On a bandwidth per customer basis, the most spectrum-constrained operators are Verizon Wireless, with 1.02 Hertz per connection (Hz/c) and AT&T with 1.18 Hz/c, says Roger Entner, Recon Analytics principal.
T-Mobile US has 34 percent more spectrum per subscriber than Verizon, and 16 percent more than AT&T.
Sprint has 2.6 to 3.6 times more than Verizon, AT&T or T-Mobile. Regional carrier US Cellular has 16 percent to 33 percent more spectrum per subscriber than AT&T and Verizon.
Subscriber and Spectrum Statistics, First Quarter 2015
Operator
|
Q1 '15 Connections in millions
|
Q1 '15 Market Share
|
Average Spectrum in Mhz
|
% of Spectrum
|
Difference between Spectrum & Market Share
|
Average Spectrum in Hz/connection
|
AT&T
|
121.7 million
|
34.6%
|
143.1
|
22%
|
(12.6%)
|
1.18
|
Verizon
|
108.5 million
|
30.8%
|
110.6
|
17%
|
(13.8%)
|
1.02
|
Sprint
|
57.1 million
|
16.2%
|
208.2
|
33%
|
16.8%
|
3.64
|
T-Mobile
|
56.8 million
|
16.1%
|
78.1
|
12%
|
(4.1%)
|
1.37
|
US Cellular
|
4.7 million
|
$1.4%
|
6.5
|
1%
|
(0.4%)
|
1.36
|
DISH
|
0
|
71.6
|
11%
|
11%
|
n/a
| |
Others
|
3 million
|
0.9%
|
32.5
|
5%
|
4.1%
|
3.57
|
Source: Recon Analytics
| ||||||
Neither Sprint nor T-Mobile US have in recent years faced an immediate need for more capacity, in other words, argues Entner.
And though future needs have to be taken into account, one might argue neither Sprint nor T-Mobile US are in dire need of spectrum, requiring large spectrum set asides to allow them to “catch up” to AT&T and Verizon.
The argument, though, is that Sprint and T-Mobile US have less lower-frequency spectrum better suited for coverage, and need lower-cost and guaranteed spectrum to better compete with AT&T and Verizon.
Entner’s analysis suggests AT&T and Verizon have not been able to prevent T-Mobile US from taking market share, despite their market power.
T-Mobile US captured 70 percent of the growth in 2014 and 99.7 percent of the growth in the first quarter of 2015.
Mobile Operator Net Additions, First Quarter 2015
Operator
|
Q1 '15 Connections in millions
|
Q1 '15 Market Share
|
2014 Phone Net Adds in '000
|
2014 Share of Phone Net Adds
|
Q1 '15 Phone Net Adds in '000
|
Q1 '15 Share of Phone Net Adds
|
AT&T
|
121.7
|
34.6%
|
524
|
9.1%
|
(327)
|
n/a
|
Verizon
|
108.5
|
30.8%
|
1,198
|
20.8%
|
(255)
|
n/a
|
Sprint
|
57.1
|
16.2%
|
(2,201)
|
n/a
|
(201)
|
n/a
|
T-Mobile
|
56.8
|
16.1%
|
4,047
|
70.2%
|
991
|
99.7
|
US Cellular
|
4.7
|
$1.4%
|
n/a
|
n/a
|
3
|
0.3%
|
Others
|
3
|
0.9%
|
n/a
|
n/a
| ||
342.1
|
5,769
|
994
| ||||
Source: Recon Analytics Analysis
| ||||||
T-Mobile and Sprint are trying to convince the Federal Communications Commission that “a guaranteed price reduction for them in the upcoming auction will somehow resolve the reality of AT&T and Verizon being larger providers with more customers,” says Entner.
If one takes the advocacy at face value, one could believe both companies are struggling to stay alive and American consumers are suffering from soaring prices and deteriorating service absent FCC action.
T-Mobile US, especially, and Sprint, to a large extent, do have less spectrum per customer in the “below 1 GHz” bands. In large part, that is a function of history. Verizon and AT&T were in the mobile business earlier, when the lower-frequency spectrum was auctioned. Sprint and T-Mobile US entered the market later, when 2 GHz spectrum was auctioned.
Arguments will be advanced by both sides--set asides or no set asides--about why consumers will benefit if one approach is taken, instead of the other. In the near term, logic suggests, Sprint, T-Mobile US and other smaller carriers and entities might benefit from set asides.
Long term, it is harder to say what market structure impact might occur. Various mechanisms, including spectrum set asides, might, in principle, help enhance competition. Evidence is mixed.
In the near term, some argue, spectrum set asides will deter bidding by the firms most able to put the new spectrum to work efficiently, and also will reduce revenues raised by the auctions.
In the upcoming 600-MHz auctions, the matter of revenue will be unusually important, owing to the auction process. Broadcasters first must agree to give up their licenses, and will have high incentives to do so only if prices are high.
But set asides will lessen the amount of potential revenue that might be generated when the licenses are made available for mobile use. So lower prices necessarily will imperil the success of the auction.
Nor is it clear, should the auctions fail, that the spectrum can later be put up for bid. Legislation allowing the auction does not apparently include a provision for trying again, in case the auction fails the first time.
Spectrum below 1 GHz
| ||||||
Operator
|
Q1 '15 Connections in millions
|
Q1 '15 Market Share
|
Average Spectrum < 1 Ghz
|
% of Spectrum < 1 GHz
|
Difference between Spectrum & Market Share
|
Average Spectrum < 1 GH in Hz/connection
|
AT&T
|
121.7
|
34.6%
|
49.6
|
37%
|
2.1%
|
0.41
|
Verizon
|
108.5
|
30.8%
|
45.5
|
34%
|
2.9%
|
0.42
|
Sprint
|
57.1
|
16.2%
|
13.4
|
10%
|
(3%)
|
0.23
|
T-Mobile
|
56.8
|
16.1%
|
6.7
|
5%
|
(11.2%)
|
0.12
|
US Cellular
|
4.7
|
$1.4%
|
4
|
3%
|
1.6%
|
0.84
|
DISH
|
4
|
3%
|
3%
| |||
Others
|
3
|
0.9%
|
10.7
|
8%
|
7.1%
|
3.57
|
Source: Recon Analytics
| ||||||
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