Wireless carriers have traditionally made money off lengthy two-year service agreements, rather than physical device sales. In the age of smartphones, however, carriers are footing the bill for expensive handsets that result in smaller margins, while phone makers such as Apple reap the benefits. To combat traditional phone subsidies, carriers in the U.S. have continued to raise monthly rates and employ new and higher fees. In Europe, service providers are taking more aggressive measures, with some carriers refusing to subsidize devices for new customers. The carriers’ latest cries of resistance are drawing applause from investors and analysts alike, who say carriers could benefit more from the smartphone boom if they raise contract prices and slow the rate at which customers buy new phones.

“Optimism has increased that we are witnessing the leading edge of a more disciplined, and more profitable, future,” Craig Moffett, a telecom analyst at Bernstein Research, wrote in a research note obtained by The Wall Street Journal. The analyst went on to question the difficulty carriers face when increasing prices due to “increased discipline and pricing power.”

Spain’s two largest wireless service providers, Telefonica and Vodaphone, no longer offer phone subsidies to new customers. The carriers are eventually hoping to retain customers, however, and then continue to offer phone discounts to existing subscribers who are looking upgraded their devices. Telefonica allows users to either pay nearly $800 for new smartphone, or sign up for an installment plan that adds 18 monthly payments of about $45 to their bills. The change in policy has resulted in 25% reduced spending on device subsidies.

Verizon Wireless chief executive officer Lowell McAdam previously mentioned Telefonica’s installment-plan and said the nation’s largest carrier may follow. “We’ll probably offer some things like that, and then we’ll see what the adoption is like,” the executive said. “You can’t push this on customers before customers are ready for it”

Wall Street has taken notice of the carrier’s concerns, and shares of Apple recently plummeted on concerns that carriers may soon squeeze iPhone subsidies. During the company’s earnings call, Apple CEO Tim Cook downplayed carrier subsidy concerns and told analysts that carriers will continue supporting the iPhone because carriers “want to provide what their customers want to buy.”

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A new study from Parks Associates found that two-thirds of U.S. consumers are unwilling to spend more than $50 per month on mobile data plans, while almost half of smartphone users were unsure how much data they consumed each month.  The report highlights the risks carriers face as they try to shift consumers from unlimited data plans to usage-based ones. “Moving mobile users to usage-based plans will be difficult and painful, but changes are necessary for operators to maintain revenues,” said Harry Wang, Director of Mobile Research at Parks Associates. “Operators would benefit by recasting mobile data services as experience-driven in order to reduce price sensitivity, fend off competition, and keep their mobile data revenue engine humming.” The firm believes that in order for carriers to maximize their revenues, they should tie in their offerings to popular apps and services, including TV, music, books, newspapers, games, location-based services, and social activities, rather than charging consumers per megabyte. Read on for Parks Associates’s press release.

Parks Associates: Two-thirds of U.S. Mobile Consumers Won’t Pay more than $50/Month for Mobile Data

DALLAS, April 25, 2012 /PRNewswire/ — Parks Associates research finds two-thirds of U.S. consumers planning to purchase a smartphone are unwilling to pay more than $50 per month for mobile data plans while almost 50% of smartphone users do not know how much mobile data they use each month. The firm’s analysts say these findings, from the report Mobile Data and Applications: Market Update, highlight the risks to mobile operators as they try to shift from unlimited to usage-based mobile data plans.

“Operators need to create new value propositions for their data services,” said Harry Wang, Director, Mobile Research, Parks Associates. “U.S. consumers are accustomed to unlimited data use for one fixed price. They are reluctantly embracing the capped data plan tiers, but they have high price sensitivity and will rebel against byte-tracking. Operators need to shift consumers’ perception away from raw data to the experience created by their data services.”

Parks Associates finds over 90% of U.S. smartphone owners have downloaded apps since product purchase, at an average of two apps per month. Worldwide, consumers will spend over $14 billion on smartphone app downloads in 2012. To maximize their revenues, operators need to tie their offerings to popular apps and services, including TV, music, books, newspapers, games, location-based services, and social activities, rather than charging consumers per megabyte.

“Moving mobile users to usage-based plans will be difficult and painful, but changes are necessary for operators to maintain revenues,” Wang said. “Operators would benefit by recasting mobile data services as experience-driven in order to reduce price sensitivity, fend off competition, and keep their mobile data revenue engine humming.”

Parks Associates will discuss operator strategies to monetize mobile data and redefine consumers’ 4G experience at CONNECTIONS™: The Digital Living Conference and Showcase, June 5-7, co-located with TIA 2012 in Dallas, Texas.

