So what's T-Mobile's backup plan?

With AT&T's deal to acquire T-Mobile USA on life support, T-Mobile may need to start considering a Plan B. By itself, T-Mobile is a wireless operator struggling to keep its best customers from leaving. Over the past several months, the carrier has aggressively cut prices and made itself a haven for bargain seekers--all for the sake of sparking a little growth. As a result, it resembles more of large prepaid carrier than one of the traditional national players. But with the promised breakup fee from AT&T if the deal isn't approved, including $3 billion plus spectrum and roaming agreements with AT&T, T-Mobile could be coming into some cash. And that cash comes with some options. From going it alone to striking up new partnerships, T-Mobile can choose many different avenues to pursue. Of course, AT&T could still pull off a miracle and get the deal pushed past objections from both the Justice Department and Federal Communications Commission--the ideal scenario for both companies. But it doesn't hurt to consider T-Mobile's options. The solo route T-Mobile, presumably flush with cash thanks to AT&T, could attempt to go at it alone. T-Mobile's parent, Deutsche Telekom AG, hasn't been subtle about its intentions to dump the U.S. market, but maybe a $3 billion cash infusion would change its mind. "The breakup fee could give Deutsche Telekom some incentive to do something," said Chris Lemley, a professor at Georgia State University's business school. AT&T attempted to sneak in a disclosure on Thanksgiving morning that it would take a $4 billion accounting charge in the fourth quarter to cover the potential fee. In the meantime, T-Mobile will likely continue to act as the low-cost option for consumers. While the other carriers are busy building out more advanced 4G networks, boast stronger phone lineups that include the Apple iPhone, and have more marketing and service resources to employ, T-Mobile can only compete on price. Having lost a lot of high-value contract customers, the carrier is expected to continue its path of pushing its prepaid service, analysts say. "Whether they can stabilize their business, we'll see," said Walter Piecyk, an analyst at BTIG Research, noting that the recent actions have helped improve some of its customer trends. Go on a buying spree DT could decide to put that $3 billion fee to work on potential acquisitions. T-Mobile could expand its prepaid presence by scooping up regional players such as MetroPCS or Leap Wireless, although both of the smaller companies use differing wireless technology. More likely, T-Mobile could seek more wireless spectrum. The carrier currently lacks sufficient spectrum to move to 4G LTE, and DT has shown a reluctance to spend for that resource. The company could hope for more spectrum to be auctioned off by the government, or pursue an acquisition. The company could also look at Dish Network, which has been slowly amassing a nationwide swath of spectrum. While Dish has a plan to build an LTE network, it could be willing to part with it or partner with T-Mobile. Likewise, Clearwire has said it is looking to sell some of its excess spectrum to raise cash. Even if it doesn't use the spectrum, having the extra assets could be valuable if T-Mobile were to look to sell itself again. Either way, opening up its wallet would be a strange turn of events for a business whose parent has so traditionally been so reluctant to spend money in the U.S. Pursue a cable hookup T-Mobile could find allies in the cable providers, which have traditionally worked with Sprint Nextel. The cable companies are sitting on their own war chest of spectrum that fits perfectly with T-Mobile's own assets. "Cable is still very much an option," said Craig Moffett, an analyst at Sanford C. Bernstein. "The opportunity to swing cable from the Sprint camp to the T-Moblie camp can't be lost on Deutsche Telekom." Related stories Justice Dept to block AT&T's T-Mobile deal AT&T to take $4 billion charge to cover possible T-Mobile breakup fee FCC chairman comes out against AT&T's T-Mobile buy But it is unclear how a deal would be structured. The cable providers have no interest in running a wireless business, having learned their lesson from the failed Pivot joint venture with Sprint. They currently offer some wireless service through a wholesale agreement with Sprint and Clearwire. Rather than buying the considerable amount of spectrum, T-Mobile could strike a deal in which it could obtain the spectrum in exchange for a stake in the business. Moffett noted that the cable companies could eventually back a T-Mobile initial public offering, which would succeed in lower Deutsche Telekom's exposure to the U.S. The cable companies, meanwhile, would get access to another wireless service provider and guard against the risk of Clearwire and Sprint dropping the ball on their 4G LTE deployment. Their current agreement with Clearwire has been an "utter debacle," Moffett said. Having another wireless provider would also help when negotiating for wholesale pricing, Piecyk added. Alone, T-Mobile and the cable provider's spectrum looks "stranded," Moffett said. But together, the spectrum represents a nationwide swath worth as much as $30 billion. Practically, the cable company's spectrum assets aren't worth as much because there is no network or wireless provider willing to put them to work. Which is why the cable providers and T-Mobile would fit nicely together. Sprint and T-Mobile This scenario has a lot of fans on Wall Street. But given the regulatory scrutiny that the AT&T deal is facing, it's increasingly unlikely that the government would approve this combination. While Wall Street sees a combination between two weak players as good for the industry, regulators may be concerned that the merger of two low-cost providers may mean higher prices in general. There are a number of other obstacles as well. Sprint Nextel and T-Mobile run on differing wireless technologies, requiring one to change over to the other. While Sprint has the ability to handle multiple wireless technologies with its planned network upgrade, that remains a major issue as the two sides attempt to reconcile their differences. Sprint is low on cash and in no position to buy T-Mobile, so the deal would be structured as a merger of equal, with Deutsche Telekom taking a large--possibly majority--stake in the combined company. For Deutsche Telekom, that may not even be worth the trouble. "It would be a smaller shareholder in a much larger and more complicated company," Piecyk said. "Is that an ideal scenario?" Switching parents This is admittedly a bit more out there, but Deutsche Telekom could attempt to sell T-Mobile to another major global wireless provider looking to get into the U.S. business. "There are a lot of players Deutsche Telekom could sell it to," Lemley said. "It could get T-mobile access to new capital." One potential buyer could be China Telecom Corp. Earlier this month, the head of its Americas business told Bloomberg that it would start selling wireless service under its own brand next year. He also signaled a willingness by the company to buy its own wireless network. Although given the U.S. government's past attitude towards Chinese-American deals, it's unclear whether such an acquisition would go through unscathed. Regulators have squashed smaller attempts by Chinese companies to acquire U.S. businesses, and a critical asset such as T-Mobile would easily find itself in the crosshairs of politicians. With AT&T's trial against the Justice Department not starting up until February, and AT&T's willingness to fight tooth and nail to save the deal, there is still a lot of time left. "Eventually, though, it will be time to entertain Plan B," Moffett said.

