T-Mobile has made an enormous investment in wireless spectrum in a very expensive bid to put its LTE network on par with Verizon's and AT&T's.
The carrier is spending almost $8 billion to acquire more than 1,500 wireless licenses that span across the United States. The licenses are for spectrum in the 600MHz range, which in terms of spectrum, is some seriously high-quality stuff. It's at a relatively low frequency, which means it's good at traveling long distances and penetrating walls — attributes that make for a strong network.
This move is all about catching up to Verizon and AT&T. Both of those carriers made big investments in spectrum in the 700MHz range — which has similar properties — years ago, and they've been able to use it to build strong, nationwide LTE networks.
Even as T-Mobile has ascended as a carrier, it's struggled to provide connectivity as reliable as what Verizon and AT&T can offer. With this purchase, T-Mobile has the room to begin changing that in a big way.
But T-Mobile can't just flip a switch tomorrow and improve its network. The spectrum it purchased is currently being used by TV broadcasters, and it could take until early 2020 for all of it to open up.
On top of that, current phones don't support 600MHz wireless. Qualcomm, the biggest provider of cellphone modems, is readying new chips to support it. But it still means that there's going to be a several-year period for these new airwaves to be phased in and for T-Mobile subscribers to gain access to it.
Making this timing all the more pressing for T-Mobile is the fact that 5G is supposed to start rolling out in 2020. That'll start a new wireless battle right as T-Mobile is catching up to the last one.
Still, today's expansion is a big deal for T-Mobile and speaks to the success the company has had over the past several years, growing from a distant fourth place into a third place carrier that can push Verizon and AT&T around, even if it's still about half the size of them.
MORE FROM THE VERGE
- NASA finds more evidence that the ocean on Enceladus could support alien life
- Elon Musk says Tesla will unveil its electric semi truck in September
- Mossberg: A plan to preserve the internet
T-Mobile says it will use the spectrum to "expand its LTE network to compete in every corner of the country." It expects to begin putting "some" of it to use as early as this year; its subsidiary MetroPCS will also be able to make use of the new spectrum.
The huge swath of spectrum comes from a nearly yearlong FCC auction that wrapped up at the end of last month, the results of which are being revealed today. The auction was a rare opportunity for companies to pick up new spectrum — T-Mobile says it won 45 percent of all spectrum sold.
The auction's second biggest winner is Dish, which spent $6.2 billion and acquired just over 480 wireless licenses. This is something Dish keeps doing for no clear reason: it's already been sitting around on a bunch of good spectrum without using it. Dish hasn't said what it's going to use this spectrum for either. But Dish has it now, and it's valuable. So maybe it'll do something this time. Dish declined to comment.
Comcast was the third biggest spender in the auction, though it came in at a distant third. It spent $1.7 billion for 73 licenses. It's not clear what Comcast plans to do with that spectrum, either. Comcast recently announced plans to launch a wireless service based around a combination of Wi-Fi and Verizon's wireless network, which it's paying for access to. Comcast gained favorable terms on that deal by selling spectrum off to Verizon in the past, so it's possible this acquisition could be about leverage. Comcast wasn't immediately available for comment.
AT&T made a small acquisition as part of the auction, paying $910 million for 23 licenses. And US Cellular picked up 188 licenses for $328 million, though they're likely to be located in rural areas, thus the lower cost.
Verizon and Sprint chose not to bid. For Sprint, that's not a great position to be in: it needs more spectrum to build out a stronger network, but it may not have wanted to put forward the money necessary to compete, especially from its already poor competitive position.
And while AT&T and Verizon may come out looking like losers, both companies likely determined the auction didn't make much of a difference to them. Both already have fast and reliable LTE networks, and their eyes are now set on 5G — another place they'll have to make big investments. This auction may have been a huge win for T-Mobile, but it's ultimately still playing catch-up.