The End of 3G Wireless Era Enables America's 5G Future

On January 3, Verizon announced that its 3G CDMA mobile network has been decommissioned. The retirement of Verizon's 3G network had been scheduled to take place by December 31, 2021. Now all three nationwide mobile wireless broadband providers now have retired their 3G networks.

As explained in my September 2021 Perspectives from FSF Scholars, "AT&T's 3G Sunset Will Make Way for Speedy 5G Services": "Old 3G networks consume significant amounts of spectrum for a small and fast-shrinking user base. That valuable spectrum needs to be repurposed to timely roll out 5G networks… so that consumers can benefit from their promised speeds and capabilities." And in an August 2021 Perspectives from FSF Scholars titled "T-Mobile's Timely 3G Sunset Will Spur Stronger Services," I wrote that "any regulatory intervention to extend the life of 3G networks would keep wireless services stuck in the slow-speed era to the overall detriment of consumers." Blog posts (here, here, and here) by FSF scholars also tracked the progress of 3G network retirement during 2022.

Fortunately, unjustified regulatory obstacles to 3G retirement appear to have been avoided. When it comes to the deployment of 5G services, every bit of available spectrum helps. The spectrum used to support dwindling 3G legacy services is now available for next-gen 5G services.  

T-Mobile's CDMA Network Sunset Did Not Harm Competition

My July 7 blog post covered most of the misleading and regurgitated evidence alleged by plaintiffs in Dale v. Deutsche Telekom AG, a private antitrust lawsuit challenging the T-Mobile/Sprint merger. I left for this blog a separate discussion about one particular claim: The Dale plaintiffs claim – wrongly – that T-Mobile's early sunsetting of Sprint's CDMA network harmed competition by stifling DISH Network's chances to succeed in entering the wireless market. But rapid migration to next-generation mobile networks benefit consumers with more capacious, speedy, and reliable services.

Because that's a mouthful, let's first understand the facts. As a condition of the T-Mobile/Sprint merger, the DOJ Antitrust Division required T-Mobile to spin off Sprint's largest mobile virtual network operator (MVNO) brand, Boost Mobile, to DISH. The purpose of this spinoff was to facilitate DISH's entry into the mobile broadband market. Combining the acquired MVNO brand with its own network infrastructure potentially would enable DISH to take Sprint's place as the fourth largest facilities-based mobile broadband provider. Boost Mobile had roughly 9.3 million subscribers at the time the merger consummated, so transferring it to DISH gave DISH a pool of customers to kickstart its business.

 

Most of Boost Mobile's customers relied on Sprint's antiquated CDMA network, an inferior legacy technology inadequate for the provisioning of 5G service. Sprint's continued reliance on CDMA technology is one of the many reasons it struggled as a company. CDMA is incompatible with "GSM," the higher quality network technology used by T-Mobile, AT&T, and Verizon. Some former Sprint customers and most of Boost Mobile's customers had old CDMA-only devices that could not connect to GSM networks. Upon the CDMA network sunset, these devices would become useless for those customers, and those customers would need to buy new phones to continue receiving service. In other words, Boost Mobile customers were hemmed in by Sprint's prior bad business decision in selecting CDMA technology that was finally facing its demise.

But as Free State Foundation Director of Policy Studies Seth Cooper explained in an August 2021 Perspectives from FSF Scholars, T-Mobile's choice to sunset the 3G CDMA network it acquired improved mobile broadband service quality for nearly every T-Mobile customer. Knowing this result would be likely, the FCC's 2019 order approving the T-Mobile/Sprint merger declined to require T-Mobile to continue CDMA network operations. Notably, T-Mobile or Boost customers would enjoy the benefits of the network sunset if they upgraded their devices.

Enter the Dale complaint. The Dale plaintiffs allege that T-Mobile sunset its CDMA network earlier than it previously indicated to sabotage DISH's chances at successfully entering the mobile broadband market. In their view, the CDMA sunset forced the customers DISH acquired from Boost Mobile to buy new devices, making them highly vulnerable to "churn" or "switching" to another provider. With DISH then hemorrhaging customers, its revenues would sink and its costs would increase, making it more difficult to construct a nationwide 5G network. And this supposedly would make T-Mobile's settlement commitments to sell network services to DISH meaningless, because DISH's mobile business would quickly lose its customers, making it dead-on-arrival. The complaint then points to the fact that DISH cut an eventual network services agreement with AT&T instead of T-Mobile as more evidence of T-Mobile harming competition.

But the Dale claimants ignores two critical facts. First, the terms of DISH's network usage agreement with AT&T appear to be better than its original agreement with T-Mobile. The contract with AT&T is for a duration of 10 years, while T-Mobile's agreement with DISH is for a duration of 7 years. And the deal does not appear to have increased costs for DISH. The Dale plaintiffs might contend that, even if DISH got a better deal with AT&T, T-Mobile's CDMA sunset still harmed competition by rendering DISH customers' devices useless because AT&T does not have an active CDMA network.

