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April 14, 2017

With its 600MHz win, T-Mobile has no more excuses for gimmicks

by John_A

T-Mobile was a big winner during this year’s 600MHz spectrum auction, but now it needs to use it to win.

Sometimes it seems that T-Mobile’s put-on brand bravado, its showy marketing and breathless self-promotion, is all done to make up for the fact that its core product — the network — is not very good.

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Specifically, compared to AT&T and Verizon, the company’s network is full of gaps in areas outside major cities — and often just outside — because it doesn’t own a sufficient amount of the proper spectrum needed to close those gaps. Well, not anymore.

This week, the company announced that it has spent $7.99 billion on 31MHz of low-band 600MHz spectrum after the U.S. regulator closed its complicated reverse auction for legacy digital TV signals last month. That 31MHz amounts to 45% of the available licensed spectrum being auctioned off, which sounds like a lot but for the fact that the FCC put aside 30MHz(PDF) for carriers that didn’t already have sizeable low-band spectrum holdings. In other words, T-Mobile and Sprint were the only companies able to pony up the cash to pay for the holdings, and Sprint wanted nothing to do with this auction.

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T-Mobile’s new coverage map with 600MHz.

With its win, T-Mobile now has the low-band spectrum to properly compete with AT&T and Verizon across the entire country. In a statement, the company effusively said that it is now in its best-ever competitive position against the two biggest mobile providers in the U.S.:

T-Mobile now owns premium low-band spectrum that can cover every single American. And, most importantly, while the Duopoly’s existing low-band spectrum is already crowded and congested, T-Mobile’s new low-band spectrum will be clear and wide-open for customers, meaning a better, faster experience. With this purchase, T-Mobile now has significantly more low-band spectrum per customer than any other major provider and nearly TRIPLE the low-band spectrum per customer than Verizon.

Of course, the comparison to Verizon is not particularly fair, since Big Red has nearly twice the mobile customers as T-Mobile, but the facts are true: T-Mobile is finally in a position to get rid of its gimmicks and hacky promotions and start beating AT&T and Verizon in tangible ways: in speed, in coverage, and in reliability. If it manages to keep costs down, and passes those savings along to consumers as it does today, then it should accelerate its growth faster than it is doing today.

Low-band frequencies, like this 600Mhz spectrum and the 700Mhz spectrum that was auctioned off in 2008, are considered the “beachfront” property of LTE, since it carries high-speed signals further distances, with better penetration of thick walls and basements than mid-high frequencies, which is where T-Mobile currently deploys the fast majority of its LTE network. The company has plenty of AWS-1 and AWS-3 airwaves, but Verizon and AT&T have most of the 700Mhz band locked up and deployed.

Low-band spectrum is prized for its ability to go through walls and reach people in remote areas. Now T-Mobile has plenty of it.

T-Mobile says that it will begin rolling out 600MHz service later this year, sharing some of it with its subsidiary MetroPCS. Equipment from Nokia and Ericsson is already available on the tower side, and Qualcomm is finalizing its baseband chips to support the new band plan. But that brings up a very important point: no current in-market phones support 600MHz, and devices with such support won’t likely roll out until the end of 2017. T-Mobile is contending with a similar problem on the AWS-3 side, which also began hitting handsets last year with the LG V20 and, more recently, the LG G6 and Samsung Galaxy S8, but it’s going to take three years or so for the full effect of 600MHz’s potential to show itself. By then, though, T-Mobile will be deploying the first stage of its 5G strategy.

Dish and Comcast also spent some money for licenses in the 600MHz auction, but it’s unclear what they plan to do with it. The former already owns plenty of unused spectrum, while the latter just partnered with Verizon on its own MVNO-based mobile network, and doesn’t have enough 600MHz spectrum to augment it. That’s why the real winner here was T-Mobile, and it’s time for the company to focus on the fundamentals.

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