Un-carrier T-Mobile (NASDAQ:TMUS) has filed documents with the FCC contesting AT&T's (NYSE:T) request to purchase more low-band 700 MHz spectrum in rural parts of West Virginia, Ohio, and Kentucky. AT&T originally filed documents in May 2015 looking to acquire more spectrum, saying that it needed the licenses to increase capacity and launch new services.
T-Mobile notes that the FCC adopted a policy in 2014 that any transaction that resulted in any carrier obtaining too much spectrum control should undergo "enhanced review," but no transaction has been denied under this policy. AT&T already controls 60% of the market in some of these regions, and obtaining even more spectrum would give it even more power and "set a dangerous precedent," according to T-Mobile.
Does it matter?
Spectrum licenses are the lifeblood of the wireless industry, and low-band spectrum is particularly valuable, especially in rural areas. Low-band spectrum allows for longer-range cellular data transmissions, which greatly reduces the density requirements of cellular networks. This, in turn, reduces capital expenditures since fewer cellular towers are needed.
It was very much thanks to 700 MHz spectrum that T-Mobile was able to dramatically expand its LTE coverage in 2015 by as much as 250%. T-Mobile acquired the spectrum blocks in 2014. The Un-carrier maintains that AT&T is mostly just interested in precluding competition by acquiring the valuable spectrum licenses, as opposed to deploying greater capacity to benefit consumers.
Considering the importance of spectrum, these types of battles aren't going away anytime soon, and T-Mobile knows how to put up a fight.
Evan Niu, CFA has no position in any stocks mentioned. 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.