Former Research In Motion co-chief executive Jim Balsillie sought a radical shift in strategy before he stepped down, Reuters reported on Friday. Citing two unnamed sources, the publication claims Balsillie wanted to allow wireless companies in North America and Europe to use RIM’s proprietary network for services on non-BlackBerry devices. The plan would help carriers entice customers to upgrade from feature phones to smartphones and allow them to offer inexpensive data plans that were limited to social media and instant messaging via the company’s BlackBerry Messenger service. Despite RIM’s network bringing in nearly $1 billion each quarter, the plan was vetoed, leading to Balsillie’s resignation soon after he stepped down as co-CEO. The Blackberry-maker will instead focus more on its next-generation BlackBerry 10-powered smartphones, and on regaining enterprise momentum.

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Following a huge week that saw Apple’s stock climb above $630 amid a fresh round of analyst upgrades, one analyst isn’t sold on the notion that smooth sailing is assured in the immediate future for the world’s most valuable company. BTIG Research analyst Walter Piecyk thinks Apple is set to report blowout earnings for the second fiscal quarter — he sees Apple earning $10.75 per share on sales of $40 billion in the quarter, versus Wall Street’s consensus of $9.81 and $36 billion — but he downgraded Apple’s stock to Neutral from Buy, noting that it’s time for investors to “take a breather.” Read on for more.

“We continue to maintain our view that Apple is the primary beneficiary of an accelerating growth trend in the global adoption of smartphones, considering global penetration of smartphones has not yet even reached 30%,” Piecyk wrote in a research note on Monday. “However, given the run up in Apple’s stock and the consensus estimates, we think now is a good time to more carefully consider how it will capitalize on the next and likely much larger leg of growth in the industry and prepare for the inevitable bumps that may occur on the way.”

The analyst believes Apple could run into some trouble starting in the third fiscal quarter that may eventually lead to a price cut on Apple’s iPhone, which currently drives much of Apple’s success due to huge margins. While numerous analysts see continued success for Apple’s highly sought-after smartphone, Piecyk believes carriers will soon grow less willing to sustain a $600 iPhone.

“Subsidies by post-paid wireless operators have fueled the growth of Apple’s $600 iPhone since its inception” Piecyk wrote. “Even in the pre-paid dominant markets of China and Europe, heavily subsidized iPhone’s are available to users willing to sign up for a contract. Wireless operators have been happy to subsidize smartphones to new and existing customers in order to provide a lift to the average monthly bill (ARPU) of their customer base, a metric which had been falling for the past three decades.”

The analyst continued, “The positive inflection point in ARPU was cheered by investors but the cost to drive that ARPU accretion is now starting to eat away at profitability and the performance of those stocks. Operators, unwilling to stall the pace of ARPU growth, offered generous upgrade policies including some that enabled a fully subsidized phone upgrade only one year in to a two year contract. We expect those policies to change as the faster upgrade rate of smartphones compared to legacy feature phones has been a costly surprise to post-paid and pre-paid operators, alike.”

BTIG sees Apple selling 33 million iPhones in the second fiscal quarter and 27.5 million in the third, when it could miss Wall Street’s earnings estimates as it did in the fourth quarter last year. “Specifically, we expect Apple’s iPhone sales to drop to 27.5 million units in Fiscal Q3 resulting in a revenue estimate that is $1 billion below consensus,” Piecyk noted.

The United States Department of Commerce and National Telecommunications and Information Administration on Tuesday announced that the federal government has repurposed 95MHz of “prime spectrum” within the 1755-1850MHz band. As per President Obama’s request, the NTIA has been collaborating with the FCC in an effort to make 500MHz of spectrum available for commercial use over the next 10 years, nearly doubling the amount currently available. “Today’s report sets a path for putting prime spectrum into commercial wireless broadband use, in support of the Obama Administration’s goal to encourage investment and innovation while enhancing America’s economic competitiveness,” said NTIA Administrator Lawrence E. Strickling. The NTIA has previously recommended the reallocation of 115 MHz of spectrum, and with today’s announcement, federal agencies have contributed 40% of spectrum to the President’s goal. “Spectrum is a finite resource in growing demand, and we need to focus on new ways to maximize its use,” said Strickling. “By working with the FCC, other federal agencies, and the industry, we can make more spectrum available to fuel innovation and preserve America’s technological leadership while protecting vital government missions.” Read on for the NTIA’s press release.

Department of Commerce Takes Next Step in Unleashing Wireless Broadband Revolution
NTIA Issues Report Setting Path to Make Prime Spectrum Available

WASHINGTON – The U.S. Department of Commerce, through the National Telecommunications and Information Administration (NTIA), today announced its finding that 95 megahertz (MHz) of prime spectrum could be repurposed for wireless broadband use. Reallocation of this spectrum would represent significant progress towards achieving President Obama’s goal to nearly double the amount of commercial spectrum available this decade. The President’s initiative will spur investment, economic growth, and job creation while supporting the growing demand by consumers and businesses for wireless broadband services.

“Today’s report sets a path for putting prime spectrum into commercial wireless broadband use, in support of the Obama Administration’s goal to encourage investment and innovation while enhancing America’s economic competitiveness,” said Assistant Secretary for Communications and Information and NTIA Administrator Lawrence E. Strickling.

