T-Mobile announces LTE plans, but will it be enough?

Tools

Flush with new AWS spectrum and $3 billion in cash it received from AT&T, T-Mobile is finally ready to hop on the LTE bandwagon in the United States with service expected to launch in 2013.

AT&T paid T-Mobile's parent Deutsche Telekom with $3 billion worth of 1700 MHz AWS spectrum and $3 billion in cash after their $39 billion merger was scuttled in December 2011. The FCC has not yet approved the transfer of the AWS licenses from AT&T to T-Mobile.

T-Mobile, long the most spectrum-constrained of the top four U.S. mobile operators, will find itself in a much better competitive position once it receives the new frequencies, which it will use along with re-farmed spectrum for the new network. The operator will invest $1.4 billion in building out its LTE network this year and in 2013, with total investments for network modernization and LTE deployment expected to reach $4 billion. T-Mobile expects to roll out LTE to most of the top 50 U.S. markets with 20 MHz service targeted for 75 percent of the top 25 markets.

Jan Dawson, chief telecoms analyst at Ovum, contends T-Mobile has a rocky road ahead to roll out LTE. "Even with the new LTE strategy, there are significant challenges ahead," Dawson said. "T-Mobile will be late to the LTE party, and its coverage will lag its major competitors for some time. Marketing the service will be tough when it has spent the last several years convincing its customers it is already offering 4G. And in addition, spectrum re-farming is needed before it can carry out its strategy, something which competitor Sprint knows is painful and costly. It will also create further confusion among customers as yet another carrier switches from one form of 4G to another."

Dawson added that T-Mobile's issues run deeper than a mere lack of next-generation technology.

"T-Mobile's problems stem from far more than just the lack of LTE. The absence of the iPhone, relatively poor network coverage and the influx of smaller carriers taking over T-Mobile's core customer base of young people looking for cheap service have all hurt it, as the over 800,000 customers it lost in Q4 attest," Dawson said. "Adding LTE is a useful step, but it may be too little, too late to turn T-Mobile around."

T-Mobile did not specify the markets in which it would first launch LTE, nor did it announce its LTE infrastructure suppliers. Traditionally, T-Mobile has deployed network gear from Ericsson and Nokia Siemens Networks. Ericsson, the world's largest mobile infrastructure provider, has dominated LTE deployments worldwide. A T-Mobile LTE contract would considerably bolster NSN's standing in the United States, where NSN has no significant LTE wins. Huawei, the world's second-biggest maker of telecom-network equipment, has been thwarted in efforts to sell network infrastructure to Tier 1 U.S. mobile operators and would likely vie for an opportunity to supply gear for T-Mobile's LTE service.

T-Mobile has been upgrading its backhaul to accommodate its HSPA+ network, and those enhancements will come in handy for its planned LTE deployments. Previous backhaul deals have been announced with Bright House Networks, FPL fiberNet, IP Networks and Zavo Group.

T-Mobile is getting AWS spectrum from AT&T in 128 markets, including 12 of the the top 20 U.S. markets, and those frequencies will up its average spectrum holdings in the top 100 markets by about 6 MHz to some 60MHz. In some markets T-Mobile will reportedly have up to 80 MHz of spectrum.

AT&T is using its 700 MHz and remaining AWS spectrum for its own LTE launch. In certain cities, AT&T relinquished to T-Mobile all of its AWS spectrum holdings, though it retained 700 MHz spectrum in those markets.

T-Mobile, in addition to using its new AWS spectrum for LTE, will also need to re-farm PCS 1900 MHz and AWS frequencies currently being employed by its existing GSM and HSPA+ networks. T-Mobile's HSPA+ network uses its existing AWS spectrum, which over time will be combined with the new AWS spectrum from AT&T for use by LTE.

T-Mobile said that as part of its network investment, it will also install new equipment in 37,000 cell sites and deploy HSPA+ in its 1900 MHz spectrum. HSPA+ at 1900 MHz will be more spectrally efficient than GSM and will harmonize T-Mobile's HSPA+ services with those of U.S. and international carriers.

T-Mobile's refarming effort for LTE will likely be fraught with complications, as the operator will have to eliminate capacity for its existing GSM and HSPA+ customers as it makes way for LTE. One method in which the operator may increase capacity overall is by deploying Voice over HSPA (VoHSPA), which would enable it to deliver voice services over its spectrally efficient packet-switched HSPA+ network rather than GSM. Though the operator has not publicly committed to this VoIP technology, Bob Calaff, T-Mobile's director of technology and spectrum strategy, recently headed up creation of a 4G Americas white paper on VoHSPA.

For more:
- see this GigaOm post
- see this LTE World post
- see this release
- see this Reuters article
- see this Bloomberg article

Related articles:
T-Mobile punished by lack of iPhone 4S, as customer losses mount in Q4
VoHSPA aims to steal some of VoLTE's thunder
T-Mobile likely to deploy HSPA+ 84 but not ruling out LTE