AT&T Agrees to Device Interoperability in Lower 700 MHz Band

Meanwhile, FCC Commissioner Ajit Pai said in a written statement the interoperability agreement may strengthen the case for delaying the H-block auction rather than holding it as early as possible, which he had previously urged (CD Aug 19 p1).

Smaller carriers have long argued that a lack of interoperability in the band threatened higher prices for devices that use the spectrum and has stalled some initiatives to build out networks in the A-block spectrum that smaller carriers bought in the 2008 700 MHz auction (CD Oct 8/10 p1). Smaller carrier executives said if the spectrum they bought requires the use of band-specific handsets, the cost would run north of $500 per device with iPhones running $650 or more.

"America’s mobile consumers have a reason to celebrate today: After many frustrating years, wireless carriers have finally reached a voluntary industry solution that will resolve the lack of interoperability in the lower 700 MHz band in the most efficient manner,” Clyburn said (http://fcc.us/15hfe7E). “This is a big win for consumers, especially in rural areas, who will see more competition and more choices. Also, by making it easier for small wireless carriers to compete, today’s interoperability solution will spur private investment, job creation, and the development of innovative new services and devices. That’s why for the past few years, I have been consistent in pushing for a final resolution to this issue."

"Today, AT&T agreed to take definitive and concrete steps to bring interoperability to the lower 700 MHz band,” said AT&T Vice President Joan Marsh (http://bit.ly/1eAsAPF). “Challenges in the lower 700 MHz band have left the 700 MHz A Block vulnerable to interference and largely undeployed.” AT&T committed to investing “considerable time and resources to the modification of its 700 MHz LTE network through the implementation of a newly-standardized software feature: which allows AT&T’s network to support Band 12 capable devices,” she said. “AT&T has also committed to working collaboratively with its chipset partners and [device makers] to introduce, within a reasonable time frame, new Band 12 capable devices into its device portfolio.” Band 12 is the 700 MHz band set aside by 3GPP for the A-block devices. Verizon Wireless’s operations are mainly in Band 13 and AT&T’s in Band 17.

AT&T’s commitments are spelled out in detail in a letter filed Tuesday at the FCC (http://bit.ly/14CUNn3). Verizon didn’t comment. An FCC official said Clyburn saw an industry agreement as preferable to an order, in part because an agreement cannot be challenged in court.

"I look forward to reviewing the details of the industry consensus that has been reached to advance the goal of interoperability in the lower 700 MHz band,” Pai said in an emailed statement. “I'm also pleased that the Commission will not impose a government mandate to achieve this goal. Moreover, it appears at first glance that today’s agreement may lead to more robust participation in the H-Block auction and strengthens the case for holding that auction in early 2014. If the agreement leads to more widespread utilization of lower 700 MHz spectrum and increases the value of the H Block, American consumers and taxpayers will benefit."

But Free Press Policy Director Matt Wood told us the agreement doesn’t appear to address all of his group’s 700 MHz interoperability concerns. “It’s good that AT&T has finally committed to exploring interoperability in the lower 700 MHz band, which so many carriers want to use for next generation mobile broadband,” he said. “But Verizon’s 4G offerings are in the Upper 700 MHz band, which means this announcement doesn’t do anything to promote switching between those two dominant providers. AT&T’s offer is contingent on the results of software and engineering tests, and on FCC decisions about Dish spectrum in yet another nearby portion of the spectrum.” He said Free Press joins those praising Clyburn’s longstanding leadership on this issue, but “AT&T’s promises are only as good as the follow-through on its commitments. Today’s filing signals the end of AT&T’s obstructionism, but still leaves us wondering what took so long to get here -- and more importantly, how quickly we'll see actual results."

The development comes the week before the Competitive Carriers Association’s annual meeting in Las Vegas, which Clyburn is scheduled to keynote. “Chairwoman Clyburn was willing to roll up her sleeves and get in the middle of dispute between carriers that had escaped resolution for over four years, until today,” said CCA President Steve Berry. “Every CCA member appreciates her commitment and tenacity. In particular, lower A block licensees like U.S. Cellular and C Spire Wireless will finally be able to use all of their lower 700 MHz spectrum, unleashing investment and innovation, helping to achieve the Administration’s goal of universal access to mobile broadband. In turn, every consumer, especially rural and disadvantaged consumers who lack access to high speed broadband, will benefit from her efforts."

Consumers Union Policy Counsel Delara Derakhshani said the agreement “means that consumers, especially those in rural areas, will have more choice when it comes to their wireless devices.” But Derakhshani said even more interoperability is needed. “We have had long-standing concerns about the lack of interoperability among wireless networks,” she said. “Customers nationwide continue to be unable to freely move from one carrier to another if they are unhappy with their current wireless service provider. In order to offer all consumers more choice, we urge the FCC to work towards broader interoperability across the entire 700MHz band and restore the right for consumers to unlock their phones so they can more easily switch carriers."

The agreement is positive news for AT&T, Stifel Nicolaus said in a research note. “The AT&T rivals say that device interoperability across the lower 700 MHz band is needed to spur greater competition and service through economies of scale and roaming,” the note said. “We believe AT&T’s shift will give it opportunities in the lower 700 MHz A Block, where it doesn’t yet have spectrum. And while there will be some added costs to AT&T, the largest overall lower 700 MHz spectrum holder and in each of the B, C, and D Blocks, we expect they will be less under an industry solution than FCC-imposed regulation.”