Since Android has long been the prepaid carrier’s OS of choice, the vast majority of those devices ran Google’s software. NPD’s Mobile Phone Track service show that year-over-year prepaid smartphone unit sales doubled in the first quarter. Quarter over quarter, prepaid’s overall share of the smartphone market jumped from 22 percent to 32 percent. NPD’s VP of industry analysis Stephen Baker said Q1 marked the twelfth straight quarter of triple digit sales increases in the U.S.

Apple certainly isn’t blind to the trend. In fact, it’s been actively seeking out prepaid carrier partnerships in the last year working with carriers like Cricket Communications, Straight Talk and T-Mobile USA. Though the iPhone’s share of the prepaid smartphone market was only 8 percent, that’s up considerably from last year when it was a mere 2 percent. Samsung share of the prepaid smartphone market is big, 32 percent, but it’s relatively stable, while Apple is on a big growth trajectory.

“For consumers looking at prepaid phones today, value does not equate with finding phones that are cheap or obsolete,” Baker said in a statement. “In fact, the Galaxy S2 and the iPhone 4S, two of the top five prepaid smartphone models in 2013, were among the top-selling phones overall just one year earlier.”

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Content providers could do this through direct payments to carriers, Stephenson said, but according to Fierce, he also said they could subsidize data costs through some kind of advertising revenue share. The end result, though, would be the same: content providers who pay would see their traffic exempted from customers’ mobile data caps.

Randall Stephenson

Stephenson comments come a week after reports that arch-competitor Verizon Wireless is in discussions with ESPN for just such a toll-free data deal. What seemed like a crazy suggestion from AT&T and other carriers last year, now looks like it might become reality. But is it a reality we really want?

A content provider-subsidized internet would be appealing to many consumers, especially those on AT&T and Verizon since carriers have hunted the unlimited data plan to the point of extinction. Imagine streaming Netflix movies and ESPN games to your heart’s content without ever worrying about exceeding your data cap or incurring overage fees.

But as I pointed out last week there could be some major unintended — or if carriers are being really cynical, intended — consequences to adopting these kinds of subsidy models. Legally mobile operators aren’t subject to the same net neutrality guidelines as the wireline broadband providers, but if mobile carriers created two separate classes of mobile data traffic they could upset the delicate balance that makes the mobile internet the mobile internet:

… there are enormous consequences to such a deal. The biggest and most obvious consequence is that it favors one provider’s content over another. If all access is created equal, then no content has an inherent advantage over another — which is the whole idea behind the wireline network neutrality rules the FCC established in 2010. But if consumers know they can get ESPN’s content without incurring any additional charge, they’ll naturally gravitate toward that content.

There’s an even bigger risk that ESPN’s competitors won’t just get penalized in the eyes of the consumer. Their traffic flow could be penalized as well. Embedded deep within Verizon’s network are policy servers that can distinguish an ESPN packet from any other packet. Not only could Verizon use that technology to exempt ESPN traffic form data plans, it also could use that technology to prioritize ESPN’s traffic from all others. The  [Wall Street] Journal’s story didn’t mention anything about traffic shaping, but you can bet its high on the list in any negotiation.

What’s particularly noteworthy about Stephenson’s comments, though, is the mention of using advertising as a former of subsidy currency. Stephenson could just be talking about inserting carrier-generated advertising into their app ad engines as compensation for their free ride on the network. But the other implication is that AT&T wants a true revenue share, taking a cut off the top of any revenue generated from YouTube ads or any Netflix subscription used on mobile.

This is an old idea the mobile industry first proposed way before the advent of the smartphone – in an age when the mobile internet was still a walled garden and carriers its gatekeepers. The idea was that operators would become equal partners with content providers, and that’s a scary proposition. I doubt that content providers want to give the gate keys back to the carriers.

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The merger will combine the country’s smallest nationwide carrier with its largest regional carrier, giving the new company a total of 42.5 million wireless customers. That’s still not enough to overtake Sprint as the nation’s No. 3, but it will give the new company plenty of spectrum in key markets. T-Mobile has plotted a course that calls for delivering large quantities of mobile data to consumers at cheap prices and with no contracts. That strategy requires T-Mo to lay its hands on all the spectrum it can find.

