Sprint's 5G Launch Potentially Gives It the 'Yellow Jersey"

At Mobile World Congress, Sprint announced its intention to launch 5G in May  with initial markets in Chicago, Atlanta, Dallas and Kansas City, along with Houston, LA, NYC. Phoenix and Washington, DC.

In support of the 5G foray, the company has lined up vendors to create and make available complementary halo devices LG (V50 ThingQ 5G), Samsung (Galaxy S10 5G) and HTC (5G Hub).   

The big picture: Sprint is finally realizing the advantage of its 2.5 GHz spectrum. While most of rivals were deploying LTE with FDD spectrum, Sprint's 100+ MHz TDD is a blessing as it can use that same wide bandwidth dynamically (split mode) to serve LTE and 5G. Therefore, it can add more downlink where market conditions require in contrast to a defined chunk of bandwidth as in competitors' FDD modes.

• On the technology side, Sprint has been very vocal about investing in Massive MIMO radios and antennas, either when upgrading existing sites or building new ones. This technology is foundational as a 5G enabler and is ramping up in the first 5 months of 2019.  
• Sprint's LTE Advance should be well over 220M POPs covered. But in late 2018, the company claims 225 gigabit LTE cities. This is important as it can provide a similar customer speed experience along side 5G. 

Why it matters:  To take a page out of the Tour de France where the leader wears the 'yellow jersey' as the winner in the stage, the 5G race seems to line up with Sprint.  While larger competitors AT&T and Verizon are deploying fatter mmW spectrum for fixed and quasi mobile service, it's unclear how they will get a national 5G footprint (It can bring in its discontinued 3G spectrum).  T-Mobile is banking on its FDD 600 MHz to provide the national coverage layer that could win the 5G geographic race down the line but it currently is still deploying and waiting for television station clearing. Moreover, it's unclear how much of its limited spectrum that it shares with LTE can provide a meaningful 5G experience. 

To be sure, Sprint's 2.5 5G coverage cannot provide a fully filled-inn national map. Physics makes it just too expensive to do so. However, using the 2.5 GHz in already built out markets and Massive MIMO upgrades along with the trend of vendor modularity (software and 5G 'cards'), Sprint can provide more 5G POP coverage than competitors in 2019.  

Tour de France observers will note that the race is multi-stage and with each stage there could be different leaders wearing the yellow jersey.  For now, in the first stage of the domestic 5G, it's looking like Sprint.

Extra content: John Saw, Sprint CTO at Mobile World Congress 2019 talking about its 5G network plans.

Why T-Mobile Needs Sprint to Increase Business Revenue

On Sunday, April 29, 2018, T-Mobile and Sprint announced their intent to merge creating a $146B transaction to hopefully close in 1H19.  During the call, CEOs John Legere and Marcelo Claure talked up the consumer benefits of a combined company and that with this new company, the US would take back 5G leadership from the Asians.

There are so many areas to address in this proposed merger from regulatory hurdles, consumer benefits, job growth (or layoffs), the ‘mother of all networks,’ the winning brand, which executives came out ahead, etc.  I’ll start with the business service side because I’ve been asking this question to T-Mobile since the Un-carrier 9.0 announcement in March 2015 (Un-carrier for Business). The offering helped stimulate additional subscriber growth and impinged upon competitors’ specific business segments. Beyond the discounted plan structure, the ability to use free Wi-Fi during air travel, and free 2G global roaming, sophisticated higher revenue business services have not been in the T-Mobile portfolio.  

Sure, T-Mobile’s SyncUp fleet management solution or DIGITS offer another layer but those products also compete with similar or more sophisticated services from Sprint, AT&T and Verizon. It’s probably safe to say that much of T-Mobile’s business growth are lines in the small-medium business segment.  

For those who are wondering what sophisticated business services may be, here’s a Sprint example below: 

With a strong consumer message, I continue to wonder what of the business prospects with the combined company.   To be sure, much of the T-Mobile’s and Sprint’s business revenue challenges are unique. T-Mobile either doesn't see the return on investment in creating a sophisticated business portfolio, as that wouldn't be relevant to its subscriber base or they were waiting on Sprint all along.  Sprint has the business services (wireless and wireline) but lack the network credibility of their competitors.   I'm happy they addressed my question on the merger call and followed up with this responding vague Tweet. 

The low hanging fruit from the T-Mobile business expansion standpoint (and in their Twitter response) is rural America, bringing broadband competition to wireless and wireline incumbents. But that should already be on the T-Mobile radar, merger or not.  For Sprint’s part, the company’s 2.5 GHz 5G vision would be a compelling one in upselling and retaining its incumbent business base. Yet with capital constraints and other financial challenges, the pace, breadth and full realization of that Sprint-only 5G network is questionable (i.e., lots of major regions or national). Sprint is already in LTE catch up mode against competitors. 

A far-reaching network is everything. Verizon and AT&T know this and have invested tens of billions in their networks.  Both companies have captured consumer and business marketshare as a result. A new T-Mobile with a true 5G national network, combining low (600 MHz), mid-band (2.5 GHz) and future millimeter wave assets will surely provide a formidable network competitor to the big two, and foundational to future business revenue expansion.  

