Why T-Mobile Has the Upper Hand as 5G Rolls Out

In February, the Federal Communications Commission auctioned off licenses for C-band spectrum, which will play an instrumental role in the deployment of 5G in the U.S. While Verizon and AT&T won the largest number of licenses in the record-breaking auction, T-Mobile made a large dent and could be a major competitor going forward with its acquisition of Sprint.

To get a better sense of the mobile landscape after the spectrum auction, Evan Moore of GLG’s Tech, Media, and Telecom team spoke with Steve Stravitz, Principal at Spectrum Management Consulting. Below are a few select excerpts from the full teleconference.

Can you give us a better understanding of why C-band spectrum is so critical to the industry?

The industry overall is in a unique place with the acquisition of Sprint by T-Mobile. That allowed T-Mobile to get its hands on the EBS/BRS band. The other players did not have what they refer to as the new mid-band spectrum. C-band spectrum is well-suited for 5G and high-broadband services. The 2.3 gigahertz to the 6 gigahertz band’s ability to implement a massive MIMO (multiple-input, multiple-output) as well as get a maximum coverage makes the span one of two or three must-have bands in terms of 5G deployments.

Are there any disadvantages in using the C-band spectrum as we move forward into the 5G life cycle?

The in-building coverage is the largest Achilles’ heel. The propagation characteristics get worse as you move higher, so C-band spectrum won’t give you the same type of in-building coverage that low-band frequencies still provide today. We’ve been trained that if we have coverage issues to move toward windows when we’re in high-rises to mitigate the propagation loss or lack of that exists as you move farther into buildings. So low band will still have its place, especially for in-building and rural coverage. But the density of the network is such that, especially for suburban and urban areas, C-band as well as the EBS/BRS bands are the ones to have.

How did the results of the C-band auction change the competitive picture among some of the wireless operators?

It wasn’t until 2016 that the prior band of choice was the low-band frequencies. It was no doubt that the mid-bands, PCS, and AWS, were the old workhorses. Low-band frequencies allowed for a better user experience, but they’re referred to as the bands of last resort. Until 2016, and the 600-megahertz band allocation, low-band spectrum was pretty much controlled by Verizon and AT&T with around 85% of the MHz-pop in their hands and allowing for dominance. Looking at the auction results, you have a situation where Verizon pretty much matched the footprint or depth of spectrum that T-Mobile has in the new mid-band. Verizon sent the message that it’s not giving up its leadership position in the U.S. marketplace. AT&T did not fare as well.

To break it down: 160 megahertz of the 280 megahertz went to Verizon, 80 megahertz went to AT&T, and 40 megahertz of spectrum went to T-Mobile (in the major markets). Still, T-Mobile will have a head start. There’s no way the others can even be on the same playing field until 2025. It’s just not physically possible by the asset allocation aspects of how this equation works.

Overall, it turned into an auction of the have and have-nots. There were hopes on certain other auction participants that they would enter the marketplace, but this auction did not allow it because of the high price points.

AT&T spent more than $23 billion at the C-band auction. The company said it’ll likely use it to further compete in their mobile offerings. What are your thoughts on the company’s use of C-band spectrum and how important might the deployment timeline be for it in terms of its competitive positioning in the market?

AT&T did well, but the reality is that it’s rock, paper, scissors here. It walked away with only 60 to 80 megahertz of spectrum, compared with the 140 to 160 megs by Verizon (in major markets). It puts AT&T at a disadvantage. There’s also a shark in the water, which in this case is T-Mobile. This forces AT&T into acquisition mode. Otherwise, it’ll have an inferior offering and be at tremendous risk, at least in terms of wireless, losing the benchmarking speed wars, and the eventual advertising blitz.

Any thoughts on the use cases for Verizon’s C-band spectrum and how that might change competition?

Here’s the interesting thing with Verizon: what will probably be somewhat concerning from a customer perspective is that there’ll be a different user experience depending upon what you’re able to access in terms of their network resources. In urban areas, Verizon customers who are outdoors with a 5G phone can access the millimeter wave spectrum and get 400 to 800 megabits per second (a Gbps in perfect conditions). If you’re outdoors in a suburban or urban area and get onto the C-band frequencies, you’ll probably get 250 to 450 megabits per second. If you’re in a rural area or deep indoors, you’ll be relegated basically to the low-band frequencies or the older mid-band frequencies, and most likely get 20 to 50 to 80 megabits per second. There’ll be a ridiculous range of user experience when Verizon gets this thing built out.

Do you envision Verizon and AT&T will need to spend more in order to meet their deployment timelines and coverage expectations?

On a yearly basis, I don’t think so. Right now, probably the gold standard is T-Mobile. It’s trying to obtain those synergistic benefits that you can only obtain once you turn off the Sprint network. It’s deploying the EBS/BRS spectrum bands at a rate of 1,000 sites per month. Verizon says it’ll hit 7,000 to 8,000 in a yearly build-out. Verizon doesn’t seem to be in a tremendous rush to actually get the network up and running.

What does the timeline look like for a widespread C-band deployment?

Between spectrum availability, equipment availability, and the ability just to go ahead and have people deploy this, what I envision is that there’ll be certain market launches for the C-band in the first quarter of next year because companies don’t want to allow T-Mobile to have a head start. It won’t be until 2025 that the complete band is unpacked because they have to launch some satellites and continue clearing the earth stations out of the band, so they don’t cause interference.

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About Steve Stravitz

Steven Stravitz is the Principal of Spectrum Management Consulting. His company works with operators and manufacturers that utilize spectrum and do valuation work to help companies prep for auctions, as well as track transactions. In addition, he works as a part-time consultant (acting Chief Technology Officer) for Landover Wireless, a mobile broadband builder/operator. Steve has participated in every spectrum auction that has occurred in the U.S. and can speak to historical and current dynamics, with specific focus in CBRS, C-band, and millimeter wave spectrum.

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This telecommunications industry article is adapted from a GLG teleconference. If you would like access to events like this or would like to speak with telecommunications industry experts like Steven Stravitz or any of our more than 900,000 industry experts, contact us.

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Questions Asked During the Teleconference:

• Can you give us a better understanding of why C-band spectrum is so critical to the industry?
• What is the percentage of signage of traffic that we should be expecting on this band versus other spectrum bands?
• Are there any disadvantages in using C-band spectrum as we move forward into the 5G life cycle?
• How did the results of the C-band auction change the competitive picture among some of the wireless operators?
• Were Charter and Comcast participants that bowed out due to the price of the auction, or were there other reasons that led to their decision to not bid in C-band?
• How did the results of the auction and the future plans for C-band deployment impact competition among the tower companies?
• What are your thoughts on AT&T’s use of C-band spectrum and how important might the deployment timeline for them be in terms of their competitive positioning in the market?
• Any thoughts on the use cases from Verizon for their C-band spectrum and how that might change competition?
• Do you envision that Verizon and AT&T will need to spend more in order to meet their deployment timelines and coverage expectations?
• Are there any tailwinds that you envision that could help expedite a widespread C-band deployment?
• What are your thoughts around that technology and the opportunity to combine a lower-band uplink with a C-band downlink?
• Do you believe that uplink demands will increase over time due to virtual reality and other new-use cases that may come to bear?
• Are there any headwinds that you think the operators may face in deploying C-band spectrum?
• As we look at the next three to five years, are there any companies you think we should be keeping our eyes on as we move forward with C-band deployment?
• Is there anything that we haven’t covered today that you think is worth noting for our audience?