sprint said in an FCC filing. Sprint also said the proposal would nearly triple AT&T's current spectrum screen headroom and double Verizon's, while eliminating Sprint's headroom. Sprint referenced the FCC's upcoming 2015 spectrum auction in its objection to the spectrum screen changes. The FCC has proposed limiting wireless operators with large low-band spectrum portfolios from bidding on portions of 600 MHz that will be available in an upcoming auction.

"Low-band spectrum is so competitively important that it warrants a 600 MHz reserve for carriers with limited low-band spectrum, yet the staff recommends that all spectrum (including low-band) count equally in a revised spectrum screen," Sprint said.

In its filing, Sprint proposed its own three-tier approach to the spectrum screen, which would take the different propagation characteristics of low-band, mid-band and high-band spectrum into account.

The FCC will vote on the spectrum screen proposal at its May 15 meeting.

Magic Quadrant shows telecom trends and industry leaders

While pressure on global network services prices is "relentless," according to Gartner's Magic Quadrant for Global Network Service Providers, providers are responding by focusing on extending their networks, relying on partners to improve regional coverage, or both. Providers are also focusing on automation and IT system consolidation to reduce costs, as well.

Gartner analysts Neil Rickard and Robert F. Mason wrote that new global network proposals from enterprise customers are predominantly for managed hybrid IP WANs that combine Internet access and VPNs with MPLS and often Ethernet services (primarily used for data center interconnection). Enterprise adoption of cloud IT service delivery is driving significant transformation of their WAN architectures, adding new origin points for applications.

"Bundling managed LAN and wireless LAN with managed WAN services continues to grow in popularity," the report said.

Vendors named to Gartner's Leaders quadrant include BT Global Services, AT&T and Verizon. The major criteria include having broad service portfolios, innovative cloud services and global coverage.

Vodafone was added to the quadrant for the first time and was the only provider listed as a "visionary," following its acquisition of Cable & Wireless Worldwide network and for leveraging its mobile capabilities to enhance its fixed networking offerings. T-Systems was the sole provider in the challenger quadrant for focusing its networking services in the European market.

Providers in the Niche Players quadrant include Sprint, Century Link and Level 3 Communications. The niche players were ranked there largely for their forward-thinking visions, competitive prices and expanding offerings, but were limited by poor network coverage and a smaller global presence.

To be included in the report, providers must meet criteria that include selling enterprise networking services in a minimum of 25 countries in at least three geographic locations, and they must generate at least $200 million in annual revenue and not only resell network services from another provider.

Huawei to focus on Europe, but U.S. rural telco effort continues

Huawei's founder and CEO Ren Zhengfei told reporters in London this week that his company would accelerate investments in countries that aren't suspicious of its motives, meaning not in the U.S. Addressing rumors that Huawei might go public, he said an initial public offering for China's largest networking vendor going public wouldn't do anything to accelerate trust that Huawei would not spy on other countries using its equipment.

Huawei has repeatedly battled cybersecurity concerns that China could tamper with network equipment deployed in the U.S. Despite talk of investing elsewhere and overcoming those fears in the U.S., Huawei has been making inroads with U.S. Tier 2 and Tier 3 telecom carriers for several years, many of which are in sparsely populated areas.

Beyond its extremely competitive pricing, Huawei often gets high marks for the quality of its networking equipment. Zhengfei said he would like Huawei to be perceived as a European company; the company won't be abandoning its smaller telecom, wireless and rural electric coop customers in the U.S.

In January, newly appointed Huawei VP of Sales Bill Gerski talked to us about his efforts to sell into rural electric co-ops, wireless operators and Tier 3 telcos. Gerski's background is in the cable and satellite markets, which gives him understanding of rural markets in the U.S., he said.

Staying away from government concerns about using Huawei equipment, Gerski said smaller operators need to build up broadband and that buying Huawei equipment offered them a good way to do that. Gerski is trying to make inroads into the 800 rural telcos, 700 rural electrical coops and 2,500 wireless companies.

"All I'm asking rural telcos [to do] is give Huawei a chance," Gerski said." I ask them to let us come in and take a look at what you're trying to do. Let us come up with a bid. Let us take you to Dallas and show you our R&D center if you want to. You can see the equipment that we have to offer." (Kate Gerwig)

Mobility named the biggest driver of telecom innovation

The biggest challenge in the wireless market is that consumers are addicted to connectivity and speed, a challenge that also gives wireless operators a major growth opportunity, according to Craig Wigginton, vice chairman and U.S. telecommunications sector leader at Deloitte & Touche LLP. Wigginton discussed the trends and challenges facing the telecom industry this year, and named mobility as the biggest driver for innovation.

"The ongoing expansion of the mobile ecosystem … is keeping pressure on the industry to increase the availability and quality of broadband connectivity," he said. Carriers must pursue technological advancements to handle demand, while spectrum availability and efficiency will be a focus of mobile momentum, he said.

While mobility is gaining momentum, deployment isn't cheap. Wigginton said carriers need to invest in new technology and infrastructure, acquire spectrum, and fund research and development. "Companies that don't -- or can't -- maintain focus on rapid innovation may lose out to those that do," he said.

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