T-Mobile’s 5G strategy
T-Mobile (TMUS) is considering the future opportunities and limitations of 5G (fifth-generation) technology, which densifies the network with small cells. The company believes that lower latency, rather than just capacity, is 5G’s big differentiator.
T-Mobile is confident about its ability to maintain capacity growth, and it’s supporting the capacity needs of its network by converting spectrum from 3G (third-generation) to LTE (long-term evolution) and adding 700 MHz (megahertz) to its footprint. T-Mobile is working on its 5G initiative with Nokia (NOK), Ericsson (ERIC), and Samsung (SSNLF).
According to a FierceWireless report on September 20, 2016, T-Mobile’s chief technology officer, Neville Ray, said, “We’ve already demonstrated speeds up 12 Gbps with latency under 2 milliseconds, 8×8 MIMO [multiple-input and multiple-output] and four simultaneous 4k video streams.” T-Mobile’s 5G speed was more than three times faster than Verizon’s (VZ) in its trial back in February 2016, according to a report from CNET.
AT&T could be another aggressive player in the 5G market
AT&T (T) has also been an aggressive player in the 5G market. Even in the past, it’s tried to outbid its rivals in order to gain spectrum advantage. AT&T was the highest bidder during the AWS-3 spectrum auctions in early 2015, purchasing spectrum worth $18.2 billion.
The AWS-3 spectrum auction is the major auction conducted by the FCC (Federal Communications Commission) as of 2008. As seen in the graph above, Verizon and T-Mobile also participated in the auction and made winning bids of $10.4 billion and $1.8 billion, respectively.
AT&T’s proposed acquisition of Time Warner (TWX) will help it to lower its capex investments, with minimal capex requirements at Time Warner balancing its higher capex needs. As a result, AT&T will have more resources and opportunities to invest in 5G technology.