It’s becoming clear that AT&T is, if not scared, at least on edge with regards to T-Mobile’s trajectory. Today’s announcement is proving that maybe they should be.
T-Mobile, ranked 4th nationwide in terms of subscriber base, has repeatedly stated over the past year that they’re looking to shake up the wireless industry in the United States. A lot of people have written this off as marketing speak, (especially with the nonsense about being an “Uncarrier”) but T-Mobile is starting to live up to their promises.
They instituted a new subsidizing policy where the price of a phone is completely disconnected from the price of your cell service, meaning that bringing your own phone to a carrier can finally make a substantial difference in how much you pay every month.
AT&T this week announced a plan to snatch subscribers away from T-Mobile by offering select customers a combination of discounts and trade-ins adding up to a maximum of $450. Enough to pay off remaining contract fees (if they’re a holdover when T-Mobile still signed 2-year contracts) or phone bills, plus a little extra if you trade your T-Mobile phone in and buy one from AT&T (given that just about every worthwhile T-Mobile phone should work flawlessly on AT&T, this part of the deal may not be so hot).
The move came before T-Mobile was expected to announce a similar deal here at CES.
One of the problems with T-Mobile has been the strength of their network. While 2g and voice coverage has always been reasonably good, the network was dead last both times in getting 3g and 4g operational in large swaths of the U.S. On top of this, T-Mo’s high-frequency spectrum doesn’t pack the same punch as some of their rivals when it comes to building penetration (that’s not T-Mobile’s fault, mind you; it’s just physics).
With the news today of a spectrum purchase from Verizon, it’s becoming clear that T-Mobile is very serious about competing with the other carriers. Not just via clever – and consumer-friendly – sales and policies, but also in terms of sheer network capabilities. The deal with Verizon involves T-Mobile paying out nearly $2.4 billion in cash, plus trading over close to a billion dollars worth of wireless spectrum (it hasn’t been said what spectrum this involves on T-Mobile’s part, but our bet is some AWS spectrum in various locations, as Verizon can use that to boost its own LTE offerings)
The 700MHz acquisition will be used to enhance T-Mobile’s high-speed LTE, and the superior reach and building penetration will mean stronger, faster signals for its customers.
T-Mobile said it expects to have the requisite hardware in place to take advantage of the new spectrum purchase by the end of 2014.
For its part, Verizon has been trying to sell some of its unused 700MHz frequencies for more than a year before this deal was reached.