Do T-Mobile and Dish need each other?

t-mobile dish

Earlier today I read an article over at Seeking Alpha, written by a research analyst and author named Brian Nichols. In it he argues that Dish and T-Mobile need each other. And after reading, I’m hard pushed to find a strong argument against it. It highlights something we’ve known for a long time. But, like anyone not wanting to admit to any kind of defeat, we convince ourselves that “it’ll be okay.”

It’s all about spectrum. As is seemingly everything these days. T-Mobile needs more of it to continue rolling out its LTE network. It’s so desperate to get its hands on the precious 600MHz frequency airwaves at next year’s auction that it – almost literally – hasn’t stopped petitioning and lobbying the FCC to reserve more for the smaller carriers. Although it acquired a safe amount of AWS-3 spectrum at last year’s auction, it wasn’t happy with how the overall bidding went down. The duopoly got the majority of the spectrum with Dish Networks being the surprise big bidder.

This tweet from John Legere, T-Mo’s CEO yesterday pretty much sums up the company’s mood:

T-Mobile clearly lacks low band spectrum. And that’s the key. It’s LOW-band spectrum T-Mobile needs. It may like other flavors of LTE to improve coverage. But it’s the low band it wants more than anything else.

Nichols points out that Dish has tons of AWS-4 spectrum sitting aside doing nothing. This 2GHz spectrum is potentially awesome for use in mobile cellular networks. Although it’s not the best for building penetration (what T-Mo needs), it could be fantastic for super-fast LTE. In another article on Fool.com, Nichols puts it like this:

“Think of AWS-4 like a nine lane, newly paved series of interstates that run seamlessly through Atlanta, meaning it allows for a better flow of data. And remember, Dish’s interstate remains unused, sitting beside crowded highways, and looking ever so attractive.”

Here’s the kicker: Dish has to put at least 40% of its AWS-4 spectrum in to use for connecting mobile devices by 2017. Except Dish doesn’t have the infrastructure to do that. It essentially has a big pile of fast, awesome spectrum (worth around $25 billion) doing nothing. T-Mobile has the infrastructure, and could always use more spectrum to expand and improve its “Data Strong” network further. It might even be able to boast a coverage map similar to Verizon if it did.

It’s worth reiterating – Dish happened to be one of the biggest buyers at the recent AWS-3 auction. So it has two big piles of mid/high frequency spectrum. Both of which could potentially be of use to T-Mobile. But neither is what T-Mobile needs right now as a matter of urgency.

Which brings me to my real point: Right now, Dish needs T-Mobile infrastructure a heck of a lot more than T-Mobile needs Dish’s spectrum.

What T-Mobile really needs, and really wants right now is low band spectrum. It wants to build a durable, strong and reliable spine to its already super-fast network. That’s what the 700MHz band 12 frequency is doing right now. It punches through building walls, making sure customers still get an LTE signal when they’re in their homes or offices.

I have no doubt that T-Mobile sees Dish’s spectrum holdings as a tempting treasure chest, waiting to be cracked open. But as a matter of necessity, it needs other spectrum more.

It also needs cash. Sadly, you can’t get spectrum just by hoping, wishing or lobbying for it. Would a deal with Dish leave T-Mobile with enough capital to spend on a healthy amount of the 600MHz spectrum at next year’s auction? That’s a question that can only be answered when financial details of any potential deal are revealed.

And this is perhaps when the first mention of Comcast (sorry) comes in. It has capital. It might not have spectrum, and it might be a company with a terrible reputation (I mean, I’m on the other side of the Atlantic and I know Comcast sucks), but it has cash. T-Mobile could do a lot of damage to its competition in the 2016 incentive auction with that kind of money.

So is it a choice between the maverick satellite TV company and the evil machine? It might not be. With T-Mobile’s current reputation as the rock-star carrier that also happens to be the fastest-growing network operator, there are bound to be other companies interested. Last year alone two companies tried to buy T-Mobile (that we know of). This year, we’ve heard of Dish and Comcast. Next year, who knows?

What do you think? Do we need Dish? Does Dish need us?

