By Mark Long / CIO Today. Updated April 09, 2012.
T-Mobile and its joint venture with Cook Inlet have agreed to a spectrum-swapping deal with Leap Wireless International and Leap's majority-owned Savary Island Wireless. Financial details were not disclosed.
Operating in select U.S. markets, Leap Wireless offers prepaid mobile services under the Cricket brand. If the proposed spectrum-swapping deal passes scrutiny by the Federal Communications Commission, the company will gain access to 10 megahertz of advanced wireless spectrum (AWS) in Texas' Brian College Station, Galveston and Houston markets as well as in Phoenix, Ariz.
Leap Wireless expects the pending spectrum swaps to enhance the company's spectrum depth in those markets while boosting the venture's longer term flexibility to offer a larger LTE channel, said Leap CEO Doug Hutcheson.
"As we have previously announced, we plan to cover approximately two-thirds of our current network footprint with LTE technology over the next two to three years," Hutcheson said Monday.
"In addition, the transactions will allow us to realign spectrum in key markets into contiguous channels, thereby optimizing our delivery of wireless services."
Leveraging its AT&T Windfall
T-Mobile USA is slated to receive a swath of AWS spectrum in markets across the nation as compensation for AT&T's failure to close its proposed merger with the carrier. The resulting AWS spectrum windfall will provide T-Mobile with wireless coverage in 128 U.S. metropolitan markets, including Atlanta, Baltimore, Boston, Dallas, Denver, Houston, Los Angeles, Phoenix, San Diego, San Francisco, and Seattle.
However, a T-Mobile spokesperson said Monday that the pending spectrum exchange with Leap Wireless "is separate from the expected spectrum transfer from AT&T." Moreover, T-Mobile expects its new agreement with Leap "to enhance the 4G user experience as we continue to deliver a fast, nationwide 4G network and modernize our network for LTE services."
If the FCC approves the proposed multi-market AWS swap, T-Mobile will receive spectrum from Leap and its Savory Island joint venture in several markets within Alabama, Illinois, Missouri and Minnesota. Additionally, the deal calls for the companies to exchange spectrum in New Mexico and Texas, as well as in the metropolitan markets of Atlantic City, Philadelphia, and Wilmington, Del.
Juggling the Spectrum Crunch
The driving force behind the latest round of spectrum juggling is to better position the participating wireless carriers to compete in selected markets as they await the FCC's plan to auction off additional spectrum. Earlier this year, AT&T noted that the nation is already facing a serious wireless spectrum crunch and that gaining access to additional wireless frequencies is absolutely critical.
Moreover, the FCC's decision to reject LightSquared's application to offer satellite-based spectrum backhaul services for wireless carriers due to GPS interference concerns has left wireless scrambling for other options to keep up with growing wireless data demand.
AT&T CEO Randall Stephenson told investors last January that wireless growth cannot continue without more spectrum being cleared and brought to market. "And despite all the speeches from the FCC, we're all still waiting," Stephenson said.
In the absence of spectrum auctions, AT&T and other U.S. wireless carriers are taking the logical step of entering into smaller transactions to acquire the requisite spectrum for meeting unprecedented demand, Stephenson said.
"But even here, we need the FCC's action and leadership, and unfortunately, even the smallest and most routine spectrum deals are receiving intense scrutiny," he said. "[It's] clearly time for Congress and the FCC to step up."