Attachment a 1 Statements on Competition in the Wireless Industry
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Attachment A Statements on Competition in the Wireless Industry Comments to the FCC Statements to Investors COMPETITION [M]arketplace hyper-consolidation has increased provider concentration MetroPCS. The market for our wireless services is highly competitive. and decreased competition. Rural Telecommunications Group We compete directly in each of our metropolitan areas with other Comments at 3. facilities and non-facilities based wireless broadband mobile service providers, wireline, Internet, cable, satellite and other communications RCA [has] concerns about the growing dominance of the larger carriers, service providers by providing a wireless alternative to traditional as rural and regional carriers struggle to compete. Rural Cellular wireline service. We believe that competition for subscribers among Association Comments at 1-2. wireless broadband mobile providers is based mostly on price, service area, services and features, call quality and customer service. MetroPCS 2009 Annual Report at 12. Strong operational results and net subscriber growth of approximately 1.4 million subscribers over the past 12 months resulted in record consolidated Adjusted EBITDA for the company of over $322 million, up approximately 38% from the second quarter 2009. MetroPCS Reports Second Quarter 2010 Results, Press Release, Aug. 5, 2010. U.S. Cellular. The wireless telecommunication industry is highly competitive. U.S. Cellular 2009 Annual Report at 8. Leap Wireless. And in terms of the competitive landscape looking forward, you know like any other industry, it’s competitive and I think people forget that from time to time. We will be faced with competition as long as we continue to do business. And that’s a good thing. It always makes you better. Walter Berger, EVP & CFO of Leap Wireless International, Goldman Sachs Inaugural Technology, Media & Telecom Leveraged Finance Conference, Apr. 14, 2010. [W]hile we have had to compete in this overcrowded space over the last year, we do continue to innovate, we do continue to understand what 1 Attachment A Comments to the FCC Statements to Investors COMPETITION (CONT’D) our customers want and we do continue to develop. Walter Berger, EVP & CFO of Leap Wireless International, Raymond James Institutional Investors Conference, Mar. 08. 2010. Cincinnati Bell. The Company operates in highly competitive industries. The Company believes it is likely in 2010 that competition will be fierce. Cincinnati Bell 2009 Annual Report at 12. Clearwire. During the second quarter, Clearwire added 722,000 total net new subscribers. The Company now expects that total subscribers will be approximately three million by the end of 2010. Clearwire Reports Strong Second Quarter 2010 Results, Press Release, Aug. 4, 2010. 2 Attachment A Comments to the FCC Statements to Investors ACCESS TO SPECTRUM [M]any small, rural and mid-tier carriers that would love to offer MetroPCS. We don’t need 100 megahertz. Obviously, we’d like to nationwide service on their own networks are unable to do so due to have more spectrum than less spectrum, but we’re very comfortable lack of access to wireless spectrum. MetroPCS Comments at 17. that, on average, we have sufficient spectrum to roll over into LTE. Roger Linquist, Chairman & CEO of MetroPCS Communications Inc., [S]pectrum scarcity and the absence of a spectrum cap have stifled new Sanford C. Bernstein Strategic Decisions Conference, Jun. 4, 2010. market entry and next-generation network upgrades, which in turn has reduced competition. Rural Telecommunications Group Comments at Leap Wireless. So from a spectrum standpoint as we said, we think we 3. have adequate spectrum to continue to drive us ahead. So I don’t know at this point we have any issues that are concerning or alarming to us on what we have seen on how that is unfolding. Doug Hutcheson, CEO of Leap Wireless International, Citi Global Entertainment, Media, and Telecommunications Conference, Jan. 07, 2010. Clearwire. This capacity is a unique and sustainable advantage for Clearwire, thanks to our all-IP network and unmatched spectrum holdings. Dr. John Saw, SVP-CTO of Clearwire Corp., cited by Mike Dano, Clearwire to begin testing LTE, promises speeds of 20-70 Mbps, Fierce Wireless, Aug. 4, 2010. U.S. Cellular. U.S. Cellular may acquire access to spectrum through a number of alternatives, including participation in spectrum auctions, partnering on a non−controlling basis with other auction applicants and other acquisitions and exchanges. U.S. Cellular 2009 Annual Report at 15. Q: And you have enough spectrum to deploy LTE as well as 3G?” Morgan Stanley Analyst. A: “We have significant spectrum over most of our footprints.” Ted Carlson, President & CEO of Telephone and Data Systems, Inc., Morgan Stanley Tech., Media, & Telecom Conference, Mar. 1, 2010. 