Though Deutsche Telekom is the one making the buyout offer, T-Mobile will actually become a part of MetroPCS, taking advantage of the U.S. company’s placement on the New York Stock Exchange. DT, however, will own the majority of the shares, and – though we’ve been calling the new merger T-Metro for short – the company will take on the name T-Mobile USA. MetroPCS will live on as a brand in T-Mo’s arsenal.

The deal sailed over regulatory hurdles (the FCC didn’t even bother to vote on it), but it nevertheless suffered a close call when it came before Metro’s shareholders. Institutional investors took exception to what they considered DT’s low-ball offer and threatened to rage a proxy war to derail the deal.

DT at first played the tough guy refusing back down, but as the shareholder meeting approached earlier this month, it got nervous. MetroPCS rescheduled the meeting for this week, while DT proffered up a new terms – lowering the merged company’s debt load and that debt’s interest rates – to make the more attractive. It worked. The deal’s biggest opponent, hedge fund Paulson & Co., lifted its protests.

Once the deal closes, T-Mobile has a long integration process ahead – an ordeal that makes me question whether the merger is worth the trouble. T-Mobile, however, isn’t looking to duct tape together its GSM-based networks and Metro’s CDMA systems. It has something more radical in mind: cannibalizing MetroPCS for its spectrum. While T-Mo will keep the Metro brand and support its existing customers, the regional carrier’s CDMA and LTE networks are goners. T-Mobile plans to incorporate Metro’s spectrum into its ongoing network overhaul, creating very fast and high-capacity LTE and HSPA+ networks.

This post was updated at 9:30 AM Wednesday to add more background details.

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In a nutshell, Guavus is trying to make telcos — including “all tier-1 mobile operators” — smarter by letting them make sense of the data their networks are generating. Those companies are historically alright at using their demographic and billing data to improve marketing efforts, but they’ve been largely blind to what’s happening on their networks, Guavus Founder and CEO Anukool Lakhina told me during an interview a few months ago. However, he said: “The magic happens in marrying and infusing that network data with the demographic and billing data.”

To get a better sense of how Guavus does what it does, I suggest reading Stacey Higginbotham’s October 2012 interview with Lakhina. You can also watch his presentation from our Structure: Data event just last month.

Guavus has actually been busy lately. In January, it closed a $30 million funding round and bought mobile-analytics startup Neuralitic Systems less than two weeks later. When I spoke to Lakhina about that acquisition, he said the plan is to use Neuralitic’s marketing and application expertise to help customers automate business processes, promotions and other functions based on their newfound insights into what’s happening across the entire company.

Feature image courtesy of Shutterstock user Pavel Ignatov.

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Softbank offers much-needed investment to the still struggling No. 3 U.S. wireless operator. But Dish doesn’t just bring cash; it’s got 4G spectrum and a huge pay TV network to boot. Informa Telecoms & Media Principal Analyst Mike Roberts lays out all of the advantages of a Sprint-Dish marriage:

“First and most importantly, Dish could combine its 2GHz LTE spectrum with the LTE spectrum of Sprint and Clearwire to build one of the strongest LTE spectrum portfolios in US, which would be the foundation for a powerful new competitor in the US telecoms market. Second, using Sprint’s newly-modernized mobile network would give Dish a cost-effective way to deploy LTE in its 2GHz spectrum and meet the FCC’s rollout requirements. Third, if the deal goes ahead, Dish and Sprint could quickly offer TV, broadband and mobile bundles to compete more effectively with larger integrated telecoms players such as Verizon and AT&T.”

In particular, Dish’s spectrum would give Sprint the immediate room it needs to grow its LTE capacity. Sprint’s current LTE network is bit undersized compared to high-capacity 4G networks its competitors are rolling out. While Sprint is planning to buy the remaining stake in Clearwire — which would give it Clearwire’s vast 2.5 GHz holdings — Clearwire is using a different type of LTE technology that could make getting the right consumer devices more difficult. Becoming part of Dish would give it the right kind of licenses to complement Sprint’s current network.

Also, Sprint taking over Clearwire isn’t a given. Several other companies have expressed interest in the 4G operator and its spectrum, and last week Clearwire revealed it just got a new offer from an unnamed entity to acquire its licenses in big cities for between $1 billion and $1.5 billion. The Wall Street Journal pegged that unnamed company as Verizon Wireless.

Given all of the crazy variables in this complex game of spectrum chess, it seems like a Sprint and Dish would form a good match, but the companies haven’t always seen eye-to-eye.

