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C Spire sues AT&T over alleged collusion

Mon, 06/04/2012 - 11:56am
Maisie Ramsay, Wireless Week

C Spire is suing AT&T and two of its vendors for allegedly colluding to manipulate the LTE standards process so it and other regional operators would be prevented from building out their networks.

The antitrust suit takes before the court lower-tier providers’ longstanding belief that AT&T purposely manipulated the 3GPP into creating a class for the 700 MHz band that shut out its competitors from using the same LTE equipment and devices to give it an advantage in the marketplace.

Regional operators have a limited network footprint, and their survival depends on the ecosystem created by their larger competitors, said Steven Berry, head of the Rural Cellular Association, which represents operators like C Spire.

"Companies like C-Spire have the money and spectrum to deploy a network, but they don't control the ecosystem, and they don't have the ability to roam,” Berry said.

Without access to smartphones that can roam on the nationwide networks of top-tier operators, companies like C Spire are unable to compete, as they can only offer wireless service in a limited area. This issue is at the heart of C Spire’s lawsuit.

C Spire has the spectrum and resources to build its LTE network, but it has been unable to get network gear and handsets because the creation of AT&T’s separate band class has delayed development of the band owned by C Spire and other lower-tier operators.

C Spire has pushed out the launch date for its LTE network to September and will use its AWS and PCS spectrum for the service instead of the 700 MHz licenses it bought at auction.

C Spire warned its business could suffer irreparable harm if it is unable to quickly obtain LTE equipment for its band class.

Subsidiary Corr Wireless, also a plaintiff in the suit, is claimed in the complaint to be at such a competitive disadvantage because of AT&T’s action that it “may not survive as an operating entity,” even if C Spire won its case and got immediate injunctive relief.

In a lawsuit filed in April with a U.S. District Court for the Northern District of Mississippi, C Spire alleged that AT&T, Qualcomm and Motorola used the 3GPP’s standards-setting process to “tilt the technological rules in its favor” by creating a separate band for AT&T’s spectrum – Band Class 17 – from what had once been a single band, Band Class 12, the band owned by C Spire and most other regional providers that bought 700 MHz spectrum during the FCC’s 2008 auction.

As a result, AT&T’s LTE network is incompatible with C Spire’s network.

Band Class 17 was not created until after the auction closed, catching companies like C Spire – which paid $191.5 million for 24 lower A- and B-block licenses – off guard. When the auction took place, there were only two 700 MHz bands: Band Class 13, comprising the upper A-, B- and C-block, and Band Class 12, comprising the lower A-, B- and C-block.

“The expectation of everyone, except perhaps AT&T and the other defendants, was that owners of Band 12 spectrum licenses would use that spectrum to deploy 4G LTE wireless technology,” C Spire said in its complaint. “Instead, however, defendants AT&T, Qualcomm, Motorola and perhaps others have engaged in concerted action designed and intended to delay the plaintiffs and other similarly situated carriers from deploying 4G LTE service on their Band 12 spectrum.”

AT&T, which owns lower B- and C-block spectrum, argued to the 3GPP it needed its own band class to protect it from interference from the A-block, which does not have a guard band to protect it from television broadcast signals in adjacent Channel 51. The 3GPP, ostensibly a neutral entity, agreed at the behest of AT&T and its vendors, allowing the creation of AT&T’s incompatible Band Class 17 network.

When C Spire, formerly known as Cellular South, attempted to get the FCC to intervene, AT&T vendors Motorola and Qualcomm allegedly “made direct threats to intimidate” it. In its complaint, C Spire states that a Qualcomm representative said it “would delay development of Band 12 as retribution for the actions of Cellular South with respect to an interoperability petition then pending before the FCC.”

Since then, the development of Band 12 has been so delayed that C Spire has been unable to deploy LTE. Meanwhile, AT&T has rolled out its LTE network to cover 74 million people in about 40 markets, and Verizon Wireless’ LTE service now spans more than two-thirds of the U.S. population.

And even if C Spire were able to construct its Band 12 LTE network, it still wouldn’t have roaming, crippling its ability to compete with the nationwide LTE networks of AT&T and Verizon. The technological incompatibilities between AT&T’s LTE network and C Spire’s network means AT&T is under no legal obligation to offer roaming, as the FCC can’t mandate an operator change its network for a roaming partner.

C Spire states in its lawsuit that “there are no commercially available Band 12 4G LTE devices” currently available. However, U.S. Cellular, another Band 12 operator, recently rolled out its LTE network with a smartphone, tablet and Wi-Fi hotspot from Samsung.

The lawsuit makes no mention of Samsung, the vendor C Spire hired to construct its LTE network and provide it with devices.

AT&T did not respond to requests for comment but has insisted its efforts to create a separate band class for its 700 MHz holdings were merely to avoid interference from A-block operations, not part of a conspiracy to stop its smaller competitors from entering the LTE market.

Court documents indicate AT&T is attempting to get the lawsuit dismissed on jurisdictional grounds. Motorola and Qualcomm could not be immediately reached for a statement on C Spire’s suit.

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