T-Mobile on Friday announced an unprecedented move to immediately add a significant amount of capacity to its network by essentially borrowing spectrum from other companies.
One Wall Street analyst said the move could triple the amount of spectrum the operator has devoted to lowband 4G LTE in most of its major markets.
"T-Mobile's network is as good as AT&T and Verizon's and it is going to get better," wrote the analysts at Wall Street research firm New Street Research in a note to investors Monday, describing T-Mobile's latest action as a "genius move."
Under the new agreement, Comcast, Dish Network, Bluewater, Channel 51, Grain Management affiliate NewLevel, LB Holdings and Omega Wireless will loan T-Mobile their 600MHz spectrum licenses for free for the next 60 days. T-Mobile said it would use the spectrum "in the markets where it can be quickly deployed."
"In trying times like this, we understand how important it is for people to remain connected," explained T-Mobile's Neville Ray in a statement.
Indeed, network operators around the globe are bracing for traffic spikes as home-bound customers work to prevent the spread of the virus.
"The step was taken as the nation responds to the spread of COVID-19," Dish Network explained in its own statement. "Dish's 600MHz spectrum will enhance T-Mobile's network nationwide as wireless users increasingly turn to mobile networks for work and personal use."
The New Street analysts speculated that Dish and the other companies involved in the action could begin charging T-Mobile to use the spectrum after 60 days. "It could make sense for both sides if they do," the analysts wrote. So far T-Mobile and U.S. Cellular are the only two major wireless network operators that are using 600MHz for their cellular offerings.
T-Mobile does need FCC approval to deploy the spectrum; the agency granted that approval on Sunday. "This temporary authority will help T-Mobile better serve customers who, like all of us, are making significant adjustments to their daily lives to minimize in-person interactions and slow the spread of COVID-19," FCC Chairman Ajit Pai said in a statement.
How it will work
In a detailed post about the development, the analysts at Wall Street research firm LightShed Partners explained that the FCC auctioned a total of 70MHz of spectrum in the 600MHz band in 2017, and T-Mobile now owns, on average, 30MHz of the spectrum nationwide. In its most recent annual report, T-Mobile said it counts more than 33 million devices on its 600MHz spectrum, which the LightShed analysts estimated is roughly half of T-Mobile's branded customer base.
The Lightshed analysts explained that Dish is the second largest owner of 600MHz spectrum and owns, on average, 20MHz nationwide. Comcast, meanwhile, owns 10MHz of 600MHz spectrum across the footprint of its broadband operations. Neither company has so far put the spectrum to commercial use. The other companies that are loaning T-Mobile spectrum own smaller chunks in other various locations.
The LightShed analysts noted that T-Mobile has devoted a significant amount of its 600MHz spectrum to its 5G network. But because that network is still relatively new, there are not very many customers actually using it. "We believe the vast majority of T-Mobile's LTE deployments on 600MHz spectrum are just 10MHz (5MHz of downlink) deep, while the rest of the band has been dedicated to 5G-NR," the LightShed analysts wrote.
That means that "Dish's spectrum alone should triple T-Mobile's current LTE deployments on 600MHz in most markets. That should provide a major uplift in capacity and speed for T-Mobile users," the analysts explained.
Importantly, T-Mobile confirmed to Light Reading that it will be able to upgrade its 600MHz cell towers remotely with a software upgrade in order to put all that new, donated spectrum to use. That's critical considering the amount of time and money it would take to send technicians to its cell towers in order to conduct the upgrade.
What's particularly interesting about all of this is how it relates to T-Mobile's proposed merger with Sprint, which is widely expected to close sometime in the next few weeks. As part of that merger, T-Mobile will gain Sprint's vast 2.5GHz spectrum holdings. But the merger also is designed to position Dish Network to become an MVNO of T-Mobile, and to eventually build a 5G network with its own vast spectrum holdings.
However, T-Mobile could also gain more permanent access to Dish's 600MHz holdings under the merger agreement among Sprint, T-Mobile and Dish announced last year. That's because the companies agreed to "negotiate in good faith to reach an agreement" that would allow T-Mobile to "lease some or all of Dish's 600MHz spectrum licenses for deployment to retail consumers." Meantime, Dish would use its other spectrum holdings – including its AWS-4, lower 700MHz E Block and AWS H Block licenses – for its own 5G network.
"This temporary COVID-19-induced deployment of 600MHz spectrum can provide investors some insight about how quickly Dish's spectrum can be implemented into existing networks and the value of spectrum ecosystem over the uncertain promise of future spectrum opportunities like C-Band," wrote the LightShed analysts, pointing to the FCC's expected auction of midband C-Band spectrum in December.