There was once talk of a partnership between the two, using Sprint’s new networks to host Dish’s LTE service. But those talks fizzled, and Sprint and Dish wound up becoming big adversaries, fighting over Clearwire’s future and squabbling about interference issues in their spectrum neighborhood.

Copious amounts of money certainly can heal old wounds, but there’s a question of whether Dish has enough money. Despite Dish’s big war chest, it would still need to go $9 billion further into debt to finance its proposed deal, Stifel Nicolaus analyst Christopher King said in a research note. Dish may have just set off a bidding war, but it might not have the money to see it through. According to King:

“We believe that DISH is more strategically desperate for Sprint than is SoftBank; however, SoftBank certainly has deeper pockets. … As such, we believe SoftBank is in a better position, financially speaking, to match DISH’s offer – or raise the offer further – should it choose to do so. It appears to us that Sprint is in a solid position from a negotiating standpoint.”

If the money’s right, Sprint may not care about any of the strategic advantages of a Dish deal. As with all carriers, Sprint’s foremost concern is spectrum and Sprint may be in a position to acquire better licenses with Softbank’s cash.

Last week, the U.S. Department of Justice advised the Federal Communications Commission to set rules for its forthcoming TV airwaves auction favoring smaller operators like Sprint and T-Mobile over dominant carriers AT&T and Verizon. If FCC does give Sprint an advantage in that auction, it could walk away with some very attractive 600 MHz airwaves without breaking the bank.

Chess photo courtesy of Shutterstock user Elnur

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When Sprint made its bid in December to buy up the remaining shares of Clearwire it didn’t already own, it also agreed to extend $800 million in financing to the hobbled WiMAX carrier. Clearwire could have started withdrawing those funds in January. But when Dish submitted its counterbid it clearly stated that if Clearwire took that money from Sprint, the satellite TV provider would take its offer and skedaddle.

Clearwire didn’t dip into the Sprint financing in January while it was reviewing Dish’s offer. On Friday, Clearwire revealed it wouldn’t tap those funds in February either, which would keep Dish at the table and allow it to continue negotiating. The filing also reveals that since 2010 Clearwire has held negotiations with at least nine other entities over possible spectrum sales, strategic partnerships or outright acquisitions.

Though Clearwire hasn’t eliminated Dish from consideration, Sprint said the recommendation in the proxy statement was a clear vindication of Sprint and the substance of its offer. From Sprint’s statement:

“We continue to believe that the DISH proposal is illusory and conditioned on many things, including the receipt of governance rights, a spectrum sale and a commercial agreement which are not actionable under our merger agreement and other agreements between Clearwire and Sprint. We are pleased the Clearwire Board continues to recommend approval of our transaction and look forward to closing our merger and delivering even greater wireless service to the American consumer.”

Photo courtesy of Shutterstock user Gary Paul Lewis

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What does Google have up its sleeve? Taken together with other Google wireless and broadband initiatives, this network could be a piece of a larger plan to build a future heterogeneous network, or HetNet, that combines both cellular and Wi-Fi technologies into a single extremely flexible and high-bandwidth system. HetNets will become the mobile carriers’ future network architectures, but there’s nothing precluding Google from deploying one, as well, using all of the Wi-Fi, small cell and unlicensed spectrum at its disposal.

Google’s small cell experiment

Though Google made portions of the application confidential so they’re not viewable by the public, Crowley was able to glean some interesting details from the document, which he then posted in his blog.

A Ruckus Wireless Wi-Fi hotspot/small cell

Essentially, Google wants to build and operate over two years a very dense network of 50 low-power small cells in both indoor and outdoor locations. The total breadth of the network would only be two miles so this would be quite a high-capacity concentration of cells indeed. It would use the same 2.5 GHz spectrum currently used by Clearwire for WiMAX and its forthcoming LTE network, but Google did not reveal the specific radio technology it would use, nor did it reveal the manufacturer of its base stations.

This isn’t Google’s first request to the FCC for to test a new wireless technology. Last February Google filed an application with the FCC to experiment with a new residential gateway that used advanced Wi-Fi and Bluetooth technologies to redistribute Google Fiber’s high-bandwidth connection. My colleague Stacey Higginbotham wrote that Google could be eyeing longer-range gigabit-Wi-Fi as a means of blanketing towns and cities with untethered broadband.

