While the coronavirus scare shut down Mobile World Congress this year, the U.S. wireless industry got a big boost last week with a federal court ruling allowing the T-Mobile/Sprint merger to go ahead.
When we hypothesized about the fate of Sprint in the midst of the 5G transition and network convergence trend over a year and a half ago and the four-operator market structure being imposed by the U.S. Justice Department, we wondered whether market forces would be stymied for a while. The federal court ruling reminds us that rationality still prevails. In the words of Charlie Munger, vice chairman of Berkshire Hathaway, at the Daily Journal annual meeting last week, “…trying to be rational helped.” His quote was not in reference to the merger, but I find it poignant relative to this momentous event in the U.S. wireless industry.
The New T-Mobile will have a bigger scale to better compete against AT&T and Verizon, as shown below, and the industry as a whole will be in a better position to further invest in 5G networks for the next level of telecom evolution. The New T-Mobile will no doubt expand its network capacity via the 2.5 GHz massive MIMO layer on top of the existing 600/700 MHz base layer. Meanwhile, Verizon and AT&T will continue to strategically overlay 5G millimeter wave and LAA and CBRS network layers on top of their sub-3 GHz macro layers until the C-band spectrum becomes available.
Expanding 5G network capacity affords the operators enough “room” to explore adjacent market opportunities beyond consumer mobile broadband to Fixed Wireless Access for in-home fixed broadband market. Also, combined with edge computing, private LTE and 5G networks can start to address mission-critical industrial applications like smart factories and autonomous driving. Perhaps, over time, the mobile operators can leverage their expanding wireless network capacity and coverage to bring more competition to the fixed broadband market, just as the cable operators are expanding their scope beyond fixed broadband into wireless.
The industry dynamism is not a result of the market forces alone. The FCC has been very dynamic in bringing forth low, mid, and high band spectrum to the marketplace. The FCC’s recent spectrum auctions of the millimeter wave bands along with the upcoming CBRS PAL and C-band auctions are scheduled to further “arm” the industry for continued expansion beyond traditional wireless services targeting consumers to industrial IoT and mission-critical enterprise applications. With healthy competition and new market opportunities on the horizon, the operators will be more inclined, and in a better position, to invest in network infrastructure to enable new innovative use cases.
The dynamism of the U.S. wireless industry is wonderful to see. The industry is moving forward, and the federal court ruling encourages that. Of course, the operators need to prove that they will, in fact, leverage their assets to expand into new market opportunities in fixed broadband to bring more competition for consumer benefit, and enable industrial use cases through private wireless networking and edge computing. Both will be necessary to derive a higher network utilization on billions of dollars being invested in the mobile networks. An inherent goal of industry consolidation is the promise of market competition and resultant consumer benefits. We will be watching these trends closely as the operators expand their 5G network footprints over the next few years.
By the way, at the Daily Journal annual meeting, Munger further noted, “If you are not going to be a sex object, you may have to rely on rationality. It’s the only thing you’ve got.” The U.S. wireless, and telecom industry more broadly, is seen as unsexy “bit pipe” business.
The industry may not be sexy, but plenty of “sexy” objects like Tesla cars rely on LTE connectivity for mapping, audio streaming, firmware updates, diagnostics, etc., today and will further depend on 5G for autonomous driving in the future. Also, future apps and lucrative businesses will undoubtedly be created on top of 5G networks. I guess the wireless industry is for rational nerds. Mr. Munger, your wisdom and rational thinking are always welcome here!
Kyung Mun is a senior analyst at Mobile Experts LLC, a network of market and technology experts that provides market analysis on the mobile infrastructure and mobile handset markets. Over the course of his 20+ years in the wireless and cable industries in a dynamic range of roles from engineer to product manager and technology strategist, Mun has contributed to the advancement of mobile communication while working at leading companies in the mobile value chain including Motorola, Texas Instruments, Alcatel-Lucent and a few startups in between. He holds undergraduate and graduate degrees in electrical engineering from the University of Texas at Austin and Georgia Tech, and studied finance and strategy at Southern Methodist University.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.