Spectrum Drama: Made for TV

Posted by Sam Churchill on

Now that Clearwire announced its plan to deploy LTE-Advanced in the 2.6 GHz band, with some 100 MHz available for expansion (announcement transcript), how will other carriers expand their spectrum? Sprint’s 6.5 million WiMAX customers currently surpass Verizon’s 1.7 million LTE subscribers, notes Paul Kapustka, but Verizon has grown rapidly in the eight months their LTE has been available.

But Verizon’s LTE growth could hit a brick wall relatively soon, as towers become saturated. Sprint, in contrast, has 6 times the spectrum capacity and higher tower density.

According to Cisco’s Visual Networking Index, North American mobile data traffic will grow 20-fold from 2010 to 2015, a compound annual growth rate of 82%. Mobile data traffic in 2015 will be equivalent to 2x the volume of the entire North American Internet in 2005, says Cisco.

There’s not much spectrum available for LTE. It could be years until new spectrum in the television band comes available. Small 10-15 MHz slices between 2-3 GHz may also become available. Meanwhile, it’s crunch time.

Lets’ review the current spectrum available to carriers in the United States:

  • AT&T Mobility:
    The 2nd largest carrier in the United States plans to piece together 700 MHz licenses for LTE service, since their spectrum blocks were not nationwide. Currently AT&T’s LTE service is only available in four metropolitan areas. They won smaller A & B licenses (5MHz x 2) for LTE in 700MHz, that are regional and local and are piecing together national service. Verizon bought the “C Block” which provided nationwide coverage with one shot. AT&T plans to use HSPA on the AWS band (1.7/2.1 GHz) that it currently is not using and plans to gang their AWS frequencies (5MHz x 2) together with their 700 MHz frequencies. AT&T also hopes to utilize any unused T-Mobile AWS frequencies for HSPA+. AT&T likes to call HSPA+ “4G” even when they use only 5MHz wide channels. Bottom line: AT&T has unused AWS frequences and spotty 700 MHz frequencies. Their current headroom for expansion seems limited; perhaps 10-30 Mhz.
  • T-Mobile USA:
    T-Mobile, the 4th largest carrier in the US, is using most of their AWS spectrum already. They use PCS frequencies (1.9 GHz) mostly for voice and their AWS frequencies (1.7/2.1 GHz) mostly for HSPA+. AT&T says its proposed merger with T-Mobile will allow them to offer more 4G in more places. But T-Mobile is already deploying HSPA+ which gangs two AWS bands together for double the spectrum (10MHz x 2). They don’t have much spectrum to spare. A merger with AT&T would mostly save money on towers and could even be regressive if HSPA+ is expanded. Bottom line: T-Mobile has very little unused AWS frequences and no LTE plans. Their spectrum headroom is about nill.
  • Verizon Wireless:
    The number one carrier in the United States paid nearly $10 billion for 20 MHz (10MHz x 2) of nationwide 700 MHz coverage. Their coast-to-coast LTE service has been widely praised for superior performance. Verizon’s pioneering success with LTE has a downside, however – where do they go from here. Verizon has very little AWS spectrum and will likely have to wait until additional spectrum is available before it can expand their LTE service.
  • Sprint-Nextel:
    The 3rd largest carrier in the United States was widely derided for buying Nextel 6-7 years ago. While the deal was a disaster on the books, the company acquired large chunks of 2.6 GHz spectrum and Nextel’s 800 MHz spectrum. Today Sprint-Nextel owns about half of Clearwire and some 150 MHz in the 4G world band at 2.6 GHz. Bottom line: Sprint-Nextel has no spectrum worries. Their spectrum headroom is virtually unlimited.

Prepaid providers, such as Leap Wireless , MetroPCS and U.S. Cellular also own AWS spectrum. They would likely be bought by Verizon if the AT&T/T-Mobile deal goes through since Verizon has more cash. TracFone is the largest MVNO, a “virtual network operator”, buying capacity from AT&T, Verizon and T-Mobile and reselling prepaid (mostly voice) service. Sprint-Nextel may soon offer wholesale LTE service to other operators using Clearwire’s LTE-Advanced spectrum.

T-Mobile and Verizon may have the most need for spectrum. T-Mobile could merge with AT&T, but it wouldn’t add new spectrum, they’ll just manage it more efficiently. If AT&T expands HSPA+ rather than move to LTE it could actually be a step backward. The Verizon/AT&T duopoly could keep prices artificially high, reducing the need for spectrum.

Verizon’s 700 MHz LTE service has been a big success. Their 700 MHz towers cover 2-3 times the radius of PCS at 1.9 GHz. That’s 9 times the potential subscribers per tower. The problem is that Verizon’s LTE service on 700 MHz could soon reach their maximum capacity. Too many subs chasing too few LTE towers. Not enough spectrum.

T-Mobile has activated their AWS spectrum for HSPA+ service, nationwide. AT&T and Verizon, in contrast, paid more than $4 billion for their AWS spectrum. Spectrum that remains untouched.

