Timing is Everything: The advent of 'seats to the streets' connectivity that includes triple and quadruple-play services was anticipated since before the first 3G data networks and devices were deployed. The current deal flow is on schedule with forecast developments for late 2012 into 2013 Further consolidation is expected.
Last July, we predicted a new wave of consolidation would take place to engulf Clearwire and the use of its 2.6GHz band 41 spectrum. The rationale was that the spectrum would come into play as LTE-Advanced TD-LTE networks and devices, including the Apple iPhone and Samsung Galaxy lines, became available. The timing for TD-LTE chips from Qualcomm, Samsung, commercial scale network deployments and device availability had been firming up the long-term forecasts needed to support the needed growth in use of the spectrum. Cost synergies with common developments in China, Indonesia and other population rich markets are helping to fuel interest in the spectrum were expected to emerge as well. That was expected to focus more attention on Clearwire and the spectrum.
Our expectations for consolidation focused on the financially strapped and future limited operators including metroPCS, Clearwire, with T-Mobile not considered an immediate target for being acquired since they had recently received additional spectrum and capital from the AT&T breakup. Clearwire was postulated to be eventually acquired by Sprint, however, we anticipated it staying independent through the early stage of TD-LTE introduction due to Sprint's desire to spread costs of 2.6GHz network development among Clearwire wholesale customers. That projection was upset by the subsequent take-out offer by Sprint for the remaining 49% of the company following their agreement to sell 70% of the company to Softbank.
While the exact timing and details of acquisitions have been difficult to forecast, the climate that precipitated the current spate of deals was relatively easy to surmise. Once the major trends are able to be substantiated by solid data, forecasting of interest in the spectrum becomes more a matter of timing. The deals are precipitated due to the timing of markets and technology that makes for shifts in product offerings and underlying use of spectrum. Simply put, acquisitions become more likely as companies figure it has become time to move or face missing out on windows of opportunity. Companies also face the threats of new competition as their current markets come under pressure from the shifts of incumbents and new market entries.
Coming up: 1) Forecasts for DISH, Sprint, Softbank, and Clearwire slate of deals. 2) An outline for success of DISH TV Everywhere