Weekly Telecom: Verizon’s LTE And Cable Deals, China Unicom’s 4G Launch

by Trefis Team
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The past week saw quite a few interesting developments shape up in the telecom sector. At the CTIA Wireless event this week, Verizon (NYSE:VZ) took the opportunity to emphasize its need for wireless spectrum and back its spectrum purchase for the cable companies. Several reports suggested that Verizon may be trying to push Google’s (NASDAQ:GOOG) Android LTE devices ahead of even the iPhone, adding fuel to rumors that the huge iPhone subsidies may be forcing its hand. Meanwhile, China will get its first ’4G’ HSPA+ network next week from China Unicom (NYSE:CHU), which is trying to drive 3G adoption levels up following its iPhone launch.

Verizon-Cable Co Spectrum deal

Verizon’s spectrum purchase from the cable companies, Comcast (NASDAQ:CMCSA), Time Warner (NYSE:TWC) and Cox Communications continues to be the talk of the telecom industry with critics opposing the deal on grounds that it would be giving Verizon too much power. Last week, opponents of the deal such as the CWA lauded a decision by the FCC to extend its review of the deal as they saw it as a signal that the regulators found potential issues with the deal. However, this was most likely a routine delay and not really a “stopping of the clock”, as the CWA liked to believe, since the FCC rarely finishes such reviews within 180 days.

At the CTIA Wireless event this week, Verizon sought to appease the critics by saying that it was no spectrum hoarder, unlike the cable companies who have sat on the spectrum for almost five years now. Verizon had earlier said that it plans to sell some of the 700 MHz spectrum it has currently no use of in a bid to secure regulatory approval. In an earlier article, we had argued how the deal should be approved just for the fact that it brings the currently unused spectrum back into play in the mobile sector, which is in dire need of the resource as data usage shoots up. (see The Verizon-Cable Deal Will Go Through Despite FCC Delays)

If the spectrum that Verizon plans to sell doesn’t find any bidders, the FCC may have to ask Verizon to split the cable spectrum up and divest some of the assets. Either way, the FCC needs to get the deal approved in one form or the other since the next spectrum auctions will probably not happen for another couple of years at least.

See our complete analysis for Verizon here

Verizon-LTE

Verizon seems to be pushing Android devices over the Apple iPhone, according to many reports out in the media. [1] While this has many surprised and wondering if the higher subsidy costs on the iPhone is driving Verizon to do so, we believe that the true reason may lie elsewhere – the iPhone’s lack of LTE support in the current models.

Verizon’s CFO, Fran Shammo, has made it clear in many statements this year that he is focusing on driving LTE adoption rates this year. Having started building out an LTE network earlier than rivals AT&T and Sprint in late 2010, Verizon now boasts of a coverage that far exceeds theirs. It is therefore understandable that the largest wireless carrier in the U.S. is pushing Android LTE devices over the iPhone and trying to leverage its first mover advantage in order to make the billions it has spent on the network so far count. (see Verizon Promotes LTE Over iPhone With Good Reason)

China Unicom

Following in AT&T’s footsteps in the U.S., China Unicom will become the first to roll out the faster HSPA+ 3G network in China next week. [2]

In a message to existing 3G subscribers, China Unicom announced that all phones and tablets that currently run on its network and are HSPA+ compatible will be able to access higher speeds on their devices, starting May 17th. HSPA+ is the same technology that, although not technically right, AT&T touts as 4G and markets effectively as a ploy to maintain its iPhone lead over rivals in the U.S. It looks like China Unicom is using the same playbook to not only promote 3G but also retain a competitive edge over rival China Telecom (NYSE:CHA), to whom it recently lost its iPhone exclusivity in March. As the 3G battle heats up, it needs to fend off behemoth China Mobile (NYSE:CHL) as well, which is also likely to get the iPhone soon. (see Qualcomm Paves the Way for an Apple-China Mobile iPhone Deal)

See our complete analysis of China Unicom here

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Notes:
  1. Further Proof Verizon Is Pushing Potential iPhone Customers To Other Devices, Appadvice, May 6th, 2012 []
  2. China Unicom to Rollout HSPA+ 3G For Phones Next Week, TechInAsia, May 9th, 2012 []
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