Via: SeekingAlpha

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  • no2apple

    Seeking Alpha … haha . Its a joke..

  • Steven

    I want Dish to leave T-Mo alone. Not a fan of Dish. T-mobile needs to get just a small amount of 600mhz spectrum this year and deploy it in the few markets they were out bid in for 700mhz. Eliminate those areas that were put on low band lockdown.

  • Justin Smith

    If Dish had more capital that could support T-Mobile, didn’t mess with their plans/uncarrier moves then I think I’d be all for a T-Dish deal(just keep the T-Mobile name).

    Dish’s AWS-4 Spectrum has similar propagation characteristics to T-Mobile’s current AWS-1 spectrum but 20×20 everywhere which would be great coupled with 600Mhz. As well as something that many people aren’t mentioning, Dish was T-Mobile’s biggest competitor in the AWS-3 auction and outbid T-mo on more bids than anyone else. That’s just my thoughts on the whole rumor and the benefits.

    • The AWS-4 (2000MHz) band shares more characteristics with the PCS band (1900MHz).

    • archerian

      Dish was T-Mobile’s biggest competitor in the AWS-3 auction and outbid T-mo on more bids than anyone else.

      And yet T-mobile somehow blames the Big 2 for it and goes to excruciatingly painful lengths to avoid mentioning Dish as their main competitor for the auction. Can’t spit on your potential boss now can we?

      • jdogs

        What’s the point on mentioning dish, they are not competition yet. Why waste time and money on that.

      • Mike Palomba

        How do you quote a post on here? I know how to reply to one but I don’t know how to quote one.

        • archerian

          Enclose the text to quote in a blockquote tag. I can’t show it here without it being quoted itself, check Google for HTML tag ‘blockquote’ and do the same in a normal disqus text field like this one.

        • Mike Palomba

          Enclose the text to quote in a blockquote tag. I can’t show it here without it being quoted itself, check Google for HTML tag ‘blockquote’ and do the same in a normal disqus text field like this one.

          I think I did it wrong lol

        • Mike Palomba

          Oh wait I did it right. Thanks for your help!

        • archerian

          No problem, remember to close the tag after the quoted text so your own text doesn’t fall in the quote.

  • iMotoXperiaGalaxy

    Dish is garbage!! T-Mobile needs Comcast or Sprint.

    Haha!

  • Adrayven

    Another thing you forget Cam. Part of the deal with the current auction limitations on the 600MHz is if T-Mobile or Sprint merge or get bought out; its likely to get the current auction limitations on ATT/Verizon thrown out.

    So if
    1) Dish succeeded. Dish is already limited on cash and not only would T-Dish not have more cash to buy spectrum but need even MORE cash because ATT/Verizon will not have limits and it will become a bidding war they cannot win.

    2) Comcast gets them, again, Auction limitations go out the window. Now Comcast has some cash, but they don’t have cash to go head to head to with an un-inhibited ATT/Verizon.

    Fact is.. if any buyout happens prior to the auction, it will likely be at t-mobile’s expense in a big way.

    • Cam Bunton

      Good points, well made.

    • Cam Bunton

      So if Dish wants to get this done, it really is in a Catch 22 situation. It needs to get its spectrum in use by 2017. In which case, a deal needs to be done soon so that they can get the ball rolling with T-Mobile and find a way to make it work logistically before the end of 2016.

      Waiting until after the 2016 auction to avoid the reserve potentially being scrapped doesn’t give them enough time to work out all the issues involved with making use of AWS-4.

      It’ll be interesting watching this all play out, for sure. I just hope something major’s announced before the end of June. Otherwise, I don’t get the joy of covering it.

      • archerian

        realistically, what’re the chances for device support on AWS-4 in a year or so when it is owned by Dish? It will need marketing muscle from someone far bigger and entrenched like ATT or VZW to make it viable.

