T-Mobile (NASDAQ:TMUS) has the worst network of the four major wireless carriers.
The company may argue otherwise, but it finished fourth in the most recent RootMetrics Mobile Network Performance in the U.S. report. That does not mean John Legere and company don't have a lot to celebrate -- T-Mobile's fourth place score shows a huge improvement over the company's numbers a year ago -- they simply still lag behind their rivals.
RootMetrics even offered up some encouragement for the Un-Carrier in the report:
T-Mobile's performance within metro areas was strong in multiple test categories, with improved data reliability and fast speeds. If you primarily use your smartphone in a major urban environment, T-Mobile remains a solid choice. Even though urban areas carry more weight in our results, T-Mobile currently lacks the broad coverage to excel in our National or State RootScore studies.
However you look at it, though, T-Mobile still stands behind Verizon (NYSE: VZ), AT&T (NYSE: T), and even Sprint (NYSE:S). That's true for now, but the company has big plans as to how to change that going forward.
What is T-Mobile going to do?
At a late-September financial conference hosted by Deutsche Bank, T-Mobile CFO Braxton Carter said the company has more money than it needs as it prepares for a large spectrum auction next year. He told the crowd at that event that the company plans to purchase enough low-band spectrum to cover the entire United States, and it believes it can do that with billions of dollars to spare.
Having consulted with the major credit rating agencies, T-Mobile found that it can spend up to $10 billion without harming its ratings, said the CFO, but the company expects to spend much less than that.
"Completing that full national footprint on low-band, it's very affordable," Carter said. "I can't imagine it would be over a billion, a billion and a half dollars to do that."
How will this improve the network?
The next Federal Communications Commission auction will sell airwaves in the 600MHz range that were previously used by television broadcasters. These low-band frequencies "are crucial for building a cellular network that can cover long distances and penetrate building walls," ARS Technica explained.
One macrocell tower using low-band spectrum covers the same geographic area as five macrocells using the mid-band spectrum T-Mobile typically relies upon, Carter said. The CFO also noted that his company already has more than half of the U.S. population covered by low-band spectrum since buying some from Verizon last year.
T-Mobile should be able to pick up what it needs at the auction because the FCC is setting aside a portion of the spectrum being sold for carriers that own fewer low-band airwaves. That takes AT&T and Verizon out of that portion of the game, according to ARS, and Sprint, which would be qualified to bid, has already release a statement saying it won't.
It's a changing world
T-Mobile has already done a lot to cut into Verizon, AT&T, and Sprint's network lead. The 82 RootMetrics score it posted is actually better than the 81.6 that scored top honors for Verizon just a year ago in the same report, and it's better than the 79.5 AT&T scored.
Network quality is becoming less and less of a reason to pick one wireless provider over another. If T-Mobile succeeds in making the spectrum purchases it expects to, there's no reason to believe it won't offer comparable nationwide service to AT&T and Verizon once it can deploy the new technology.
That's good new for the Un-Carrier, and bad news for its rivals, which have been able to use offering better networks as a way to charge more than T-Mobile. Remove that advantage, and price becomes the deciding factor for many. That could lead to a huge customer influx for Legere and Carter's company, coming at the expense of AT&T and Verizon.
Daniel Kline has no position in any stocks mentioned. He is a T-Mobile customer who has had no issues with splitting time between the Hartford, Connecticut area and West Palm Beach, Florida. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.