T-Mobile has come out as the big winner in the recently concluded auction held by the Federal Communications Commission for wireless spectrum, as the Un-Carrier bid nearly $8 billion to acquire over 1,500 wireless licenses across the United States.
The enormous investment places T-Mobile in the position to further challenge, and possibly outmuscle, telecommunications industry rivals AT&T and Verizon.
FCC Airwaves Auction Results
The FCC revealed that next to the $8 billion bid made by T-Mobile, the second largest amount came from Dish Network, which spent $6.2 billion.
The auction was able to accumulate $19.8 billion in winning bids, mostly made up of the collective $14.2 billion bid made by T-Mobile and Dish Network. Other companies who successfully participated in the auction are Comcast, which bid $1.7 billion; Columbia Capital, which bid $1 billion; and AT&T, which bid $910 million.
The purchase made by AT&T was significantly smaller than the one made by T-Mobile. Surprisingly, Verizon and Sprint did not made any bids at all.
According to MoffettNathanson analyst Craig Moffett, there were three surprises in the auction results.
"Comcast bought less than expected, Dish Network bought more, and Verizon bought nothing at all," he stated.
Why Is Spectrum Important To Carriers?
Wireless radios in mobile phones utilize different frequencies to communicate with the cell towers of carriers. The carriers own the rights to various frequencies in different regions, preventing their networks from interfering with one another. These rights to use a specific frequency in a specific area are purchased from the FCC as a license.
For carriers, low frequency signals are better as they travel better over distance and are more capable of penetrating structures. Older companies AT&T and Verizon own much more low-band spectrum at 700 MHz compared to the newer T-Mobile and Sprint, an advantage that have allowed them to offer better coverage.
T-Mobile To Soon Claim The Carrier Throne?
The wireless licenses that were acquired by T-Mobile are for high-quality, low frequency spectrum at 600 MHz, which would lead to a stronger network for the Un-Carrier.
T-Mobile has long been viewed by consumers as a carrier with great prices and promos, but with coverage not up to par with AT&T and Verizon. With its newly acquired spectrum, however, T-Mobile now has the opportunity to close the gap in terms of coverage with AT&T and Verizon, and then bank on superior offers to grab a larger share of the subscriber market.
The improvements in its cellular network will not happen overnight for T-Mobile though, as the purchased spectrum is currently being used by TV stations. The FCC repackaged spectrum not being efficiently used by these companies and sold them through the auction, but it might take until 2020 until the frequencies actually open up.
In addition, current smartphone models do not support 600 MHz, though Qualcomm, the world's biggest supplier of modems for smartphones, is preparing new chips to support the frequency.
It might take at least a few years before T-Mobile is able to effectively tap into its $8 billion investment, but it would seem that the Un-Carrier now has a path to the top in the cutthroat wireless carrier industry.