That hypothetical criticism would fall short because of the second critical fact. T-Mobile and DISH resolved their dispute over the CDMA sunset and inked a new, lower-priced network services agreement in which T-Mobile agreed to assist with transitioning Boost Mobile customers to GSM-capable devices. Thus, even if upgrading to next-gen mobile network technology could be conceived as cognizable consumer harm, T-Mobile's agreement with DISH alleviated that harm. Indeed, T-Mobile's CDMA sunset improved mobile broadband service for virtually every customer, likewise increasing network quality competition.

In view of the facts, the complaint in Dale shows an absence of harm and a benefit to consumers. Antitrust claims with no harm and real benefits to consumers are not viable.

Antitrust law is supposed to protect competition, not competitors. Yet far too often, the crux of arguments made by antitrust claimants is harm to particular competitors. Of course, certain types of harm to particular competitors can harm competition, if there is evidence that it leads to market price increases and output reductions. But in this case, harm is nowhere near clear given the pro-competitive benefits from sunsetting legacy technologies and expanding next-generation technologies.

Under the Dale plaintiffs' ideal version of competition, T-Mobile's network infrastructure and financial resources would have been conscripted to maintain an outdated technology to the advantage of a competitor. This would have slowed 5G network deployment and made T-Mobile customers worse off. The plaintiffs in Dale should have difficulty in convincing a court to side with claims that are based on such a skewed view of competition.

Realizing the benefits of next-gen networks requires that old legacy technologies be timely sunset. For the good of consumers, 5G networks have rapidly been deployed across the U.S. DISH still has a shot to become the fourth nationwide facilities-based 5G provider, and its recent announcement that its 5G network is available to more than 20% of the US population indicates that it may be on pace.

AT&T's 3G Network Sunset Will Enhance 5G Services for Consumers

Today, AT&T is shutting down its 3G Universal Mobile Telecommunications Service (UMTS) network so that it can repurpose more of its licensed spectrum to 5G. AT&T's 3G-to-5G transition is an important milestone, as AT&T is the first nationwide wireless provider to entirely close down its legacy 3G network. Plans to close down the 3G UMTS network were publicly announced by AT&T in February 2019, and it was recently reported that data traffic on the legacy network dwindled to less than 1% of AT&T's overall network traffic. Overwhelmingly most services that were previously using 3G services heeded the three years advance notice and have moved to 4G LTE or 5G network services. And some services have secured other means to enable their 3G devices to connect to next-generations networks.

Despite receiving ample advance notice regarding AT&T's 3G network sunset, the alarm industry has sought government intervention to delay it. However, the FCC has declined to step in. The Commission's refusal to intervene is likely because the agency lacks any legal authority to stall the 3G-to-5G transition. Additionally, any government-imposed delay would inhibit the ability of AT&T to optimize their 5G networks, offer consumers faster and more capacious services, and more effectively compete in the wireless market. 

  

For more on this matter, see my September 2021 Perspectives from FSF Scholars, "AT&T's Sunset Will Make Way for Speedy 5G Services: Technology Transitions Shouldn't Be Delayed by Special Pleading." Also see my November 2021 blog post, "FCC Should Dismiss Alarm Industry's Petition to Stall 3G-to-5G Transition."

The Sunset of T-Mobile's Legacy 3G CDMA Network is Drawing Near

An article published in Fierce Wireless on February 8 reports that a California Administrative Law Judge (ALJ) has recommended that the California Public Utilities Commission (CPUC) deny a petition by DISH Network that seeks to delay T-Mobile's shutdown of the 3G CDMA network that it acquired in its merger with Sprint. T-Mobile is scheduled to closed down the legacy network so that it can repurpose more of its spectrum to support 5G services. DISH has claimed that it was not given reasonable notice about the timeframe for T-Mobile's planned 3G sunset, and it seeks an order by the California agency to delay the sunset. But as reported by Ms. Monica Alleven in Fierce Wireless, the ALJ found that it was reasonable to leave any decision about what constitutes "reasonable notice" regarding the proposed 3G shutdown to the federal government.  

The importance of transitioning spectrum from legacy services to next-generation services was the subject of my August 2021 Perspectives from FSF Scholars, "T-Mobile's Timely 3G Sunset Will Spur Stronger 5G Services: Early 2022 CDMA Network Retirement Shouldn't Be Slowed." In that Perspectives, I wrote:

The generally recognized industry-wide phase-out and retirement of 3G networks, T-Mobile's unmistakable intent that it would retire Sprint's deficient CDMA network, and T-Mobile's track record in transitioning MetroPCS subscribers within 15 months all go to show that the advance notice given to DISH was reasonable. And it would be wrong to insist that those unforeseeable post-notice occurrences events like lockdowns and chip shortages somehow make T-Mobile's advance notice to DISH or its act of providing advance notice retroactively unreasonable. Those post-notice facts simply aren't relevant to the reasonableness of T- Mobile's advance notice regarding its CDMA network shutdown.