      • BillSmitty

        Not versed in the cell technicals, but wouldn’t Dish spectrum be valuable to VZ/ATT or others? They have a ton of spectrum that they could swap or trade for low band frequency, since TMO has a lot of high band covered…no? I don’t think DT wants to keep playing games with this merger stuff, so I’m confident it will go with Dish, but to satisfy shareholders they have to do a little dancing to get the best $$ possible. God forbid Comcast enters and Sprint is a dead end.

      • justanormalguy13

        They could just secretly get all the towers ready, but not flip the switch. Then they could wait until after the auction is done, then announce the merger. Then, they could hit the switch before the year is up.

        I’m sure there are laws against that though…

    • archerian

      how would the auction limits on ATT and VZW get thrown out if T-mobile and Sprint merge or T-mobile gets acquired by Comcast? the limits are not on total low band holdings but on a per market level, so it would mean the combined new entity might cross the limit in certain markets, that would mean they would have to compete against ATT and VZW on those regions.

  • taxandspend

    Move the TV stations, then ~give~ 10×10 to AT&T, 10×10 to Verizon, 10×10 to Sprint, and 10×10 to T-Mobile. And require that they start using it in some set percentage of the US in some set amount of time. Then at least we won’t see our bills increase because they have to pay a ridiculous price for spectrum.

    • thunder

      what about cspire, us cellular, Ntelos, bluegrass and all the small small guys.

      • thunder

        I say 5×5 to att, 5×5 to verizon, 5×5 to sprint, 5×5 to tmobile, 10×10 to us cellular, and 10×10 to cspire. It would help tmobile and sprint out and would bring in 2 new nationwide carriers witch could be dominate in curtain areas where they on more spectrum see this for more info on cspire and us cell.http://specmap.sequence-omega.net/

        • Cole C

          What is this 5×5 10×10 20×20 & so on? Plz and thanks to whoever answers me. Something about carrier aggregation. What does that mean too?

        • MastarPete

          it is the width of spectrum (channel bandwidth) used for Uplink (upload) and Downlink (download) so 5mhz, 10mhz and 20mhz. I’m not familiar with specific cases but 5×10 could be an example where the license don’t provide an equal amount of spectrum for uplink and downlink.

          As for Aggregation…

          Typically in the past if you wanted to transfer information you did so on a single band with a single modem connected to a single radio transceiver. Advances in technology (hardware and software) mean you can now transfer information across multiple bands simultaneously. By spreading the information across as many available bands as you have radios available (aggregation). It effectively increases the available bandwidth while lowering the amount of spectrum required on each band for any one user.

          In T-Mobile’s case 1700mhz (paired with 2100mhz) was the primary band pair used for data. T-Mobile also owns spectrum on 1900mhz and now 700mhz. Carrier aggregation means T-Mobile could broaden the effective available spectrum used for data across all three bands to improve data speeds.

          Other examples of carrier aggregation.. In DOCSIS 3.0 or newer cable modems it is referred to as channel bonding. However, instead of describing the channel bandwidth, modems that support bonding list the number of channels they can bond ex: 4×4, 8×4, Docsis 3.1 will support 16×4, 16×8.

          I believe for WiFi the closest equivalent is MiMo (multiple input, multiple output) though it behaves differently since there isn’t as much spectrum available so everything happens on the same band. To get the most out of a WiFi router with 3×3 MiMo (describes the number of radio transceivers), your laptop, tablet or phone also needs to have the same number of transceivers.

        • gabmasterjcc

          Generally, you are on the right track with your comments, but MIMO is completely not equivalent. There are two things that somewhat are. First, depending on which version, you can pick your channel bandwidth. Second, the aggregation of 2.4GHz and 5GHz bands is possible with some equipment. MIMO is multiiple receive and transmit antennas. This allows for beamforming, which is a completely different function. It still uses the same amount of bandwidth.

  • thunder

    I would be fine with dish/Tmobile but would rather It just be Tmobile like it is today.

    • Cole C

      Then I would be just fine with Comcast if T-MoBile stayed the same lol

  • I agree that Dish needs TMUS more than the other way around. Unfortunately, I’m afraid that DT wants Dish more than it wants TMUS.

