MetroPCS buys Pocket NE, plans LTE deployment

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Regional, no-contract carrier MetroPCS (NYSE:PCS) is looking to purchase the spectrum and network assets of failed Pocket Communications New England, which cover parts of Connecticut, Massachusetts and elsewhere in the region. A MetroPCS spokesperson was not immediately able to answer questions on the transaction, including how much MetroPCS would pay.

MetroPCS purchased spectrum from Pocket covering Hartford, Conn., and surrounding areas.In a filing with the FCC, MetroPCS said it will use the purchase to expand its services in the area, and eventually will deploy LTE network technology over Pocket's spectrum. The issue is pending before the FCC.

The transaction largely would bring to a close Pocket's brief efforts in wireless, and would return to MetroPCS spectrum that it initially purchased in the FCC's AWS spectrum auction.

Headed by Paul Posner, Pocket launched unlimited, flat-rate calling services in Texas in 2006. In 2008, Posner landed a $100 million equity investment from venture capital firm Battery Ventures, which he used to expand his operation into New England. As part of that expansion, Posner in July 2008 traded some New England PCS spectrum licenses to MetroPCS in exchange for an AWS spectrum license covering parts of Connecticut and Massachusetts that MetroPCS won during the FCC's 2006 spectrum auction. MetroPCS paid $364 million in the 2006 auction for the AWS license.

In February, Cricket provider Leap Wireless (NASDAQ:LEAP) announced it would form a joint venture with Pocket in Texas, essentially acquiring the company's operations there. At the time, Pocket counted around 300,000 subscribers in South Texas and New England.

Pocket sent a warning to its New England customers in late September that it would shut down operations there. "We regret to inform you that as a result of unsustainable losses, Pocket Communications NE is unable to continue in business and will cease operations and no longer provide wireless communications services. Pocket Communications NE will cease providing service on October 31, 2010."

Thus, it appears MetroPCS used the situation to purchase back the spectrum it traded out to Pocket just two years ago.

In its filing with the FCC, MetroPCS laid out its plans for Pocket's New England operations: "The license being acquired by MetroPCS will complement existing MetroPCS licenses and also will allow MetroPCS to provide additional advanced services, including 4G services using Long Term Evolution (‘LTE')."

MetroPCS so far has launched LTE services running over its AWS spectrum in Las Vegas, Dallas-Ft. Worth and Detroit. The carrier has said it plans to have roughly 80 percent of its existing 13 core markets covered with LTE by the first quarter of next year. However, those plans likely do not include MetroPCS' new New England market.

MetroPCS counts 7.6 million total subscribers, and has access to spectrum licenses covering 146 million people. With the addition of roaming agreements, MetroPCS' services reach roughly 220 million people.

For more:
- see this FCC filing (PDF)

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