Asked about the C-band opportunity, where the FCC later this year will kick off an auction of 280 megahertz of mid-band spectrum, T-Mobile President and CEO Mike Sievert answered about how one might expect: with tempered enthusiasm.
The quiet period for the C-band auction, which begins December 8, hasn’t yet started, so the topic was fair game during a virtual Goldman Sachs investor event on Wednesday.
“We’re interested, but what you can expect from us is what you’ve always seen from us: discipline. We’re going to be focused on whether … there’s a value,” Sievert said. “It’s good spectrum. We’ve been testing it. We’re interested in it. But we’re coming from a position of strength and a tradition of being disciplined.”
The AWS-3 spectrum auction, which ended in 2015 with a record $44.9 billion in bids, racked up “tens of billions of dollars,” he said. “What did we do? We played with discipline. We waited. We bided our time for the 600 MHz, which was a much better deal and much more important to us strategically,” he added. “We like this. This is a great moment and we’ll see what happens.”
T-Mobile President of Technology Neville Ray also alluded to T-Mobile’s track record and history of investing in spectrum when asked about the C-band opportunity.
“We have just an amazing set of assets now,” with the combination of Sprint and its 2.5 GHz spectrum. “We’ve never had this capability to go to market, deploy ahead of our competition, et cetera. We’ll see where we get to. There’s a lot of decisions to be made,” Ray said, noting the C-band auction quiet period is right around the corner. “More to come.”
T-Mobile launched its nationwide 5G network last year using 600 MHz low-band spectrum, but Ray often talks of his spectrum “layer cake” strategy, which includes low, mid- and high-band spectrum. T-Mobile is aggressively building out the 2.5 GHz mid-band spectrum acquired from Sprint, and it has millimeter wave (mmWave) holdings as well to serve as the top layer.
It’s a different story for T-Mobile’s competition. T-Mobile holds the largest amount of sub-6 GHz spectrum of the Big 3, and Verizon and AT&T especially are expected to bid aggressively in the C-band auction.
Here’s how Sievert characterized it: “AT&T and Verizon are absolutely going to kill each other over C-band. I think they’re going to spend tens of billions of dollars they don’t have, stress out their balance sheets, put at risk their share buyback and dividend plans in order to not be left outside the party on 5G because they’re stuck and they got themselves stuck and they’re way behind us and they can’t stand it,” he said. “They’re going to have to do things that are probably going to be uneconomic.”
As part of its policy, the FCC instigated quiet periods before and during spectrum auctions in part as a way to prevent collusion among participants. Bidders are not supposed to speak to one another about auction strategies, nor are they to speak about it publicly, for that matter. And anyone talking about auctions before the quiet period begins likely isn’t going to talk like they’re gung-ho on it because that would serve, it would seem, to potentially drive prices up. Saying they’re going to follow a “disciplined” strategy is about the safest way to go.
Verizon claimed 4G; T-Mobile wants to own 5G era
Sievert wasn’t shy about talking smack about his rivals, especially Verizon, but he did give it props for its 4G network prowess.
“Now at the beginning of the 5G era, we have the opportunity to lead on the network front, the way Verizon did in the 4G era. They got out in front of everybody in 2010 and they put down a marker and became famous for being a company that had the best network in the 4G LTE era. We’ve been chipping away at that,” he said. “We will lead the 5G era. We’re positioned to lead. They’re going to spend the next year or two retooling their strategies to try and emulate what we’re doing.
“Verizon got out so early saying, ‘5G’s about millimeter wave,’” and they’re in the process now of kind of retooling, he added. “A prediction for you is very simple. AT&T and Verizon are going to spend the next year spending tens of billions of their shareholders’ dollars, stressing out their balance sheets to get an asset base that still isn’t as good as T-Mobile’s,” and then finally, they’ll be on a strategy that’s two or three years, or more, behind T-Mobile. “That’s a great place for us to be.”
But he’s aware perceptions need to catch up. “Brands are stubborn. That’s a great thing about brands. They’re more stubborn than the facts. It takes a while. We’re going to have to be patient. We’ve been focused very much on telling the truth to consumers and businesses about what we have,” he said.
“I’ll give Verizon credit. At the dawn of the 4G era in 2010, they jumped out in front of everybody and that established a brand pattern that they were able to feed on for a decade, through the entire 4G era. They had the world convinced they had the best network, and for much of that era, it was absolutely true,” Sievert said.
That’s T-Mobile’s opportunity in the 5G era. T-Mobile has created a reputation for the lowest prices and putting customers first. That’s important, but now it has to convince consumers that it has the best network in 5G. “The facts are there, it’s our job to convince them,” he said.
Asked about the multi-year, $17 billion deal with American Tower that was announced on Tuesday, Ray said it provides long-term certainty and he’s pleased to have the deal locked down and done. “I can now accelerate that mid-band and low-band build with American Tower in a way that pre-deal, I couldn’t, so that puts more wind in my sails as we look to aggressively build this network out.”