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According to Fierce Wireless, one of the chief benefits of 700 MHz is its strong propagation characteristics. Carriers need fewer tower sites to cover the same area — but more people must share that tower.

While TowerCo CEO Richard Byrne acknowledged that there are some definite advantages to 700 MHz propagation, especially for in-building penetration, “at the end of the day, especially in densely populated areas, it comes down to volume of spectrum.”

In cities, carriers will need additional capacity. But because 700 MHz travels further, self-interference is worse. AT&T and Verizon may have a problem. If their initial LTE deployment proves popular, how can they increase capacity? Microcells? WiFi? Both are more expensive per square-mile.

AT&T’s Ralph de la Vega at the D-9 conference (right), said without the T-Mobile deal, AT&T will only be able to deploy LTE to around 80 percent of the country, compared with a claimed 97 percent with the merger.

AT&T has said it plans to merge 700 MHz with T-Mobile’s AWS band (1.7/2.1 GHz). But how will that work? If AWS has only one third the range, won’t it result in dropped data calls? De la Vega also said the company found interference problems with microcells.

AT&T, T-Mobile and Verizon will soon be using most of their spectrum assets. Then what? Microcells may cause interference, while 700 MHz towers can’t deliver the urban density required. Oops.

Sprint seems better positioned for the future:

  • Sprint has 150 Mhz of 2.5-2.6GHz spectrum.
  • They can deliver higher cellular density in urban areas.
  • They can partition off another 20-40 Mhz for Sprint LTE
  • They can sell off 20 MHz of spectrum for Lightsquared LTE access
  • They get access to Lightsquared’s 1.6 GHz and rural satellite access

The other big winner may be SpectrumCo.

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).

SpectrumCo paid $2.37 billion for their nationwide spectrum. It’s currently unused by cable operators and is probably worth 2-3 times what they paid for it.

Voice over LTE – at 2.6GHz – is where the cable operators need to be. Since they already have joint ownership of Clearwire and the 2.6 GHz spectrum, they’re well positioned to move when it’s ready in 2-3 years.

Cox paid $248.3 million for AWS licenses in 2006, and transfered those licenses out of SpectrumCo and directly to Cox. Cox owns 12 megahertz of AWS spectrum licenses covering 76% of its wireline footprint. Cox also paid $304M for 14 A block, and 8 B block licenses in the 700 MHz band. Now Cox is getting out of cellular operations. They’ll be a virtual operator, handing operation over to Sprint.

Cellular operators need spectrum. They will inevitably make an offer for SpectrumCo assets that cable companies can’t refuse.

Sprint pleads spectrum poverty in it’s filing with the FCC (below, pdf). The FCC includes only 55.5 MHz of BRS (low-power cellular) spectrum in its spectrum screen calculations due to other users of the band. Combined, Sprint and Clearwire control nearly 100 Mhz of spectrum.

Sprint and Clearwire own some 150 Mhz in the 2.5-2.6 GHz band. But some 42 MHz of spectrum in the Middle Band Segment (“MBS”), between 2572-2614 MHz, is used primarily by Educational Broadcast stations (EBS) to transmit high-powered video for educational programming. Sprint says “low-power, cellularized operations in the Middle Band Segment could be subject to interference from legacy high-power video operations.” In addition, neither BRS Channel 1 (“BRS-1”) at 2496-2502 MHz nor the J and K Block guard bands at 2568-2572 MHz and 2614-2618 MHz are readily usable for mobile telephony/broadband services.

Here’s the bottom line as I see it:

  • Clear’s WiMax currently has much spottier (and slower) coverage than Verizon’s 700 MHz LTE. That’s because 2.6 GHz spectrum doesn’t have the range of 700Mhz and it’s using half the spectrum of Verizon. But wait a year. Ten times the user population will try to get access to a single 700 MHz tower on Verizon. One Verizon tower won’t be able to handle 100-200 users effectively.
  • Sprint can deliver more macro/micro cell density in urban areas — and it has bandwidth to burn.
  • Voice over LTE and a Lightsquared partnership may strengthen their position.

I don’t own any telecom stock and I’m not planning to. But I think Sprint’s prospects are good. This is not rocket science. That’s always been the premise behind Clearwire.

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