July 2013

Technology has complicated the very trade deal meant to revolutionize it.

Disclosures about the National Security Agency’s surveillance of European diplomats shrouded opening talks last week on a massive agreement between the European Union and United States that would redefine digital trade. While the revelations’ effects remain unclear, they have magnified privacy concerns and further politicized an already tense debate over information access and ownership. Negotiators now face an even knottier battle to reconcile the tech industry’s push for digital freedom with European desires for individual protections.

A letter sent to the UK's four leading Internet service providers from the government has made them very cross indeed. The letter comes from the UK Department for Education but it sets out a list of demands from Downing Street, with the stated aim of allowing the prime minister to make an announcement shortly.

The companies are asked, among other things, for a commitment to fund an "awareness campaign" for parents. They're not particularly happy about promising cash for what the letter concedes is an "unknown campaign" but it's the next item on the menu which is the source of most of their anger. This asks them to change the language they are using to describe the net safety filters they will be offering to internet users. Instead of talking of "active choice +", they are urged to use the term default-on. The letter says this can be done "without changing what you're offering." A person at one ISP told me the request was "staggering - asking us to market active choice as default-on is both misleading and potentially harmful."

AT&T and prepaid wireless provider Leap Wireless International have entered into an agreement for AT&T to acquire Leap for $15 per share in cash. Under the terms of the agreement, AT&T will acquire all of Leap’s stock and wireless properties, including licenses, network assets, retail stores and approximately 5 million subscribers.

As of April 15, 2013, Leap had $2.8 billion of net debt. Leap shareholders will also receive a contingent right entitling them to the net proceeds received on the sale of Leap’s 700 Mhz “A Block” spectrum in Chicago, which Leap purchased for $204 million in August 2012. Leap’s network covers approximately 96 million people in 35 U.S. states. Leap currently operates -- under the Cricket brand -- a 3G CDMA network, as well as a 4G LTE network covering 21 million people in these areas, and has 3,400 employees. AT&T will retain the Cricket brand name, provide Cricket customers with access to AT&T’s award-winning 4G LTE mobile network, utilize Cricket’s distribution channels, and expand Cricket’s presence to additional U.S. cities. The result will be increased competition, better device choices, improved customer care and a significantly enhanced mobile Internet experience for consumers seeking low-cost prepaid wireless plans. The combined company will have the financial resources, scale and spectrum to better compete with other major national providers for customers interested in low-cost prepaid service.

Cricket’s employees, operations and distribution will jump start AT&T’s expansion into the highly competitive prepaid segment. The acquisition includes spectrum in the PCS and AWS bands covering 137 million people and is largely complementary to AT&T’s existing spectrum licenses. Immediately after approval of the transaction, AT&T plans to put Leap’s unutilized spectrum – which covers 41 million people – to use in furthering its 4G LTE deployment and providing additional capacity and enhanced network performance for customers’ growing mobile Internet usage. Owners of approximately 29.8% of Leap’s outstanding shares have entered into an agreement to vote in favor of the transaction. The transaction is subject to review by the Federal Communications Commission and the Department of Justice and to other customary closing conditions. AT&T expects the transaction to close in six to nine months.