Assuming the deal is done and approved by 1H19 projections, it’s logical that parents, DT and Softbank, would increase capital (and not count on OpEx synergies) to accelerate the network vision (pun intended).  T-Mobile has a solid track record in integration (MetroPCS), network expansion and great execution. I’d expect no less from the combined Sprint and T-Mobile network planning and engineering teams. T-Mobile is already on track to plant a national 5G network flag thanks to its 600 MHz (albeit with thin dedicated spectrum), when that will be supplemented by the 2.5 GHz (>300M POPs) is the big question.   If the deal isn't approved, T-Mobile will need to build up its business portfolio to truly compete.   

[[[updated May 2, 1018]]]

On T-Mobile's 1Q18 Earnings Call, CEO Mike Sievert addressed the attacking the business segment at the new T-Mobile.   He stated: " Our business plan is funded for an expansion of our enterprise team. In year one, we’re going to take advantage of this set of capabilities and get after it and we funded our plan in year one to hire aggressively to get after the business market."

T-Mobile Goes 5G, It's Expected Except with its 600 MHz

The wireless path for all wireless carriers beyond LTE is 5G. Everyone in the industry knows this.  Conventionally, the spectrum associated with 5G talk has been in the millimeter wave (mmW) realm.  That's why Verizon purchased XO because they had 28 and 39 GHz.  That also can be said with AT&T's purchase of FiberTower (24 and 39 GHz) and its interest in StraightPath (28 & 39 GHz).  There are many on-going trials on the vendor side and carrier side as well in mmW bands.   The width of the mmW spectrum availability is in the order of hundreds of GHz rather than the tens of MHz in each that carriers have today.

T-Mobile has also pursued mmW 5G trials. In September '16, Ericsson announced it achieved 12 Gbps   with T-Mobile in the 28 GHz band.  So with T-Mobile's announcement that it seeks to deploy 5G in the newly acquired 600 MHz spectrum (31 MHz covering 325M POPs) is a true departure from the conventional 5G talk and norm.  Why?

While 5G is the front and center of the announcement, what is lost is that T-Mobile seeks to use some of that spectrum for LTE deployment.   In the 1Q17 earnings call, Neville Ray (CTO) touted that the company wanted to put the spectrum to use quickly, with buildout ready by end of year 2017 along with handset support (Samsung & another vendor).  Two points that T-Mobile have shrugged off:

1) The spectrum needs to be cleared.  T-Mobile's initial 600 buildout will be where there are no clearance issues. It's also the geography where their 700 doesn't cover, so apparently it's a win.  The implication is that it's closing the coverage holes and getting to network and geographic parity with AT&T and Verizon, negating the "Verizon map" marketing advantage.

2) 600 ecosystem cost and support is costly.  It's clear that T-Mobile will be the first mover in 600 LTE and they painted similarities to delving into AWS spectrum.  They claim it's no different.  However, T-Mobile's modus operandi is and has always been pushing the technical and marketing envelope.  It has a good track record.

So the conventional playbook says that 600 will bring geographic and network parity against AT&T and Verizon.  More importantly, it will expand T-Mobile's sales and distribution footprint to greenfield markets traditionally served by AT&T and Verizon because they were the only game in town.

BACK TO 5G

To T-Mobile's credit, they're not ahead of the market as they anticipate buildout in 2019 with commercial service ready in 2020 along with a national footprint.  This is not aggressive but along the conventional standards and industry timeline.  Again, what is unconventional is its use of 600 MHz, unexpected in many tech circles.

The problem with this and conventional 5G talk is from a speed perspective is that it won't make the multi-Gbps targets as so many trials have demonstrated.  Moreover, 31 MHz is going to be divided with its earlier 600 LTE implementation.  This 5G implementation will likely pick up more spectral efficiency in delivering speed relative to LTE but again, as standalone 5G, the operating bandwidth is limited.  So what's the play?  There are two for now.

1) In a conference call with industry analysts, Neville and his network execs talked up rural IoT.  The argument goes that standard 5G mmW IoT is limited by the spectrum and really a play in urban areas due to the propagation characteristics.  While it's out of character with over three years of direct consumer wins, this feels more like a business play.  To be sure, T-Mobile has kicked off its IoT effort in January 2017 and it shouldn't end with 3G and LTE (NB).  IoT connected numbers in the billions and  every carrier wants a piece of the pie. With low or no per unit acquisition costs along with sustained recurring revenue, each connection has an excellent (industry term) customer lifetime value.  The money potential will preset itself in 2020 and beyond but for now, the announcement gives T-Mobile business and IoT force some roadmap to present compared to AT&T and Verizon, which have a substantial lead.

2) T-Mobile's 2020 national 5G network target is a pure marketing win. Again with conventional 5G talk with mmW, this conventional implementation will not have a 5G national footprint. While that is true, competitors can claim greater 5G speed compared to T-Mobile's 600 5G speeds.  The only caveat is that T-Mobile is likely going into mmW 5G as well.  So looking ahead, another related component will be the ongoing mmW spectrum acquisition race.

In closing, all the industry talk, other spectrum bands are likely to be refarmed into 5G.  I'm counting on Sprint to announce its 5G foray using its 2.5 GHz resources soon.