For the last eight years, T-Mobile has been rewriting the rules of a broken, arrogant industry. Now T-Mobile is the network leader, and we showed two weeks ago how this supercharged Un-carrier will write the rules for the 5G era from the start. The contrast between how we are leading now and how Verizon and AT&T led in the early days of wireless is stark. They led with contracts and limits and fees. And we’re leading with free upgrades, disrupting one of America’s most disliked industries – broadband providers – and hiring thousands of people in the heartland. And the network is what makes that difference possible.
Nowhere was that clearer than last month, when in the space of less than 48 hours, we - along with Verizon and AT&T - held investor days to lay out our plans for the next few years, including our plans for 5G after the record-setting C-band spectrum auction. This gave a very clear picture of the current and future state of 5G in this country and an even clearer picture of T-Mobile's leadership. But don't take my word for it, here's how one analyst characterized it:
“The most important takeaway here is that T-Mobile’s clear spectrum advantage was fully reinforced by all three players. Put simply…T-Mobile wins.” [1]
“They [T-Mobile] will be first to 5G, and they will be best in 5G. Everything we heard from all three carriers over three days underscored that simple point.”[2]
As much as I enjoy seeing the world recognize reality, there are a few facts worth highlighting about the current state of 5G in this country and what that means for the future.
We’re now in the second phase of 5G, and it’s all about mid-band.
The first phase of 5G was confusing, like watching a basketball team play a football and baseball team simultaneously. We all had radically different strategies. Verizon was focused on mmWave but limited 5G coverage. AT&T was focused on marketing 4G as if it were 5G. And at T-Mobile, we were focused on laying the foundation for 5G with low-band spectrum and delivered nationwide 5G coverage
In this second phase, everyone in the industry is playing the same game - building out optimal mid-band spectrum to deliver the perfect combo of speeds and coverage. Often called the "goldilocks" of spectrum for this reason, mid-band spectrum is clearly the global sweet spot for 5G. It's going to be much easier to compare progress and benchmark success in this phase of 5G, which leads me to my second point.
T-Mobile has a winning hand and a lasting advantage.
Verizon and AT&T have very limited mid-band deployments to date while T-Mobile started preparing for the Sprint merger well over two years ago and began work in earnest last year. Already, we cover 125 million people with mid-band 5G today. By the end of 2021, we expect to reach 200 million nationwide. By end of 2022, that'll grow to 250 million, and to nearly 285 million (90% of Americans) by the end of 2023. And we'll only continue to grow from there at a pace that can't be matched.
By comparison, Verizon announced plans to cover 100 million people with mid-band over the next 12 months and 175 million by the end of 2023 - just 61% of T-Mobile's planned coverage. AT&T said they expect to cover just 75 million people by the end of 2022 and 100 million people by early 2023, a fraction of T-Mobile's coverage.
So even once competitive deployments are well underway, by the end of this year, T-Mobile will cover twice as many people as Verizon.
One analyst recently said this about it:
“T-Mobile has a strong performance lead. Three factors will drive ‘fast 5G’ network performance: 1) POPs covered; 2) the consistency of performance in covered markets; 3) capacity per subscriber. T-Mobile has a strong lead on all three measures, which should drive accelerating market share gains. They will maintain this lead through the forecast period and perhaps indefinitely.”[3]
Now that they've invested tens of billions to acquire C-band spectrum, Verizon will have access to 60 MHz and AT&T will have access to 40 MHz of their new C-band spectrum by the end of this year and will have to wait until the end of 2023 to use the rest. And, of course, we had just the right success in this spectrum auction ourselves to round out our network strategy… and will get access to that spectrum at the same time.
But beyond this, T-Mobile’s winning hand and lasting advantage includes an amazing team. That’s why we have achieved so many 5G firsts, including being the first – and still only – to light up standalone 5G. It’s why we have the largest and fastest 5G network. And that’s why we’re the premier provider positioned to deliver innovations like 5G carrier aggregation, ever-expanding 5G coverage, improved network response times and combined layers of capacity for greater speed and performance. Competition delivers!
