July 2011

Billionaire Philip Falcone’s LightSquared struck a 15-year deal with Sprint Nextel to share network expansion costs and equipment in an effort aimed at making both stronger wireless competitors.

LightSquared will pay Sprint to build and operate a nationwide wireless network that uses high-speed long-term evolution, or LTE, technology. During an 11-year period, LightSquared will pay Sprint $9 billion in cash and credits valued at about $4.5 billion. Sprint can use the credits to acquire capacity from LightSquared, which plans to offer wholesale wireless service to consumer electronics companies and other telecommunications operators. The deal has potential advantages for LightSquared and Sprint as they attempt to challenge Verizon Wireless and AT&T, the two largest U.S. wireless operators. For LightSquared, the agreement is a way to build out its planned national network more rapidly with lower costs. The company said it now expects to be able to offer service to 260 million people in the U.S. by the end of 2014, a year earlier than required under its licenses with the Federal Communications Commission. For Sprint, the deal will provide a new source of revenue as the third-largest U.S. wireless company struggles to compete with bigger rivals.

Pando Networks has published the results of a study evaluating the Internet download performance of 4 million users across the country. The data offers some insight into regional bandwidth trends, highlighting significant disparity between US states in the average quality of Internet connectivity.

The study found that the Northeastern states and the West Coast had the highest average Internet speed. Rural regions in the Midwest tended to have the lowest average download performance -- a finding consistent with previous reports of broadband availability challenges in rural communities. The highest-performing state was Rhode Island, with an average download speed of 894KBps. The lowest performer was Idaho with only 318KBps. The scores from Pando's tests are quite different from the results of a smaller broadband performance study conducted by Communication Workers of America (CWA) in 2007. The CWA survey identified some similar regional trends, but found uniformly higher performance across the country. Both studies point to Rhode Island as the state with the fastest average broadband speed, for example, but CWA computed average broadband speed in the state at 5MBps. Pando's tests are based on real-world downloads made by users of the company's services, so it's not necessarily an accurate reflection of the user's actual bandwidth capacity.

Sen. John McCain (R-AZ) took to the Senate floor to criticize Sen. Harry Reid's debt ceiling plan for including payments to broadcasters as part of incentive auctions (which are in there because they are predicted to raise billions to help pay down that debt).

While giving credit to Senate Majority Leader Reid (D-NV) for at least coming up with a plan, Sen McCain, a former chair of the Senate Commerce Committee, said he understood that having spectrum auctions in there would provide billions of dollars in auction revenues, but suggested he had heard that before. "I have been in this body for a considerable period of time and I can't tell you the number of times we have called for auctions of spectrum." He called that an annual "cop out" that prevented legislators from making "tough decisions." He said that, "most egregiously," Reid's plan calls for paying a billion dollars for returning unused spectrum. Actually, the bill sets that money aside to compensate the broadcasters who don't sell off spectrum for any channel repositioning or "repacking": required to free up contiguous spectrum for wireless broadband. And even that is far under the $2.5 billion NAB has predicted that relocation might cost. But Sen McCain made his point that it pained him to compensate broadcasters as part of the move.

"Television broadcasters got the spectrum for free," said Sen McCain, "now we're supposed to act the taxpayers to give them a billion dollars to give back spectrum that they owe?," he asked before correcting the end of the statement to "that they own," though his original seemed to better capture the tenor of his criticisms.

The Justice Department has asked Google for more information and time as it investigates the search giant’s $400 million acquisition of Admeld, a display advertising company, Google said. The second request “doesn't surprise us, as today’s display advertising industry is very new and highly complex,” Neal Mohan, Google’s vice president of display advertising, wrote in a blog post. “But we'll work to enable this review to be concluded as quickly as possible.” Mohan argued that publishers and advertisers had many options for buying and selling display ads, including three that were new in the last month. In addition to start-ups, Google also competes with big companies like Yahoo and Microsoft in display advertising.