United Wireless has an LTE network, but it doesn’t have any handsets.  

That’s because it can’t find any phones compatible with its portion of the 700 MHz band. 

"No one is making handsets," says Mike Laskowsky, wireless network manager at United Wireless. "We've been hitting every possible vendor group to try to find out if they've got handsets, but we haven't gotten one yet."

Like many rural providers, United Wireless holds spectrum in the lower 700 MHz band that is only compatible with band class 12 devices. Phones running on its LTE network won’t work on AT&T and Verizon’s network, which use band 17 and band 13, respectively.

And like other regional operators, the small Kansas wireless provider can’t find band class 12 phones. 

United Wireless so far has been unable to offer its customers anything but fixed in-home Internet routers and dongles – not exactly the next-generation capabilities it envisioned when it decided to move to LTE. 

The company was supposed to get phones from its infrastructure vendor, Huawei. But after the LTE network was built, Huawei failed to come up with the band class 12 handsets promised in its contract, leaving United Wireless scrambling to find devices. 

Huawei says it’s “committed to delivering United Wireless a complete portfolio of solutions, and will be offering band class 12 devices in our roadmap.”   

The interoperability problem plaguing companies like United Wireless is at the heart of a heated debate between regional providers and their larger competitors – namely AT&T – over the interoperability issue.  

AT&T is at the center of debate because its lower 700 MHz spectrum shared the same band class as regional providers until AT&T carved out its own band class, bifurcating the lower 700 MHz band and creating the interoperability issue. Because Verizon holds spectrum in the upper 700 MHz, it has been largely at the sidelines of the current debate, which is focused mainly on the bottom half of the band.

When regional operators bought spectrum during the FCC’s 2008 auction, there were only two bands: band 12 for the lower 700 MHz A, B and C block and band 13 for the upper 700 MHz A, B and C block. 

After the auctions closed, AT&T and its vendors approached the 3GPP standards setting body to create a separate band class for AT&T’s lower B block and C block spectrum. The companies argued the band class would allow it avoid interference problems with the A block, which lacks a guard band to protect it from television broadcast signals in adjacent Channel 51.

3GPP agreed to the change. The decision made AT&T’s network incompatible with the systems regional operators had planned to deploy on their newly purchased band 12 spectrum, cutting them out of the ecosystem they had counted on when they purchased their 700 MHz licenses at auction.

Now, regional providers represented by the Rural Cellular Association (RCA) want the FCC to make AT&T’s band 17 part of band 12, a move that would open the LTE ecosystem growing around AT&T’s network to small and mid-size providers currently shut out of the market. The FCC is considering the proposal to establish interoperability in the lower 700 MHz band but has yet to tackle interoperability in the upper 700 MHz band, regulations that would affect Verizon Wireless.

AT&T argues that the shift would force onerous changes to its network and devices and open it to interference from the A block. AT&T would have to shift its entire device line to band class 12 chipsets and reconfigure its LTE network if the FCC makes the lower 700 MHz into a single band.

“Some carriers will still insist that an interoperability mandate requiring all carriers in the lower 700 MHz band to rely on Band 12 is both appropriate and necessary to ensure full deployment of the A block,” Joan Marsh, AT&T vice president of regulatory affairs, said in a recent post on the operator’s official blog. “But such an unprecedented countermanding of industry standards is a lose-lose proposition that could delay LTE deployment and expose millions of current LTE customers to poor reception, dropped calls and slower data speeds."

The head of the RCA, Steve Berry, says the regulations are a necessity. Operators with band 12 spectrum are finding it “exceedingly difficult” to deploy LTE with the current state of the market. "It is pretty difficult to build out a network when you don't have devices and the capability to actually use the network," Berry says 

As the battle rages in Washington, operators like United Wireless are left bereft of LTE devices to offer customers.  

An Urgent Matter 

The competitive disadvantage the interoperability issue creates is already having a major impact on band 12 operators. 

U.S. Cellular’s band 12 LTE network is available in just a handful of markets, and it has so far only launched three LTE devices – one smartphone, one tablet, one mobile hotspot.  

Meanwhile, AT&T’s LTE network is available in about 40 markets and Verizon’s LTE service covers more than two-thirds of the U.S. population. 