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Rumor revival: iPhone 5 to sport 4-inch display

Is the iPhone 4S the last iPhone to have a 3.5-inch display? That's what Japanese Apple tracking blog Macotakara is reporting. Citing an unnamed source, the site says that Hitachi and Sony have already started shipping 4-inch LCD panels to Apple for use in "new iOS devices." The two companies are also said to be providing panels for Apple's next iPad, which is said to be "changed fundamentally." If true, the move would suggest that Apple has not just decided on the design for the followup to the iPhone 4S, which was unveiled and released just last month--but is beginning to collect parts and produce units. Yet the 4-inch display rumors ahead of that unveiling were numerous. In February, a snapshot out of China depicting the front screen of what looked like an iPhone with a larger and wider display cropped up. Just weeks before, component industry tracker DigiTimes claimed that Apple was eyeing bigger screens, in part to better compete with Android and Windows Phone devices. Then, in March, something a little bit more interesting happened. Purported "mold engineering" drawings made the rounds, depicting a device that looked like an iPhone 4 but with a noticeably larger screen. This was followed in June by blog This Is My Next, claiming that Apple was working on an iPhone with a 3.7-inch display, and a slew of cases that hit store shelves designed for a slightly larger, but thinner iPhone, based on an alleged prototype device leaked from a manufacturing facility. Alternatively, a report by our own sister site CNET France near the end of September loosely claimed Apple would use a qHD (960x540 pixels) screen that measured about 4.2 to 4.3 inches diagonally. That's compared to the iPhone 4 and 4S' 3.5-inch display that runs at a higher 960x640 pixels. One of the most recent reports ahead of this came last week from iLounge, which laid out several rumors about Apple's product changes during 2012. On that list was an iPhone with a 4-inch display, alongside metal casing and a summer launch. Apple currently maintains three basic sizes for apps to fall into: non-Retina Display iPhones and iPods, Retina Display iPhones and iPods, and the iPad. Changing dimensions with two additional configurations would mark another step for developers when designing their software, be it utilities or games.

