TMO’s spat with Dish shows the US 5G race is still about sub-6 GHz spectrum

Despite all the hype about millimeter wave deployments and auctions in the USA, only Verizon has placed these high frequency bands at the center of its first-stage 5G plans. AT&T is rolling out some base stations, mainly for fixed wireless, in 39 GHz, but its big push into mobile services will be focused primarily on sub-6 GHz bands. Sprint is heavily reliant on its existing, and plentiful, 2.5 GHz airwaves for its first 5G deployments. And T-Mobile is even further down the spectrum with its plan to launch 5G on a wide coverage basis in 600 MHz.

TMO’s aggressive strategy may, however, have to change if it fails to acquire Sprint, whose midband riches will complement the wide area 600 MHz network very nicely. The review process for the proposed merger was slowed by the recent government shutdown and certainly does not look like a formality, which has led the companies to step up their lobbying of the FCC and Department of Justice.

In a new prospectus filed last week with the Securities and Exchange Commission, TMO set out its updated vision for 5G, focusing on the potential it would have if allowed to merge with Sprint. It claimed: “By 2024, the New T-Mobile network will have approximately double the total capacity and triple the total 5G capacity of T-Mobile and Sprint combined, with 5G speeds four to six times what they could achieve on their own.”

It reiterated its plan to use Sprint’s 2.5 GHz spectrum and its own nationwide block of 600 MHz for its 5G deployment and said this would “create the highest capacity network in US history”, offering “broad and deep nationwide 5G”.

It went on: “New T-Mobile will be the only company able to bring a broad and deep nationwide 5G network to market quickly in the first years of the 5G innovation cycle, harnessing enhanced capacity and spectrum efficiencies to deliver lower prices to consumers and businesses of all sizes across the US.”

The company has also hit out at Dish Network, another potential 5G deployer, accusing it of spectrum hoarding. TMO’s outspoken CEO, John Legere, tweeted: “Next on ‘Hoarders’: @dish. They’ve warehoused $11bn of spectrum for years and missed every build deadline. NOW they finally started to deploy with one tower so the spectrum doesn’t get taken away #UseItOrLoseIt!.”

This was in response to a video Dish had posted of its first NB-IoT tower in Windsor, Colorado, about 80 miles north of the satellite TV firm’s headquarters in southern Denver. Dish has been accumulating spectrum, at auction and by buying bankrupt satellite spectrum owners, for years now but failed to deploy the hoped-for LTE network. Faced with FCC ‘use it or lose it’ deadlines for some of its bands, it promised to build a national network using the NB-IoT technology, which supports low power machine-to-machine applications. It also has the benefit, if Dish’s real objective is just to keep the spectrum as a tradeable asset, of requiring relatively few base stations to achieve the broad coverage the FCC will demand.

Dish has labelled this upcoming network ‘5G’ and said it aims to add real 5G capabilities soo, spending $10bn on a 5G Standalone platform with its own core. If it does decide its airwaves are worth more in support of a network than as assets to sell on, it could build out mainly to support a data business to complement its existing services, or it could provide a wholesale platform for emerging IoT and industrial providers (something its NB-IoT choice, its talk of a full 5G core, and its joint trials with Amazon AWS, might suggest).

Dish has always said, however, that it will require a network infrastructure partner to make a national build-out cost-effective – once, that was going to be Sprint, and there have also been past rumors of merger talks with T-Mobile or a cablecos. However, those have quietened recently, especially after Dish lost out to Softbank in a bid to buy Sprint.

As well as Legere’s tweets, TMO recently submitted a filing with the FCC, arguing that the agency should strip Dish of its licences. “T-Mobile USA Inc. reiterates its request that you notify Dish that its planned build-out will not meet the company’s obligations under the Commission’s rules and that the Commission should take swift action to recover and relicense the spectrum if Dish follows its announced plans,” the filing read.

