In April 2017, T-Mobile spent $7.9 billion on an FCC auction of lowband 600MHz spectrum. The wireless provider ended up with 31 MHz of spectrum, 45% of the total amount the FCC had for bids. Dish Network has spent the second largest amount with $6.21 billion. Lowband spectrum travels further than medium and highband waves and penetrates structures better. What it doesn’t do is deliver blazing fast download data speeds.
T-Mobile wants to buy more low-band 600MHz spectrum
T-Mobile uses its 600MHz spectrum for its Extended Range 5G service. These signals are more readily available to T-Mobile subscribers than the Ultra Capacity 5G. The latter uses the mid-band 2.5GHz spectrum picked up by the Sprint acquisition and some high-band mmWave signals.
The carrier has said that customers can expect download speeds of 400Mbps and above with Ultra Capacity 5G. That’s equivalent to the 400Mbps download speed we achieved with our Pixel 6 Pro on Verizon’s comparable 5G UltraWideband network, which is also a combination of mid-band airwaves (in the C-band) and mmWave signals.
By combining three channels of mid-band (a process known as carrier aggregation), T-Mobile has been able to achieve 3 Gbps download data rates close to mmWave 5G speeds with mid-band availability. With 3 Mbps, you can download a feature film within seconds. T-Mobile says such a great 5G experience will be available to its subscribers later this year.
The markets covered by the acquired spectrum include San Francisco, Atlanta, Chicago, Los Angeles, Boston, Tampa, Columbus, Minneapolis, Seattle, Philadelphia, Baltimore, Washington, DC, Dallas, Phoenix, Houston, Salt Lake City, St. Louis, and New Orleans.
The new 600MHz lowband spectrum T-Mobile is buying covers 108 million point-of-presence (POPs), representing about a third of the US population. The licenses involved in this purchase are already being used by T-Mobile, which had entered into a lease during the onset of the pandemic as wireless carriers attempted to expand their coverage.
T-Mobile is the only major US carrier with a dedicated low-band 5G network
Now T-Mobile wants to buy the spectrum so it can own it. T-Mobile CFO Peter Osvaldik made an interesting point at an Oppenheimer investor conference held Tuesday morning. He said: “We’re very differentiated from a 5G perspective, and the low-band layer is definitely creating some of that. We’re the only ones with a dedicated low-band 5G network. The competition is giving us more DSS. aggregation (aggregation) with the midband layer to improve coverage, so that’s another strategic advantage of using 600 (MHz) in that space.
T-Mobile’s three-layer cake 5G coverage
What Osvaldik noted was that T-Mobile has its 600MHz dedicated low-band network. Verizon and AT&T are using Dynamic Spectrum Sharing (DSS) to deliver their nationwide 5G coverage rather than low-band like T-Mobile. With DSS, LTE and 5G, service can be delivered from the same spectrum band.
T-Mobile is also looking to fill some of the gaps in its nationwide mid-band coverage by participating in FCC Auction 108, which has more 2.5GHz mid-band spectrum to offer. New Street Research has lowered its estimate of what T-Mobile expects to spend at Auction 108 from $3.4 billion to $0.8 billion. The $2.6 billion that the research firm expects T-Mobile not to spend on the auction will be used to purchase additional 600MHz spectrum.
In what is actually a positive sign for Dish Wireless, New Street points out that T-Mobile’s purchase of 600 MHz is “a positive sign for spectrum values and for Dish in particular. The 600 MHz value is more in five years.” This would indicate that Dish’s 600MHz stake will more than double from $6 billion to nearly $15 billion. In an environment where investors are concerned about Dish’s ability to raise capital against spectrum assets, a value marker like this is very helpful.”
The additional spectrum purchases are good news for T-Mobile, but for Dish, having one of its key assets more than double in value could help raise the money needed to keep going. building the country’s “fourth nationwide facility-based network competitor.”
Now back to T-Mobile. The airline is expected to spend $4.25 billion on spectrum by 2022.