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Google's Angle grows up, improving browser graphics

Angle, a Google graphics project for Windows computers, has passed an important certification milestone that could improve some browsers' graphics. Google launched Angle in March 2010 as a way to help the fortunes of WebGL, the nascent 3D graphics technology for browsers. And yesterday, Google programmer Vangelis Kokkevis announced Angle has been certified to pass the OpenGL 2.0 certification test suite. WebGL provides a low-level graphics interface that mirrors the OpenGL standard used on Mac OS X, Linux, iOS, and Android, but that's still a second-class citizen on many Windows machines. Windows comes with Microsoft's rival standard called Direct3D, and it's Angle's job to translate OpenGL commands into Direct3D. "Angle is a necessary step in our continued efforts to push the web platform forward. Without Angle, it would be impossible to reliably run WebGL on many Windows computers, so we couldn't enable great applications like MapsGL," Kokkevis said. MapsGL is an optional WebGL-based interface to Google Maps that provides 3D buildings and other features not ordinarily present in the online mapping tool. Angle is used in both Chrome and Firefox to bring WebGL to Windows machines. That's important given that Microsoft has been downright frosty toward WebGL, but traditional game programmers are eager to tap its abilities for building more sophisticated 2D and 3D games to the Web. TransGaming, a company specializing in cross-platform gaming technology, helped improve Angle so it could perform the full set of OpenGL commands, Kokkevis said. Convincing Microsoft to embrace WebGL remains a very large hurdle to the technology's success. Even with Angle, Internet Explorer doesn't support WebGL, which means developers making games, virtual worlds, or splashy Web application interfaces can't rely on it being present even in modern browsers. For users, that means worrying about Web sites with annoying warnings such as "this game only works in recent versions of Firefox, Opera, and Chrome."

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Europe rules ISPs can't be forced to block pirate sites

Good news from Europe: ISPs can't be forced to monitor or block customers from using the Web. A European court has ruled that record labels and film studios can't use the courts to instruct a broadband company to track or try to block a customer.

"E.U. law precludes the imposition of an injunction by a national court which requires an Internet service provider to install a filtering system with a view to preventing the illegal downloading of files," the European Court of Justice ruled.

Record labels, film studios, and other owners of copyrighted music, movies, or media have in recent years tried to steer government and courts toward making ISPs responsible for piracy. They argue that ISPs should keep an eye on what their customers are doing online, and if they spot a customer illegally accessing copyrighted material, courts should order the ISP to boot the customer off the Internet.

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Microsoft has long been one of the most ardent proponents of expanding U.S. copyright law. But that enthusiasm doesn't extend to the new Stop Online Piracy Act, which its lobbyists are quietly working to alter, CNET has learned.

It's little surprise that Web-based companies like Google, Facebook, and Twitter oppose SOPA, which is designed to make allegedly piratical Web sites virtually disappear from the Internet. They, and many civil liberties and human rights groups, worry that SOPA could jeopardize legitimate Web sites too.

Even Garret, the Business Software Alliance's "copyright-crusading ferret," doesn't like the Stop Online Piracy Act.

