Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: T-Mobile Challenges AT&T's Proposed Spectrum Acquisition

By Evan Niu, CFA - Jan 21, 2016 at 11:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

T-Mobile thinks AT&T wants to stifle competition by hogging all the spectrum.

What happened?
Un-carrier T-Mobile (TMUS 0.69%) has filed documents with the FCC contesting AT&T's (T 0.56%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AT&T Inc. Stock Quote
AT&T Inc.
$18.10 (0.56%) $0.10
T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
$145.58 (0.69%) $1.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.