    Though the AWS3 licenses from Dish would integrate nicely in TMUS network, perhaps merely requiring minor upgrades to its cell sites where its AWS licenses overlap, the AWS4 licenses would likely require new equipment and much more capital spending.

    I disagree about Comcast though. Out of aversion and out of the fact that though it has more capital, after decades raping its customers in monopoly deals with thousands of city councils throughout the nation, Comcast brings no spectrum to the table. And, while spectrum can be lit up in months, all that capital could be used to acquire spectrum only years ahead.

  • wicketr

    Also keep in mind that DISH would also benefit by gaining a retail presence. T-Mobile stores could both demo and sell DISH units, handle payments, box swapping, etc. That could significantly increase the number of customers they have and reduce costs.

    • archerian

      what, and add to the burden of the already clueless reps who barely can understand T-mobile terms and plans? I’m not saying they all are, but in any average store there are enough walking around that you’ll be taking a chance with the one who is going to help you.

      • Joe

        Haha yup I ask them something that is not very technical and there like ummm I don’t know of such a thing.

        • TaylorW86

          If you need a technician call the tech care line, we’re sales people. That’s life. You ever ask somebody at the gap how to sew a shirt? Ever asked a car salesman to repair your car?

  • gabmasterjcc

    If T-Mobile and Dish do merge, I think they should sell the AWS-4 block. They could probably sell it to AT&T or Verizon. As a part of that deal, they should get partial payment via AWS-3 spectrum. That would help them get a good size AWS-3 block (after combining Dish’s holding and their own). It gives them some cash for the 600 MHz auction and reduces AT&T or Verizon’s cash on hand for the 600 MHz auction.

    For AT&T or Verizon, they get an awesome 20×20 block of spectrum for great service potential. They are in less need of low band, so it is not as valuable to them and the high auction prices wouldn’t necessarily make them happy. Also, AWS-3 and AWS-4 don’t have any phone support yet so swapping their AWS-3 for AWS-4 has little impact. Both of them are also more capable of driving phone manufacturers to support the new unique band for their phones, so AWS-4 is slightly more valuable to them than T-Mobile in that respect.

    Now this would never happen, as it is too complex… But I think it would be the best outcome.

    • Justin Smith

      NO, just NO! The AWS-4 block also iant 20×20 it is 40×0 40Mhz only for download! As the FCC allowed dish to do that. T-Mobile also needs capacity in many markets which AWS-4 would be perfect for. 600+AWS-4 would be a perfect match.

  • gadget_hero

    DISH needs T-Mobile WAY more than T-Mobile needs DISH. What TMO needs is not more mid-band and high band spectrum, they need low band stuff. US Cellular would be a great prize, more PCS (for Band 2 LTE), and they have a bunch of A block (700MHz). This minus a few smaller markets could get TMO pretty much close to nationwide A block and can plug lots of holes. Then TMO could use PCS for LTE/HSPA (fall back) and all AWS4 for LTE and just for giggles if Sprint sells some BRS/EBS they can put that on top like a cherry.

    • Cole C

      Did you not read the article? That’s exactly what was said

      • gadget_hero

        Except it wasn’t US Cellular wasn’t mentioned.

  • kevev

    “T-Mobile could do a lot of damage to its competition in the 2016 incentive auction with that kind of money.”

    They could also do a lot of damage to it’s customer base with a Comcast merger. Be careful Magenta!

  • Cole C

    I REALLY DISLIKE THAT Deutsche telecom is trying to sell T-Mobile! I would like the dish merger. Not the Comcast though. I would like T-Mobile to have their capitol though or is it capital? I think it’s the former.

    • josephsinger

      Capitol is a building.

  • Abhinav Tella

    Look at Sprint, why it went for Softbank instead of Dish…….. Dish could not offer much in terms of actual investment. Dish is close to the size of T-Mobile and I am guessing a lot of money will have to be spent on debt servicing rather than real growth. Feel free to correct me if I am mistaken.

  • sushimane88

    can someone make a map that would show how much of a improvement tmobile would look like if dish and tmobile merged? thanks

  • KlausWillSeeYouNow

    Yes, yes, yes.