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4G/3G/WiFi

Is 4G Worth Losing T-Mobile?

Here's one argument in favor of the AT&T Inc. (NYSE: T) acquisition of T-Mobile US Inc. : It's the only way AT&T will ever build a proper 4G network.

It all comes down to geography, Allied Fiber LLC CEO Hunter Newby writes in a recent entry for his PR firm's telecom blog. The United States is so spread out that any nationwide network buildout is problematic; this is one reason why its broadband rankings are so low compared to countries such as Korea.

AT&T won't attack an LTE backhaul buildout with gusto -- or at least wouldn't reach the 95 percent coverage it's now talking about -- unless it's got the resources gained in this merger, Newby reasons. And he thinks that's worth making the trade-off of having one less competitor in U.S. wireless.

"This is what we really need as opposed to being stuck at 3G service, but having lots of inexpensive offerings from several providers," he writes.

Besides geography, AT&T would be stopped by the prospect of competitors riding on any new fiber-to-the-tower backhaul it builds out, Newby argues. Specifically, T-Mobile doesn't have the same motivation to build nationwide 4G infrastructure, since it can't spread the network cost across other services.

Ironically, once it builds out 4G backhaul, AT&T might be motivated to lease it out to other providers. At that point, the market would make up for the loss of T-Mobile, Newby argues.

"That’s the gift. Once the capex is spent to bring FTTT it is there. As the fiber penetration increases it seeds the towers for future mobile operator entrants that will not have the same mountain to climb," Newby writes.

Even if the merger is approved, there will be the question of how close AT&T will come to its purported 95 percent LTE coverage. The company was slow to deploy 3G capacity even to the big cities. Maybe 4G would light a fire under its seat; maybe not.

And the merger doesn't necessarily give AT&T a 4G slam dunk. T-Mobile would bring spectrum, but it's got less to offer AT&T on the cell-site side. In rural areas, T-Mobile has few of its own towers and rents from other providers; AT&T would have to either continue T-Mobile's leasing agreements or spend the money to add radios to its own towers. (See Big AT&T & T-Mobile 4G Buildout Ahead? and Gleaning AT&T's 4G Plans for LTE on AWS.)

— Craig Matsumoto, West Coast Editor, Light Reading

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