US DOJ files suit to block AT&T, T-Mobile merger

AT&T is now facing a huge potential roadblock on its proposed merger with T-Mobile: Bloomberg reports the U.S. Department of Justice has filed an anti-trust suit to block the deal. Claiming the merger would “remove a significant competitive force from the market,” the filing suggests the deal would create an anti-competitive environment if allowed to proceed. AT&T has recently taken steps to alleviate such sentiment, saying Tuesday it returned 5,000 onshore customer service jobs from offshore locations as a result of the merger.

T-Mobile stands to gain quite a bit if the deal doesn’t go through. Deutsche Telekom, the parent company of T-Mobile USA, will earn a $3 billion payoff, while T-Mobile USA will receive a small portion of AT&T’s existing wireless spectrum and reduced roaming rates on AT&T’s network.

It will take time before we see the outcome of the just-filed suit, but I can’t help but think back to Om’s thoughts when the proposed merger was announced; they echo the thoughts of the DOJ:

The biggest losers of this deal are going to be the consumers. While AT&T and T-Mobile are going to try to spin it as a good deal to combine wireless spectrum assets, the fact is, T-Mobile USA is now out of the market.

T-Mobile USA has been fairly aggressive in offering cheaper voice and data plans as it has tried to compete with its larger brethren. The competition has kept the prices in the market low enough. This has worked well for U.S. consumers. With the merger of AT&T and T-Mobile, the market is now reduced to three national players: AT&T, Verizon and Sprint. Net-net, U.S. consumers are going to lose.

Handset makers, competitors and Google all have much to lose by the deal as well, but if the $39 billion merger doesn’t go through, it looks like the biggest loser will be AT&T. The carrier will lose cash, spectrum holdings and the ability to add T-Mobile’s unique 1700 MHz frequency to AT&T’s LTE network expansion plans.

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Forget gas; future Ford cars may run on the cloud

Ford continues to think ahead with connected cars, showing off a concept car that’s as intelligent as the best smartphones. Thanks to mobile broadband, access to a driver’s calendar and entertainment preferences, and smart engineering, the Ford Evos is an example how the cloud can power cars of the future. In conjunction with the IFA show in Berlin, the auto-maker is showing off the Evos concept vehicle in this video, released today.

As impressive and futuristic as the Evos concept is, many of the features don’t seem too far-fetched because of their “connectedness.” Why couldn’t a car re-route you to a more scenic drive if your early work meeting was cancelled or postponed en route? If you have a favorite Internet radio station, perhaps your car should know about it and auto-tune on the drive. And Ford has already touted smart mapping apps for electric vehicles that automatically direct you to the closest recharging station.

We’ve seen so many personalization options in smartphones — where the devices start learning about us and act as intelligent secretaries — that in my mind, these concepts are a natural progression to vehicles. Cars can easily have the sensors and silicon to make this future a reality, but having access to our digital identities in the cloud is the fuel for this future. We’ll talk more about this connectedness among the Internet of Things at our Mobilize event later this month, where I expect to hear about many other intelligent devices.

Related: Om’s interview earlier this month with Ford Motor Company CTO Paul Mascarenas, on how connectedness will change cars.

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Wi-Fi hotspots, the once and future network king

Updated. Wi-Fi hotspots will continue to grow in terms of locations, the total number of connections and their importance to network operators who face growing data demand. In its latest report, In-Stat research provides some numbers to give some sense of scale for the hotspot trend, estimating that in 2015, wireless hotspots will account for nearly 120 billion connect sessions. Helping to grow the connection number will be improved, automatic log-ins and more hotspots to tap in to.

Around the globe, In-Stat expects one million hotspot locations available by 2013, and based on the number of publicly available new Wi-Fi networks I’m seeing in my rural backyard, I’m not surprised. Businesses of every size are turning to Wi-Fi not only as a convenience for customers but also as a way to expand foot traffic, advertising opportunities and engagement. Traditional brick-and-mortar stores don’t have the most people on their networks, however. That distinction belongs to transportation hubs and convention centers, where the large crowds account for 30 percent of all Wi-Fi hotspot connects.

Laptop computers are still the No. 1 device for Wi-Fi hotspot use, which makes sense as Wi-Fi radios are standard fare for notebooks. Smartphones and tablets are catching up, however, even though many have integrated 3G or 4G radios. Device owners are apt to take advantage of free or low-cost hotspots to reduce the risk of mobile broadband data overages as carriers migrate away from unlimited data plans. The Wi-Fi connections are often faster and can use less power, which can save battery life on these mobile devices.

