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1 Important Way T-Mobile May Be Ahead of AT&T and Verizon

By Evan Niu, CFA - Apr 23, 2013 at 8:30PM

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Will T-Mobile's tardiness to the LTE party end up paying off? The No. 4 carrier thinks being fashionably late will give it a leg up with rolling out the next stage of LTE evolution relative to larger rivals.

Sometimes it pays to be fashionably late. That's the case that T-Mobile is making with regards to its young LTE network. Since the magenta carrier is the far behind its larger rivals with deploying an LTE network, that could actually bode well for its ability to roll out newer technologies.

Specifically, T-Mobile believes it has a leg up over AT&T (T -0.14%) and Verizon (VZ 0.80%) Wireless with LTE-Advanced because its networking gear is newer than Ma Bell's or Big Red's. That's what T-Mobile network exec Yasmin Karimli told VentureBeat in an interview last week, saying that rivals with more mature networks also have older hardware that could be two years old. The bigger players may subsequently need to "rip and replace" networking equipment accordingly when the times comes for LTE-Advanced to be deployed.

T-Mobile's new LTE network currently only covers seven cities. In comparison, Verizon Wireless now covers over 491 cities with its LTE footprint, while AT&T still lags with 181 markets. In an emailed statement, Verizon Wireless spokesman Thomas Pica said:

We are actively involved with our technology partners on LTE-Advanced. When LTE-Advanced is ready for prime time, Verizon Wireless will lead the deployment charge, as we have done with 4G LTE.

Pica added that Verizon is "taking the first steps in deploying small cell technology this year, which are part of [Verizon's] LTE-Advanced plans."

Last year, AT&T said it will roll out LTE-Advanced in the 2013, but hasn't elaborated much recently.

LTE-Advanced is the next evolution of LTE, and includes important technologies like carrier aggregation. With spectrum becoming increasingly scarce and valuable as carriers blanket the airwaves, carrier aggregation can more efficiently utilize spectrum by combining separate chunks of frequency bands. Current technologies require contiguous blocks of spectrum.

Regulators believe that AT&T and Verizon hold a disproportionate amount of spectrum relative to rivals, particularly in low-frequency bands. That's why the Department of Justice's Antitrust Division recently recommended that the Federal Communications Commission structure an upcoming auction to favor the two smaller national carriers, Sprint and T-Mobile.

There's also opportunity for baseband chip providers in LTE-Advanced. Sequans Communications just introduced an LTE-Advanced chip; Broadcom did likewise. Most analysts are still confident that market leader Qualcomm will be able to maintain its edge, though, since the company is already on its third generation of chipsets while most rivals are still on their first.

T-Mobile may be able to move quicker to LTE-Advanced, but AT&T and Verizon still have awfully deep pockets to beef up their networks with.

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Stocks Mentioned

Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
$51.40 (0.80%) $0.41
AT&T Inc. Stock Quote
AT&T Inc.
$21.29 (-0.14%) $0.03
Sprint Corporation Stock Quote
Sprint Corporation
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
$139.76 (3.65%) $4.92
Sequans Communications S.A. Stock Quote
Sequans Communications S.A.
$3.20 (5.61%) $0.17

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