But Redmond's skepticism is notable because unlike the Web companies, Microsoft earns nearly all of its revenue by licensing software--which can, of course, be pirated--and loses money on Bing and its online services division. What's even more telling is that Microsoft had enthusiastically endorsed a narrower version of the copyright bill, called Protect IP, earlier this year.

That concern about SOPA, which is heading toward a committee vote in the House of Representatives next month, led to a rare and embarrassing about-face on the part of the Business Software Alliance, a trade association that represents Microsoft's interests in Washington, D.C. (BSA, along with the Motion Picture Association of America and the Recording Industry Association of America, is among the seven members of the International Intellectual Property Alliance. Among BSA's projects is a pro-copyright Web site for kids featuring Garrett, the copyright-crusading ferret that Wired dubbed one of the "lamest technology mascots ever.")
When Rep. Lamar Smith, a Texas Republican, introduced SOPA last month, BSA distributed a statement saying it "commended" him for it and that the legislation was a "good step...to address the problem of online piracy."

Yesterday, BSA President Robert Holleyman changed his tune, saying in a blog post that SOPA "needs work" and that "valid and important questions have been raised about the bill."
While the wording of SOPA hasn't changed over the last four weeks, the politics have. A person familiar with the situation told CNET that BSA's volte-face came after Microsoft and, to a lesser extent, other members of the trade association had reviewed the bill and informed Holleyman of their displeasure.

Holleyman did not respond to a request for comment today. A spokesman for BSA would say only that "I'm directing you to the blog post."

It's possible that Microsoft is reluctant to oppose SOPA publicly because it would jeopardize its relationship with Smith, the influential chairman of the House Judiciary committee, which oversees copyright law. Microsoft declined to respond to a query from early yesterday, with a representative saying only that we are "unable to accommodate your request."
Microsoft isn't the only company to embrace Protect IP yet have reservations about SOPA. Tim McKone, AT&T's executive vice president of federal relations, told CNET last week that "we have been supportive of the general framework" of Protect IP. But when it comes to SOPA, all AT&T would say is that it is "working constructively with Chairman Smith and others toward a similar end in the House."

One major difference between the two proposals is that SOPA is broader. Protect IP, which is awaiting a Senate floor vote, would allow courts to order AT&T, Comcast, Verizon and other ISPs to pretend that the domain names for targeted Web sites didn't exist. (The Domain Name System, or DNS, translates alphanumeric domain names like CNET.com into the numeric IP addresses actually used by computers, in this case 64.30.224.118.)

SOPA goes further by permitting the Justice Department and courts to order ISPs to block customers from visiting the numeric IP addresses of off-limits Web sites. It also appears to authorize deep packet inspection, which raises privacy concerns.
This week's public position-revision by BSA has inspired some mirth on the part of its customary opponents on copyright law.

Art Brodsky, communications director of Public Knowledge, which previously twitted BSA in a blog post titled "Copyright industry: Copyrights trump human rights?", says he welcomes a potential new ally.

"Generally BSA has been very hawkish on the intellectual property front," Brodsky says. "We're always glad to see them become enlightened on these issues."

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Following FCC chairman Julius Genachowski's official show of opposition to AT&T's proposed buyout of T-Mobile, AT&T said last night that it will take a $4 billion accounting charge in the fourth quarter to cover a breakup fee to T-Mobile should the deal fail to gain regulatory approval.

AT&T and T-Mobile parent Deutsche Telecom also said they've withdrawn their pending approval applications to the FCC "to facilitate the consideration of all options at the FCC and to focus [the companies'] continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice either through the litigation pending before the United States District Court...or alternate means."
In August, the Justice Department filed a lawsuit to block the buyout.

And on Wednesday, Genachowski asked the other four FCC commissioners to approve an administrative hearing on the proposed deal, during which AT&T would have to show how the merger was in the public interest.

In a briefing with reporters at the time, FCC officials said the merger would create an "unprecedented" level of concentration in the wireless market and that it was impossible to see how the deal could serve the public.

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