NTIA, working with federal agencies, evaluated the potential of the 1755–1850 MHz band to accommodate commercial wireless broadband service. This spectrum band is of great interest to the wireless industry. However, over 20 federal agencies currently hold more than 3,100 individual frequency assignments in this band to perform a host of mission-critical functions, including law enforcement surveillance, military tactical communications, air combat training, and precision-guided munitions.

While NTIA’s analysis shows it is possible to repurpose all 95 MHz of spectrum for commercial wireless broadband, there are several challenges that need to be met before making a formal recommendation to the Federal Communications Commission (FCC).

In the past, the federal government has freed up spectrum for exclusive commercial use by clearing a spectrum band of federal users, who typically relocated to other bands. However, given the growing demand for spectrum by both industry and the federal agencies, it is increasingly difficult to find desirable spectrum that can be vacated by federal users as well as spectrum in which to relocate these federal users. Due to the scarcity of spectrum, the complexity of federal operations, and the time and cost of relocating federal users, the old approach alone is no longer feasible.

In addition, NTIA’s analysis of the cost of a complete relocation raises questions as to whether the proceeds from auctioning the 1755-1850 MHz band for commercial use will exceed federal relocation costs, as required by law. Moreover, some of the federal systems in this band may require more than a decade to relocate, which could further complicate deployment of commercial services.

Accordingly, in the report issued today, NTIA proposes a new path forward for spectrum repurposing that relies on a combination of relocating federal users and sharing spectrum between federal agencies and commercial users. Spectrum sharing will be a vital component to satisfying the growing demand for spectrum, and federal and non-federal users will need to adopt innovative spectrum-sharing techniques to accommodate this demand. NTIA proposes convening discussions between industry and the relevant federal agencies under the auspices of the Commerce Spectrum Management Advisory Committee, with the goal of finding ways to work together through sharing or other means to reduce the time and expense of repurposing the 1755-1850 MHz band, while maintaining essential Federal capabilities and maximizing commercial utilization.

“Spectrum is a finite resource in growing demand, and we need to focus on new ways to maximize its use,” said Strickling. “By working with the FCC, other federal agencies, and the industry, we can make more spectrum available to fuel innovation and preserve America’s technological leadership while protecting vital government missions.”

Today’s report is in response to a June 2010 Presidential Memorandum that directed the Secretary of Commerce, working through NTIA, to collaborate with the FCC to make available an additional 500 MHz of spectrum over the next 10 years for commercial wireless broadband service. In November 2010, NTIA released a 10-year plan and timetable for meeting the President’s goal. NTIA identified 2,200 MHz of spectrum for evaluation, the process for evaluating these candidate bands, and the steps necessary to make the selected spectrum available for wireless broadband. In addition, NTIA identified some nearer-term spectrum reallocation opportunities, recommending a total of 115 MHz of spectrum that could be made available for wireless broadband use within five years.

Repurposing the 95 MHz of spectrum at 1755-1850 MHz, combined with NTIA’s prior recommendation to reallocate 115 MHz of spectrum, would bring federal agencies’ contribution to 40 percent of the President’s goal. NTIA is committed to finding ways to maximize the economic potential of this spectrum in a cost-effective manner, while maintaining essential Federal missions.

The Federal Communications Commission announced on Monday the reformation and modernization of the Lifeline program. The revamped program will ensure affordable phone service is available to low-income families. Lifeline is a “universal service program that fulfills Congress’s mandate to ensure the availability of communications to all Americans.” The percentage of low-income households with phone service has increased dramatically since the program began in 1985, from 80% to nearly 92% last year. The FCC is looking to create a number of databases and protocols to end carrier abuse of the program. One such measure will be the creation of an eligibility database from governmental data sources to automate eligibility of initial and ongoing Lifeline participants. The move will “reduce the potential for fraud while cutting red tape for consumers and providers.” Lifeline is set to be revamped by no later than the end of 2013.
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Democratic Representative Edward Markey of Massachusetts released a draft of his cell phone privacy bill on Monday. The Mobile Device Privacy Act is designed to protect consumers from tracking software such as Carrier IQ, which caused an uproar late last year when it was discovered to be secretly monitoring 150 million smartphone users. The bill would require companies to disclose the use of such tracking software and clarify exactly what information the software collects. Customers would have to consent to any data collected or transmitted, and third parties would have to file applications with the Federal Trade Commission and the Federal Communications Commission to ensure the data is being transmitted securely. “Consumers have the right to know and to say ‘no’ to the presence of software on their mobile devices that can collect and transmit their personal and sensitive information,” said Markey when speaking to The Hill. Markey serves on the House Energy and Commerce Committee and is the co-chairman of the Congressional Privacy Caucus.