Network operators see the benefits of Wi-Fi offload and are likely to aid in the expansion of hotspot locations by partnering with businesses directly or through existing hotspot networks, such as Boingo Wireless. In July, for example, Japanese network operator KDDI said it would build out 100,000 Wi-Fi hotspots by March 2012 that will seamlessly work with the carrier’s WiMAX network. A seamless network transition, in addition to automatic log-in software — similar to Boingo’s current application — essentially turns Wi-Fi into the “other” cell network in this case.

Update: By way of email, In-Stat analyst Amy Cravens offered me additional context to the prediction of one million hotspot locations by 2013, saying there were an estimated 420,000 hotspot venues in 2010 and figures 630,000 by the end of 2011.

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Pre-paid, wholesale subs keep Sprint afloat ahead of LTE

Sprint announced Thursday it gained 1.1 million subscribers in the second quarter in addition to its lowest churn rates ever for both pre- and post-paid customers. That good news on the customer side was offset by another quarterly financial loss: The no. 3 carrier in the U.S. experienced a net loss of $847 million on $8.3 billion in revenues. Sprint did report higher overall average revenues per user as more consumers added 3G and 4G data plans, but it still lost money due to its mix of customers.

In a statement today, Sprint CEO Dan Hesse focused on the positives:

Sprint’s second quarter results, including our fourteenth consecutive quarter of improved customer care satisfaction, our best ever postpaid churn, more than 1 million net wireless subscriber additions and wireless service revenue growth, validate that our focus on providing simplicity, value and an unmatched customer experience is working.

Hesse’s statement is correct and factual, but unfortunately, overlooks other facts contributing to Sprint’s current challenge. Although the company gained 1.1 million net subscribers adds, net post-paid consumers declined by 101,000. That means the bulk of the new customers would be from less profitable segments. Indeed, 519,000 of the new subscribers are wholesale or affiliate customers, while 674,000 were added through pre-paid channels. That’s a problem, because ARPU on the pre-paid side actually declined slightly to $28.

Part of the issue here for the more lucrative post-paid side could be due to Sprint’s choice of 4G technologies. Sprint initially opted for a WiMAX network it opened for business in October 2008, but the speeds are getting leapfrogged by LTE and HSPA+ networks from competitors. Sprint is now turning to LightSquared’s spectrum, and bank account, to build out an LTE network. As a result of the deal, also announced today, Sprint will receive $9 billion over the next 11 years from LightSquared, and will be able to offer competitive speeds and coverage as its grand WiMAX experiment comes to an unprofitable close.

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White spaces standards are here. Next up: devices!

Another hurdle was removed today for “Wi-Fi on steroids,” as the IEEE published a wireless standard that could bring high-speed broadband to rural areas. The 802.22TM-2011 standard will be used on frequencies that were used by analog television channels, but were freed up when the U.S. transitioned to digital television broadcasting over the air. Known as “white spaces” technology, the wireless standard supports transmissions speeds topping out at 22 Mbps per channel, with a range of up to 100 kilometers.

With the new standard now approved, hardware manufacturers have a blueprint to begin designing and building products that can use the upcoming wireless networks. Unlike the frequencies used by cellular network operators, the white spaces use unlicensed spectrum (just like today’s Wi-Fi networks), so a wide range of compatible devices are expected from many companies. This would make it far easier and cheaper for those in remote areas to gain faster Internet access, for example.

Schools and enterprises could use the technology to deploy campus-wide wireless networks more easily due to the extended range white-space networks could bring. Google and other companies interested in smart grids can benefit from intelligent, connected meters that shoot data directly to power distributors. And carriers could even supplement their current Wi-Fi offloads, which are very limited in range, with white-space networks. For more details on the potential uses of white-spaces, see our recent “everything you need to know” article.

On a more personal level, individual devices could gain a much greater range and connect directly to homes. I currently use a mobile broadband connection to manage the lights and temperature of my home, for example. But I’ve held off on adding some webcams for security and monitoring for package deliveries, simply because transmitting such video over a 3G or 4G connection will have me hit my data caps too quickly. With white-space devices and support, however, I could be miles from home and still keep an eye on things without worrying about monthly data caps.

We’ll be talking more about such connected devices and the networks they use at our two-day Mobilize event in September; with the new wireless standard now ratified, white-space networks are sure to factor into our conversations.

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