U.S. Mobile Operator Spectrum Positions, Strategies Changing Fast

U.S. mobile service provider spectrum holdings, spectrum prices and spectrum strategies are changing very rapidly, in part because of the proposed T-Mobile US merger with Sprint, the emergence of Dish Network as a new provider, and very-active spectrum auctions.

Though scale is a clear advantage of the proposed T-Mobile US merger with Sprint, spectrum acquisition is key. A merged Sprint plus T-Mobile US would have huge spectrum assets, compared to all other leading mobile providers.

Though scale is a clear advantage of the proposed T-Mobile US merger with Sprint, spectrum acquisition is key. A merged Sprint plus T-Mobile US would have huge spectrum assets, compared to all other leading mobile providers.

Also, Verizon’s relative spectrum paucity also is clear. Verizon has more customers to support on its network than does T-Mobile US or Sprint, for example, and arguably the most to gain from using small cells to intensify its spectrum reuse. 

Verizon also has the most incentive to use new millimeter wave spectrum, as that represents the greatest immediate source of new mobile spectrum. 

source: New Street Research

Though Verizon in 2018 had about the same amount of spectrum as T-Mobile US, it had twice the number of subscribers, and three times the number of Sprint, which had almost twice the spectrum. 

source: Cowen

source: Statista

Spectrum prices also might be a bit hard to evaluate using the traditional dollars per MHz per potential user, in part because the amounts of spectrum are so much greater for millimeter wave auctions. Where low-band spectrum with much more limited capacity once sold for prices above $1 per MHz POP, millimeter wave spectrum appears so far to be selling for $.01 per MHz POP, and should cost even less, on a MHz-POP basis, as frequency increases.

The reason is that higher frequencies feature much-greater capacity (orders of magnitude more MHz per POP). As with any business or consumer budget, there is only so much money to spend on any particular product. 

As consumers now pay between $40 and $80 for internet access for hundreds of megabits per second, where they once paid the same amounts for a few megabits per second, so too mobile service providers can only afford to pay so much for new blocks of spectrum.

So prices will fall. 

source: Spectrum Financial Consulting