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If you are an everyday wireless consumer walking into a store to purchase a new smartphone, the terms HSPA+, WiMAX and LTE may mean very little to you. Yet, each of those networks is different and each is being advertised as “4G” in the United States, thanks to an International Telecommunications Union policy that allows carriers to market newer 3G technologies as “4G” networks. A new bill presented to the U.S. Senate this week hopes to force wireless carriers to clarify what exactly their “4G’ networks offer, including minimum and maximum data speeds. The bill was filed by Senator Amy Kobuchar and Al Franken from Minnesota as well as Senator Richard Blumenthal from Connecticut. “Wireless providers need to make sure their customers can count on the speed, reliability, and the price they were promised when they signed up” Senator Franken explained. “And if they can’t fulfill their promise, they need to be held accountable.” The bill is in addition to The Next Generation Wireless Disclosure Act, which was filed in June by Congresswoman Anna G. Eschoo, who applauded the new bill from Kobuchar, Franken and Blumenthal. Read on for the full press release from Eschoo’s office.

Rep. Eshoo Applauds Senate Introduction of 4G Legislation by Senators Blumenthal, Klobuchar and Franken

Washington, DC – Today, Rep. Anna G. Eshoo (D-Palo Alto), top Democrat on the U.S. House of Representatives’ Energy and Commerce Subcommittee on Communications and Technology, applauded Senators Richard Blumenthal (D-CT), Amy Klobuchar (D-MN) and Senator Al Franken (D-MN) for introducing a Senate companion bill to the Next Generation Wireless Disclosure Act, which she introduced in the U.S. House in June.

“Consumers deserve to know exactly what they’re getting when they sign up for a two year wireless data plan,” said Rep. Eshoo. “Consumers want faster and faster phones, and demand for 4G is only going to increase. But they also deserve to know the truth about the speeds they’re actually getting. Wireless companies advertise 4G service as ‘lightening fast’ and ‘super-charged,’ but that’s not always the case. My legislation is simple – it will require truth in advertising.

“I’m proud that Senators Blumenthal, Klobuchar and Franken have introduced this legislation in the Senate. With their help, we can make sure that consumers have all the information they need to make an informed choice about which wireless data service to purchase.”

Senators Blumenthal, Klobuchar and Franken introduced the legislation earlier today in the Senate, and released the following statements:

Sen. Blumenthal said, “As consumers become more reliant on Internet capabilities from their mobile devices, it is essential that they have the most accurate and useful information about the products and plans they are purchasing. Whether they are using a tablet or a smartphone, wireless users deserve an honest description by companies of product capabilities. I’m proud to introduce the Senate companion to the bill that Representative Eshoo has worked so tirelessly on in the House to help bring fairness and certainty to consumers.”

Sen. Klobuchar said, “When consumers purchase a 4G wireless plan, they have the right to know exactly what they’re getting for their money. This legislation will help ensure that wireless companies are honest about their product’s capabilities so consumers can get a fair deal.”

Sen. Franken said, “While wireless data makes it easier for people all over Minnesota to do their jobs and to access music, movies, and books from virtually anywhere, it’s important that consumers know what they’ll be paying for when they sign a contract. Wireless providers need to make sure their customers can count on the speed, reliability, and the price they were promised when they signed up. And if they can’t fulfill their promise, they need to be held accountable.”

As it stands there is no standard definition for 4G wireless broadband internet, allowing the four major wireless companies in the United States to advertise several different technologies as “4G,” despite vastly different speeds based on their wireless provider and location. The Next Generation Wireless Disclosure Act would require wireless companies to disclose the details listed below in their marketing and advertising at the point of sale and in all billing materials.

• Guaranteed minimum data speed

• Network reliability

• Coverage area maps

• Pricing

• Technology used to provide 4G service

• Network conditions that can impact the speed of applications and services used on the network

The legislation will further require the Federal Communications Commission (FCC) to evaluate the speed and price of 4G wireless data service provided by the top ten U.S. wireless carriers. This will provide consumers with access to a side-by-side comparison in their service area. For full background on Rep. Eshoo’s Next Generation Wireless Disclosure Act (H.R. 2281), please click here. Rep. Eshoo’s legislation has been endorsed by several groups, including the Consumers Union, the National Consumers League, New America Foundation, the Media Access Project and Public Knowledge. A copy of the bill can be accessed here.

Eshoo serves as the Ranking Member on House Energy and Commerce Committee’s Communications and Technology Subcommittee.

Google may be preparing to take its mobile efforts to the next level as it tests a Google-branded MVNO in Spain. Unconfirmed reports accompanied by photos of a Google SIM card and a Nexus S running on a “Google_Es” network suggest that Google is toying with the idea of becoming a Mobile Virtual Network Operator, or a company that provides cellular service by leasing capacity from existing wireless carriers and piggybacking on their networks. The photos suggest that testing is in the late stages as Google has already printed branded SIM cards, which have reportedly been delivered to Google Spain employees for testing. Additional details are scarce for the time being, but a Google-branded MVNO with deep Google Voice integration and a portfolio of Android devices from its potential Motorola acquisition could give the tech giant unprecedented control over the user experience. There is currently no firm indication that Google is testing similar services in other markets. Additional images follow below.

