AT&T, Verizon Gearing Up to Transmit LTE Video in 2014

AT&T will use the 700 MHz D- and E-block licenses it acquired from Qualcomm in 2011 for $1.93 billion for broadcasting, reusing frequencies previously deployed by the defunct MediaFLO mobile TV service, Stephenson said. That will give AT&T 12 MHz on each of the east and west coasts and 6 MHz for the middle of U.S., Stephenson said. AT&T previously had said it planned to use the spectrum for LTE advanced carrier aggregation with other AWS, PCS and cellular licenses. AT&T has LTE available in 46 U.S. markets with 270 million points of presence (POPs) and expects to have spread it across the entire network by mid-2014, executives have said.

Verizon will use its 700 MHz C-block spectrum to deliver broadcast LTE, McAdams said. The service will likely be sold as a package within wireless plans, AT&T and Verizon executives said. Verizon had LTE available in 500 markets with 301 million POPs June 30, the company said. About 35 percent of Verizon’s postpaid smartphone customers are using LTE and about 65 percent of the carrier’s traffic is carried over the network, McAdam said. Verizon recently signed a four-year deal with the NFL to carry games, industry analysts said.

The use of separate bands for delivering video services will free up space for additional data on existing AT&T and Verizon networks, Stephenson said.

The ability to carry video using LTE was part of what caused Verizon to agree to buy partner Vodafone’s 45 percent of Verizon Wireless for $130 billion (CD Bulletin Sept 2 p1), McAdam said. While the deal still must be cleared by the FCC and Vodafone needs some regulatory approvals in Italy, “we should be in good shape and moving forward with the business” in Q1, McAdam said.

"The growth aspects of the U.S. market outweighed” expanding Verizon’s business into Europe, something that would have come with merging the companies, McAdam said. “It was a question of whether it would have been better to merge or move aggressively in the U.S.,” and Verizon chose the latter, he said.

The acquisition of Vodafone’s stake also will move Verizon toward offering a “converged” package of telematics, video, wireless, broadband and cloud services, McAdam said. The packaging of the services will likely occur during the next 12-24 months, McAdam said. While 4G will demonstrate the “potential” for video being delivered wirelessly, 5G will cement its place as a service, McAdam said. The 5G technology isn’t expected before 2020, but promises speeds several hundred times faster than 4G LTE, industry officials have said. Samsung has described plans for data transmission in the millimeter-wave band at a frequency of 28 GHz at speeds up to 1.056 Gbps to a distance of two kilometers.

Meanwhile, Verizon will introduce voice-over-LTE (VoLTE) service in 2014 using cellphones still containing a CDMA chip, a spokesman told us. Verizon is continuing to work with the technology in its labs, and the first VoLTE-equipped phones minus the CDMA chips aren’t expected until late 2014, with the first commercial service arriving the following year, McAdam told us. Verizon announced its first successful VoLTE calls in 2011. The Redbox Instant by Verizon streaming service is growing “slower than we would have liked,” said McAdam, saying technical glitches hampered the rollout earlier this year. Verizon owns 65 percent of the venture. Outerwall, formerly Coinstar, controls the remainder.

Verizon also will begin testing a FiOS media server this fall that will transmit video wirelessly to TVs and other Internet Protocol devices, eliminating the need for coaxial cable, McAdam said. Verizon unveiled the media server at the 2012 CES, having worked on it with Motorola’s set-top group, which has since been acquired by Arris. Verizon is targeting 45 percent penetration with consumers for its FiOS broadband and video offerings, above the current 39 percent and 34 percent rates, McAdam said. In some markets like Texas, penetration is above 50 percent, he said.

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AT&T will add new markets for a fiber-to-the-home network capable of 1 Gbps Internet speeds, Stephenson said. AT&T launched a 1 Gbps service in Austin, Texas, earlier this year and the “cost dynamics” and “revenue implications look good,” so other markets will be added “over time,” Stephenson said. With Google Fiber also having introduced a 1 Gbps service in Kansas City, Kan., other cities are starting to “accommodate and tailor terms” to lure high-speed service providers, Stephenson said. AT&T is seeking to sell about 10,000 wireless broadcast towers and is “bundling” them so it could lease them back if it needs to add capacity, Stephenson said. AT&T has about 70,000 wireless towers, he said. “There are people in a better tax position that could get better value from these than us."

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Pandora’s recent $312 million stock offering may be used for potential acquisitions and to defray content costs, founder Tim Westergren said. Pandora said last week it would sell up to 13 million shares at $25 each, up from 10 million planned earlier. “It’s not earmarked for something right now and it makes more sense to have some money in the bank,” Westergren said. The amount could increase to $378.8 million if the underwriters including JP Morgan Chase & Co. and Morgan Stanley exercise a 30-day option to buy 2.73 million more shares, up from 2.1 million originally, Pandora said. The offering is expected to close this week. Crosslink Capital, Pandora’s biggest shareholder, is selling 5.2 million shares, an increase from the original 4 million. Meanwhile, KXMZ-FM, the Rapid City, S.D., radio Pandora bought earlier this year for $600,000, will be operated as a continuing business and also used to test new strategies for Pandora, Westergren said. While he conceded the station, which has 43,000 listeners, could help Pandora qualify for the same publishing royalty rates as Clear Channel-owned iHeartRadio, he said the company weighed buying a broadcaster “for a while.” Pandora has been in a battle with the American Society of Composers, Authors and Publishers (ASCAP), which sets royalty rates for the compositions in its portfolio. A federal judge last week upheld Pandora’s right to perform all compositions in the ASCAP repertory. Pandora is scheduled to go before the Copyright Royalty Board next year for rate-setting, Westergren said. With the launch of iTunes Radio and other royalty agreements, “our sense is the band” of potential rates is “narrowing,” he said. Pandora will continue to expand its number of local advertising offices, adding another 10-12 in 2014 to go along with the 29 now in place, Westergren said. Pandora has typically been hiring from local broadcasters, with some employees initially being paid less money than before, but eventually making up the difference in cash commissions, Westergren said. Pandora has no immediate plans to expand in international markets, but continues with a presence in Australia and New Zealand, which accounts for less than 25 percent of the company’s annual sales, Pandora said.