Leap Wireless would consider joining forces with another company, CEO Doug Hutcheson said as the carrier released Q3 results last week. Leap “has strong independent growth prospects, but we have also taken significant steps to explore appropriate collaborative alternatives to further building the business,” Hutcheson said. MetroPCS has been the favorite to buy Leap since last September, when it proposed to the carrier (CD Sept 5 p2). A post-700 MHz auction MetroPCS deal still seems likeliest, but cable and satellite companies looking to enter wireless could be interested, Stanford Group analyst Michael Nelson said. Buying or joint venturing with Leap could cost less than buying spectrum, he said. AT&T also could make a move on Leap, Egan-Jones said in a note. “It is probably cheaper for AT&T to purchase Leap than to expand its own systems,” the analyst firm said. Nelson disagreed, citing high integration costs. An AT&T deal would make “no sense at all” because GSM carrier AT&T would need to convert Leap CDMA-based network, he said. Leap also updated investors on 700 MHz auction plans and its earnings results restatement on the period from 2004 through Q2 2007. Leap “filed to participate in Auction 73,” Hutcheson said. “The company has been a disciplined bidder in past auctions resulting in one of the lowest average price per MHz POP paid, and the company expects to be thoughtful in managing its spectrum opportunities and liquidity.” Earnings revisions shrank service revenue $8 million and operating income $23 million over the restated periods, he said. Leap expects related regulatory filings to be done by Dec. 31, he said. The restatement slowed release of Leap Q3 results; other U.S. carriers reported earnings in late October and early November. In Q3, Leap net losses grew significantly, rising $42.5 million year-over year to $43.3 million. Leap blamed higher interest and taxes from accounting method revisions. Gross customer adds, up 11 percent year-over-year, were “less than we anticipated,” said Hutcheson, citing “changes in customer buying patterns during the third quarter.” In Q4 Leap should hit expected customer adds, driven by “attractive post-Thanksgiving results,” he said.
Towerstream can win 700 MHz spectrum despite its size, CEO Jeff Thompson said Thursday during a panel at the Thomas Weisel Partners conference in San Francisco. The wireless broadband firm said Wednesday it filed an auction application (CD Dec 13 p9). Thompson and officials from FiberTower and Airspan Networks also discussed WiMAX’s advantages over Long Term Evolution (LTE), a rival technology embraced by AT&T and Verizon Wireless.
Nokia GSM phones don’t infringe Qualcomm patents, a International Trade Commission judge said in an initial determination. The ruling isn’t a final decision. That will come in late April. But the commission historically doesn’t “disturb” it, former ITC lawyer Lyle Vander Schaaf said in an interview.
Leap Wireless subsidiary Cricket agreed to pay $30 million for Hargray Communication’s wireless business, it said Wednesday. Cricket will acquire Hargray Wireless, including its 15 MHz spectrum license, wireless network and “the majority” of its customer base. Hargray’s wireline and wireless bundled customers will remain with Hargray but receive Cricket service under a wholesale arrangement to be made once the parties close the acquisition, Cricket said. Cricket will bring service to Savannah, Ga., and Hilton Head, S.C. The market additions “complement our newly launched Charleston, S.C., market as well as our existing Carolinas cluster,” said Cricket CEO Doug Hutcheson. Cricket expects the deal to close the first half of 2008, subject to FCC and other approvals, it said. The acquisition furthers Leap’s overall “cluster strategy,” said Current Analysis’ William Ho. “The most recent example can be seen in the North Carolina coverage area where Leap linked… Charlotte, Greensboro and Raleigh, thereby minimizing roaming,” he said. The Hargray integration should “play out similarly, as Savannah and Hilton Head are all coastal and adjacent.” Network integration should be easy since Leap and Hargray are both CDMA carriers, he added.
Vonage filed Monday a counterclaim against AT&T in the companies’ intellectual property case, according to the docket in the U.S. District Court for Western Wisconsin. The VoIP company also filed a motion to transfer the case to the U.S. District Court for New Jersey. But the documents weren’t available right away Wednesday. AT&T sued Vonage alleging infringement of a VoIP patent in October (CD Oct 23 p3). But last month, Vonage said the parties were nearing a $39 million settlement (CD Nov 9 p6). If the AT&T-Vonage settlement is final, the counterclaim and transfer motion could be “residue from pre-existing legislation” that is “somehow appearing late and won’t have an effect at this point,” said Stifel Nicolaus analyst Rebecca Arbogast. But Vonage’s actions could also suggest the settlement isn’t final, in which case the filings are “standard operating procedure” and represent a “very reasonable next step,” she said. Spokesmen for Vonage and AT&T declined to comment.
