Yesterday, Verizon announced 2021 as the retirement date for their CDMA networks. This would include the 2G voice and the 3G EVDO networks. To accomplish this Verizon will need to develop Rich Communication Services (RCS) for their LTE network and change out customer handsets. 9 years should allow this to be a smooth transition. Verizon has clarified that this is more of a planning horizon. Rich Communication Services is the route carriers are taking to retain their voice customers. RCS is essentially Carrier Voice over IP (VoIP). It will likely be the only VoIP service that will be capable of delivering E911 location information as is required today. Obviously when every phone (device) only has a data connection, many VoIP solutions will be competing for the mobile customer.
In looking at Verizon's web site, I can purchase a Samsung Galaxy Tab 2 for $349.99 and have 4GB of data monthly for $30.00/mo, no contract. I agree that this 7" tablet is a little big for a phone, but it does fit in my back pocket. For $30/mo, I can have both voice and data using Skype, OOMA, or ClevorConnect for a small monthly fee. For an iPhone with a 4GB data plan, I would be paying $110/mo for access. Once the LTE network matures, covering homes, highways, and interstates between cities, an $80/mo savings will be pretty attractive.
Verizon's "shut down" statement also causes me to wonder why Sprint will be spending 3 years and multiple billions of dollars, modernizing their CDMA network. I understand the enhancements to coverage that Network Vision provides and the unfortunate lack of other spectrum partners (Lightsquared) to use their new base stations, but I certainly hope that Sprint ran the numbers on developing a Nextel Push-to-Talk (PTT) solution on a WCDMA platform, before launching down the current path. At this point, it appears that Sprint will be the primary US carrier pushing for continued support and development on the CDMA platform.
How are carriers going to prevent being only data providers without the current high dollar voice services?
It is interesting that a Sprint offer would be forthcoming for MetroPCS considering that Sprint walked away from a purchase earlier this year. As the report below indicates, Sprint's spectrum holding are in the PCS spectrum band including their national PCS G channel while MetroPCS's spectrum holding is primarily in the AWS spectrum band. Although Sprint and MetroPCS operate compatible CDMA networks and handsets the MetroPCS network would be virtually redundant with the Sprint network except for perhaps 5% of the towers that could be utilized to improve coverage or overload capacity. Adding MetroPCS' spectrum to Sprint's spectrum holding is a case of 1+1=2 since no new efficiency is found. Conversely, looking at the merger with T-Mobile, there is an opportunity to create a 1+1=3. This is possible as I expect T-Mobile and Verizon to rationalize their spectrum holdings in the AWS band allowing each carrier to maximize their channel size across a market in this band. Once MetroPCS' customer are shifted to T-Mobile's HSPA+ network, the MetroPCS spectrum can be added to the T-Mobile initial 10x10MHz FDD-LTE offering to create a 20x20MHz FDD-LTE channel. This positions T-Mobile as one of the front runners on LTE channel size in the US. Only Dish and Clearwire currently have the spectrum holdings to launch a 20MHz wide LTE channel and Dish's opportunity still sits with the FCC and its need to protect the AWS2 spectrum that is also being referred to as PCS H spectrum. It is likely that Dish will not net the entire 20MHz that they anticipated.
What does the merger agreement between T-Mobile and MetroPCS mean on a market by market basis? You can fully understand the plan unless you figure in the Verizon's spectrum holdings in the AWS band. Above is a screenshot of the AllNet Labs Spectrum Landscape that depicts the uplink AWS spectrum positions in New York and Los Angeles. As a reminder, uplink is the traffic that goes from the mobile device to the cell site. In the New York market Verizon owns 2 - 10MHz blocks of spectrum and T-Mobile owns 2-10MHz blocks of spectrum and 1-5MHz block of spectrum, assuming the merger receives approval. Since the game for Verizon and T-Mobile now is 4G-LTE, both carriers would prefer to have the largest blocks of contiguous spectrum in this band as possible. This will allow the maximum speeds out of their spectrum positions. Since Verizon's New York spectrum is currently unused, I would expect Verizon and T-Mobile to exchange the F block channels with the A block channels. In this scenario, Verizon would own a 1x20MHz channel and T-Mobile would own a 1x25MHz channel. This is inline with T-Mobile's statement that the MetroPCS merger would provide it with a 1x20MHz LTE channel in most markets after the MetroPCS spectrum is recovered in roughly two years.
Los Angeles is a bit more complicated unless the AT&T spectrum transfers to T-Mobile have not been updated with the FCC. With October data from the FCC, AT&T still holds very minor positions in the AWS band in several of the Top 20 markets. Assuming this is an accurate picture of the Los Angeles spectrum, T-Mobile and Verizon could exchange B and F bands, which would provide no benefit to Verizon but would increase T-Mobile's maximum channel size to 1x15MHz.
Why getting the largest channel size within a spectrum band important? The LTE Advance feature of Carrier Aggregation will allow you to combine channels in different spectrum bands to 'form' a larger data pipe, but carrier aggregation cannot combine two or more different channels within the same frequency band. When we speak of frequency bands, we are referring to the distinct 700MHz, Cellular, Personal Communication Service (PCS), Advance Wireless Service (AWS), Wireless Communication Service (WCS), Broadband Radio Service (BRS), and Educational Broadcast Service (EBS) bands.
Any potential T-Mobile/Verizon trades are simplified by Verizon's unused spectrum. Do you think we will begin to see trades involving spectrum that is in use?
Below is a link to an Investor's Presentation provided by AllNet Labs utilizing the AllNet Labs Spectrum Landscape report to analyze three recent wireless announcements: Verizon's 700MHz A block spectrum holdings; Verizon's SpectrumCo purchase and agreement to share the related AWS spectrum; and the AT&T proposal for the WCS band.