The laws of physics don’t bend
One analyst had this to say about the physics of mid-band:
“[T-Mobile’s] spectrum propagates farther. This last point – the propagation advantage of 2.5 GHz – hung over both Verizon’s and AT&T’s presentations, but neither was able to make a convincing case that they would be able to counter this advantage.”[4]
C-band spectrum is great. We bought a bunch of it, too. But spectrum obeys the immutable laws of physics. The higher the frequency, the shorter the distance it can travel and the more easily it is blocked by objects. C-band is 3.7 to 3.98 GHz. T-Mobile's existing mid-band 5G network uses 2.5 GHz spectrum. Higher banded spectrum cannot travel as far.
The coverage that wireless companies can get from a frequency band depends on a variety of factors - things like base station equipment, end-user device specifications, operating environment, performance margins, FCC Rules and the propagation characteristics of the frequency band itself. And when you look at 2.5 GHz vs. C-Band, most of these factors leave little difference between the two bands other than the better propagation characteristics of 2.5 GHz, resulting in its superior coverage compared to C-Band. The base station equipment for both bands has a similar Massive MIMO antenna implementation, but the maximum allowed output power levels are different and significantly larger for 2.5 GHz where it matters the most and where more than 83% of the population lives. The chipset and mobile device specifications are the same, but 2.5 GHz rules allow twice as high maximum power than C-band, which is particularly beneficial in the context of in-home broadband to support improved uplink coverage. The same is true for operating margins and cell edge performance.
With that in mind, we conducted extensive RF simulations and analysis as well as material field testing to assess C-band performance across various geographies and topographies. And we saw that C-band performs well in dense urban environments with low inter-site distances, but that performance is lower in other environments. We estimate C-band will require 50% more cell sites for meaningful and continuous coverage, and in some areas, for example in-building, the required densification can be 4x higher than 2.5 GHz.
Now, Verizon is trying to convince the world it can bend the laws of physics and make C-band work similarly to 2.5 GHz. Of course, this is not new for the Verizon team. They tried to convince the world they could bend the laws of physics with mmWave, and after years of trying, they failed. As some analysts put it coming out of Verizon's presentation:
"The lie of millimeter wave is dead" [5]
“After years of LTE network capacity constraints and Verizon's "staggering whiff" at setting expectations in 2018 for its ability to pass and serve homes with a superior service relying on millimeter wave spectrum, the market heavily discounts telco fixed wireless home broadband forecasts.”[6]
Verizon has recently put a lot of misinformation into the market, and I'm sure they'll double down at their earnings this week. But here's how it breaks down:
The inescapable fact is that delivering seamless mid-band 5G coverage with C-band alone requires extensive network densification and updates to all 5G sites. That’s both time-consuming and expensive outside of urban areas. So Verizon and AT&T, following their failed business strategies to date, now have a choice: spend more to provide contiguous coverage with C-band, or leave their customers with performance and quality holes in their 5G coverage. We are making them have to compete harder!
5G Home Internet is here
One really big point of good news for customers is that 5G enables a real alternative to cable. While AT&T seems to be sitting this one out over concerns their network cannot deliver enough bandwidth to challenge and replace home internet, Verizon committed to offering service to 20 million homes by year-end 2023.
Two weeks ago, we launched T-Mobile 5G Home Internet with 30 million homes eligible on launch day, 10 million of them in rural areas and small towns. Competition has arrived for the nation’s ISPs, and consumers – especially those in under-served areas of the country – will be the winners.
Overall I couldn’t be prouder of the incredible work the team here at T-Mobile is doing and will do to truly deliver 5G for All. What are your thoughts about the state of 5G? Let me know, as always on Twitter, @NevilleRay.
