T-Mobile: We'll start to use incentive auction spectrum 'at the end of 2017'

Some industry analysts have speculated that it may take several years before carriers can begin to deploy services on the 600 MHz airwaves that the FCC will put up for auction in the coming weeks. But T-Mobile executives think they may be able to begin to leverage that spectrum as early as 2017.

The FCC last month announced an initial spectrum clearing target of 126 MHz for the incentive auction, marking the maximum amount the Commission had hoped to offer. The spectrum comes from TV broadcasters willing to give it up for a price, and some of it will eventually be bid on by wireless service providers and others during a "forward auction" later this year.

Once the forward auction is complete -- a process that likely will take a few weeks but could conceivably extend into 2017 -- the spectrum will have to be repacked, making available for mobile network operators while the TV broadcasters are moved to other channels. The FCC has laid out a 39-month timeframe for repacking, although that schedule has come under fire from the National Association of Broadcasters and others who claim it doesn't give broadcasters enough time to move to other airwaves.

Nonetheless, T-Mobile hopes to begin to put some of those airwaves it wins in the auction to use by end of next year, well ahead of the repacking plan some have already deemed far too optimistic.

"We believe we'll be able to get the start of deployment and usage at the end 2017," said Peter Ewens, T-Mobile's executive vice president of corporate strategy, during an investor conference yesterday. "Obviously the repacking debate is still in play. I think personally the dynamic will change once the auction is over, because you will have winners in the reverse auction -- that means broadcasters who want to get paid -- and then you'll have everyone else. And right now I think it's easy for all the broadcasters to stand together and talk about how difficult repacking is, but once the auction's over there's a bunch of people who want to get paid. And they don't get paid until the stuff gets repacked."

Ewens added that T-Mobile's first deployments on any new 600 MHz spectrum could happen in rural areas, where network transitions might be simpler to execute.

T-Mobile executives declined to disclose more details about the auction, citing the FCC-mandated quiet period in advance of the event. But they once again cited the company's progress in migrating customers to LTE, saying that additional spectrum will help the carrier keep pace as data consumption continues to ramp up and 5G technologies begin to come online.

"We now have 80 percent of our data on 4G LTE, and we have 52 percent of our voice calls on VoLTE, so the majority of the traffic and a majority of the true capacity is now on LTE," Braxton Carter said during the conference. "When you look at the amount of spectrum that is being dedicated to 4G LTE, it's only 52 percent of our spectrum…. We're actually very aggressively refarming first PCS spectrum, then we'll go in and start refarming increasing amounts over time, so we have amazing capacity in a very spectrum-differentiated standpoint."

And Carter didn't miss a chance to take a swipe at Sprint's move to lower its guidance for capex for the rest of the year to roughly $3 billion, far below analysts' estimates in the range of $4.5 billion.

"I'll tell you one of the most astounding things to us that we were actually applauding from a competitor's standpoint was Sprint coming out with guidance that they were taking their capital expenditures down," Carter noted. "Because ultimately we are a facilities-based carrier and if you don't have the quality product to sell, how are you going to keep your customers? How are you going to continue to grow? And the worst thing you can do from a carrier's perspective is not adequately invest in your network, let alone the whole issue that Sprint has of unlocking a treasure trove of spectrum because they don't have the density in their network…. I guess it's borne out of necessity -- if you don't have the cash you can't spend it -- but it was very, very surprising."

Sprint CEO Marcelo Claure has said the revised capex guidance is related to the carrier's strategy of densifying its network through "tens of thousands" of small cells, which often require the approval of local governments. That strategy is a departure from more traditional plans that outsource deployments to tower companies, which can be costly and come with long-term contracts.

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Special Report: 600 MHz incentive auction primer: Who will bid, when it will happen, how it will work, and how much money it will raise

Related articles:
FCC clears maximum amount of 126 MHz of spectrum for 600 MHz incentive auction
Incentive auction of 600 MHz spectrum kicks off
NAB blasts Wheeler's 'disingenuous' statements on incentive auction repacking schedule
Sprint's lowered capex guidance - from $4.5B to $3B - concerns investors, despite $11B in liquidity

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