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T-Mobile Executive Calls for More Spectrum for Smaller Competitors

Neville Ray, T-Mobile’s senior vice president of engineering and operations, thinks the key to competition isn’t net neutrality rules but more spectrum.

Specifically, he is pushing regulators to auction radio airwaves in the AWS band where T-Mobile and smaller carriers are already building out networks for wireless broadband services. T-Mobile is the fourth-largest carrier of wireless services in the nation, and despite the huge leaps in subscriber growth by the nation’s two largest carriers – Verizon Wireless and AT&T, he describes the wireless market as “hyper-competitive.”

Ray is in town this week to meet with FCC commissioners and attend the 3G Americas conference in town this week, a group that he chairs. And no, he didn’t comment on whether T-Mobile is interested in buying Sprint Nextel.

Here are the highlights of our conversation Thursday morning:

You are rolling out your 3G network and are boosting it with a new technology (HSPA+) that will make access speeds faster. Meanwhile, the largest carriers, Verizon Wireless and AT&T, are planning to begin rollouts of their 4G networks next year, which will be even faster. How are you going to keep up with them as they move on to the next generation of mobile broadband?
Timing is always key on these offerings. But if you look at Verizon's position next year, they have no plans to upgrade or enhance their 3G network, from what we hear, until they get to LTE (4G). So they are basically going to have a lion's share of their customers based on legacy and aging networks. There will be a two-year gap between availability of our HSPA+ services (faster 3G service) and what will happen on LTE. So even if I had LTE spectrum available or were looking to launch some form of LTE, I would still be doing everything I’m doing on HSPA+ because the near-term and medium-term benefits that are available to us.

A big question the FCC is tackling is the competitiveness of the wireless industry. As the fourth-largest national carrier, looking at the top two carriers gain more new subscribers than anyone else, how would you describe competition in the market?
We believe the market is hyper-competitive. We have four national players, and you could argue Metro PCS and Leap make up national players in one form or another, too. There are regional players, so in some markets you have six to seven carriers to choose from. And then you have new entrants with Clearwire coming in and cable company Cox now is building out a wireless network. And consumers have choices on services from pre-paid to post-pay, you name it. I compare that with fixed broadband, in my home town, where my choices are extremely limited. I had to choose from Comcast or Qwest for cable or DSL and my cable provider has just raised their prices.

If 80 percent of all new net subscribers were going to Verizon Wireless and AT&T, however, what does that say for the competitive landscape of the future? You may have a lot of carriers but the giants are getting bigger faster and number three and four, Sprint Nextel and T-Mobile, aren't adding like them.
Our 3G reach and the products we offer are much broader and getting even more so, which will make for far more competition. We don’t believe AT&T and Verizon's positions out there are out there to stay and that is why we are here competing. You have to look a bit further than the next 12-18 months.

And what will happen after 12-18 months?
This is where spectrum comes back to table. We’ve been able to drive significant competition against those incumbents in the last eight to 10 years because of the availability of spectrum and ability bring new capabilities to customers.

How does net neutrality impact that view of the horizon?
We’ve prided ourselves in being the most open before AT&T and Verizon got religion with Android. We have a free, vibrant and open system. And Apple, which has a more closed environment -- also has a vibrant system for application. So we don't see how some form of incremental regulation is going to enhance the consumer proposition in terms of innovation, price competition, you name it. It’s a very very competitive market out there. And to ensure that, we need the availability of more spectrum.

Say there is another spectrum and what happens is that AT&T and Verizon end up with the biggest holdings, as seen in the 700MHZ auction last year, what would that do?
We would hope that the FCC be cognizant of those risks and would address them.
Most immediately, we think they could free up AWS1 spectrum, where Metro and Leap, along with us, were both big winners. This would be a nice booster shot. ... That also happens to be where the smaller competitors like Leap and Metro are as well.

By Cecilia Kang  |  October 15, 2009; 3:44 PM ET
 
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Comments

T-Mobile is right, even though they are not really that small a company (they're owned by Deutsche Telekom). More spectrum means more competition. And it's vital to revise the rules so that the spectrum can't be snatched up by huge companies trying to hoard it and foreclose competition.

Posted by: squirma | October 15, 2009 6:24 PM | Report abuse

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