Post-600 MHz Auction Thoughts

With the 600 MHz auction out of the way and companies starting to announce their Q1 2017 numbers, the wireless industry and telecommunications industry as a whole are in a massive state of flux right now. As 6PM on April 27th looms, we should expect mergers to start cropping up in possibly as soon as a few weeks.

Dish and T-Mobile: a rock-solid combination

Several combinations are possible but the most positive and regulator-friendly would have to be the combination of T-Mobile US and Dish Network. Dish’s massive glut of spectrum in the midband range as well as newly acquired spectrum with surprising depth at 600 MHz give it plenty of options for who to partner with. However, T-Mobile is probably its best choice for several reasons. The first of which being T-Mobile’s own spectrum holdings. Not only are they complementary to parts of Dish’s spectrum but they are also the 4th largest when compared with Sprint, AT&T, and Verizon who have holdings above 70 MHz and even up to 200 MHz in some markets. The fact that T-Mobile’s holdings aren’t so large would allow a merger of the two to pass through regulatory scrutiny without a need for divestment.

The second reason would be T-Mobile’s existing (and, again, complementary) network of AWS/PCS-spaced cell sites. While Dish did come away from this most recent auction with solid low-band holdings, the bulk of their spectrum lies in midband territory. T-Mobile’s network was designed with midband spectrum in mind mainly because they have been deprived of low-band spectrum for so long. Dish’s new spectrum could be put to use with little effort in some markets because even some of T-Mobile’s existing hardware – mainly antennas but also RRUs depending on area – can already accommodate it.

The third reason would have to be the content-provider play. T-Mobile has no path to actually providing some of the content that flows over its network. Dish, having complete national reach and the leverage to strong-arm broadcasters (as it is known to do), could provide this play. In addition to its traditional satellite service, Dish’s Sling service would be able to offer plenty of value to T-Mobile’s younger, stream-savvy users. The biggest play T-Mobile could pull off with Sling and Dish by its side would be finally offering the dream TV service: individual channel selection for a similar price to bundling. The biggest roadblock for that dream, however, is the content producers.

What about Comcast?

Comcast walked away with only a small set of 10 MHz licenses (with the exception of 20 MHz in Nashville, TN). At first glance, it would seem as though they were beaten to the punch by T-Mobile and Dish. However, their activation and announcement of their new XFINITY Mobile service using Verizon and their own WiFi hotspot network makes their plans for this spectrum a little more clear. Rather than Comcast trying to build their own network to move away from Verizon or keeping the licenses as an investment until a carrier in need of capacity comes knocking at their door, we will likely see Comcast lease these licenses to Verizon in exchange for better terms in their MVNO agreement.

Another much scarier possibility is Verizon and Comcast announcing a mega-merger for the ages. Verizon has been slicing away at its copper and FiOS network for years now usually siphoning it off to Frontier. Its former national residential service footprint is now relegated to the northeast and parts of the mid-Atlantic. Comcast, on the other hand, has a massive cable network across the nation with much of it being hybrid-fiber coax. Verizon could once again take its seat as a national residential provider through Comcast’s cable systems. These cable systems would also provide a strong backhaul solution for Verizon’s ever-growing small cell network. The company has been lighting up small cells everywhere from New York to markets that barely make the top 150. Having an extensive cable/fiber network like that would take yet another step out of building these small cells and speed up what is currently a miserably slow process. There are also plenty of opportunities for media plays considering the newly combined company would be offering cable TV and would also own, in-whole or in-part, NBCUniversal.