T-Mobile USA open to spectrum possibilities

T-Mobile USA Inc. looks to be hunting for spectrum, and according to comments by its CEO, is not afraid to find a partner to fill that need.
According to a Reuters report this morning, T-Mobile USA CEO Robert Dotson told analysts at an investor conference that the carrier would be interested in a joint venture in an attempt to gain access to additional spectrum.
“We continue to look at JV opportunities for additional spectrum … there are a number of different options we look at, (we) have been talking with cable companies, with Clearwire,” Dotson told the conference attendees, according to Reuters.
T-Mobile USA’s spectrum needs in direct relation to its desire to roll out so-called 4G wireless technologies. The carrier is currently using the approximately 20 megahertz of spectrum it acquired in the AWS auction to support its 3G network that began as an UMTS deployment but has since migrated to HSPA 7.2. T-Mobile USA is also beginning to roll out speedier HSPA+ technology on its 3G network that will support download speeds up to 21 megabits per second. However, T-Mobile USA would need at least 10 megahertz, and more likely 20 megahertz of clean spectrum if it wants to begin rolling out a 4G network using the LTE standard. The carrier also has an average of 20 megahertz of spectrum across the country in the 1.9 GHz band that it’s using for its GSM/GPRS/EDGE networks that are the backbone of its voice offering.
Clearwire Corp. has been viewed by many as a possible partner as the company has an abundance of spectrum in the 2.5 GHz band that it is currently using to support its WiMAX build out. A partnership between the two could be in the form of either a wholesale model where T-Mobile USA would buy access to the WiMAX network to resell to its own customers or T-Mobile USA could attempt to acquire a portion of Clearwire’s spectrum to support its own 4G plans.
The cable company plan could also prove compelling to T-Mobile USA. A number of cable operators are currently sitting on modest spectrum portfolios acquired during the AWS and more recent 700 MHz auction, an auction that T-Mobile USA did not participate in. One cable company, Cox Communications, is in the process of building out its own wireless network using its AWS and 700 MHz holdings that will initially rely on CDMA2000 1x EV-DO, but with a planned migration to LTE.
Dotson seemed to shoot down rumors of a planned partnership with the industry’s No. 3 operator Sprint Nextel Corp. claiming it did not make sense to combine two operators that are both going through their own “challenges.” Both Sprint Nextel and T-Mobile USA have posted quarterly results showing increased difficulties in competing against their larger rivals Verizon Wireless and AT&T Mobility. However, a partnership with Clearwire could be viewed as a partial partnership with Sprint Nextel as the carrier currently owns 58% of Clearwire.
One kink in T-Mobile USA’s plans could come from its parent company, German telecom giant Deutsche Telekom AG, which yesterday announced new strategies to “double revenue in growth areas and increase free cash flow.”
Those plans specifically mentioned plans to increase its operating income before depreciation and amortization margin at T-Mobile USA from the 31% posted in 2009 to more than 35% by 2012. At the same time, DT wants to invest in T-Mobile USA to help expand its HSPA+ network to cover more than 185 million potential customers by the end of this year and double its smartphone penetration to 8 million units by the end of the year and account for more than 50% of devices in its network by 2012.
DT noted that this increased network speeds and greater number of 3G smartphones will allow T-Mobile USA to cut into its competitors’ lead in data average revenue per user by as much as 60% by 2012. T-Mobile USA posted $10.20 in data ARPU for the fourth quarter of 2009, which was well below the more than $15 per month posted by its larger rivals.
During the conference, T-Mobile USA also noted that during the fourth quarter customers using 3G devices powered by Google Inc.’s Android OS were consuming nearly 400 megabytes of data per month, compared with 364 Mb being consumed by users with other 3G smartphones, 134 Mb on average for all 3G devices and 21 Mb for all 2G devices.
In support of its 3G build out, T-Mobile USA said it was increasingly using “alternate” backhaul providers that have allowed the company to reduce its backhaul costs by around 90% compared with its original T1-based cost projections.