Verizon (NYSE: VZ ) Wireless pounced on Cellular South's pending launch of LTE network technology, via partner Samsung, and used the issue to bolster its argument against government oversight of next-generation network deployments.
"The Cellular South-Samsung alliance shows that the intensely competitive wireless market is driving carriers and equipment manufacturers to provide consumers and businesses with increasing choices to meet their wireless broadband needs," Verizon wrote in a recent FCC filing. "The commission should continue to allow the wireless device market to develop in response to competitive pressures and customer demands -- not new, intrusive, and unwarranted regulatory intervention."
The dust-up stems from the differing flavors of 700 MHz spectrum that carriers are using for their LTE deployments. Verizon acquired most of the FCC's 700 MHz C Block spectrum (which lies in band class 13) in 2008, and many of AT&T (NYSE: T ) Mobility's 700 MHz licenses sit in the lower C and B Blocks (which lie in band class 17). Meanwhile, Cellular South and a number of other, smaller operators acquired 700 MHz spectrum licenses in the Lower A, B and C Blocks, which lie in band class 12. Thus, devices designed for Verizon's band class 13 flavor of LTE cannot work on the band class 12 flavor Cellular South is using.
(Indeed, AT&T confirmed in October that its first LTE-capable USB stick -- the USBConnect Adrenaline from LG -- will not work on the LTE network Verizon is scheduled to launch this weekend, due to the carriers' differing LTE band classes.)
To address the issue, Cellular South, Cavalier Wireless, Continuum 700 and U.S. Cellular in 2009 joined under the "700 MHz Block A Good Faith Purchasers Alliance" banner to petition the FCC to require that device vendors build LTE gadgets that will work across all of the various flavors of 700 MHz LTE, from band class 17 to band class 12. The group argued that AT&T and Verizon were using their size and weight to encourage equipment makers to build equipment that only supports the 700 MHz band classes that they own. "As a result, consumers and smaller carriers that acquired lower band 700 MHz Block A spectrum are left without viable and widely useful equipment options," the group wrote in its initial FCC complaint.
Thus, Cellular South's announcement last month of a deal with Samsung to build an LTE network and smartphones on Cellular South's 700 MHz band class 12 spectrum, launching in the fourth quarter of next year, appears to have rankled Verizon.
"The claimed inability of A Block licensees to do precisely what Cellular South is now doing -- deploying 700 MHz spectrum using band 12 devices -- was the entire premise for the alliance's petition for rulemaking seeking a commission-imposed interoperability standard," Verizon wrote in its FCC filing. "Accordingly, Verizon Wireless respectfully requests that the commission dismiss the Good Faith Purchasers Alliance petition for rulemaking."
Cellular South, however, isn't staying quiet on the issue. "Cellular South's LTE announcement proves that Verizon and AT&T have been disingenuous in their claims that the Lower 700 MHz A Block suffers from adjacent channel interference which would prevent interoperability," said Eric B. Graham, vice president of strategic and government relations for Cellular South. "This has been their rationale for developing equipment in self-serving and essentially proprietary band classes. It is time for Verizon and AT&T to stop their pursuit of anti-consumer policies, and next-generation interoperability is a good place to start."
The Rural Cellular Association, which has petitioned the FCC on behalf of the Good Faith Purchasers Alliance, offered its own angle. "The consequences of a lack of interoperability still exist -- the anti-competitive, anti-consumer reality where roaming will not be technically possible, equipment prices will be unnecessarily high, and nationwide deployment of 4G mobile broadband will be needlessly delayed," the association said in a statement. "AT&T and Verizon have created spectral islands that do not allow interoperability with any other carriers or public safety. This does not fully utilize spectrum for mobile broadband in the 700 MHz."
RCA concluded: "RCA continues to push the FCC to grant the Good Faith Purchaser's petition. There is a small window of opportunity to solve the interoperability issue. With carriers currently deploying LTE service, every day that passes exacerbates the problem. Commission delay on the Good Faith Purchaser's Petition will help to increase the largest carriers' dominance in an already consolidated market at the expense of rural carriers and the consumers they serve."
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