T-Mobile Bids Big in U.S. Spectrum Auction

T-Mobile Bids Big in U.S. Spectrum Auction

When the 600 MHz broadband auction held by the United States regulator, the Federal Communications Commission (FCC), closed late last week, T-Mobile US was the biggest winner, having bid US $8 billion for over 1,500 wireless licenses. In doing so, the operator acquired 45 percent of all the low-band spectrum sold, more than any other company (competitors Verizon and Sprint declined to bid, while Dish Network spent US $6.2 billion). According to T-Mobile, the purchase will quadruple its low-band holdings and allow it to cover 100 percent of the U.S. and Puerto Rico. The operator also said that it will be putting some of this new spectrum to use during 2017.

Tarifica’s Take

This major investment shows that T-Mobile is planning to take its fight against the big two of AT&T and Verizon Wireless to the next level. After years of unconventional, aggressive “Un-carrier” moves to gain market share, the operator now needs to consolidate its gains. Unlimited data offers, low prices, and a plethora of marketing bells and whistles have pushed T-Mobile from fourth place to third among U.S. mobile operators. Now, in order to have any chance of going farther, the company must provide better connectivity, since network quality and coverage have been the most important factors in motivating AT&T and Verizon customers to resist T-Mobile’s siren call.

In his characteristic hyperbolic style, T-Mobile President and CEO John Legere said, “This spectrum sets us up to bring the Un-carrier—and REAL competition—to wireless customers everywhere, many of whom have never had real choices in wireless. If the duopoly [meaning AT&T and Verizon] thought things were rough before—well, just wait!”

Legere went on to characterize T-Mobile’s spectrum acquisition as putting it ahead of the competition in terms of technology. Its customers, he said, “will be able to speed on a brand-new, wide-open wireless freeway, while carrier customers have to crawl along on their clogged, congested, low-band freeways.” Low-band spectrum is indeed valuable because of its ability to travel great distances and penetrate structures, and T-Mobile claims that it “now has significantly more low-band spectrum per customer than any other major provider and nearly TRIPLE the low-band spectrum per customer than Verizon.”

Of course, it should be kept in mind that T-Mobile’s customer base is smaller than those of the “duopoly.” Regardless of whether the claims about spectrum per customer are accurate, the fact remains that in making this US $8 billion investment, T-Mobile is playing catch-up. To challenge the big two, it must bring high-quality LTE coverage to more people in more geographic regions.