T-Mobile's LTE, Business Strategy Makes it a Major Player
Perhaps the best thing to come out of AT&Ts failed bid for T-Mobile was the breakup fee, spectrum and roaming deals that AT&T had to give T-Mobile as part cost of the merger breakup. On Feb. 23, CEO Philipp Humm announced that T-Mobile would launch its Long-Term Evolution (LTE) network starting in 2012, and would start selling LTE devices in 2013. Humm said that T-Mobile would be upgrading its existing network, broadening its coverage using both Evolved High-Speed Packet Access (HSPA+) and LTE, and would offer its service at prices significantly less than its competitors.
Humm also said that T-Mobile would be harmonizing its band usage by devoting some of its 1,900-MHz band, currently devoted to GSM, to HSPA+ and running LTE in its 1,700-MHz band. This change would not affect current T-Mobile customers since their devices will already work with the new HSPA+ frequencies, although it would offer less bandwidth to GSM and 2G users.
Most notably, the change would make T-Mobiles services on 3G and 4G accessible to the Apple iPhone and to international users visiting the United States. Humm said that he envisioned a greater international role for T-Mobile by leveraging its relationship with Deutsche Telekom and by joining the Free Move alliance, which allows users to travel between countries without paying the normal roaming fees. Humm said that the improved international access was part of T-Mobiles new effort at building the business-to-business (B2B) part of the company.
Currently, T-Mobile has about 5 percent of the business market share in the United States, and Humm said that T-Mobile intends to improve that number.
The move to add enterprise users will include hiring a thousand new sales staff, and offering dramatically reduced rates and a number of other services that Humm declined to specify. Currently, T-Mobile offers a business phone system that allows companies to leverage T-Mobiles WiFi calling capabilities into making mobile phones integral to a companys internal phone system.
Humm said that T-Mobile expects to spend about $4 billion on the expansion and LTE deployment. Humm also noted repeatedly that T-Mobile USA suffered badly during the period of uncertainty that accompanied the ill-fated AT&T merger. He said that the company lost customers and was unable to sign agreements with Mobile Virtual Network Operators (MVNO), while the cloud of the AT&T deal hung over us.
We have suffered under the AT&T deal, said Humm.
Of course, the key announcement was the launch of LTE.
Joining Humm on the press call, T-Mobile CTO Neville Ray said that the company was deploying a more advanced version of LTE than was in use by other carriers.
Ray said that T-Mobile would support data rates up to 72M bps on its network in areas where it has full coverage. Currently, T-Mobile supports data rates of 42 megabits per second on its HSPA+ network. In addition, Ray noted that T-Mobiles LTE deployment would be speeded up by installing integrated radio/antenna devices fed by a fiber-optic connection. He also said that the fast LTE launch is possible because T-Mobile had upgraded its backhaul for the HSPA+ deployment.
Humm noted that he doesnt expect a great deal of customer impact.
Customers are buying 4G, said Humm, explaining that most customers dont care whether their 4G phones are using HSPA+ or LTE. However Ray noted that LTE is about 50 percent more efficient than the current HSPA+, which will allow T-Mobile to improve its capacity and coverage when its deployed.
Whats interesting about T-Mobiles announcement is that the company appears to be bouncing back from the cloud of uncertainty that surrounded it while the merger situation dragged on. Now that AT&Ts cash is on hand, and now that the spectrum that AT&T needs will be available as soon as the Federal Communications Commission approves the transfer, which seems likely, the company seems to be well-situated to be a major player again.
Whats also interesting is that this is taking place approximately a year after Humm testified before Congress and said that T-Mobile cant survive without the AT&T merger. Apparently, this wasnt exactly the case, but the outcome did show that T-Mobile needed a piece of AT&T to make things work. Whats not likely, however, is that AT&T ever thought that T-Mobile would get a piece of it by extracting it as part of the breakup fee. So in a sense, Humms prediction was correct, but probably not in the way he expected.
Its also worth noting that T-Mobile has announced its opposition to the plan by Verizon Wireless to acquire the spectrum owned by several cable companies. Humm said that T-Mobile wants some of that spectrum as well, and that Verizon shouldnt be allowed to have such a concentration of spectrum as it would have if the deal were to go through. If the wording of the objection brings back echoes of the opposition to the merger with AT&T, that may not be a coincidence.
Ultimately, the good news is that T-Mobile has apparently emerged from the AT&T merger battle stronger and more competitive than it was when it started. This is very good for T-Mobile and its customers, obviously, but its also good for the rest of the industry where competition is clearly critical.