A Protus news release claiming victory in a patent suit brought by J2 Global Communications’ Catch Curve is “misleading” and contains “incorrect” statements, J2 General Counsel Jeffrey Adelman said in an interview Wednesday. On Nov. 13, the U.S. District Court for the Central District of California dismissed the case “with prejudice,” blocking Catch Curve from reasserting patents against Protus. In Protus’ statement Wednesday, the Canadian Internet fax company said the court threw out the case after holding in a May Markman hearing that the Catch Curve patents didn’t apply to Protus’ MyFax and Virtual Fax services. But that’s not how it happened, Adelman said. “Protus did not ‘win’ anything and the court did not rule on anything that resulted in the ultimate dismissal,” he said. Protus’ account of the Markman hearing is “incorrect,” the general counsel said. “Instead, after years of litigation, Protus finally disclosed that certain of its operations were based outside of the United States. Based on that… disclosure and given the nature of the particular patent claims at issue in the U.S. Catch Curve case in light of limitations of U.S. patent law, the case was voluntarily dismissed.” That result “does not change anything either with regard to J2’s or Catch Curve’s position with respect to Protus or with respect to the ongoing Catch Curve licensing program,” Adelman said. Asked for comment, Protus stood by its news release. “We maintain that the Markman hearing results were completely in our favor and these patents do not apply to the MyFax services. The fact that the case was dismissed was a clear win for Protus,” a spokeswoman said. Protus wouldn’t say why it issued the release a month after the court order. “There was no time disclosure requirement attached to the release,” the spokeswoman said. J2 and Catch Curve have several other lawsuits against Protus in the U.S. and Canada. In Canada, Catch Curve has a patent suit covering “the sales that were also the subject of the U.S. case,” Adelman said. And J2 has suits “on a number of different patents against Protus in both Canadian and U.S. courts,” as well as a “significant junk fax case against Protus in the U.S.,” he said.
AT&T will pursue Long Term Evolution (LTE) technology for its next-generation network, relegating WiMAX to “niche” markets, officials said at the Bell’s Investor Day in San Antonio. In the meantime, AT&T aims to “move away from old telco categories” and focus on mobility and Internet Protocol (IP) communications, said CEO Randall Stephenson. IP “makes converged [wired and wireless] services possible” and “is where this industry’s headed,” he said.
AT&T will start to “emphasize” an existing open handset rule more when training salespeople, a spokesman said. However, allowing non-AT&T GSM phones onto the AT&T network is a policy the carrier has had “for years,” he said in response to a USA Today article about the AT&T’s open handset practice. AT&T has long offered an option to register GSM phones that run on the 850 or 1900 MHz bands, including T- Mobile and European carriers’ handsets, he said. AT&T customers are also able to take their phones to other networks; if the customer fulfilled contract obligations, AT&T will unlock the handset, he said. The spokesman declined to “speculate” on whether AT&T’s promotion of the policy would extend beyond employee training. He also wouldn’t say whether Verizon’s “any app, any device” announcement last week (CD Nov 28 p2) was an impetus for AT&T. Frontline Wireless took credit for AT&T’s move to build awareness. “This is a big win for our policy argument, and it is a reaction to what Frontline has championed on open access,” it said Thursday.
Verizon Wireless told Wall Street Wednesday that it will take part in the 700 MHz auction set to start Jan. 24. Speaking to the UBS annual conference, Denny Strigl, Verizon Wireless chief operating officer, confirmed the carrier’s participation but declined further comment. “Because of FCC anti-collusion rules, I can’t provide any commentary beyond what I've just told you,” Strigl said. MetroPCS also confirmed its participation at the UBS Conference. MetroPCS Chief Financial Officer Braxton Carter also declined to elaborate, citing the “extreme” anti-collusion restrictions. Clearwire, which is building out a WiMAX system, won’t bid, it said in a filing to the Securities and Exchange Commission. T-Mobile USA and EchoStar are still silent on participation. EchoStar’s stock took a hit after Wachovia cited a news report saying the direct broadcast satellite services provider was participating. “Speculation of an AT&T-EchoStar deal could be significantly diminished if EchoStar filed for the auction,” David Barden of Bank of America Equity Research wrote Wednesday. “While we continue to believe that AT&T has little interest in buying EchoStar, particularly at current levels, speculation would likely be resurrected if the company did not file.”
AT&T continued its wireless network expansion, revealing this week an asset swap with Verizon Wireless to meet Dobson divestiture requirements, and acquisition of regional carrier Edge Wireless to expand its GSM network in the Pacific Northwest. AT&T is hungry to grow its network so it can gain a competitive edge marketing against rivals, analysts said.