During separate appearances at the Citi 2020 Global TMT West Conference in Las Vegas this week, executives from Verizon and T-Mobile made the case for their respective 5G network strategies, one being laser-focused on millimeter wave and the other touting its nationwide capabilities.
Of course, T-Mobile CEO John Legere, who famously refers to his rivals as “dumb and dumber,” wasn’t in the room. He’s set to leave the post in the spring, with T-Mobile President and COO Mike Sievert in line to take over in May. But that doesn’t mean the “un-carrier” is any less intent on stealing the network crown, mainly from Verizon. Sievert, EVP and CFO Braxton Carter and President of Technology Neville Ray were there to sing the praises of their company's strategy.
Ray said T-Mobile is excited about being the first to launch nationwide 5G. It originally intended to launch in mid-2020, but managed to get it done ahead of schedule. And it wasn’t just about building the network, but making sure the phones were available as well; it launched with two 5G phones capable of using its 600 MHz network, and expects a lot more affordable handsets this year to support its spectrum versus millimeter wave.
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Of course, T-Mobile currently is using that low-band spectrum, and “for me, it’s just the beginning,” Ray said, noting how T-Mobile wants to close the transaction with Sprint, and build a world-class 5G network with Sprint’s 2.5 GHz mid-band spectrum.
“I want to be sitting here this time next year with you talking about this tremendous network which is literally kicking the ass out of AT&T and Verizon, because their plans cannot match what we can do with the combination with Sprint. We’re ready to go,” he added.
T-Mobile can deliver much faster capability on the phones and much broader reach than “some very fragmented 5G strategies from our competition,” Ray said. “I don’t know how you ever compete with a nationwide map with millimeter wave, for example, which is the Verizon story right now... AT&T chasing our tail as fast as they can to get something up on low band so they have a story to tell.”
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The T-Mobile executives were exuberant after earlier on Tuesday announcing preliminary fourth-quarter results that included 1.9 million total net additions, the 27th quarter in a row where it recorded more than 1 million total net additions. T-Mobile ended the year with a total customer base of 86 million connections.
Sievert also boasted how T-Mobile has the most rapidly decreasing churn in the market, summing it up: “We don’t fear competition. Bring it on. We are the competition.”
Cable disruption
Cable introduces a different dynamic, and that seems to come disproportionately from Verizon, he said. (It’s worth noting that Verizon today announced it will disrupt cable with its new "Mix and Match" Fios internet plans, which is the type of move that T-Mobile has touted in the past.)
Sievert on Tuesday said from T-Mobile’s vantage point, both in the third and fourth quarters, “Verizon was really swinging the bat in this market like we haven’t seen in some years, and that’s a different dynamic. They are the big gorilla and they’re swinging the bat much harder. We’ll see what that looks like financially for them. I don’t know … it looks really expensive, the kinds of things that they’re doing. But one thing I can say, it’s not coming from us. In that same quarter, where they’re swinging the bat like we haven’t seen in years, we delivered the performance that we announced… We’re confident that our model works,” and resonates with consumers, he said.
In fact, he said, T-Mobile delivered its performance when a big part of the advertising did not involve in-quarter promotions but more longer-term messaging, indicating the days of having a disadvantage in the network are over. “Sentiment is turning. America is waking up that there’s a new network leader and that we’re not even done yet,” he said.
The wireless market has always forced consumers to pick: do you want a great deal from a company that puts customers first and treats you right or do you want the best network? “Those days are over. You don’t have to choose. You can have both,” he added.
Verizon’s LTE coverage
Earlier in the day, Ronan Dunne, EVP and CEO of Verizon Consumer, suggested Verizon, which ended the third quarter with about 118.65 million wireless connections, in some ways is a victim of its own success.
“I have a 4G LTE network that serves the entire country and provides speeds that in most cases are higher than the available DSL offering for customers. So I’m not scrambling using 5G technology to make up for the fact that I don’t either have coverage or capacity in my 4G LTE network,” he said, not naming names.
“What we’ve done is we’ve focused on the ability of 5G, the real 5G, to be a fundamental game changer,” which means speed and capacity and having the level of bandwidth that it takes to make a huge difference. “To do that, you’re in the millimeter wave environment,” he said.
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Verizon’s focus on millimeter wave, of which it has bounties, has been pioneering; it launched the first millimeter wave network more than two years ago. That was an investment not only to prove out the technology, but to make sure it was at the front of the pack, he said. That’s not to say its other spectrum can’t be used for 5G.
“It’s not like we can’t do what others have been doing in recent weeks,” he said. “But on the basis of what we’ve seen so far, that doesn’t provide any differentiation” in either speed or coverage relative to Verizon, he added. “We’re making sure that we are building our millimeter wave capability and momentum so that will facilitate in the areas where we have the most of our traffic,” the majority of which is in major urban areas.
At the same time, the arrival of Dynamic Spectrum Sharing in 2020 will allow Verizon to enable its other spectrum assets for the delivery of 5G in the same way that others already have done, he said. “What that builds for us is an opportunity to enhance the network reputation that we have already but then also broaden out the offering,” and that’s where the 5G Home offering comes up. The 5G Home service is another way of competing with cable in the home.
While T-Mobile waits to hear if a District Court judge in Manhattan will approve its acquisition of Sprint, its biggest rivals will report their fourth-quarter results later this month. AT&T is set to release its fourth-quarter and 2019 results on January 29, and Verizon is scheduled to announce its fourth-quarter results on January 30.