In addition, Google is a big cheerleader for the unlicensed TV white spaces, which would expand the free-to-access model of Wi-Fi to the wider mobile network. It’s also a backer of the FCC’s proposal to designate 3.5 GHz a shared band over which any company could deploy small high-capacity cells. Google wants to test its new small network over licensed frequencies, but that doesn’t mean it couldn’t shift over to the shared small cell band when it becomes available.

Google Mobile?

Despite all of the rumors about Google teaming up with Dish Network or T-Mobile, I have serious doubts Google wants to become a full-fledged license-owning mobile operator. But the more details emerge about the Google’s wireless experiments, the more I suspect that Google plans to get into the mobile business – or at least the mobile broadband business – in a very non-traditional way.

Instead of building towers, buying nationwide 4G licenses, and offering voice and SMS plans, Google could build tightly integrated, multi-technology, small cell mobile data networks around the country. Starting with Google Fiber cities, it could use its install base of residential and business connections to deploy a shared gigabit Wi-Fi network that any other Google Fiber customer could access (similar to the residential hotspot approach Free Mobile uses in France).

Second, Google could build a network of indoor and outdoor LTE small cells, either tapping into the new shared 3.5 GHz band or by leasing airwaves from a company like Clearwire, and those cells could be backhauled again with Google Fiber links. In rural or less densely populated areas it could extend its networks range by using white spaces. All of those parts wouldn’t exist as separate networks. HetNet would glue them all together, allowing customers to seamless move between Wi-Fi connections and cellular links and in many cases access both radio technologies simultaneously.

“The most recent Google application might be part of a larger plan leading to HetNet architectures in which, say, licensed and unlicensed wireless networks would be combined,” Crowley said when I asked him about the possibility. “Backhaul for such networks is technology agnostic but Google Fiber could be made to handle it.” Crowley, however, was quick to point out that there is nothing in Google’s numerous FCC applications that indicate it has HetNet plans in the works.

If Google were to take the HetNet approach to mobile broadband, it would have to ask itself a key question. Would it want to focus solely on dense urban zones – where most mobile data user congregate – or would it want to fill in all the gaps in between? If it’s the latter case, then Google would have to start playing the mobile operator’s game. You simply can’t provide 4G coverage on a freeway using small cells and Wi-Fi.

Google wouldn’t necessarily have to buy another operator or build its own big-tower macro network from scratch though. It could become a mobile virtual network operator (MVNO) leasing capacity off of a T-Mobile or a Sprint’s network in areas where its HetNet couldn’t reach. As I’ve written before, the carriers are now much more open to the idea of selling network capacity to potential competitors. But then again, the carriers have never dealt with an MVNO that would be as powerful and threatening as Google.

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Perhaps there are strategic or business reasons why AT&T would want to buy a foreign mobile carrier, but operationally it’s hard to see what it stands to gain. While there has been plenty of international investment in U.S. operators, the opposite hasn’t been true. And there are plenty of reasons why U.S. operators have tended to stand alone rather than function as globe-spanning multinationals.

It’s no coincidence that most of the big multinationals are based in Europe where the individual wireless markets are small. By launching in multiple countries, companies like Vodafone or Telefónica gain much bigger economies of scale than if they just stayed home. With such scale they can dictate pricing to their infrastructure and handset suppliers, and they can coordinate their services across borders.

If you’re AT&T, though, scale isn’t an issue. With 100 million connections AT&T is the 18th largest mobile carrier in the world even though it operates in just a single market. If you rank them in terms of mobile revenue, AT&T is the globe’s fourth largest carrier. AT&T has enormous leverage over its vendors. It even got Apple to design a version of the iPhone 5 for its LTE band – a 4G configuration no one else in the world uses. You can’t get more powerful than that.

What’s more, if AT&T were aiming at increasing its pricing power further, buying an international carrier would do it little good. In the U.S., carriers use different mobile frequencies, deploy different network technologies, and maintain different requirements for their handsets.

So far all of the international ties U.S. carriers have yielded zilch. Verizon is almost half-owned by Vodafone, but apart from collaborating on a few international standards efforts, the two function completely separately. T-Mobile USA is wholly owned by Deutsche Telekom, but the only thing the U.S. operator shares with its international cousins is branding and a few common carrier apps. A T-Mobile USA customer venturing onto a European T-Mobile network still pays the same exorbitant roaming rates as any other customer of the U.S. carriers. And as our European readers constantly pointing out, T-Mobile sells a lot of iPhones — none of them happen to be in the U.S.