U.S. Cellular’s lone LTE smartphone, the Samsung Galaxy S Aviator, retails for $200 and only came to market this spring. Verizon has been selling similar LTE smartphones since last year and is offering many of them at half the cost of U.S. Cellular’s device. 

Customers on U.S. Cellular’s LTE network can only access the next-generation mobile broadband service in pockets where it has coverage. U.S. Cellular doesn’t have LTE roaming because its network is incompatible with larger providers, and it is unlikely to ever get roaming if the FCC doesn’t pass its interoperability mandate. 

U.S. Cellular is working to reverse ongoing declines in its customer base, but is attempting to do so with an LTE network that’s far less competitive than its larger rivals. 

U.S. Cellular declined to provide executives for an interview, but federal affairs executive Grant Spellmeyer said at a recent conference that “the challenges have been enormous” for its LTE network in part because manufacturers “have been unable to deliver” devices. 

“It is the number one regulatory issue facing our company… The devices that we purchase (aren’t as cheap) as they should be and deployment is not as rapid as it otherwise would be,” he said, describing the lack of roaming as a “significant competitive challenge.”  

Another regional provider that has struggled to deploy LTE on its band 12 spectrum is C Spire Wireless, which has about 900,000 customers in Mississippi, Tennessee, Alabama and Florida. It was forced to delay the launch of its LTE network by nine months after it was unable to procure devices.  

When the network finally goes live in September, it won’t be using the 700 MHz spectrum it paid $191.5 million for during the FCC’s 2008 auction. Instead, C Spire will run the service on its existing AWS and PCS spectrum as an interim step.  

The reason: C Spire can’t find LTE smartphones compatible with band 12. 

C Spire has stated its LTE network will have a smaller footprint and will be less able to handle customers’ data demands over the long term because it is not using its 700 MHz spectrum. C Spire needs to leverage 700 MHz spectrum to stay competitive over the long term. 

C Spire did not return requests for comment. It is not clear why it has been unable to obtain devices when U.S. Cellular, whose 700 MHz spectrum and legacy networks mirror C Spire’s, managed to go live, albeit with a limited selection. But in a lawsuit filed in April against AT&T, Qualcomm and Motorola, C Spire alleged the three providers conspired to manipulate the 3GPP standards process and purposely delayed development of band 12 to hamper its LTE deployment.  

Other regional providers with band 12 spectrum are giving up on using their licenses for LTE entirely because they can’t find devices. Status reports on band 12 deployments filed with the FCC show a multitude of companies are struggling to obtain LTE equipment and are instead choosing alternative technologies like CDMA, GSM and WiMAX. 

The clock is ticking. These companies don’t have an unlimited amount of time to figure out how to use their spectrum. They could lose two years off their licenses if they fail to meet a June 2013 FCC deadline to build out 35 percent of the area covered by their 700 MHz spectrum.

“They’re looking at other ways to meet their buildout requirements that may not be the preferred 4G LTE network build,” Berry says. Those networks won’t be as competitive against the LTE service of larger operators, pushing rural wireless broadband further behind.

Interoperability, however, isn’t a silver bullet for all band 12 operators. 

The Problem with Interoperability 

You’d think that United Wireless would be more enthused about the FCC’s plan to collapse AT&T’s band class 17 with band 12 because it would eventually allow United Wireless to access the flourishing numbers of LTE smartphones currently only compatible with AT&T’s network.

But Laskowsky isn’t sure the company really stands to benefit from an interoperability mandate. As he explains it, AT&T’s band class 12 phones fall back to its legacy GSM network. Because United Wireless is a CDMA provider, it still won’t be able to use phones from AT&T’s portfolio even if the interoperability mandate passes; it needs phones that are both LTE band class 12 and CDMA, and AT&T’s devices under the regulations would be LTE band class 12 and GSM. 

“It makes no difference to people like us,” Laskowsky says. “If AT&T is forced to go from 17 to 12, they will still have GSM fallback, so that wouldn’t open up the availability of handsets for anybody.” 

United Wireless only has about 16,000 subscribers. There’s no way it can afford the large-volume orders required for specialized devices – its handset purchases are in the thousands, not the millions. Like other small and mid-size wireless providers, United Wireless depends on having access to the same devices manufactured for larger providers with the same network configuration. And that’s proving difficult with LTE. 

