T-Mobile has purchased 10MHz of Advanced Wireless Spectrum (AWS) from U.S. Cellular for $308 million.
T-Mobile CEO John Legere put the purchase in succinct terms. "In today's marketplace," he said in a June 28 statement, "spectrum is gold."
T-Mobile's new spectrum covers 32 million people in the Mississippi Valley region—specifically, St. Louis, Nashville, Kansas City, Memphis, Lexington, Little Rock-North Little Rock, Birmingham, New Orleans and Louisville. It will allow T-Mobile to expand its Long Term Evolution rollout in the area and deliver LTE to new markets.
"This is a rare opportunity to secure precious AWS spectrum in key markets that will immediately be put to use by both T-Mobile and MetroPCS customers," said Legere. "This deal expands our network and capacity, allowing for a broader rollout of 4G LTE and an even faster and more reliable 4G experience for our customers—in addition to spurring competition in the wireless marketplace."
T-Mobile and prepaid carrier MetroPCS completed their merger May 1.
T-Mobile's network is based on GSM technology, while MetroPCS' is based on Code Division Multiple Access (CDMA), making the pair not an instant fit. T-Mobile's plan is to transition MetroPCS' customers to T-Mobile's LTE and 4G High Speed Packet Access (HSPA) networks, and then to roll out LTE across MetroPCS' spectrum.
As MetroPCS customers make the transition, Legere has promised they'll see "dramatically improved coverage and performance."
Digging for Spectrum 'Gold'
The wireless carriers are doing all they can to acquire as much spectrum as they can, without raising any red flags from the Federal Communications Commission (FCC).
Last summer, likewise in the interests of its LTE rollout, T-Mobile purchased AWS spectrum licenses from Verizon Wireless, improving T-Mobile's spectrum position in 15 of the top 25 U.S. markets. Verizon was unloading some of the spectrum after a major, and highly contested, spectrum purchase from the nation's leading cable companies.
All the major carriers are today participating in a balancing act of acquiring as much spectrum as possible, to support growing demand for mobile data, while trying not to be accused of hording or growing overly large to a point that dampens competition.
AT&T's failed bid to purchase T-Mobile in 2011, for its spectrum and customers, is the example all others are working to avoid.
The U.S. government will hold a major spectrum auction in 2014—a major land-grab—and already all parties are angling for position by trying to determine what the rules will be.
Verizon Wireless and AT&T are in favor of having no purchase limits in place, arguing they could lower the amount of money the auction raises and effectively determine winners and losers. Sprint, T-Mobile and others fear that without limits, Verizon and AT&T would grab everything for themselves.
On June 24, T-Mobile proposed a Dynamic Market Rule by which the auction would proceed with limits. Were the bidding to fail to clear the revenue target, the limits would gradually be lifted, as necessary.
Proposing the rule during a conference call, Gregory Rosston, deputy director of the Stanford Institute for Economic Policy, described it as "almost an insurance plan for the FCC, to make sure they don't get it wrong."