Mergers & acquisitions

Does Rural America Need a Massive Ma Bell?

6:10 PM -- With the Antitrust Division of the U.S. Department of Justice on AT&T Inc. (NYSE: T)'s case and Sprint Corp. (NYSE: S) suing, the $39 billion T-Mobile US Inc. acquisition looks to be on much shakier ground than it was two weeks ago.

One of the selling points in the initial merger promotion from AT&T was how it would benefit rural users with near blanket coverage of Long Term Evolution (LTE). But AT&T says the combined company would complete a 97 percent footprint of nationwide 4G service within six years, so it is worth asking how long it would take before rural users would actually feel a mobile broadband boost.

We know that AT&T, even prior to its T-Mobile takeover plans, wanted to cover 80 percent of the population with LTE by the end of 2013. The vast majority of those users are likely to be in urban areas. According to the U.S. Department of Transportation, around 79.2 percent of Americans currently live in cities and towns. [Ed note: 83.7 percent, according to the latest Census data.]

AT&T seems to have given itself several years after the 2013 target to get to an 80 percent LTE footprint to scale to the other 20 percent. In part, this is understandable -- T-Mobile doesn't even have its own towers in some parts of the country and rents space from other tower operators. So it could be costly to build out the modern capacity and backhaul to support LTE.

Nonetheless, it seems like whatever happens with AT&T and T-Mobile, at least some rural users are still looking at a long wait for 4G LTE.

— Dan Jones, Site Editor, Light Reading Mobile

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paolo.franzoi 12/5/2012 | 4:54:36 PM
re: Does Rural America Need a Massive Ma Bell?

Dan, I think the numbers are from the 2000 Census....try the following from the 2010 Census data:

Over four-fifths (83.7 percent) of
the U.S. population in 2010 lived in
the nation’s 366 metro areas, and
another one-tenth (10.0 percent)
of the population resided in the
nation’s 576 micro areas (Table
2). Metro areas grew almost twice
as fast as micro areas, 10.8 percent
compared to 5.9 percent.
Population growth of at least twice
the national rate occurred in many
metro and micro areas, such as
some areas in parts of California,
Nevada, Arizona, Texas, Florida,
and the Carolinas. No metro area in
the West region declined (Figure 4).


cnwedit 12/5/2012 | 4:54:35 PM
re: Does Rural America Need a Massive Ma Bell?

I think AT&T's inclusion of rural America in its justification for buyig T-Mobile is simply an arguing point for the FCC. A little bit of flag-waving, if you will.

Having ubiquitous LTE would benefit everyone, since even hard-core city dwellers drive through the hinterlands on their way to the next urban areas, so to the extent that AT&T cares about rural coverage, that's probably the bigger issue.

I don't think most rural dwellers expected to see AT&T offering LTE in their neighborhoods any time soon, with or without T-Mobile. And I don't think they expect to see a race in their direction.

To the extent that LightSquared can make it financially feasible for regional or smaller rural carriers to add LTE, we might see some rural coverage. But I'm guessing it will take longer than 2014.

joset01 12/5/2012 | 4:54:35 PM
re: Does Rural America Need a Massive Ma Bell?


joset01 12/5/2012 | 4:54:35 PM
re: Does Rural America Need a Massive Ma Bell?

In 3 to 5 years time are we going to see a race for rural customers on LTE. I mean, LightSquared has signed up 13 wholesalers, many smaller rural or regional operators, so they must be showing them that they expect to be online with LTE in some non-urban areas by say 2014 or so (guess-work on my part).

billsblots 12/5/2012 | 4:54:32 PM
re: Does Rural America Need a Massive Ma Bell?

Most of these rural areas do not have anything better than dial-up service.  When I visit my siblings' families one hour out of Detroit internet is used much like it was in 1996 when you had a 100 minutes a month plan from your provider.  Internet use was planned out and was an event, not connected all the time for live chat, video chat, FB chat, paying bills, shopping, streaming Netflix through the 52 inch HD screen, and watching highlights from last weekend's football games.  There isn't 3G in many of the rural areas, so trying to work a smartphone or iPad puts you on someone's "E"xtended network at about the same speed as dial-up.