AT&T also claims that regional operators would only glean limited benefits from interoperability – like United Wireless, it doubts CDMA providers could get much of a boost to their ecosystem from an influx of band class 12 devices that fall back to GSM.

The RCA calls that claim a “red herring.”  

“It may be wishful thinking on AT&T’s part that they can still maintain a position that they’re technically incompatible with band 12, so they don’t have to offer roaming,” Berry says. Under current FCC regulations, AT&T cannot be forced to make changes to its network to accommodate roaming partners.

Some of RCA’s most high-profile members have CDMA networks, including U.S. Cellular and C Spire Wireless. But Berry says that’s not a reason to dismiss the benefits of interoperability: Regional providers will benefit from interoperability even if they don’t have legacy GSM networks.  

Berry maintains that making AT&T’s LTE network compatible with the LTE service of regional providers will open up the availability of devices – even if they need an extra chip for CDMA fall back – and will allow roaming on AT&T’s network. 

“We need an ecosystem that allows our carriers to access 4G-LTE networks,” Berry says. “If the chip is there, our members can put that solution into their handsets.” 

Differences in legacy technologies are just one of a number of reasons AT&T thinks interoperability won’t fix the dilemma faced by band 12 licensees. 

AT&T points out that interoperability won’t solve another major deterrent to LTE deployment: interference from Channel 51.  

The FCC never established a guard band between Channel 51 and the lower A block – the plan had been to move television broadcasters out of the band, but the move never happened and the spectrum was sold off with interference problems in every market where there is a Channel 51 television broadcast station – markets like New York City, Chicago and Los Angeles. 

Regulations meant to protect broadcasters in Channel 51 set up exclusion zones that preclude A block licensees from transmitting a signal within 60 miles of the digital television transmitter. CTIA and the RCA have asked the FCC to move broadcasters out of the band, but so far all the commission has done is freeze applications for new Channel 51 stations. Moving the broadcasters out of Channel 51 could be politically difficult, as the television industry is already up in arms about the FCC’s incentive auction plans.

Channel 51 interference has put the brakes on a number of LTE deployments. Cincinnati Bell, for instance, is unable to use its A block spectrum in Dayton and Springfield, Ohio, because of transmissions from ABC affiliate WKEF. 

“(Cincinnati Bell) finds itself in a quandary as to how it will meet the June 2013 build-out requirement and comply with the Commission’s interference protection requirements,” the operator said in documents filed with the FCC, referring to interference created by the desired signal-to-undesired signal ratio, or D/U. “It may not be possible to meet this requirement if a technical solution to the D/U problem is not available by that time.” 

Vulcan Wireless, owned by Microsoft co-founder Paul Allen, is in a similar quandary. It spent $113 million on two A block licenses covering the Portland and Salem, Ore., and Seattle markets, but it can’t use them because of Channel 51 interference. 

The Channel 51 interference issue is so bad that when Verizon Wireless announced it was selling off its lower A and B block holdings, spectrum-strapped T-Mobile USA stood up and said it didn’t want it.

The interference problems “will most likely take three to six years to resolve, if at all," T-Mobile CEO Philip Humm said during a May conference call.

AT&T wants the FCC to shift its focus from interoperability to Channel 51 interference. The A block was supposed to be beachfront spectrum. But now, the “A block has become known as beachfront property with an oil spill,” Marsh said in a recent blog post. 

Fixing the A block could convince AT&T to move to band 12. In documents filed during the FCC’s review of its Flo TV purchase from Qualcomm, AT&T indicated it would consider band 12 if interference issues weren’t a problem.

But the RCA says AT&T’s attempt to focus the debate on Channel 51 interference is just a distraction – it maintains that interoperability must come first.

"You can solve Channel 51 interference and it won't matter – you still don't have interoperable devices," says RCA General Counsel Rebecca Thompson. "Until the FCC collapses band class 17 into band class 12, our members will not have access to devices. While Channel 51 is a huge issue, interoperability has to be solved first."

The FCC is reviewing comments on its interoperability proposal, but it could be some time before any regulations are put in place and regional providers are able to reap the benefits of the rejuvenated ecosystem.  

By then, it could be too late. C Spire recently revealed that subsidiary Corr Wireless has been placed at such a competitive disadvantage by the interoperability issue that it may go out of business entirely.