T-Mobile's 2.5GHz appetite shows no signs of slowingT-Mobile's 2.5GHz appetite shows no signs of slowing

According to one spectrum analysis firm, T-Mobile has gained around $6.6 billion worth of 2.5GHz spectrum licenses all over the country since 2020.

However, Airwave Research cautioned that T-Mobile probably has not actually spent that much money on those spectrum licenses. Instead, the firm estimates T-Mobile may have only spent around a fourth of that amount – or around $1.6 billion – in real money.

That's because T-Mobile is the only big company that's buying 2.5GHz spectrum licenses. AT&T and Verizon do not use the 2.5GHz spectrum band in their networks. Moreover, T-Mobile is already leasing many of the licenses it's buying, thereby complicating the financial details of its spectrum purchases.

Regardless, the true financial details of T-Mobile's 2.5GHz purchases are known only to the operator itself. And T-Mobile isn't saying.

The 2.5GHz market

T-Mobile's recent 2.5GHz spectrum license acquisitions have been happening in the so-called "secondary market," where spectrum is bought and sold directly between the entities that own the spectrum licenses. FCC spectrum auctions are considered the primary market for spectrum. (T-Mobile was the big spender in the FCC's 2.5GHz spectrum auction in 2022.)

And T-Mobile's appetite for 2.5GHz spectrum acquisitions in the secondary market shows no signs of fading. For example, just this month the University of North Carolina filed documents with the FCC to sell ten of its 2.5GHz spectrum licenses to T-Mobile.

"T-Mobile respectfully submits that the proposed transaction will advance the public interest by enhancing T-Mobile's ability to expand its array of commercial wireless mobile services throughout North Carolina," the operator told the FCC, the US government agency that must approve all such spectrum transactions.

The terms of T-Mobile's deal with the University of North Carolina were not disclosed, and T-Mobile has generally declined to comment on its 2.5GHz spectrum purchases. But Airwave Research estimates T-Mobile's deal with the University of North Carolina is worth around $220 million. T-Mobile has inked dozens of such agreements every year since 2020.

Indeed, Airwave Research estimates that T-Mobile now owns more than 8,000 2.5GHz spectrum licenses, mostly in rural areas. It leases around 1,500 such licenses.

Airwave Research is a new startup in the wireless industry that maintains a real-time database of spectrum purchases and ownership. It calculates the value of spectrum licenses based on a variety of factors, including past spectrum market transactions.

But, to be clear, it's difficult to estimate the value of any spectrum band, much less the complex 2.5GHz spectrum band that T-Mobile is using. That's because spectrum doesn't have any intrinsic value; it's only worth what a buyer would be willing to pay for it.

What's going on here

T-Mobile built its speedy midband 5G network on spectrum in the 2.5GHz band. However, the company initially didn't own its spectrum licenses in that band. Instead, the company leased access to its 2.5GHz spectrum licenses from universities, high schools and other educational institutions, which actually owned the licenses.

The situation stretches back to the 1960s, when the FCC granted 2.5GHz spectrum to US educators. The agency's goal at the time was to allow universities, high schools, religious institutions and others to broadcast instructional TV programming into schools and workplaces as a way to supercharge the US educational system during the country's Cold War with the Soviet Union.

As time went on and the cellular industry matured, companies including Nextel and Sprint began inking spectrum leasing agreements with those educational institutions (which generally weren't using the spectrum). That's because antiquated FCC rules wouldn't allow those institutions to sell their 2.5GHz spectrum licenses outright.

But the FCC changed its rules in 2020. That change allowed schools, universities and other 2.5GHz license owners to sell their licenses outright.

After the change, T-Mobile immediately started snapping up those spectrum licenses – essentially changing itself from a spectrum renter into a spectrum owner.

Challenges

T-Mobile's pursuit of 2.5GHz spectrum has faced its share of challenges.

First, some of T-Mobile's rivals have complained that the company's vast trove of 2.5GHz spectrum has given it an outsized edge on its competition. T-Mobile is far and away the biggest player in the market for 2.5GHz spectrum – according to Airwave Research, the company now owns just over half of all the spectrum licenses in the 2.5GHz band, in terms of the per-MHz POPs available.

The per-MHz POPs figure indicates the amount of money spent on spectrum, the amount of spectrum available, and the number of people that spectrum covers. Each of those elements – as well as other factors – can affect the value of spectrum licenses.

Separately, some of the smaller players in the 2.5GHz band have complained that T-Mobile's operations have been interfering with their networks. For example, Redzone Wireless recently told the FCC that T-Mobile's network in Maine is causing "operational disruption and economic harm to Redzone and its subscribers."

Finally, T-Mobile's 2.5GHz spectrum leasing situation also raised the possibility of another company swooping in and buying the license rights out from under T-Mobile. That's exactly what WCO Spectrum tried to do, as Light Reading has previously reported. 

The situation led to dueling lawsuits between WCO and T-Mobile.

However, WCO backer Gary Winnick died last year, and now T-Mobile and WCO are in settlement talks.