Broadband Cable Association of Pennsylvania


September 21, 2012

What if you didn't finish building it, and they came anyway? Some of the country's biggest cellphone carriers may be about to find out.

Verizon Wireless, AT&T Inc. and Sprint Nextel Corp. have spent billions of dollars rolling out new networks that promise super-fast speeds for browsing the Web on mobile phones. And they have heavily marketed the technology, called LTE, even though for AT&T and Sprint those networks aren't anywhere near complete. That hasn't been a problem so far, because only a small percentage of their subscribers actually use the new networks. But the coming iPhone 5, which touts LTE capability, may tempt the masses to try those networks out, exposing gaps in coverage and testing the networks' ability to handle heavy traffic for the first time.

Carriers have a lot riding on LTE, the fourth major upgrade of their networks since cellphones were rolled out commercially three decades ago. Not only does the technology move data roughly 10 times faster, it does so more efficiently, allowing carriers to squeeze more mileage out of their limited holdings of airwave rights. Plus, faster Web surfing is expected to prompt consumers to use more mobile data, giving carriers' revenue a boost. "As the customers move to LTE, they consume more data," said AT&T Chief Executive Randall Stephenson on Wednesday, spelling out for investors carriers' hopes. "We are feeling really good about this and how it is playing out so far."

The risk is carriers will stumble just as consumers are giving the new technology its first real test. The LTE network assembled by Verizon Wireless, a unit of Verizon Communications Inc. and Vodafone Group PLC, covers 230 million people but has gaps in rural and some suburban areas AT&T's network covers around 74 million people. Sprint is just getting started, with just 19 cities covered, and T-Mobile USA, the fourth largest U.S. carrier, has yet to roll out LTE coverage. The U.S. population is around 312 million. Since roaming has not been enabled on LTE, subscribers who travel or live in areas without consistent coverage will lose LTE service frequently, and their phones could run down their batteries hunting for a signal.

AT&T, whose reputation took a beating when its network proved unable to handle the data traffic unleashed by the iPhone last decade, didn't start building its network until last year. There can be big gaps even within areas that AT&T says it covers. While AT&T offers LTE coverage in New York City, gaps across a large swath of the suburbs in Westchester County and north central New Jersey mean many commuters will lose LTE coverage on their way out of the city.

AT&T does provide a detailed map on its website showing where subscribers can expect to get LTE signals. When subscribers hit gaps in LTE coverage, they'll fall back to AT&T's older network. The company and analysts say the drop in data speed won't be as noticeable as a network switch on Verizon or Sprint. "We believe our 4G network is up to the test and is best designed to deliver the most consistent speeds in the industry," said AT&T senior executive vice president John Donovan.

Verizon got an early jump on its LTE competitors but focused mainly on densely populated metropolitan areas. For instance, it covers the most crowded areas of New Jersey. Yet according to the map on its website, parts of some suburbs have no 4G coverage, including nooks in Verona, West Orange, North Caldwell, Wayne and Franklin Lakes. Similarly, Verizon offers broad coverage in the San Francisco Bay Area, southern coastal region stretching from Los Angeles to San Diego, and the Central Valley. But there are Bay Area holes, including the foothills of the Santa Cruz Mountains just west of Silicon Valley. For most Americans, LTE is just mumbo-jumbo. Research firm Park Associates says 69% of U.S. smartphone users know little about LTE, an acronym for Long Term Evolution.

Nearly 47% of 3,000 people surveyed by investment bank Piper Jaffray Cos. feel they don't need a 4G LTE network, though younger consumers and men are more likely to see the technology as useful. Another 26% said they thought all 4G LTE networks were largely the same. Some of the confusion may reflect the fact that carriers have muddied the issue of "fourth-generation" technologies, a term once reserved for LTE and a competing standard called WiMax. AT&T and T-Mobile relabeled networks they had previously called 3G as 4G-with the blessing from the industry's standards organization-and Sprint started selling LTE phones before it had coverage in any major cities.

The confusing naming conventions help explain the low penetration rates of LTE devices. As of the end of the second quarter, Verizon said that nearly 11 million of its 89 million wireless customers on contract were using its 4G LTE network. In the same period, about 1% of the contract subscribers at AT&T and Sprint Nextel were using LTE smartphones, according to estimates by J.P. Morgan. But as the iPhone's popularity prompts users try out the service, networks will come under pressure, said J.P. Morgan Chase & Co. analyst Philip Cusick. Nicola Palmer, the chief technology officer of Verizon Wireless, said the carrier has been taking steps to prepare for new demand, including improving connections between cell towers and its network backbone. Sprint vice president of network development, Iyad Tarazi, said the carrier has been adding capacity on its LTE service as well as its older 3G network to prepare for the new demands. Wall Street Journal

CBS boss Les Moonves is interested in buying a cable entertainment network - at the right price. "Are there cable networks we could run better than other people? Yes," Moonves said today at the Goldman Sachs Communacopia Conference in New York. CBS has largely sat out the cable business as rival media giants loaded up over the past two decades. Those cable units now drive profitability for the likes of Disney, Time Warner and Viacom, which owned CBS before the company was split.

The demand for cash-cow cable networks means they don't come cheap, however. "Would we like a general entertainment channel at the right price? Absolutely," Moovnes said. CBS does own premium network Showtime, a small sports service, CBS Sports and Smithsonian Networks. It also has international cable holdings. New York Post

If you believe Rob Gleason, chairman of the Pennsylvania Republican Party, Mitt Romney is neck-and-neck with President Obama in the state and is about to start airing campaign commercials any day now. Gleason, eager to hold onto Pennsylvania's swing-state status as polls show a consistent lead for Obama, released his own poll Thursday. It paints the Keystone State as a statistical tie. That poll of 800 likely voters conducted from Saturday to Monday showed Obama with a 1-point lead, 48-47 percent, over Romney. Gleason said the Romney campaign received the poll Wednesday and will soon start running commercials in Pennsylvania. "I can say that for sure," said Gleason, adding, "Like it or not, Barack Obama is going to lose Pennsylvania."

Sounds confident, right? We'll see. A Romney campaign spokeswoman in Pennsylvania declined Thursday to say if Gleason's claim was accurate. Romney has not been running ads in Pennsylvania, and the super PACs that support him have pulled their ads in the state. An Inquirer poll last month showed Obama holding an 11-point lead on Romney. An average of Pennsylvania polls compiled at gives Obama an 8.6-point lead. Karl Rove, the Republican strategist who runs one of the super PACs that pulled ads in Pennsylvania, on Monday shifted the state from "lean Obama" to "safe Obama," citing what he sees as a 10-point lead for the president. Philadelphia Daily News