December 2011

Leap Enters into Spectrum Transactions with Verizon Wireless

Leap Wireless has entered into definitive agreements to acquire 12 MHz of 700 MHz A block spectrum in Chicago from Verizon Wireless for $204 million and to sell Verizon Wireless excess PCS and AWS spectrum in various markets across the U.S for $188 million. This additional spectrum in the Chicago area will supplement the 10 MHz of spectrum Leap currently operates in Chicago. The companies anticipate that both transactions will close simultaneously, subject to regulatory approvals and other customary closing conditions. The sale of spectrum in these transactions will not impact Leap's operations in its existing operating markets.

In addition, Leap's non-controlled, majority-owned venture, Savary Island Wireless, has also entered into a definitive agreement with Verizon Wireless to sell AWS spectrum in various markets for $172 million, subject to regulatory approvals and other customary closing conditions. Savary Island has agreed to use substantially all of the proceeds from this sale to prepay its indebtedness to Cricket at the closing of the transaction. In connection with such closing, Cricket will repay the balance of a note which is secured by a portion of the Savary Island spectrum being sold to Verizon Wireless.

Library Wars: Amazon and Publishers Vie for Control of E-Book Rentals

As the digital era unfolds, the role of libraries in the distribution of e-books has emerged as a significant issue of contention.

While print books are still the mainstay of most libraries, and audiobooks are accepted as a regular feature, there is considerable uncertainty about how to handle e-books. Among the six largest trade publishers, only Random House has been selling e-books to libraries without restrictions, and a spokesman said that it is now "actively reviewing" its position. Macmillan and Simon & Schuster do not sell e-books to libraries at all. Hachette and Penguin withhold their newest titles, and HarperCollins caps the number of times a book can be loaned at 26 after which, in principle, it needs to be repurchased. The soaring popularity of e-books and the dominance of Amazon and its proprietary Kindle reader have apparently made these publishers wary of the impact on sales. Smaller publishers and academic presses share those concerns and recognize that e-books could, over time, replace print books as the format of choice among students and scholars, which would seriously undermine their revenue model. About two-thirds of libraries across the country now offer some access to e-books, mostly working through OverDrive, which is the leading provider of digital books to institutions. Initially, Amazon did not make its Kindle e-books available to OverDrive. When Amazon changed that policy this past September, library patron access to e-books substantially increased, and publishers privately expressed concern that substantial numbers of e-book buyers would become borrowers instead. Steve Potash, chief executive of OverDrive, told the New York Times that connecting libraries to the Kindle "is going to bring millions of readers to the public library."

E-Commerce Sales Are Booming, Thanks to Discounts and Free Shipping

Online, at least, shoppers are spending money. Lots of it. People have spent $18.7 billion on e-commerce sites so far this holiday shopping season, 15 percent more than last year during the corresponding days, according to comScore.

They spent $6 billion the week that ended Dec. 2, including Black Friday and Cyber Monday, and spent more than $1 billion on three separate days that week, after breaking the billion-dollar mark for the first time on Cyber Monday last year. But retailers are paying for the surge in spending by offering discounts and free shipping. They have offered free shipping, which Web shoppers have grown accustomed to, at record levels, comScore said. Almost two-thirds of holiday purchases during the heavy shopping weeks before and after Thanksgiving included free shipping, about 10 percentage points higher than last year. And many retailers extended their deals beyond Cyber Monday.

iPad 3, iPhone 5 with LTE? Not so fast, carrier says

Last week, reports from Nikkei Business indicated that Apple was trying to bring an LTE model of the iPad to Japan by summer 2012, and an LTE iPhone later in the year. But those claims have been denied by the rumored carrier, NTT DoCoMo.

Now, it could be that the carrier is reluctant to tip its hat about any negotiations while they’re still in progress, but it’s a fairly definitive statement if taken at face value. LTE connectivity is one of the most wished-for features for iPhone owners, according to a recent study from ChangeWave Research. Consumers have made similar statements about the iPad, which also lacks the super-fast connection. Apple CEO Tim Cook said at the Verizon iPhone launch that LTE chips would have required too many design compromises; others have speculated that LTE would be too taxing on the phone’s battery life. Features aside, the most important speculation surrounding the next generation of the iPad is the release date, which — according to Apple’s regular schedule — is expected in March 2012. But Apple hasn’t been adhering to its normal schedules, leaving gift-buyers trying to decide what to do in order to avoid gadget buyers’ remorse after the holidays.

Lawmakers begin hammering out compromise cybersecurity bill

The House Homeland Security Committee subcommittee on Cybersecurity began hammering out the details of its legislative proposal as lawmakers from both parties focused on finding consensus.