AT&T already has international mobile interests to boot. It owns a substantial stake in Latin American wireless giant América Móvil, which AT&T inherited from SBC Communications. There’s no major cross-border coordination there either. I assume we’ll see the same independence from Sprint when Japan’s Softbank takes over the carrier later this year (though it would be awesome if Softbank brings its brilliant advertising campaigns here).

Basically U.S. operators have always acted as independent global players, through both necessity and wont. I can definitely understand why AT&T would like to grow its business internationally. It already serves a huge multinational customer base through its wireline and enterprise business, and it would like to exert that same influence in mobile. But I doubt it would get any closer to accomplishing that goal by buying international carrier like KPN or Everything Everywhere than it merely by partnering with those same carriers.

Feature photo courtesy  of Flickr user ToastyKen 

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CTIA’s eponymous spring conference used to be the biggest mobile and wireless event in North America, providing the latest showcase for new phones, services and technology. But in the last five years or so the event has been overshadowed by the CEA’s Consumer Electronics Showcase in Las Vegas and the GSM Association’s Mobile World Congress in Barcelona.

Not only do both shows take place right before CTIA each calendar year, but shifting trends in the industry made CTIA less and less relevant. CTIA is a carrier-driven event, but as the smartphone opened up the mobile ecosystem to a wealth of new third-party apps, OSes and devices; the role of the carrier has shrunk. Meanwhile, the importance of the smartphone as a high-powered connected computer has gained primacy, which made CES a natural fit for new device and app launches.

CTIA’s other big focus was on the arcane world of network infrastructure, in particular the CDMA technologies used by a good deal of operators in the Americas. But as global carriers consolidated under a single GSM-driven 4G technology, LTE, CTIA’s networking influenced dwindled. MWC, which originally focused on European operators and GSM standards, became a much more worldly conference.

While CTIA didn’t specifically cite the competition in its announcement, the big reason for placing its unified super show in the fall can only be to put some distance between it and CES and MWC. The first merged event will be held the week of Sept. 9 in Las Vegas, which positions CTIA to catch new device launches for the holidays.

CTIA’s exhibitors and members have been clamoring for a single-show format for years, but I wonder if the move is a bit too late to restore the conference’s luster. As I’ve said before, the biggest problem with CTIA is that, as a conference, it has functioned more as a big podium from which carriers talked down to the industry. That was fine 10 years ago when carriers were the alpha and the omega of mobile, but since then the industry has outgrown the operators.

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Denver-based BroadHop has developed a traffic management and policy server deployed in more than 70 wireline and mobile carrier networks around the world. The technology allows a carrier to develop service tiers based on bandwidth or application. Such a “policy” could take the shape of a simple speed boost – customers who pay more each month could get access to a faster pipe. The reverse is also true: it’s a policy server that’s downgrading your bandwidth when carriers throttle your data connection.

But BroadHop’s technology can be used to create much more sophisticated tiers than merely “fast” or “slow.” Policy could be used to craft video-streaming or VoIP plans, which prioritize video or IP communications packets over all others from the network core all the way up to the airwaves. That traffic could not only be shaped for different service tiers, it could be used to charge different rates for different types of traffic.

It’s that kind of advanced packet prioritization that Cisco seems most interested in, particularly as it mobile carrier customers search for ways to replace their threatened voice and SMS revenue.

In the Cisco blog post, VP of Corporate Business Development Hilton Romanski said that BroadHop would become part of Cisco’s mobile carrier group and its technology would become the baseline from which Cisco would build a raft of new applications. For instance, Romanski said BroadHop tech could be used to power a mobile video-on-demand service where a customer paying for a movie would find his bandwidth boosted and his video bits prioritized over all other traffic.

Operators like Verizon and Leap are already experimenting with the concept of a “turbo” button on mobile phones, and AT&T is broaching the delicate subject of having developers foot the bill for their mobile traffic their apps generate. If these concepts ever see the light of day, the policy servers like BroadHop’s are going to become critical elements in the network.

Cisco certainly isn’t the only one who spots this trend. All of the major mobile infrastructure and software vendors have acquired or invested in building up their policy portfolios in the last few years. The most recent is Citrix, which bought Bytemobile earlier this year.

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