Wireless operator executives descended on Capitol Hill yesterday to defend or argue against AT&T's (NYSE:T) proposed $39-billion acquisition of T-Mobile USA.
During his testimony before the Senate Judiciary Committee's subcommittee on antitrust, competition policy and consumer rights, AT&T CEO Randall Stephenson reiterated one of the company's key justifications for the acquisition: That it would allow AT&T to deliver LTE service to 97 percent of Americans, covering an additional 55 million more Americans than AT&T's current LTE plans. That message, of course, was echoed by T-Mobile USA CEO Phillipp Humm.
"T-Mobile does not have sufficient spectrum to roll out a competitive LTE network while also continuing to support its existing GSM and HSPA+ networks," Humm said in his testimony. "By combining the spectrum of both companies, the entity will be able to support LTE and the two legacy technologies, GSM and HSPA+. It will allow LTE to reach more than 97 percent of the U.S. population, as stated by AT&T, which is something T-Mobile would not have been able to do on its own."
Stephenson said the LTE benefits fit with President Obama's goal of extended high-speed mobile broadband to 98 percent of all Americans within five years. "This is a private market solution to address a public policy objective," he said, adding that AT&T will not need to use Universal Service Fund money to reach its LTE buildout targets.
While Stephenson plays the rural broadband card, I'd like to know some specifics. Just what sort of time table is the company committed to when it comes to deploying expensive LTE services in markets that have lower population densities? The whole reason operators have not deployed services to rural areas in the past is because doing so hinders an operator's ability to make money. Operators, after all, have shareholders to answer to.
LightSquared found favor with the FCC early on with its plan to use satellite and terrestrial spectrum to build a wholesale LTE network by promising to offer LTE coverage to 92 percent of the population by 2015 and meeting certain aggressive buildout thresholds.
If regulators are going to approve this deal, they need to hold AT&T's feet to the fire when it comes to rolling out LTE to the majority of the country by stipulating rollout, coverage and data speed requirements that are more aggressive than its 700 MHz license and AWS license stipulations. AT&T's 700 MHz licenses sit in the lower C and B Blocks (which lie in band class 17).
In general, 700 MHz licenses need to cover between 35 percent and 40 percent of their license territory (depending on the license held) within four years of receiving the license and 70 percent to 75 percent of the territory within 10 years. That really doesn't guarantee a viable broadband offering for many years to 97 percent of the population. In the AWS band, where both operator hold spectrum, AWS licensees must make a showing of "substantial service" in their license area by 2025. --Lynnette