Declaraciones a futuro
This blog includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including information concerning T-Mobile US, Inc.'s future network coverage, are forward-looking statements. Estas declaraciones a futuro generalmente se identifican mediante las palabras “anticipar”, “creer”, “estimar”, “suponer”, “pretender”, “puede”, “podría” o expresiones similares. Las declaraciones a futuro se basan en las expectativas y supuestos actuales, que están sujetos a riesgos e incertidumbres y podrían provocar resultados reales que difieran significativamente de las declaraciones a futuro. Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the following: natural disasters, public health crises, including the COVID-19 pandemic (the "Pandemic"), terrorist attacks or similar incidents; adverse economic, political or market conditions in the U.S. and international markets, including those caused by the Pandemic; competition, industry consolidation and changes in the market condition for wireless services; data loss or other security breaches; the scarcity and cost of additional wireless spectrum, and regulations relating to spectrum use; our inability to retain or motivate key personnel, hire qualified personnel or maintain our corporate culture; our inability to take advantage of technological developments on a timely basis; system failures and business disruptions, allowing for unauthorized use of or interference with our network and other systems; the impacts of the actions we have taken and conditions we have agreed to in connection with the regulatory proceedings and approvals of the Transactions (as defined below), including the acquisition by DISH of the prepaid wireless business under the Boost Mobile and Sprint prepaid brands (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shentel and Swiftel), the complaint and proposed final judgment agreed to by us, Deutsche Telekom AG ("DT"), Sprint Corporation ("Sprint"), SoftBank Group Corp. ("SoftBank") and DISH Network Corporation ("DISH") with the U.S. District Court for the District of Columbia, which was approved by the Court on April 1, 2020, the proposed commitments filed with the Secretary of the Federal Communications Commission ("FCC"), which we announced on May 20, 2019, certain national security commitments and undertakings, and any other commitments or undertakings entered into including but not limited to those we have made to certain states and nongovernmental organizations (collectively, the "Government Commitments"), and the challenges in satisfying the Government Commitments in the required time frames and the significant cumulative cost incurred in tracking, monitoring and complying with them; our inability to manage the ongoing commercial and transition services arrangements that we entered into with DISH in connection with the Prepaid Transaction, which we completed on July 1, 2020, and known or unknown liabilities arising in connection therewith; the effects of any future acquisition, investment, or merger involving us; any disruption or failure of our third parties (including key suppliers) to provide products or services for the operation of our business; the occurrence of high fraud rates or volumes related to device financing, customer payment cards, third-party dealers, employees, subscriptions, identities or account takeover fraud; our substantial level of indebtedness and our inability to service our debt obligations in accordance with their terms or to comply with the restrictive covenants contained therein; adverse changes in the ratings of our debt securities or adverse conditions in the credit markets; the risk of future material weaknesses we may identify while we work to integrate and align policies, principles and practices of the two companies following the Merger (as defined below), or any other failure by us to maintain effective internal controls, and the resulting significant costs and reputational damage; any changes in regulations or in the regulatory framework under which we operate; laws and regulations relating to the handling of privacy and data protection; unfavorable outcomes of existing or future legal proceedings; our offering of regulated financial services products and exposure to a wide variety of state and federal regulations; new or amended tax laws or regulations or administrative interpretations and judicial decisions affecting the scope or application of tax laws or regulations; the possibility that we may be unable to renew our spectrum leases on attractive terms or the possible revocation of our existing licenses in the event that we violate applicable laws; interests of our significant stockholders that may differ from the interests of other stockholders; future sales of our common stock by DT and SoftBank and our inability to attract additional equity financing outside the United States due to foreign ownership limitations by the FCC; the volatility of our stock price and our lack of plan to pay cash dividends in the foreseeable future; failure to realize the expected benefits and synergies of the merger (the "Merger") with Sprint, pursuant to the Business Combination Agreement with Sprint and the other parties named therein and the other transactions contemplated thereby (collectively, the "Transactions") in the expected timeframes or in the amounts anticipated; any delay and costs of, or difficulties in, integrating our business and Sprint's business and operations, and unexpected additional operating costs, customer loss and business disruption, including maintaining relationships with employees, customers, suppliers or vendors; unanticipated difficulties, disruption, or significant delays in our long-term strategy to migrate Sprint's legacy customers onto T-Mobile's existing billing platforms; and changes to existing or the issuance of new accounting standards by the Financial Accounting Standards Board or other regulatory agencies. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Select words in this release were edited on July 6, 2023.
[1] Moffett Nathanson report “U.S. Wireless: Seven Takeaways from Three Analyst Days”, March 15, 2021
[2] Moffett Nathanson report “U.S. Wireless: Seven Takeaways from Three Analyst Days”, March 15, 2021
[3] New Street Research Report “4Q20 Wireless Trends: The race to real 5G is on”, April 12, 2021
[4] Moffett Nathanson report “U.S. Wireless: Seven Takeaways from Three Analyst Days”, March 15, 2021
[5] New Street Research report “The Analyst Days: What We Learned About Network Strategies and Competitive Positioning”, March 15, 2021
[6] Sanford C. Bernstein & Co report “U.S. Telecom, Cable & Satellite: Telco home Internet guidance implies industry net adds and penetration that we don't believe”, March 24, 2021