By borrowing spectrum licenses that aren’t currently being used by their license holders, U.S. operators T-Mobile, Verizon, AT&T, and US Cellular are going to be able to increase their network capacity for the next 60 days. The extra capacity is intended to help wireless customers who are homebound because of COVID-19.
Analysts say the increase in spectrum should help Verizon, T-Mobile, AT&T and US Cellular increase the capacity and coverage of their networks. “It will help with reach,” says Chetan Sharma, an analyst with Chetan Sharma Consulting. “And it will probably help them provide capacity relief to rural areas.”
The shared spectrum arrangements were made possible by the Federal Communications Commission’s (FCC) Wireless Telecommunications Bureau, which signed a special authorization so the operators can use these additional spectrum licenses. It is also part of the FCC’s Keep Americans Connected Pledge, which is aimed at helping ensure Americans get online and stay connected.
Borrowing of spectrum licenses is very unusual in the wireless industry. According to Roger Entner, analyst with Recon Analytics, in the past there may have been a few temporary spectrum usage arrangements made for a music festival or some other large event but nothing like these current deals. Entner says it’s a smart move by the wireless operators and by the FCC.
“The FCC Chairman is taking practical steps to address these issues,” Entner said. These moves come at a particularly critical time because mobile operators around the world have started reporting surges in network usage as customers work from home to prevent further spread of the virus.
Verizon said on March 19 that in its week-over-week traffic analysis it has seen traffic over its networks (both wired and wireless) increase 75 percent. Gaming has produced the most usage with a 75 percent increase while web traffic has increased by 20 percent. Virtual private network access has also increased by 34 percent. “While it is not clear yet how having millions of additional people working from home will impact usage patterns, we remain ready to address changes in demand, if needed,” said Verizon CTO Kyle Malady.
Dish Network is a key player
Dish Networks is playing a very instrumental role in these spectrum deals. The company is providing additional spectrum to T-Mobile, AT&T and Verizon.
The company is allowing the operators to use some of its spectrum licenses that it purchased but isn’t currently using for the next 60 days.
T-Mobile secured its extra spectrum licenses in the 600 MHz spectrum band by forging agreements with Dish, as well as Comcast, Bluewater, Channel 51, NewLevel, LB Holdings and Omega Wireless.
But most of that spectrum for this deal will come from Dish Network, which is the second largest holder of 600 MHz spectrum after T-Mobile. According to Lightshed Research, a New York-based financial research firm, Dish owns about 20MHz, on average, of 600 MHz spectrum nationwide.
Lightshed believes the donated spectrum will provide T-Mobile with up to 40MHz of additional spectrum in the 600 MHz band, which will triple the amount of 600 MHz spectrum that the company has currently devoted to its LTE network. T-Mobile is expected to use the extra spectrum to expand its LTE network rather than using it for 5G, Lightshed said.
Dish is also connected to Verizon’s securing of additional spectrum to meet customer demand during the COVID-19 pandemic. Verizon will be using spectrum licenses from Northstar Wireless and SNR Wireless in the AWS-3 spectrum band.
While Dish doesn’t technically own that spectrum that is licensed to Northstar and SNR, it does have a financial relationship with the two firms. The two companies teamed with Dish to acquire $10 billion worth of spectrum licenses in the AWS-3 auction in 2015.
New Street Research financial analysts estimate that the Northstar and SNR spectrum in the AWS-3 band will add about 8 MHz of spectrum nationwide to Verizon’s network. Verizon has deployed its LTE network in the AWS spectrum where it already owns a significant footprint of coverage.
With AT&T, Dish is lending 20MHz of its AWS-4 (Band 66) and all of its 700 MHz spectrum to AT&T. Analysts at New Street Research believe that AT&T will be able to deploy the AWS-4 spectrum quickly because it already uses spectrum in the AWS-1 and AWS-3 bands. In addition, AT&T will likely use Dish’s 700 MHz E-Block in conjunction with the D-Block that the company has started using in some of its markets.
But it’s not just the big Tier 1 wireless operators that are getting additional spectrum to help ease any capacity or coverage issues. Regional operator U.S. Cellular also was granted permission to use spectrum in the AWS-3 band from Advantage Spectrum. The additional spectrum will allow this operator to provide additional capacity to customers in parts of California, Oregon, Washington and Wisconsin.
Just a software configuration
For Verizon, T-Mobile, AT&T, and U.S. Cellular to make use of the additional spectrum is a fairly easy process and doesn’t require the operators to send technicians to tower sites. Sharma said it is just a software switch. “You don’t need any special electronics, you just have to expand the band in the software configurations,” he said.
However, on the handset side, consumers will need to have smartphones that are configured to use those spectrum bands.
For T-Mobile that means having devices that will work on the 600 MHz spectrum band. Entner estimates about one-third of T-Mobile’s subscribers have smartphones that work on the 600 MHz spectrum. Lightshed is a bit more optimistic and estimates that about 50 percent of T-Mobile’s customers have 600 MHz devices.
But even customers without handsets equipped to work in the 600 MHz band should benefit from the boost to capacity. Entner said that other customers will see some benefit as well because as capacity is offloaded onto the borrowed 600 MHz spectrum it should make more capacity available for the other subscribers.
Verizon and U.S. Cellular already have a large majority of their customers with smartphones equipped to work on the AWS-3 spectrum band because both the companies have had LTE deployed on that spectrum for a number of years.
AT&T’s agreement involves AWS-4 spectrum, which AT&T already uses. And like the others, these frequency bands should work for many AT&T customers as long as they have a fairly new device.
60 days or longer?
There is some speculation that these spectrum sharing agreements could last beyond the original 60-day loan period. In T-Mobile’s case, the spectrum that Dish is providing in the 600 MHz spectrum band is also part of T-Mobile’s complicated acquisition of Sprint, which it is expected to close in the coming weeks. As part of that deal, T-Mobile has agreed to lease that 600 MHz spectrum from Dish but the two companies have not yet agreed upon a price.
Sharma, however, doesn’t believe this spectrum sharing will continue long-term. “I don’t think they can count on this continuing,” he said. “It could, however, lead to other possibilities with spectrum that is sitting idle. Maybe it will be on the minds of regulators to think about how to utilize spectrum for the greater good.”