U.S. Cellular CEO: We don't need to participate in 600 MHz auction
A top U.S. Cellular (NYSE:USM) executive said that the company currently has enough spectrum and resources to meet its customers' demands for mobile connections. However, he said the company might purchase some spectrum in the FCC's upcoming incentive auction of TV broadcasters' 600 MHz spectrum.
"We want to make sure that we have low-band and mid-band spectrum in every one of our markets," said Ken Meyers, U.S. Cellular's CEO, during an investor event. He said the regional carrier has mid-band spectrum and low-band spectrum is almost all of its markets, but he said the carrier doesn't have low-band spectrum in a few of its markets and so it might purchase 600 MHz licenses in those markets.
He added that U.S. Cellular can densify its network with its existing spectrum holdings if it needs to add network capacity.
Verizon (NYSE: VZ), AT&T (NYSE: T) and T-Mobile US (NYSE:TMUS) are expected to participate in the FCC's incentive auction. Wells Fargo recently projected that AT&T will outspend its rivals on licenses during the auction, dropping up to $10 billion on a 2x10 MHz block of spectrum with nationwide capability. The firm said the 600 MHz incentive auction will generate up to around $35 billion in total bids.
Sprint (NYSE: S) said it will not participate in the auction. The auction is scheduled to get underway in March.
U.S. Cellular executives also said that U.S. Cellular currently has some unused spectrum around Chicago that it might want to get rid of. "We would prefer trading [that spectrum] for spectrum we need," said U.S. Cellular's Ted Carlson, explaining that a spectrum trade is more effective due to the taxes involved in selling spectrum.
Aside from the carrier's spectrum situation, Meyers also said U.S. Cellular recently finished a test of Voice over LTE technology in three markets, and that the carrier hopes to launch VoLTE technology commercially in one major market sometime this year. He said that move would help U.S. Cellular provide roaming services to its rivals, thereby scoring more roaming revenues.
Finally, Meyers also discussed his company's competition with T-Mobile US, which continues to find success in the U.S. wireless market -- T-Mobile said it expects to add another 2 million net customer additions in the fourth quarter. Meyers explained that U.S. Cellular's primary competitors are AT&T and Verizon, but that T-Mobile continues to aggressively market its services in U.S. Cellular's service areas. However, he said that "on average" T-Mobile's progress hasn't affected U.S. Cellular. "They still are small, single digit penetration in our markets on average," he said of T-Mobile.
U.S. Cellular added 17,000 postpaid customers in the third quarter, flat from the second quarter and lower than 52,000 in the year-ago period. At the time of the carrier's earnings announcement, Meyers said that the company's gross postpaid additions of 200,000, which were down from 251,000 a year ago, were lower than the company wanted and were partly a result of lower traffic to the company's retail stores, similar to other electronics stores.
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Article updated Jan. 8 to correct speaker identities and the U.S. network status.