UPDATE: Turns out this was a hoax pulled off by a site described by Engadget Spanish as a “Spaniard 4chan.” Full details can be found on the Engadget Spanish site.

[Via cellular-news]

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Sprint’s already been very vocal about its opposition to AT&T’s planned purchase of T-Mobile from Deutsche Telekom, but on Tuesday the carrier officially asked the Federal Communications Commission to step in and block the purchase. In its 377-page filing, Sprint argued that the acquisition would make AT&T the nation’s largest carrier with a total of 118 million subscribers and a 43% grip on the postpaid market. The carrier added that Verizon and AT&T would earn 78% of all wireless revenues and the “Twin Bell” duopoly would have an 82% grasp of the postpaid market, making it difficult for other carriers such as Sprint to compete. AT&T, meanwhile, has argued that the acquisition will create jobs, will not stifle competition, and will help deliver high-speed wireless broadband to 97% of U.S. residents.

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AT&T, the nation’s second largest wireless provider, has just announced that it will acquire T-Mobile USA from parent company Deutsche Telekom in a cash and stock deal worth approximately $39 billion. With all of the talk of Sprint and T-Mobile joining up, the AT&T news comes out of the blue — though strategically it makes more sense due to both carriers’ spectrum and network technology. It has been widely reported that Deutsche Telekom was looking to get rid of T-Mobile USA for various reasons. AT&T has also committed to delivering LTE to an additional 46 million people with the T-Mobile acquisition, promising to cover close to 95% of the U.S. population with LTE wireless services in the future. The deal is expected to close, pending regulatory approval, within the next 12 months. The full press release is after the break.

DALLAS, TEXAS AND BONN, GERMANY — March 20, 2011— AT&T Inc. (NYSE: T) and Deutsche Telekom AG (FWB: DT) today announced that they have entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction currently valued at approximately $39 billion. The agreement has been approved by the Boards of Directors of both companies.

AT&T’s acquisition of T-Mobile USA provides an optimal combination of network assets to add capacity sooner than any alternative, and it provides an opportunity to improve network quality in the near term for both companies’ customers. In addition, it provides a fast, efficient and certain solution to the impending exhaustion of wireless spectrum in some markets, which limits both companies’ ability to meet the ongoing explosive demand for mobile broadband.

With this transaction, AT&T commits to a significant expansion of robust 4G LTE (Long Term Evolution) deployment to 95 percent of the U.S. population to reach an additional 46.5 million Americans beyond current plans – including rural communities and small towns.  This helps achieve the Federal Communications Commission (FCC) and President Obama’s goals to connect “every part of America to the digital age.” T-Mobile USA does not have a clear path to delivering LTE.

“This transaction represents a major commitment to strengthen and expand critical infrastructure for our nation’s future,” said Randall Stephenson, AT&T Chairman and CEO. “It will improve network quality, and it will bring advanced LTE capabilities to more than 294 million people. Mobile broadband networks drive economic opportunity everywhere, and they enable the expanding high-tech ecosystem that includes device makers, cloud and content providers, app developers, customers, and more. During the past few years, America’s high-tech industry has delivered innovation at unprecedented speed, and this combination will accelerate its continued growth.”

Stephenson continued, “This transaction delivers significant customer, shareowner and public benefits that are available at this level only from the combination of these two companies with complementary network technologies, spectrum positions and operations. We are confident in our ability to execute a seamless integration, and with additional spectrum and network capabilities, we can better meet our customers’ current demands, build for the future and help achieve the President’s goals for a high-speed, wirelessly connected America.”

Deutsche Telekom Chairman and CEO René Obermann said, “After evaluating strategic options for T-Mobile USA, I am confident that AT&T is the best partner for our customers, shareholders and the mobile broadband ecosystem. Our common network technology makes this a logical combination and provides an efficient path to gaining the spectrum and network assets needed to provide T-Mobile customers with 4G LTE and the best devices. Also, the transaction returns significant value to Deutsche Telekom shareholders and allows us to retain exposure to the U.S. market.”

As part of the transaction, Deutsche Telekom will receive an equity stake in AT&T that, based on the terms of the agreement, would give Deutsche Telekom an ownership interest in AT&T of approximately 8 percent. A Deutsche Telekom representative will join the AT&T Board of Directors.

Competition and Pricing
The U.S. wireless industry is one of the most fiercely competitive markets in the world and will remain so after this deal. The U.S. is one of the few countries in the world where a large majority of consumers can choose from five or more wireless providers in their local market. For example, in 18 of the top 20 U.S. local markets, there are five or more providers. Local market competition is escalating among larger carriers, low-cost carriers and several regional wireless players with nationwide service plans. This intense competition is only increasing with the build-out of new 4G networks and the emergence of new market entrants.