Cybersecurity has become a rare opportunity for bipartisan cooperation as both parties increasingly recognize the importance of safeguarding the nation's computer networks from attack. The hearing continued in that cordial vein and featured substantive discussion of how to improve the draft proposal. House Republicans favor more limited regulation, reduced barriers to information sharing and voluntary incentives for industry to beef up its protections, while the Democratic-led Senate and White House have called for broader and more stringent regulations overseen by the Department of Homeland Security.

AT&T and Qualcomm urge FCC to not delay deal approval

AT&T and Qualcomm are urging the Federal Communications Commission (FCC) to quickly give final approval to AT&T's purchase of $1.9 billion of wireless licenses from Qualcomm, despite calls for the agency to delay a decision.

FCC Chairman Julius Genachowski said last month he was circulating an order with the other commissioners to approve to the deal, but the Rural Telecommunications Group filed a motion on Nov. 30 asking the FCC to put its review on hold. The group argued that because the FCC had linked its review of the Qualcomm deal to its review of AT&T's proposed purchase of T-Mobile, it should not make a decision on the Qualcomm deal while the outcome of the T-Mobile deal is still in doubt. AT&T withdrew its application with the FCC to buy T-Mobile but says it plans to re-file if it survives the Justice Department's lawsuit to block the merger.

Groups slam Verizon for blocking Google app, say tougher net neutrality needed

Two consumer advocacy groups slammed Verizon for reportedly blocking a mobile application developed by Google, saying the incident shows that the government needs to adopt tougher regulations of wireless Internet providers. Verizon, which plans to offer its own mobile payment service, says it is still in negotiations with Google over the app. Consumer advocacy groups Public Knowledge and Free Press said blocking the app will hurt competition and consumers.

"Verizon shows no hesitation in using its gatekeeper position over its subscribers to restrict or block applications that compete with its own offerings," Matt Wood, policy director for Free Press, said. "Verizon's actions restrict consumer choice, stifle competition and kill innovation." Harold Feld, legal director of Public Knowledge, said the possibilities for "anti-competitive, anti-consumer behavior are fairly obvious." He said the FCC could have prevented Verizon's actions with tougher network neutrality rules. “It is unfortunate that the Federal Communications Commission chose to give wireless Internet access a second-class status to becoming an open network," he said. “Today’s dispute between Google and Verizon is just the type of situation that likely would not happen if it were clear that a firm ‘no discrimination’ standard were in effect for wireless services."

Verizon says not blocking Google Wallet

Verizon Wireless said it was not blocking Google Inc's payments app, Google Wallet, on its latest smartphone, and said it was still in talks with Google about the service.

Verizon said that because Google Wallet did "not simply access the operating system and basic hardware of our phones like thousands of other applications," the service "needs to be integrated into a new, secure and proprietary hardware element in our phones." [But, of course] Verizon was in continuing talks with Google about the application, the spokesman said.

Verizon Wireless blocks Google Wallet payment app from new Nexus ‘superphone’

Verizon Wireless is blocking Google’s new flagship phone from supporting Google’s attempt to make the smartphone the credit card of the future. In blocking the Google Wallet software from running on the new Samsung Galaxy Nexus, Verizon Wireless said that it was waiting to provide a wallet application until it can offer “the best security and user experience.”

Verizon and rivals AT&T and T-Mobile USA are part of a consortium called ISIS that is planning its own payment system. Google confirmed that Verizon had asked it not to include the wallet function in the Galaxy Nexus phone, due out soon. The new smartphone is the latest iteration of the Nexus line, which showcases new features and capabilities for phones running Google’s Android software. In this case, the phone is the first to run a new version of Android, dubbed “Ice Cream Sandwich.”

Spectrum Legislation Expected to Be Rolled Into End-of-Year Bill

House Republican leadership is expected attach House spectrum incentive auction legislation to a broad, end-of-the year, must-pass bill, a House Commerce Committee source confirmed on background.

The Jumpstarting Opportunity with Broadband Spectrum (JOBS) Act passed the Communications Subcommittee last week, and the source said House leaders have indicated it could be added to that legislative package, which would extend the payroll tax holiday, as the president has called for, but also include things on the Republican's wish list, like their version of the incentive auction bill, which would prevent the FCC from putting access conditions on spectrum reclaimed for wireless. A Senate version of spectrum incentive auction legislation was added to the president's Jobs bill back in September, but that bill failed to pass. One D.C. bill-watcher said they expected the JOBS Act to be added to the package before it gets a full Commerce Committee vote.

Benton

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