3 Attachment A Comments to the FCC Statements to Investors AVAILABILITY OF SMARTPHONES TO REGIONAL AND SMALL CARRIERS As the largest carriers control ever more customers through market MetroPCS. We sell a variety of handsets manufactured by nationally consolidation, it will become increasingly difficult for small, rural and recognized handset manufacturers for use on our network, including mid-tier carriers to secure cost-effective contracts for the manufacture models that have cameras, can browse the Internet, play music and have of advanced wireless handsets. MetroPCS Comments at 16. other features facilitating digital data. MetroPCS 2009 Annual Report at 7. [E]xclusivity agreements between large carriers and device manufacturers limits customer choice and degrade the mobile wireless We introduced our first smart phones last year, introduced a Blackberry experience. Rural Telecommunications Group Comments at 3. last year. Very, very nice robust handset lineup in the total SKU range of 15 to 20 at any given point in time. Braxton Carter, SVP & CFO of MetroPCS Communications, Statement at Jefferies & Co. Global Internet, Media & Telecom Conference, May 12, 2010. Leap Wireless. The handsets—again, we’re excited about. You can see the Droid, the BlackBerry Curve, the 8530 and, again, some of the other 3G devices that we have. Again, I think this offering, once we get the Droid and the BlackBerry out, will be as compelling as most everybody else. It will be really an excellent set of handsets. Walter Berger, EVP & CFO of Leap Wireless International, Goldman Sachs Inaugural Technology, Media & Telecom Leveraged Finance Conference, Apr. 14, 2010. Cricket also said it plans on releasing 15 smartphones, feature phones and broadband devices between last month and the end of the year. The lineup includes the Android-based Kyocera Sanyo Zio, the BlackBerry Curve 8530 and refreshed models of two of the company's most popular feature phones, the Cricket Captr II and the Cricket MSGM8 II. Cricket is also launching a personal Wi-Fi hot spot, the Crosswave, and expects to launch the Huawei 1705 modem and Cricket A605 USB modem next week. Maisie Ramsay, Cricket Unveils Tiered Broadband Plans, 15 Devices, Wireless Week,Aug. 4, 2010. NTELOS. [A b]road array of full featured handsets and Smartphones, including such popular brands as Samsung, LG, BlackBerry, Motorola and Android [are offered to postpay customers]. NTELOS Holdings 4 Attachment A Comments to the FCC Statements to Investors AVAILABILITY OF SMARTPHONES TO REGIONAL AND SMALL CARRIERS (CONT’D) Corp. 2009 Annual Report at 6. Cincinnati Bell. The company now has 85,600 smartphone subscribers, which is 46 percent more than at the end of the second quarter of 2009. Cincinnati Bell Inc. Reports Second Quarter 2010 Results, Press Release, Aug. 4, 2010. Pocket Communications. Pocket Communications – “Pocket” today announced the launch of its smart phone line up that provides a full function smart phone with Internet, camera, music, texting or email starting as low as $99.00. Pocket Communications Announces New Smart Phone Line Up for as Low as $99, FierceWireless, Sept. 23, 2009. Handset exclusivity exacerbates the competitive struggle for rural and Leap Wireless. Whether it’s a Metro, whether it’s us, whether it’s regional carrie[r]s in the wireless industry. A carrier that can others in this space, I think what is becoming the issue of the day is as monopolize access to the latest handsets has a competitive advantage. the consumer just continually looks for this value proposition in RCA carrier members that do not have the purchasing power to virtually every buying decision that they make, they’re now looking at command exclusive deals with handset manufacturers face a the buying decisions around this and they’re having a hard time competitive disadvantage in their efforts to gain new customers and differentiating the product offerings that we offer, that Metro offers, or retain existing customers. Rural Cellular Association Comments at 2-3. others, other than the price point, which is substantially higher. Walter Berger, EVP & CFO of Leap Wireless International, Jefferies & Co. Global Internet, Media & Telecom Conference, May 12, 2010. 5 Attachment A Comments to the FCC Statements to Investors GEOGRAPHIC COVERAGE AND THE ABILITY TO OBTAIN ROAMING AGREEMENTS [T]he two largest wireless providers – AT&T and Verizon Wireless – MetroPCS. We now, with our MetroPCS unlimited nationwide which – are patently unwilling to provide other wireless carriers with access to that isn’t all of our rate plans, cover over 11,000 cities and towns in the wireless data roaming on non-discriminatory terms and conditions at US and over 220 million people in the US. … When you go back a year just and reasonable rates, even though significant portions of their ago, the footprint that we covered was approximately 160 million pops networks were subsidized by universal service funds. MetroPCS and we’ve been very aggressive at filling that coverage out with Comments at 10. strategic roaming relationships with other carriers, both regional and national and again now over 220 million pops. Braxton Carter, SVP & Market consolidation has a perilous impact on rural carriers’ ability to CFO of MetroPCS Communications, Jefferies & Co.