Is T-Mobile's 5G Plan Just a Pipe Dream?

Iain Morris
5/3/2017
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John Legere, the belligerent, potty-mouthed boss of T-Mobile US, is famous for ranting about his bigger rivals' shortcomings.

He is also quick to pounce on any opportunity for self-promotion, and justifiably regarded as something of a marketing genius. "Every time he says something it sounds fantastic," says Bengt Nordström, the CEO of the Northstream market-research and consulting group. "When you read the small print there are always strings attached."

So when AT&T Inc. (NYSE: T) regrettably labeled a forthcoming 4G service as "5G Evolution" last week, Legere was among the first to call BS on the "fake 5G" pronouncement in a manner that would have made Donald Trump, a fellow ranter and self-publicist, feel proud. Days later, T-Mobile US Inc. was promising to have a "true" nationwide 5G network in place in 2020, just a year after the first 5G standard is due to appear. (See Surprise! AT&T Markets 4G Advances as '5G Evolution' and T-Mobile Promises 'Nationwide' 5G in 2020 With New Spectrum.)

Was this a classic bit of legerdemain from Legere, or can the self-styled "Uncarrier" really pull off such an ambitious network move?

Up for a 5G Fight
T-Mobile US CEO John Legere bares his teeth before going into 5G battle.
T-Mobile US CEO John Legere bares his teeth before going into 5G battle.

Both Nordström and Heavy Reading Principal Analyst Gabriel Brown think the plan is feasible from a technical standpoint. "It basically maps to the timeline for non-standalone 5G radio standards, availability of the first commercial equipment and the spectrum allocation," says Brown.

Indeed, thanks to a recent 3rd Generation Partnership Project (3GPP) plan to accelerate the development of the 5G new radio (NR) standard, the initial version of 5G should arrive in the market in 2019 -- up to one year earlier than the industry had originally expected. This "non-standalone" variant will allow operators to use the 5G NR in tandem with an existing 4G network. (See 3GPP Approves Plans to Fast Track 5G NR.)

"My expectation, at this stage, is that Ericsson and Nokia will upgrade their current state-of-the-art LTE base station platforms to support 5G NR," says Brown. "Both vendors have recently introduced new platforms and it is unlikely, although not impossible, they will introduce new RAN [radio access network] equipment that can be deployed commercially at scale in that timeframe."

As Brown points out, T-Mobile's 5G announcement also comes shortly after it splashed $8 billion on a swathe of 600MHz spectrum, having previously been a comparative weakling in the sub-GHz game. As T-Mobile brings these airwaves into use, and swaps out equipment, it "would need a good reason not to try to deploy 5G," says Brown. (See T-Mobile, Dish & Comcast Big Winners in $19.8B 600MHz Auction.)

Nordström is in broad agreement. "From 2019 operators will [start to] replace existing legacy base stations that are too expensive to upgrade with multi-standard, multi-frequency equipment," he says. "Operators could then allocate network resources in those base stations to 5G if they so wished."

That is the theory, in any case. The business case means the reality is likely to be quite different from T-Mobile's nationwide-5G-by-2020 plan.

The chief obstacle is on the cost side, about which T-Mobile and parent company Deutsche Telekom AG (NYSE: DT) have been unsurprisingly tight-lipped. But the German telco was far less reticent about 5G cost expectations at the Mobile World Congress (MWC) earlier this year. The bill for deploying 5G across Europe might be anything between €300 billion ($328 billion) and €500 billion ($546 billion), said Timotheus Höttges, Deutsche Telekom's CEO, during a press conference. (See DT Plots 5G Across Entire Footprint and The Growing Pains of 5G.)

Chief Technology Officer Bruno Jacobfeuerborn was similarly alarmist. Citing figures in a 2016 report from investment bank Barclays, he said the cost of deploying a 28GHz-based 5G network in the US could run to about $300 billion. (See DT CTO: Costs Must Fall or 5G 'Won't Work'.)

Next page: A budget-busting bill

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Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
5/4/2017 | 4:46:53 AM
The Stars Align
Spectrum, standards, technology all align for T-Mobile to deploy 5G in this timeframe. An operator with this set of circumstances would need a very good reason not to pursue 5G. I think we'll see very similar models in Europe with the 700 MHz allocation.

Also, I think you underplay the advantages of multi-connectivity and software-confgurable radio in combined 4G/5G networks. These are basically the reasons I've been bullish on 5G deployment -- much more so than my analyst peers. 
Jim_Jackson
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Jim_Jackson,
User Rank: Light Weight
5/3/2017 | 10:27:08 PM
Re: The CTO says 28GHz will be part of the network
There goes that cheap 600mhz buildout the article spoke about.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
5/3/2017 | 7:03:17 PM
Re: The CTO says 28GHz will be part of the network
Sounds like we have entered into the fake 5G era. Let the mudslinging begin ladies and gentlemen! 
DanJones
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DanJones,
User Rank: Blogger
5/3/2017 | 1:02:12 PM
The CTO says 28GHz will be part of the network
Neville Ray said in his blog that mmWave will be part of the network (although he didn't say exactly when). Remember that T-Mobile got 28GHz and 39GHz holdings when it bought MetroPCS.
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