It continued: “Dish’s announced plans for a narrowband Internet of Things network do not make sufficient use of the valuable spectrum for which it is licensed and are not intended to result in the provision of meaningful commercial service. Dish is merely attempting to forestall the Commission’s recapture of its licenses. Dish’s purported future plans to upgrade its NB-IoT network to a Fifth Generation (“5G”) wireless mobile broadband network after July 2020 do not excuse its failure to satisfy upcoming performance requirements – performance requirements for these bands that it has already missed once. These misses are part of a clear pattern of Dish’s lack of commitment to use its wireless spectrum. The Commission should not permit that behavior to continue.”

In response to TMO’s attacks, Dish said in a statement: “It’s ironic that T-Mobile, which has built its brand on innovation and disruption, is doing everything in its power to suppress a new wireless entrant. Even more notable, this opposition comes at a time when T-Mobile is attempting to further thwart competition by merging with Sprint, a merger that, as Dish and dozens of others have pointed out, would harm consumers.”

It insisted its network plans are real, adding: “Dish remains committed to meeting the obligations of our FCC licenses, and we continue to make progress on our Phase 1 NB-IoT build-out. We are excited to deploy the nation’s first standalone 5G network in Phase 2, a network that will not be burdened by current legacy architecture. Not only will the Dish 5G network leverage the power of the new wireless standards, it will serve as a springboard for the coming generation of technologies that will transform our digital economy.”

Walter Piecyk, an analyst with BTIG Research, supported Dish in a client note, writing: “T-Mobile claims Dish is not using enough spectrum for the build-out plan. However, spectrum utilization/loading is not specified in any build-out requirements that we have seen. T-Mobile did not meet their own build-out requirements with 100% use of spectrum.”

He added: “It’s hard not to speculate that T-Mobile’s comments are a reaction to Dish’s opposition to T-Mobile’s proposed acquisition of Sprint. Spectrum is important to T-Mobile’s growth plans. However, it’s clear that Dish’s spectrum would take on an even greater importance to T-Mobile’s growth plans if the Sprint acquisition was blocked. Dish’s Band 66, which we value at $20bn, would be particularly attractive to T-Mobile.”

Meanwhile, as three of the four national MNOs, plus Dish, bicker over sub-6 GHz bands and technologies, Verizon is taking the technically challenging route of centering on mmWave bands, which still present major issues in terms of range, indoor penetration and available mass market chipsets. The motivation, presumably, is to get a headstart in this emerging area of 5G and drive the direction of the industry; while tapping into plentiful spectrum to deliver superfast speeds (good for marketing as well as new applications), and to limit the amount of spending the telco will need to do at future auctions.

Nicola Palmer, the operator’s chief network officer, has said the mobile 5G service will be called 5G Ultra Wideband (no relation to the UWB technology) and “Ultra Wideband to us means it’s on millimeter wave, whether it’s 28 GHz or 39 GHz, and we have a lot of that across the United States.” She told LightReading: “If you don’t have 800, 900 almost 1 GHz of capacity in those wavelengths, then you’re not really getting the speed and throughput. Now, can you do different things with that? Sure. But, initially, 5G needs to be different than 4G. And that’s why Ultra Wideband is our path of choice. And that’s why our spectrum is in the millimeter wave range. Because it will provide an absolutely different experience. Not just for the home –  where we’re getting 300Mbps and above – but also for mobility and smartphones.”

So far Verizon has only launched fixed 5G services – its 5G Home offering, kicked off in October, which is now available in four cities, running in about 400 MHz of its 28 GHz spectrum. But despite the large numbers of base stations needed to support dense, mobile 5G in mmWave bands, Verizon does not expect to boost its capex budget significantly this year. It spent $17.2bn in capex in 2017, $16.7bn in 2018, and in 2019 it expects to spend between $17bn and $18bn.

CEO Hans Vestberg threw some light on that in the most recent earnings call, saying “Remember, the majority of investments in the 5G network is coming with the fiber networking we’ve been doing, the passive asset we’re doing, the intelligent edge network design that we’ve been working on for years, and then, of course, you have the equipment coming at the end of it. So, we have actually been, for several years, investing into being prepared for 5G, and this is including the capex guidance for this year.”