T-Mobile’s slow build-out of its T-Mobile USA network, once a shortcoming, may be turning into an advantage for Europe’s largest phone company, says Bloomberg. But whether T-Mobile USA and Clearwire will team up for spectrum is anyone’s guess.
T-Mobile says their HSPA+ network now reaches 200 million people in 100 major metropolitan areas. It plans to double the speed of their HSPA network in 2011, to deliver peak speeds up to 42 Mbps.
Look at the chart — T-Mobile needs 40 MHz to be competitive with AT&T and Verizon.
T-Mobile currently provides HSPA+ on their AWS band. It’s far less expensive then the forklift upgrade that Verizon and AT&T made for LTE. AT&T and Verizon each invested nearly $10 billion just buying new spectrum on the 700 MHz band. Not to mention huge new infrastructure investments, nationwide.
- AT&T’s LTE transition begins in the second half of 2011 and will go through 2013. AT&T’s LTE devices will fall back to HSPA.
- Verizon’s 700 Mhz LTE network is available in 38 initial launch areas for $50-$80 a month. Devices will fall back to Verizon’s CDMA network for voice and data.
What will T-Mobile do when it needs more spectrum? The number of U.S. smartphone users are expected to increase from 60.2 million in 2010 to 84.4 million in 2012. T-Mobile needs a Long-Term Evolution strategy.
According to Bloomberg, T-Mobile executives will unveil their strategy for the U.S. market in New York tomorrow.
Since 2008, T-Mobile has spent more than $9 billion to expand its 3G network. They paid over $4 billion in 2006 for their AWS frequencies. A forklift upgrade to LTE, on their current AWS band, would be problematic. There isn’t enough room to operate both.
Where are they going to get more spectrum?
Lightsquared is currently in trouble, with GPS interference issues, the odd frequency, lack of infrastructure and lack of money.
Clearwire, on the other hand, has backhaul and towers in place. Their 2.6 GHz band is globally standardized for LTE, enabling more cost/effective handsets. Infrastructure is available off the shelf. The disadvantage of 2.6GHz is the higher frequency doesn’t penetrate well indoors. Both companies need money and could cut a good deal for T-Mobile
But there is another option — buy more AWS spectrum. SpectrumCo has 19 MHz available and they’re not using it. T-Mobile USA is currently the largest user of AWS frequencies in the United States. The AWS band uses 1710 to 1755 MHz, and 2110 to 2155 MHz.
Under the name of SpectrumCo, cable operators collectively bought $2.5 billion in AWS spectrum back in 2006. At the time, cable operators planned to roll out cellular phone service, nationwide.
SpectrumCo, the AWS bidding consortium with Cox, Comcast and Time Warner Cable, picked up 137 licenses in 2006’s Advanced Wireless Services auction (at 1.7/2.1 GHz). SpectrumCo won a total of 137 AWS licenses for $2.37 billion. Comcast’s share was $1.29 billion, followed by Time Warner Cable’s $632.2 million, and Cox’s $248.3 million. (See SpectrumCo Gets Licenses). Cox paid $248.3 million for AWS licenses in 2006, and transfered those licenses out of SpectrumCo and directly to Cox.
The cable-based, nation-wide AWS phone network didn’t happen.
Instead, Comcast, Time Warner Cable and Brighthouse invested in Clearwire. Comcast put more than $1 Billion into Clearwire while TWC put in $550 billion. Meanwhile the AWS spectrum that cable operaters bought is unused.
Now that the FCC has authorized the NBC/Comcast merger (pdf), an agreement to sell their spectrum might be timely. It doesn’t seems likely, however. T-Mobile would likely get a better spectrum deal from Clearwire (who needs money), then from cable operators (who don’t).
On the other hand, T-Mobile could be bold. As a majority partner in Lightsquared, they could start with a fresh slate. The satellite/terrestrial approach of Lightsquared has a unique appeal – enabling a new vision of global communications.
Meanwhile, cable operators will likely to sit on their AWS spectrum. Spectrum scarcity will just push rates higher. That’s good for Comcast and NBC.
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