The competitiveness of the market has directly benefited consumers. A 2010 report from the U.S. General Accounting Office (GAO) states the overall average price (adjusted for inflation) for wireless services declined 50 percent from 1999 to 2009, during a period which saw five major wireless mergers.

Addresses wireless spectrum challenges facing AT&T, T-Mobile USA, their customers, and U.S. policymakers
This transaction quickly provides the spectrum and network efficiencies necessary for AT&T to address impending spectrum exhaust in key markets driven by the exponential growth in mobile broadband traffic on its network. AT&T’s mobile data traffic grew 8,000 percent over the past four years and by 2015 it is expected to be eight to 10 times what it was in 2010. Put another way, all of the mobile traffic volume AT&T carried during 2010 is estimated to be carried in just the first six to seven weeks of 2015. Because AT&T has led the U.S. in smartphones, tablets and e-readers – and as a result, mobile broadband – it requires additional spectrum before new spectrum will become available.  In the long term, the entire industry will need additional spectrum to address the explosive growth in demand for mobile broadband.

Improves service quality for U.S. wireless customers
AT&T and T-Mobile USA customers will see service improvements – including improved voice quality – as a result of additional spectrum, increased cell tower density and broader network infrastructure. At closing, AT&T will immediately gain cell sites equivalent to what would have taken on average five years to build without the transaction, and double that in some markets.  The combination will increase AT&T’s network density by approximately 30 percent in some of its most populated areas, while avoiding the need to construct additional cell towers. This transaction will increase spectrum efficiency to increase capacity and output, which not only improves service, but is also the best way to ensure competitive prices and services in a market where demand is extremely high and spectrum is in short supply.

Expands 4G LTE deployment to 95 percent of U.S. population – urban and rural areas
This transaction will directly benefit an additional 46.5 million Americans – equivalent to the combined populations of the states of New York and Texas – who will, as a result of this combination, have access to AT&T’s latest 4G LTE technology. In terms of area covered, the transaction enables 4G LTE deployment to an additional 1.2 million square miles, equivalent to 4.5 times the size of the state of Texas.  Rural and smaller communities will substantially benefit from the expansion of 4G LTE deployment, increasing the competitiveness of the businesses and entrepreneurs in these areas.

Increases AT&T’s investment in the U.S.
The acquisition will increase AT&T’s infrastructure investment in the U.S. by more than $8 billion over seven years. Expansion of AT&T’s 4G LTE network is an important foundation for the next wave of innovation and growth in mobile broadband, ensuring the U.S. continues to lead the world in wireless technology and availability.  It makes T-Mobile USA, currently a German-owned U.S. telecom network, part of a U.S.-based company.

An impressive, combined workforce
Bringing AT&T and T-Mobile USA together will create an impressive workforce that is best positioned to compete in today’s global economy. Post-closing, AT&T intends to tap into the significant knowledge and expertise held by employees of both AT&T and T-Mobile USA to succeed. AT&T is the only major U.S. wireless company with a union workforce, offering leading wages, benefits, training and development for employees. The combined company will continue to have a strong employee and operations base in the Seattle area.

Consistent with AT&T’s track record of value-enhancing acquisitions
AT&T has a strong track record of executing value-enhancing acquisitions and expects to create substantial value for shareholders through large, straightforward synergies with a run rate of more than $3 billion, three years after closing onward (excluding integration costs). The value of the synergies is expected to exceed the purchase price of $39 billion. Revenue synergies come from opportunities to increase smartphone penetration and data average revenue per user, with cost savings coming from network efficiencies, subscriber and support savings, reduced churn and avoided capital and spectrum expenditures.

The transaction will enhance margin potential and improve the company’s long-term revenue growth potential as it benefits from a more robust mobile broadband platform for new services.

Additional financial information
The $39 billion purchase price will include a cash payment of $25 billion with the balance to be paid using AT&T common stock, subject to adjustment.  AT&T has the right to increase the cash portion of the purchase price by up to $4.2 billion with a corresponding reduction in the stock component, so long as Deutsche Telekom receives at least a 5 percent equity ownership interest in AT&T.

The number of AT&T shares issued will be based on the AT&T share price during the 30-day period prior to closing, subject to a 7.5 percent collar; there is a one-year lock-up period during which Deutsche Telekom cannot sell shares.

The cash portion of the purchase price will be financed with new debt and cash on AT&T’s balance sheet. AT&T has an 18-month commitment for a one-year unsecured bridge term facility underwritten by J.P. Morgan for $20 billion.  AT&T assumes no debt from T-Mobile USA or Deutsche Telekom and continues to have a strong balance sheet.

