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Story on 4G: An AT&T Customer's Thoughts on the AT&T-TMO Merger

By Neal Gompa on Wednesday, March 28th, 2012
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If you thought the series on 4G would end with the two interviews from January, you are most definitely wrong! We have some interesting things in the works for “A Story on 4G.”

This time, I will be giving my thoughts on the proposed acquisition of T-Mobile USA by AT&T, from my perspective as an AT&T customer. I’ll also follow up with an article with my thoughts from my perspective as a T-Mobile customer. Being in the unique position of being a customer to both carriers for one reason or another, I can see the positives and the negatives from both sides. My thoughts are detailed after the break.

As an AT&T customer, I’m ambivalent to AT&T’s proposed acquisition of T-Mobile USA. On one hand, AT&T hasn’t been rather good at building out a proper HSPA+ network, while T-Mobile has been doing an excellent job in that regard. On the other hand, T-Mobile usually kept the larger carriers in check because they were a national GSM carrier that offered lower prices than Verizon and AT&T. Also, without a second GSM carrier, there is an increased chance that the variety of handsets to choose from will drop considerably, unless we quickly moved towards a market where phones and carriers are bought independently.

I’ve done my research regarding spectrum. I know that AT&T possesses quite a bit of spectrum on their own, much more than T-Mobile. They even own enough spectrum (somewhere close to 100 MHz, I believe) to build all over the nation. But, the problem is that their spectrum isn’t harmonized. T-Mobile is fortunate enough to have at least 20-30 MHz of spectrum in every market in the AWS-1 (1700 MHz UL/2100 MHz DL) band range, with an additional 10-20 MHz in the PCS (1900 MHz) band range. AT&T’s spectrum is all over the place, some 10-20 MHz here and there in Cellular (850 MHz), some 15-20 MHz here and there in PCS, about 10 MHz in most areas in US Dig Div (U.S. Digital Dividend – 700 MHz), and about 10MHz in the western half of the country on AWS-1. This actually puts AT&T in a worse situation than T-Mobile, because their licenses are scattered all over the place. Without T-Mobile, they would require quad-band LTE devices right out of the gate, because they don’t actually have a single high quality spectrum band that covers all parts of the country. And that is assuming AT&T is willing to decommission their older networks in order to free up spectrum.

AT&T stated in their press releases and webcasts that they plan on using T-Mobile’s AWS-1 spectrum as the primary spectrum for their nationwide LTE network. And that is a good thing. Why, you ask? Because it forces the decisions of other carriers regarding how to implement LTE. Since AT&T is such a large company, they can get equipment manufacturers to cater to their whims regarding hardware designs. This means that AT&T’s LTE devices will support AWS-1 and U.S. Digital Dividend out of the gate. While AT&T’s AWS-1 LTE network will cover most of the country, AT&T plans on beefing up high-population metro/urban areas with an alternate LTE network running on U.S. Dig Div.

Since AT&T’s Dig Div spectrum is incompatible with all other carriers Dig Div spectrum, the AWS-1 spectrum will provide the common spectrum. How, you may ask? Well, back in 2006, the FCC ran Auction 66, which was the auction that sold licenses for AWS-1. All major carriers in the USA, both national and regional, have access to at least some AWS-1 spectrum, which is a first since the days of the first GSM and CDMA networks. Cellular South, MetroPCS, US Cellular, Leap Wireless (Cricket), Verizon Wireless, AT&T, Sprint (through SpectrumCo), and T-Mobile USA own AWS-1 spectrum. With the exception of Verizon Wireless (who only owns AWS-1 spectrum for the eastern half of the nation), AT&T (who only owns AWS-1 spectrum for the western half of the country), and US Cellular (who owns AWS-1 spectrum primarily in the Mississippi Valley), all the carriers own AWS-1 spectrum to cover all of their current and planned markets of expansion. With the exception of Sprint, everyone planned to move to LTE. The ones that didn’t get AWS-1 spectrum to cover all their markets later bought US Dig Div spectrum to supplement it.

Now, with AT&T’s announcement that with the acquisition of T-Mobile USA, their spectral focus for LTE will be on AWS-1 instead of US Dig Div, all the other carriers are free to build out LTE on that spectrum as well. Because all of these carriers would be operating on the same spectrum, the 4G LTE hardware would be cheaper, compatible, and could be transferred from carrier to carrier. Especially since LTE utilizes SIM cards, meaning you aren’t required to check in with the carrier on using a device on their network.

In fact, MetroPCS did that last year. Their entire LTE network runs on AWS-1 and PCS. Unfortunately, the speeds on MetroPCS are terrible because they are using the same CDMA backhaul for LTE instead of improving it to handle what LTE can give out to customers.

What is the benefit of all this? Well, it means that every carrier in the USA could compete at the same level, because they can offer the same quality service, the same type of service, and even support the same hardware, as everyone else. This means that the economies of scale regarding LTE hardware would be raised to unprecedented levels in the USA. This will lead us closer to the situation that the European wireless market has been like for some time now, where consumers can purchase a device at a store, and pick any wireless network operator they want because all wireless devices are compatible with all wireless networks. This will bring more direct competition to the wireless market in the USA, resulting in lower prices across the board. The price dropping would take years to kick in though.

Many people complain that AT&T service is terrible, but in the areas I’ve been in, it usually is fine most of the time. Only a few months ago did service degrade in one area I am at, and that is because the series of storms we had in January destroyed half the towers around that area. AT&T customer service has also been gradually improving over the last year or so. Most of the time, when I talk to somebody, I usually don’t get somebody who sounds like he or she is from an outsourced call center, which is pretty great. And more reps actually know what the heck they are talking about, which is good too.

My major complaints with AT&T are that they don’t offer an equivalent to T-Mobile’s Even More Plus plans, they don’t have a standard phone unlocking policy like T-Mobile’s that is customer friendly, their Android devices are locked down to prevent sideloading, and they have several features purposely crippled on Android devices in order to milk more money out of customers. I hope that the acquisition of T-Mobile will incorporate some of the great things they offer, such as Wi-Fi Calling (UMA), open vanilla Google Experience Android devices (G-series), and so on. Hopefully, AT&T will even bring back the unlimited data plan (adding a soft data cap to it, of course).

Perhaps even some of T-Mobile’s open and enthusiastic culture will seep into AT&T and rejuvenate it into a much better cell phone company. They certainly need to become more flexible to suit the changing tastes of consumers.

There is one kink in this plan, though. If the FCC were to force AT&T to divest T-Mobile markets, this whole plan falls apart right at the seams. The only way for this plan to work is for AT&T to be able to implement an LTE network on T-Mobile’s harmonized AWS-1 spectrum. Without that spectrum, AT&T won’t build out an LTE network primarily on AWS-1, killing the whole thing before it even started.

I am definitely seeing the benefits of AT&T’s acquisition of T-Mobile USA, just not exactly the benefits that AT&T believes we’ll get.

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