T-Mobile's 2020 Plan Piles Pressure on Europe's 5G Players

European operators have previously taken umbrage at suggestions they are lagging their US peers in the 5G race. A 5G standard does not even exist, Vodafone scoffed at the start of this year. Using very high frequency bands to provide last-mile broadband connectivity, as Verizon intends, is not much to shout about, said Luke Ibbetson, the UK-based operator's director of research and development. (See European Telcos Slam '5G' Efforts in Asia, US.)

Those may be fair points, and the 5G talk could mean nothing if US telcos stumble on the 5G walk. But the European case is getting harder to make. A recent 3rd Generation Partnership Project (3GPP) decision to speed up the development of the 5G new radio specifications makes a commercial 5G launch look feasible in 2019 rather than 2020. Telcos that remain tight-lipped about their 5G intentions, continuing to insist it is "years away," risk appearing seriously unprepared. (See 3GPP Approves Plans to Fast Track 5G NR.)

Nor can the European cohort still dismiss US plans as "niche" broadband affairs. Last week, T-Mobile US Inc. said it would build a nationwide 5G network by the end of 2020, using 600MHz airwaves it bought in a recent auction along with spectrum in higher frequency bands. As challenging as that plan will be from a cost perspective, it is "technically feasible," analysts have told Light Reading. (See Is T-Mobile's 5G Plan Just a Pipe Dream? and T-Mobile Promises 'Nationwide' 5G in 2020 With New Spectrum.)

If T-Mobile can rapidly build a 5G network in a country as big as the US, then why can't Europe's operators do the same in their much smaller national markets? European operators are certainly thinking of deploying 5G in the 700MHz spectrum band, says Heavy Reading Principal Analyst Gabriel Brown. Those low-band airwaves, which are ideal for covering large geographical areas, have already been auctioned in countries including France and Germany. Companies also expect to make use of "mid-band" spectrum in and surrounding the 3.5GHz range. Yet none has announced any firm 5G targets, or even said much about 5G trials outside laboratory conditions. (See 5G Spectrum to Cost Less Than 4G, Says Expert.)

Of course, promising a nationwide 5G service by 2020 is not the same as delivering one. Having scorned AT&T Inc. (NYSE: T)'s recent 5G marketing as "fake," T-Mobile will invite plenty of derision if "nationwide" turns out to mean well below 100% coverage, as may well happen. Vodafone Group plc (NYSE: VOD) could defensibly be as dismissive of T-Mobile's 5G plans as it has already been of Verizon's.

But Europe's biggest operator could not, simply because it happens to be T-Mobile's majority owner. Of all Europe's leading players, Germany's Deutsche Telekom AG (NYSE: DT) has seemed the loudest 5G cheerleader. At the Mobile World Congress this year, it promised to deploy 5G technology across the entirety of its European footprint. Unlike T-Mobile, however, it avoided attaching any deadlines to this ambition. Because every mobile operator on the planet will eventually move to 5G, that vagueness essentially robs the operator's 5G announcement of much impact. (See DT Plots 5G Across Entire Footprint.)

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Light Reading.

It is understandable, though. The cost of blanketing Europe with 5G could be anything between €300 billion ($327 billion) and €500 billion ($544 billion), said Timotheus Höttges, Deutsche Telekom's CEO. Costs must fall or 5G "won't work," said Bruno Jacobfeuerborn, the operator's chief technology officer, in a conversation with Light Reading. (See DT CTO: Costs Must Fall or 5G 'Won't Work'.)

Using lower-band spectrum could certainly help to reduce the bill, but Ovum Ltd. analyst Daryl Schoolar still thinks a nationwide 600MHz-based 5G network might cost T-Mobile as much as $25 billion -- similar to what he estimates AT&T spent on its 700MHz-based 4G network. That figure is about five times what T-Mobile plans to invest in capital expenditure this year. Amid concern about the budget implications of the 5G plan, T-Mobile's share price has lost 3% of its value on the Nasdaq since May 2, the date of its 5G announcement. (See T-Mobile 5G Plan Could Drive Capex to Record Highs.)

Next page: Justifiably wary

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Gabriel Brown 5/10/2017 | 5:46:46 AM
European Pressure Nothing a swift edict -- sorry, action plan -- from the European Commission can't solve ;)


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