T-Mobile USA took fresh aim at Verizon Wireless' (NYSE:VZ) planned $3.9 billion purchase of AWS spectrum from cable companies, arguing that Verizon is not using its current spectrum holdings as efficiently as it claims
T-Mobile has made no secret of its desire to stop Verizon $3.6 billion purchase of the nationwide AWS spectrum licenses held by SpectrumCo, a joint venture of cable companies Comcast, Time Warner Cable and Bright House Networks. Verizon has also said it will buy Cox Communication's 20 MHz of AWS spectrum covering 28 million POPs for $315 million.
In a blog post, Steve Sharkey, T-Mobile's vice president of government affairs, blasted the deals and said that if they are approved the transactions would "unduly tip the scales in favor of the largest wireless carrier at a critical juncture in the mobile broadband industry."
Sharkey took aim at Verizon's claim that it is two times more efficient in using its spectrum than T-Mobile. He wrote that Verizon's analysis divides the carriers' nationwide total subscribers by a nationwide average amount of spectrum. "But mixing an absolute number of subscribers against a broad average of spectrum produces a pointless number," he noted. "Because spectrum holdings and market share vary dramatically on a market-by-market basis, any meaningful analysis must be done at that level."
In the blog post, Sharkey also wrote that in making its comparison, Verizon included spectrum T-Mobile does not yet have, including AWS spectrum AT&T (NYSE:T) will give to T-Mobile as a result of its failed acquisition of T-Mobile, making T-Mobile's average appear lower. At the same time, Sharkey asserted that Verizon fails to include the spectrum it is seeking to acquire against its own average.
Additionally, Sharkey wrote that "as Verizon acknowledges, not all wireless users place equal demands on the network and smartphones use approximately 35 times the data of feature phones. Verizon, nevertheless, declines to factor into its analysis that T-Mobile has a higher percentage of bandwidth-hungry smartphone customers than Verizon." And finally, Sharkey wrote that "Verizon fails to account for the fact that a majority of its own spectrum is in frequency bands below 1 GHz, which is considerably more efficient at providing coverage and capacity than spectrum above 1 GHz. All of T-Mobile's spectrum is in the higher bands above 1 GHz."
"An analysis that takes these factors into account reveals that T-Mobile is actually more efficient than Verizon is in all five of the top markets, eight of the top-10 markets, and 31 of the top-49 markets, and that, on average, T-Mobile is 50 percent more efficient than Verizon in the top markets," Sharkey wrote. "This is a very different picture than the one Verizon paints for the FCC and the public."
T-Mobile plans to deploy LTE next year in its own AWS spectrum and repurpose its PCS spectrum for its HSPA+ network, but has said it will need more spectrum as well. "As competitors like Verizon roll out LTE, it is important that T-Mobile be right there as well--bringing competition and choice to consumers," Sharkey wrote. "It is therefore no coincidence that Verizon moved aggressively to purchase the last remaining block of spectrum that carriers like T-Mobile and others could utilize to launch competitive services in competition with Verizon."
Verizon took issue with T-Mobile's stance. "In its filings at the FCC, Verizon has made a strong case that it is in the public interest to get SpectrumCo's previously unused spectrum into the hands of consumers," Verizon spokesman Edward McFadden told FierceWireless. "We have also addressed and refuted the claims made by T-Mobile."
In its FCC filings, Verizon has said that its current spectrum holdings "will not provide sufficient capacity to meet the growing demand for mobile broadband--4G, in particular--by 2013 in some areas and by 2015 in many more." Verizon noted that its LTE network, which covers 200 million POPs, provides 60 percent more spectral efficiency than its EV-DO network.
Verizon has predicted that LTE data traffic on its network will grow 20-fold between year-end 2011 and year-end 2015. To cover that gap, Verizon will continue to add additional cell sites, deploy the LTE Advanced standard, modify existing cell sites with new antennas and other equipment as well as deploy its AWS spectrum holdings. Verizon currently owns 20 MHz of AWS spectrum, mainly covering the Eastern United States. "However ... technology advancements we will deploy in the network, along with use of the AWS spectrum we currently hold, are insufficient to meet future demand, and additional spectrum is required," the carrier has stated.
RCA: Verizon warehousing 44 MHz in some markets, doesn't need more
Verizon's Mead presses Genachowski on getting cable companies' spectrum
FCC presses Verizon, cable companies for more data on deals
Verizon: We'll hit LTE capacity limit in some markets by 2013 without new spectrum
T-Mobile, MetroPCS ask FCC to block Verizon's cable deals