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T-Mobile: Going Bananas for Low-Band

Dan Jones
3/10/2014
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T-Mobile is poised to get its hands on 700MHz 4G spectrum from Verizon later this year that it says will enable it to offer better in-building, suburban, and rural coverage over time.

The 700MHz A-Band spectrum that T-Mobile US Inc. bought from Verizon Wireless for $2.4 billion this January was a main topic for executives from the carrier at the Deutsche Bank Media, Internet & Telecom Conference Monday. (See T-Mobile Spends $2.4B on Verizon Spectrum .)

"We're very confident we'll close in Q2... So we can start offering service within the year," said T-Mobile CTO Neville Ray. " 'Fifteen will be a much larger year than 14 but we'll get started in 14."

The 700MHz A-Band spectrum will allow T-Mobile to improve in-building coverage in dense urban areas and add coverage in suburban fringe and rural areas more economically than it could with the AWS (1700/2100MHz) and PCS (1900MHz) spectrum it already holds. "It's not cost effective to build out in these vast geographies with high-band or medium-band," Ray said.

The spectrum covers 70% of T-Mobile's existing customer base and 158 million PoPs. This includes nine out of the top 10 markets and 21 of the top 30 markets, he said.

Just as he told Light Reading in January, Ray has initial markets in mind where the 700MHz service will start towards the end of the year. These include Philadelphia, Dallas, Houston, Miami, and Minneapolis. (See T-Mobile CTO: On the Road to Low-Band.)

The CTO will also try and work around potential interference problems with Channel 51 TV broadcasters in affected areas, such as New York. For instance, Ray said, he can still deploy a network in parts of Long Island even if New York City is out for now and boost that prized "suburban fringe" coverage. (See T-Mobile: Channel-51 Interference a Non-Issue.)

The operator is also hoping to buy more A-Band and get potentially get more low-band 600MHz spectrum in the planned mid-2015 incentive auction from the Federal Communications Commission (FCC) .

T-Mobile made it clear that it considers the auction a milestone for the wireless industry. "There needs to be adequate regulatory protections to ensure the duopolists do not come out with all the spectrum again," T-Mobile CFO Braxton Carter told the conference crowd.

And just like the banana distribution industry, the CFO believes that three major competitors -- not four -- is the magic number for major mobile operators in the US. "It's not a question of if, it's a question of when," Braxton said when asked about the prospects for consolidation in the industry.

"To take a third-scale national player that has the scale benefits with the right business model could be very competitively enhancing," the CFO suggested. There has been talk of a T-Mobile-Sprint tie-up but the FCC appears to be downbeat about that combination. (See Tough Road Ahead for Sprint/T-Mobile?)

— Dan Jones, Mobile Editor, Light Reading

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SachinEE
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SachinEE,
User Rank: Light Sabre
3/23/2014 | 4:14:32 AM
Re : T-Mobile: Going Bananas for Low-Band
@ danielcawrey, advertising does play a much bigger role than the technical details of spectrums etc. Regarding your second point, different people have different preferences. Some people prefer speed over cost while others do the opposite. But there are considerable number of people who would like to sacrifice some speed in favor of cost.
SachinEE
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SachinEE,
User Rank: Light Sabre
3/20/2014 | 2:53:35 PM
Re : T-Mobile: Going Bananas for Low-Band
@ Dan, you are right, it seems logical. T-Mobile seems to have this understanding very clearly that they can't take on AT & T or Verizon alone. If they try to do so it will leave the equation like two big and two medium or small fish. They would rather like to be counted as third big fish even if it comes as a result of partnership with some other carrier.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
3/11/2014 | 1:35:56 PM
Re: "Yes, we have no bananas."
It's hard to believe that on the marketing side of things. Consumers don't care where the spectrum comes from. All they see is the advertising. T-Mobile has wowed more people in that way - also by being different.

You would also be surprised at the number of people who would take the reduced cost of T-Mobile over faster data. Not everyone will do that, but many will. 
DHagar
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DHagar,
User Rank: Light Sabre
3/11/2014 | 12:48:08 PM
T-Mobile: Going Bananas for Low-Band
@Sarah, I am thinking mobile markets.  To address your other post as well, I see T-Mobile as playing a "strategic" game in finding a specific niche that they think they can win at.  They will either win or lose - then maybe bananas.  If they really have a clear strategy and can pull it off, I think they can win.

DHagar
DanJones
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DanJones,
User Rank: Blogger
3/11/2014 | 11:54:16 AM
Re: It's not about scale
True enough. Although T-Mobile didn't do so badly cutting deals w/ private providers for fiber backhaul once it got HSPA+ going...
spc_isdnip
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spc_isdnip,
User Rank: Lightning
3/11/2014 | 11:51:52 AM
It's not about scale
T-Mobile and Sprint are disadvantaged because they don't own the backhaul wires; AT&T and VZ do, and scratch each others' backs to the disadvantage of the smaller players.  Nothing but regulated special access (writ large, revoking forbearance from Carrier Ethernet) pricing can fix that.

A 3-carrier market screws MVNOs badly.  The big two players sell direct.  Players 3 and 4 accept wholesale.  A 3-carrier market makes #3 bigger and less interested in wholesale, with no competition for it.  The market thus loses all of the innovation that comes from MVNOs.  Bad for consumers, though a modest ain for shareholders.  Of course we know who controls Washington.
DanJones
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DanJones,
User Rank: Blogger
3/11/2014 | 11:06:31 AM
Re: "Yes, we have no bananas."
I'm not convinced that T-Mobile expect a merger to happen any time soon. "Sooner or later" is proably the important element to Braxton's words.

They can *probably* afford to play a slightly longer game and see what happens when the next changing of the guard happens at the FCC.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
3/11/2014 | 11:03:30 AM
Re: T-Mobile: Going Bananas for Low-Band
hmm okay. Are you talking about the mobile market or banana market?
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
3/11/2014 | 11:02:29 AM
Re: "Yes, we have no bananas."
T-Mobile has also always assumed it will be their brand that takes hold, not Sprint's, although that's probably fair given the success the Uncarrier strategy has had relative to Sprint's struggling band. But, is Sprint too big and well entrenched to be treated as a pile of spectrum, as T-Mo once said?
DHagar
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DHagar,
User Rank: Light Sabre
3/10/2014 | 9:43:35 PM
T-Mobile: Going Bananas for Low-Band
@Dan, sounds like a smart move with a well thought-out business model.  Someone focused on filling the gaps and creating a good package designed for the right markets may just have the right combination.

DHagar
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