So 4G coverage will be the first opportunity for access to the modern world of connectivity for many in rural areas, representing a quantum jump in technology and the way technology is used, similar to what most people in urban and suburban areas went through 10-15 years ago when switching from dial-up to fiber optic cable with download speeds of first an unheard of 1 Mbps, to what we often experience now in excess of 10 Mbps.  Introduction of 4G will mean the same thing to rural areas as hooking up to unlimited access, fiber optic high speed broadband did to others earlier this century.

The amount of investment to reach the last 10% of the population will be expensive and extensive, and 3-5% may still be left out.

rvanbuhler 12/5/2012 | 4:54:31 PM
re: Does Rural America Need a Massive Ma Bell?

The idea that combining the two carriers will enhance rural coverage is a fiction.  T-Mobile's rural coverage is quite poor.  ATT wants T-mobile basically for enhanced capacity in urban areas.  ATT is behind the curve on 3G in most areas, due to their minimal focus on capacity in the past.

Moving from 3G to 4G involves complete replacements of existing TDMA equipment and not a few upgrade kits, or addition of the T-Mobile cell sites to the ATT inventory.

Buying and hogging everything is no answer if you do not have the foresight,  resources or capital to follow through and walk the talk.

ATT is sitting on a hog's portion of coordinated MW channel frequencies that they are not capable of building out, and it will be up to other users to use legal means to pry them out of this behemoth's clutches over time.




joset01 12/5/2012 | 4:54:30 PM
re: Does Rural America Need a Massive Ma Bell?

Re: Fiction.

Yeah, a combination of things tips that off:


1. AT&T says in its initial press release that T-Mobile will add 30% density to its networks in the cities, not rural areas.

2. The leaked letter says it will cover 80% footprint -- i.e. urban areas -- by the end of 2013, then could take up to 3 or 4 years to deploy the remaining 17%. Clearly some heavy build out going on there.

3. Ever driven through the Deep South with a T-Mobile phone? Did it earlier this year, you are constantly roaming onto smaller local operators. Not much T-Mobile coverage going on there.

^Eagle^ 12/5/2012 | 4:54:29 PM
re: Does Rural America Need a Massive Ma Bell?


Considering that ATT and VZ have shown little interest in even upgrading to 3g in many rural areas (I separate rural from cities and from medium sized towns.. what I mean is RURAL.. really small towns and the truly rural areas) at all, I truly doubt there will be a race to supply rural with 4g / LTE in any time line that will be noticed by accountants and network planners.  That is, any such "race" while not likely to happen, IF it does happen, will be a long long time down the road.  Exceptions might be small ILEC's doing it themselves.

another example of this is to note how many rurual areas have zero or very little / very slow broadband access.  Old slow DSL AT BEST!.  No FIOS.  NO Uverse.  No Xfinity.  nada, zip, nunca.  

I hope to be proven wrong as I live in one of those rural areas!  


Duh! 12/5/2012 | 4:54:27 PM
re: Does Rural America Need a Massive Ma Bell?

Rural has a couple of other dimensions.  There's rural as in dense but otherwise isolated towns, and there's rural as in isolated small clusters of houses and there's rural as in individual houses surrounded by farmland.  Then there's rural as in open plain, and there's rural as in mountainous regions and there's rural as in forested plains.  And of course there is rural as in leisure communities enjoyed by the wealthy, and rural as in hardscrabble, barely making it.   Design and economics are going to be different for all permutations.

Also, a small bit of dissonance in the AT&T/T-Mobile story.  If I recall, most of AT&T's spectrum is in the 900 MHz band, and all of T-Mobile is at 1800 MHz.  Seems to me that you'd want to use the lower frequency band, in order to achieve low cost rural coverage, especially in hilly and wooded areas.   What am I missing?

fgoldstein 12/5/2012 | 4:54:27 PM
re: Does Rural America Need a Massive Ma Bell?

Yes, D, ATT has a lot of the good old 800 MHz frequencies; T-M is basically PCS at 1900.  Buying T-M for rural coverage is like using Tabasco sauce to make your ketchup sweeter.  Wrong stuff, and not plausible.

BTW I distinguish bewteen "rural" and "rustic".  The former applies to farms, small towns, and other places where you can at least find a few people per square mile.  Rustic applies to the mountains, deserts, and other areas where the population density is really, really low.  Only a couple of million people live in all of those areas put together, but they're something like half of the country's area.  Rustic areas can be really expensive to serve, except by satellite.


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