King Street Wireless, which is U.S. Cellular's (NYSE:USM) spectrum partner, reiterated calls for the FCC to mandate interoperability in the 700 MHz band, noting that without such a directive the companies won't be able to offer an iPhone that works over the companies' 700 MHz spectrum.
"Both KSW and USCC want to offer the iPhone; Apple will not offer any Band 12 products, so KSW cannot offer the iPhone over its 700 MHz spectrum; and the only way that USCC can access the iPhone is over 850 MHz spectrum, for which it is independently licensed," King Street wrote in a recent FCC filing. "When all of these factors are put together, it is absolutely clear that due to a lack of interoperability, KSW has no opportunity to provide service to customers who want the iPhone. The only positive aspect of this situation is that it clearly demonstrates the need for interoperability relief."
King Street and other Lower 700 MHz A Block spectrum license holders have been urging the FCC for the past three and a half years to require LTE interoperability in the Lower 700 MHz band. The companies argue that vendors like Apple (NASDAQ:AAPL) make equipment for AT&T Mobility's (NYSE:T) Lower B and C Block 700 MHz spectrum in Band Class 17 and Verizon Wireless's (NYSE:VZ) Upper C Block 700 MHZ spectrum in Band Class 13, but not for those smaller companies that hold 700 MHz A Block spectrum in Band Class 12.
"KSW has shown that, given the lack of interoperability, its efforts to provide service using its 700 MHz spectrum have been severely restricted," King Street wrote to the FCC. "Specifically, KSW has explained that it cannot get access to some of the most cutting edge consumer equipment and cannot offer nationwide roaming. Each of these presents an independent basis justifying a reason to support an interoperability mandate."
U.S. Cellular recently reversed its position on the iPhone, announcing plans to sell the device later this year after previously arguing the device did not make economic sense for the carrier. Analyst Simon Flannery of Morgan Stanley estimated U.S. Cellular's deal with Apple is a $1.2 billion, three-year commitment.
U.S. Cellular did not provide a specific launch date for the iPhone but said that in order to offer the iPhone and other products, it will refarm its 850 MHz spectrum and launch LTE in Band 5 later this year. U.S. Cellular's LTE network currently is deployed on several different spectrum bands, including partner King Street Wireless' spectrum holdings in the Band 12 Lower 700 MHz A and B blocks and U.S. Cellular's own spectrum holdings in the 850 MHz band and Band 12 Lower 700 MHz A, B and C blocks. U.S. Cellular said it will increase its capex guidance by $130 million to fund the rollout of LTE in its 850 MHz spectrum. Most of that additional cost will go to new base stations that support Band 5.
The company also said that this network deployment will enable future LTE roaming.
AT&T and others have strongly argued against an FCC requirement for 700 MHz interoperability, contending that such a stipulation would slow the development of the market. Critics also have pointed out that that carriers like U.S. Cellular have been able to work around the 700 MHz interoperability problems.
- see this King Street FCC filing
Execs: 700 MHz interoperability will unleash investment, jobs
AT&T: 700 MHz interoperability proposal unnecessary, unprecedented
U.S. Cellular changes course, will offer iPhone later this year