With little fanfare, T-Mobile USA Inc. has expanded the reach of its network by more than 50 percent, chiefly through 850 MHz roaming agreements that have put the carrier on more competitive footing and mark a shift from its historic 1900 MHz-only platform.
Most of the increase in footprint has been in the West, Midwest and rural Northeast through partnerships with carriers such as Alltel Corp., Cingular Wireless L.L.C., Centennial Communications Corp., Dobson Communications Corp., Edge Wireless and Rural Cellular Corp.
According to Neville Ray, senior vice president of engineering operations for T-Mobile USA, the carrier has added more than 500,000 square miles of coverage through the agreements.
“The net improvement in our footprint is north of 56 percent,” Ray said. “It’s a very great change in the coverage map for T-Mobile.”
In addition to the roaming agreements, Ray said T-Mobile USA turned on about 3,500 new towers of its own during the year in a buildout that he called “above pretty much anything we’ve done historically.”
Between its own buildout and the roaming agreements, the expansion gives T-Mobile USA a more competitive footprint despite being spectrum-poor in many places.
“They have always been a little short on spectrum if you compare them to the other leading national carriers,” said Weston Henderek, senior analyst with Current Analysis. Between feeling a spectrum squeeze from consistently brisk customer additions of nearly a million per quarter and not wanting to fall too far behind the other national carriers in 3G network rollouts, Henderek noted that T-Mobile USA seems to have gotten over its past hesitancy on a spectrum strategy and is aiming squarely to improve its position through the 3G spectrum auction slated for this summer.
“The strategy seems to be to add more spectrum and roll out 3G, but in the meantime, they needed a little bit of a Band-Aid to fix their situation,” Henderek said.
Hence the roaming agreements, which Ray said were a cost-effective way for T-Mobile to augment its services while it gears up to enter the 3G playing field. He added that T-Mobile USA has run some small trials of 3G services and hopes to do a commercial rollout in the latter part of this year that likely will spill into 2007.
The ability to access 850 MHz roaming, according to Henderek, is “only really starting to pay off right around now,” as the number of T-Mobile USA subscribers with 850-MHz-capable handsets also is increasing. At least 50 percent of customers today have handsets that can roam on 850 MHz, Ray said. T-Mobile has been changing its handset mix so that nearly all of the wireless devices that it sells can take advantage of the 850 MHz roaming agreements. The roaming service is only available to postpaid customers; Ray said the company is looking into making the expanded network available to prepaid customers as well.
Beyond taking advantage of its 850 MHz roaming agreements, T-Mobile USA has also been linked to a possible rollup of regional GSM operators that have been struggling to add subscribers in an increasingly competitive environment. Those regional operators include Dobson, Centennial and Rural Cellular, which have significant 850 MHz holdings.
Analysts have noted that the regional acquisitions would help T-Mobile USA expand its footprint geographically, with Dobson possessing a strong network in the Midwest, South and Alaska; Centennial offering service in the upper Midwest and South; and Rural Cellular offering GSM in the Northeast, Northwest and South.
T-Mobile expects to make its fourth-quarter and yearly financial report sometime in March. While the carrier typically has been spending around $2 billion per year in expanding its network, that average figure probably won’t reflect its investment and expansion in 2005, Ray said.
“It really does change the map for T-Mobile as we start 2006,” he added.
