ORLANDO, Fla. — In his numerous panel appearances Tuesday here at the CTIA Wireless show, AT&T Chief Technology Officer John Donovan had a simple, one-word answer for the reason behind the proposed purchase of wireless competitor T-Mobile: “Spectrum.”
Specifically, Donovan said in a brief interview with Sidecut Reports following one of his panel appearances, T-Mobile’s big swath of AWS (Advanced Wireless Services) spectrum and the role it might play in AT&T’s 4G network of the future is a big reason why it makes sense for AT&T to offer the big bucks — $39 billion of them — to buy T-Mobile outright.
“It’s all about the future,” said Donovan in the interview, explaining both his and AT&T Mobility CEO Ralph de la Vega’s insistence that Ma Bell is facing a potential “exhaustion” of its existing licensed spectrum assets. While some industry observers have accused AT&T of hoarding a big patch of unused spectrum while crying wolf, Donovan said AT&T already has plans for all the spectrum under its current ownership, including plans to use both its own AWS spectrum and its 700 MHz spectrum for its forthcoming LTE network rollout.
For 4G networks like the LTE ones planned by Verizon and AT&T, along with the WiMAX network currently operated by Clearwire and Sprint, the providers need to use larger “channels” of wireless bandwidth than previous technologies to support the faster data rates. Without getting too deep into the spectrum weeds it’s worthwhile to note that to get its advertised download speeds of 5 Mbps to 12 Mbps, Verizon needs to implement two 10 MHz “channels” of LTE, one for upstream traffic and one for downstream, thereby using up 20 MHz total. Clearwire also uses 10 MHz channels for its WiMAX network, typically three or six channels in each market, and Donovan said AT&T wants to deploy 10 MHz channels for its LTE rollout.
While Donovan noted that the LTE standard allows for use of 5 MHz channels (MetroPCS, for instance, uses this implementation in its LTE network), the performance under those conditions isn’t exactly a 4G experience.
“You can deploy [LTE] using 5×5, but that doesn’t last you very long given the way data is being used today,” Donovan said. “If you look out 5 to 10 years and see where the data growth is going, you have to do something to protect against spectrum woes in the future. That’s why we need more spectrum.”
Though pinning down exactly how much spectrum any company owns is an inexact science — since some chunks are split up by geographic licenses and others have come through smaller commercial deals in mergers or sales — it is generally believed that T-Mobile owns rights to about 27 MHz of total spectrum assets in the AWS band, which has frequencies at 1700 MHz and 2100 MHz. While T-Mobile also owns other cellular spectrum licenses it’s the AWS spectrum that has AT&T excited, since Donovan said it could be used directly for LTE deployments since AT&T is already building out its network with LTE gear for those frequencies.
And while everyone from FCC Chairman Julius Genachowski to Sprint CEO Dan Hesse are calling for the government to help free up more spectrum, those battles may take years to win and are uncertain at best — as compared to buying a known quantity of ready-to-use spectrum like that AT&T would get if its proposed deal goes through.
“One of the big drivers [in the T-Mobile deal] is the need for more spectrum,” said AT&T’s De la Vega during a morning CEO panel session, where he tried to convince a largely skeptical audience that the deal would be good for potential users and the industry and not just for AT&T.
“It’s in the public interest to solve the spectrum exhaust problem, and [the T-Mobile spectrum] would help alleviate the exhaust,” De la Vega said. “It would also let us roll out LTE to 95 percent of America,” which is a much broader footprint than AT&T originally scheduled for its 4G plan.
For what it’s worth, Verizon on paper doesn’t appear to have much more spectrum than AT&T — but the company reiterated on Tuesday as several executives repeated the same line the company has used all along: Verizon is happy with its spectrum position, and is confident its network will be able to handle current and future loads without any significant spectrum additions. Of course, we have seen that such a tune can change quickly if a carrier needs a reason to justify a huge, competition-killing acquisition. So stay tuned, because this is far from the last word on spectrum battles and wireless networks.