The transaction is expected to be earnings (excluding non-cash amortization and integration costs) accretive in the third year after closing. Pro-forma for 2010, this transaction increases AT&T’s total wireless revenues from $58.5 billion to nearly $80 billion, and increases the percentage of AT&T’s total revenues from wireless, wireline data and managed services to approximately 80 percent.

This transaction will allow for sufficient cash flow to support AT&T’s dividend. AT&T has increased its dividend for 27 consecutive years, a matter decided by AT&T’s Board of Directors.

Conditions
The acquisition is subject to regulatory approvals, a reverse breakup fee in certain circumstances, and other customary regulatory and other closing conditions. The transaction is expected to close in approximately 12 months.

Advisors
Greenhill & Co., J.P. Morgan and Evercore Partners acted as financial advisors and Sullivan & Cromwell LLP, Arnold & Porter, and Crowell & Moring provided legal advice to AT&T.

Conference Call/Webcast
On Monday, March 21, 2011, at 8 a.m. ET, AT&T Inc. will host a live video and audio webcast presentation regarding its announcement to acquire T-Mobile USA. Links to the webcast and accompanying documents will be available on AT&T’s Investor Relations website. Please log in 15 minutes ahead of time to test your browser and register for the call.

For dial-in access, please dial +1 (888) 517-2464 within the U.S. or +1 (630) 827-6816 outside the U.S. after 7:30 a.m. ET. Enter passcode 8442095# to join or ask the conference call operator for the AT&T Investor Relations event.

The webcast will be available for replay on AT&T’s Investor Relations website on March 21, 2011, starting at 12:30 p.m. ET through April 21, 2011. An archive of the conference call will also be available during this time period. To access the recording, please dial +1 (877) 870-5176 within the U.S. or +1 (858) 384-5517 outside the U.S. and enter reservation code 29362481#.

Transaction Website
For more information on the transaction, including background information and factsheets, visitwww.MobilizeEverything.com.

About AT&T
AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates – AT&T operating companies – are the providers of AT&T services in the United States and around the world. With a powerful array of network resources that includes the nation’s fastest mobile broadband network, AT&T is a leading provider of wireless, Wi-Fi, high speed Internet, voice and cloud-based services. A leader in mobile broadband and emerging 4G capabilities, AT&T also offers the best wireless coverage worldwide of any U.S. carrier, offering the most wireless phones that work in the most countries.  It also offers advanced TV services under the AT&T U-verse® and AT&T │DIRECTV brands. The company’s suite of IP-based business communications services is one of the most advanced in the world. In domestic markets, AT&T Advertising Solutions and AT&T Interactive are known for their leadership in local search and advertising.

Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at http://www.att.com. This AT&T news release and other announcements are available athttp://www.att.com/newsroom and as part of an RSS feed at www.att.com/RSS. Or follow our news at @ATT.

About Deutsche Telekom
Deutsche Telekom is one of the world’s leading integrated telecommunications companies with around 129 million mobile customers, approximately 36 million fixed-network lines and more than 16 million broadband lines (as of December 31, 2010). The Group provides products and services for the fixed network, mobile communications, the Internet and IPTV for consumers, and ICT solutions for business customers and corporate customers. Deutsche Telekom is present in over 50 countries and has around 247,000 employees worldwide. The Group generated revenues of EUR 62.4 billion in the 2010 financial year – more than half of it outside Germany (as of December 31, 2010).

About T-Mobile USA
Based in Bellevue, Wash., T-Mobile USA, Inc. is the U.S. wireless operation of Deutsche Telekom AG. By the end of the fourth quarter of 2010, approximately 129 million mobile customers were served by the mobile communication segments of the Deutsche Telekom group – 33.7 million by T-Mobile USA – all via GSM and UMTS, the world’s most widely used digital wireless standards. Today, T-Mobile operates America’s largest 4G network, and is delivering a compelling 4G experience across a broad lineup of leading devices in more places than competing 4G services.  T-Mobile USA’s innovative wireless products and services empower and enable people to stay connected and productive while mobile. Multiple independent research studies continue to rank T-Mobile USA as a leader in customer care and customer satisfaction. For more information, please visit http://www.T-Mobile.com. T-Mobile is a federally registered trademark of Deutsche Telekom AG.  For further information on Deutsche Telekom, please visitwww.telekom.de/investor-relations.

Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. In addition to these factors, there are risks and uncertainties associated with the T-Mobile business, the pendency of the T-Mobile acquisition and the ability to realize the benefits of the integration of the T-Mobile business. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at www.att.com/investor.relations.

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According to information garnered by UK paper The Independent, Apple will not include Near Field Communications (NFC) technology in its next generation iPhone. Citing sources at “several of the largest mobile operators in the UK,” the paper states that Apple informed mobile carriers of its decision to forgo NFC over several meetings. Analysts suspect that Apple may be working on its own NFC-like payment system — one that routes payment through the company’s iTunes Store — as it has been discouraged by the “lack of a clear industry standard.” NFC is expected to handle over $150 billion by the year 2015, making it a trend that no mobile carrier or manufacturer wants to be left out on. 