Bidders Net total of high bids
1. T-Mobile $4.2 billion
2. Verizon Wireless $2.8 billion
3. SpectrumCo $2.4 billion
4. MetroPCS $1.4 billion
5. Cingular $1.3 billion
6. Cricket $710 million
7. Denali Spectrum $365 million
8. Barat Wireless $127 million
9. AWS Wireless $116 million
10. Atlantic Wireless $81 million
Click here to find out who is backing these bidders.

700 MHz Spectrum Winners (2008)
Source: Telephony
Bidder Total bids Spectrum acquired
#1 Verizon Wireless $9.36B C Block open access covering lower 48/key metro and economic areas
#2 AT&T $6.64B B Block metro licenses in large cities across the U.S.
#3 EchoStar/DISH Network $711M 168 E block (unpaired) licenses across the U.S.
#4 Qualcomm $588M E Block licenses in Boston, Los Angeles and New York City; placed sole bid on D Block public safety license (but didn’t win)
#5 MetroPCS $313M Single A Block license in Boston
#6 Cox Communications $304M 14 A block, 8 B block
#7 US Cellular $300M 25 A block, 127 B block
#8 Cellular South $191M 14 A block, 10 B block
#9 CenturyTel $150M A and B Block licenses in its LEC territory
#10 Vulcan Spectrum $112.8 $43.6 million for A Block” in Portland, Salem and $69 million for Seattle, Tacoma, Bremerton

Here are the facts from the FCC:

  • Verizon Wireless spent $2.8 billion for (currently unused) AWS frequencies and $9.36B for 700 Mhz — but at least they are using their 700MHz frequencies.
  • AT&T (then Cingular) spent $1.3 billion for AWS frequencies in the 2006 auction and $6.64B for 700 MHz frequencies in 2008. AT&T also paid $2.5 billion in cash for 700 MHz licenses owned by Aloha Partners and bought Qualcom’s MediaFLO 700 MHz broadcast channels (12 MHz). AT&T now covers 100 percent of the top 200 markets. AT&T has spent over $10 billion for 700 MHz and AWS spectrum. Most of it is still unused.
  • Cable operators spent $2.4 billion for 19 MHz of AWS frequencies. Comcast and Time Warner then invested billions in Clear’s Mobile WiMAX frequencies at 2.6 GHz, which they are now using instead of their AWS spectrum. Cable operators are sitting on $2.4B in AWS spectrum – just speculating the price will appreciate.

How will it all shake out?

  • Dish Network’s terrestrial LTE (2.1GHz): Dish Networks owns 20-40 MHz of satphone spectrum – without Lightsquared’s GPS problems. Verizon doesn’t like to be a virtual operator. Maybe Dish will get an offer they can’t refuse.
  • Cable’s AWS frequencies (1.7/2.1GHz): Cable operators spent $2.4 billion for 19 MHz of AWS frequencies they are currently sitting on. Do I hear $5 billion?
  • Clearwire’s wholesale frequencies (2.6GHz): Clearwire Corporation is 27% owned by Clearwire, with 51% owned by Sprint Nextel, and most of the remaining 22% owned by Comcast, Time-Warner Cable, and Intel. Clearwire announced a conservative 30 MHz frequency allocation for their new joint WiMAX/LTE Advanced services. But Sprint-Nextel could conceivably add another 20-40 MHz for resale.

Will Charlie Ergen turn down a suitcase of money from Verizon? Will cable operators get in bed with mobile – for a price? Will Sprint and Verizon form a relationship? Will the marriage between AT&T and T-Mobile be declared legal?

Stay tuned.

Related Dailywireless stories includes; LTE Spectrum: It’s War, Phoney Spectrum Scarcity,FCC: Show Us Your Spectrum Scarcity, AT&T , AT&T Gets Heat on MediaFLO Spectrum , Qualcomm Sells MediaFLO Spectrum for $1.93B, Combining AWS and 700 MHz: Why?, Sprint to Announce LTE Plans July 28?, WiMAX to TD-LTE: Everybody’s Doin’ It, Will Sprint Go TD-LTE?, LightSquared Report Card: “F”, Lightsquared Files Official FCC Report , Lightsquared: Plan “B”, Lightsquared: Lawmakers Skeptical, Lightsquared + Sprint Deal Done?, Speculation on Sprint Infrastructure, LG Telecom: CDMA & LTE Handover, Ergen Likely Got TerreStar, Charlie Ergen’s Spectacular Triple Play, Lightsquared Gets 2-week Extension, Ergen Likely Got TerreStar, Harbinger: 59MHz or What?. Time Warner Cable + Lightstream?, Lightsquared Signs Cricket Wireless, Another Rumor: Lightsquared + Sprint?, Lightsquared + Sprint?, Charlie’s Big Play, LTE Spectrum: It’s War, Lightsquared: What GPS Interference?, D-Block Gets a Hearing

Posted by Sam Churchill on Friday, August 5th, 2011 at 10:11 am .

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