Moreover, DISH could have negotiated for stronger minimum reasonable advance notice protections against risk of loss from future events that might hamper its ability to migrate Boost customers in response to the retirement of Sprint's CDMA network. But it negotiated only for a six-month minimum for reasonable advance notice, and the actual notice it received came several months ahead of the agreed upon minimum. 

After the publication of the August 2021 Perspectives, T-Mobile agreed to push back the 3G CDMA network shutdown to March 31 of this year. DISH has requested the shutdown be delayed to as late as July 2023. The CPUC will consider the AJL's recommendation that DISH's petition be denied at its public meeting on March 17.  

FCC Should Dismiss Alarm Industry's Petition to Stall 3G-to-5G Transition

The alarm industry is asking the FCC to halt 5G deployment and force AT&T to operate outdated 3G networks through the end of 2022. The Commission should at once dismiss the alarm industry's self-serving petition, which seeks government intervention to push off its own business costs onto an adjacent market provider. The agency should take a forward-looking approach and promote the 3G-to-5G transition, not needlessly stall it.

The FCC lacks legal authority to mandate 3G network delivery of private mobile IoT services. Those service offerings are individually negotiated with alarm companies, and they are not subject to common carriage rules. Also, any attempt to mandate 3G enterprise services beyond February 2022 effectively would rewrite existing contracts between AT&T and alarm companies. And it would be a grave mistake for the Commission to choke the much-needed supply of spectrum for capacious and fast-speed 5G. Prompt repurposing of spectrum from 3G to 5G is mission critical to achieving the full technological and economic benefits of next-generation wireless networks.

The retirement of single digit megabytes-per-second speed 3G networks has been widely anticipated for a decade. And AT&T provided three years advance notice of plans to retire its 3G Universal Mobile Telecommunications Service (UMTS) network in February 2022. It currently dedicates 10 MHz of its licensed spectrum in the 850 MHz band to a small and dwindling number of 3G device users whose activities use only about 4% of its 3G network capacity. AT&T plans to repurpose that valuable spectrum by using it to provide uplink communications in connection with $23 billion worth of C-Band spectrum and thereby cover 200 million Americans with 5G by year-end 2023. 

But the alarm industry is seeking to avoid or delay its costs in upgrading to next-generation mobile technologies by having government push back 3G UMTS network retirement to the end of 2022. I wrote about this matter in my September 2021 Perspectives from FSF Scholars: "AT&T's 3G Sunset Will Make Way for Speedy 5G Services: Technology Transitions Shouldn't Be Delayed by Special Pleading."

As explained in my Perspectives, the Commission has no legal authority under Title II of the Communications Act to mandate 3G network continuation. The private mobile IoT services that AT&T offers to alarm companies do not meet the definition of common carriage services. AT&T's dealings with those sophisticated business enterprises are on customized terms arrived at through arms-length negotiations. These private carriage mobile services are not mass market retail services and they are not public offerings of communications to all endpoints through the public switched telephone network. 

According to an October 28 ex parte filing with the FCC, AT&T's contracts with major alarm companies apparently require operation of 3G network operations only "until December 31, 2021" and thereafter expressly reserve AT&T's right to "terminate 3G … at any time in its sole discretion." The Commission has no legal authority to override those contractual terms. In fact, Supreme Court and D.C. Circuit precedents appear to bar the Commission from using its Article III power over spectrum licenses to prolong 3G network operations. For instance, the D.C. Circuit's 2012 decision in Cellco Partnership v. FCC recognized that "the Commission lacks authority to invalidate licensees' contracts with third parties," and also that "Title III gives the Commission no authority to make 'fundamental changes' to the terms of existing licenses." Any Commission mandate for forced operation of AT&T's 3G network would invalidate key contract terms and it also would amount to a fundamental change in terms for AT&T's 850 MHz spectrum licenses. 

Two decades ago, the alarm industry tried unsuccessfully to delay the retirement of analog wireless networks. The Commission rightly rejected any forced delay in the analog-to-digital transition. Now the agency ought to reject any forced delay in 3G-to-5G transition. 

Second Quarter of 2021 Saw Surge in 5G

There was a dramatic increase in 5G wireless adoption over the second quarter of this year, according to 5G Americas' press release on September 22:

By region, Omdia data indicates North America [U.S. and Canada] had a total of 44.6 million 5G connections by the end of Q2 2021, which is an addition of 17.9 million 5G connections and 67 percent quarter over quarter growth. Additionally, it had 501 million LTE connections by the end of Q2 2021, which marks a 0.66 percent quarterly decline in LTE.

In a pair of recent Perspectives from FSF Scholars, I wrote about how timely sunset of 3G networks – including AT&T's and T-Mobile's legacy networks – is one important factor in facilitating 5G adoption. Repurposing of additional spectrum from government use to licensed commercial use – particularly in the lower 3 GHz band – also will help realize the speed and capacity potential of 5G networks and thereby boost the U.S. economy and create new jobs.