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According to a report on Wednesday from industry watcher DigiTimes, Acer is seeing higher than expected interest in its upcoming line of tablets. Demand is so high, the report claims, that it exceeds the initial supply Acer has ordered from its manufacturing partners. The strong demand comes from various cellular carriers around the world that are seemingly eager to bundle Acer’s upcoming devices with data plans. According to the report, Acer plans to launch four devices between now and April: The 10-inch Windows 7-powered Iconia W500, which will launch mid-March; the 10-inch Tegra 2-equipped Iconia A500, which will run Android 3.0 (Honeycomb) when it launches in late March; the 7-inch Android-powered Iconia A100, which will launch in April; and the supersized 4.8-inch Gingerbread smartphone dubbed Iconia Smart, which will also launch in April. Acer noted that initial limited inventory  is due to a short supply of key components, such as touchscreen displays.

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The recent resurgence of “iPhone nano” rumors has Wall Street analysts working overtime. They already love Apple, which has basically been printing money lately, and rumors of Cupertino cooking up a smaller, cheaper iPhone could certainly send Apple’s mobile profits even further skyward. In fact, one analyst thinks a cheap version of Apple’s iOS-powered smartphone could expand its addressable market by a whopping 600%, therefore potentially giving iPhone profits a 250% boost. Bernstein Research analyst Toni Sacconaghi thinks Apple needs either needs a cheaper iPhone or more carrier agreements in order to increase its smartphone market share — a notion that borders on the obvious. The former option, a cheaper iPhone, could be achieved by building a smaller phone with a smaller display panel. But Sacconaghi loses us entirely when he pitches another possibility that Apple might address new customers by offering an iPhone that doesn’t require a data plan. Apple has more muscle than any other cell phone maker right now, no doubt, but carriers would never sell an iPhone that didn’t help them reel in the dough on precious data plans.

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In a press release today, Chinese electronics manufacturer ZTE announced its plans to open a carrier-centric, cloud-based app store at next week’s Mobile World Congress. The store will allow wireless providers to “manage their own-branded delivery services and content” online and off; the store can also be configured to work on PCs and tablets.

“Operators can in turn give their customers access to a vast range of applications and content such as videos, games, animations and books,” reads the press release. “Many middle/small operators around the world are expected to take advantage of the applications store services to expand and develop their business.”

The name of this newfangled store? iMarket — let the lawsuits begin. Hit the jump for the full press release.

ZTE to Launch Cloud-based iMarket at Mobile World Congress 2011

Mobile World Congress 2011
SHENZHEN, China–(BUSINESS WIRE)–ZTE Corporation (“ZTE”) (H share stock code: 0763.HK / A share stock code: 000063.SZ), a leading global provider of telecommunications equipment and network solutions, today announced it will launch its cloud-based applications store iMarket to global operators at the telecoms industry’s Mobile World Congress in Barcelona next week.

As content and applications (apps) continue to grow in importance for mobile device users, ZTE developed the iMarket with the aim of establishing a strong position as a provider of operator services and devices, as well as to offer operators a converged trading and services platform that can become a core part of their business. Operators can in turn give their customers access to a vast range of applications and content such as videos, games, animations and books. Unlike other online application stores, the ZTE iMarket will not only be able to run on the existing terminals like handsets, PCs, but also the tablets (known in the industry as quadruple screens).

The ZTE iMarket is also a cloud-based service. Operators simply manage their own-branded delivery services and content through the iMarket platform. Depending on the type of content the user wants to use, all ZTE iMarket products can either be downloaded and used offline, or experienced online. ZTE can provide operators with platform deployment, operation consultancy and software applications according to the individual operators’ requirements. Many middle/small operators around the world are expected to take advantage of the applications store services to expand and develop their business.

ZTE iMarket is ready now to help build operators’ business development. In 2010, ZTE established its corporate-level partnership system to provide partners with long-term support by a system of resource-sharing, a communications platform, and an open and innovative business model with benefits for both parties. Tens of thousands of applications are already available on the ZTE iMarket and the providers of these applications will continue to work with ZTE to develop the business around the world. ZTE will play the role of coordinator and collector to help operators continue to improve the iMarket service and experience.

ZTE Vice President and General Manager of Services Products Yu Yifang said: “ZTE has made major investments in the development of cloud computing, and mobile Internet applications including the Internet of Things in recent years. In 2010, ZTE Internet of Things was deployed at Expo 2010 Shanghai and received a CDMA Development Group Award. ZTE iMarket is a continuation of those significant developments.”

ZTE iMarket is already in commercial use with the world’s largest WCDMA operator, China Unicom. The two companies are cooperating on a wide range of programmes including services design, services operations and developer recruitment.