T-Mobile is warehousing spectrum … and other specious arguments

T-Mobile bought almost 200 spectrum licenses in the 3.45GHz range at the beginning of this year, but it doesn’t plan to put those licenses into use until the end of 2023.

The company spent almost $1 billion across several FCC millimeter wave spectrum auctions more than two years ago but still has no concrete plans to put that spectrum into widespread action.

Yet T-Mobile’s networking chief made this claim just a few months ago: “We have never warehoused spectrum in my entire career at the company. We never will,” Neville Ray said at a November investor event.

Is Ray being facetious? Or is something else going on?

The truth about spectrum

The reality is that spectrum is a tool. It’s a tool that can be used to provide wireless services or to create value as an investment.

T-Mobile is using most of its spectrum holdings for wireless services. The company’s network is widely regarded as the biggest and fastest 5G network in the US – mainly because of all the spectrum T-Mobile has put into the network.

But T-Mobile’s current 5G plan has no place for its millimeter wave (mmWave) spectrum holdings. Ray suggested the operator might use mmWave for fixed wireless at some point in the future. And that would be the point at which T-Mobile’s mmWave spectrum tool would shift from an investment to a network asset.

This is all perfectly legal. In general, the FCC does require spectrum owners to build a network with their licenses. Typically they must do so within 10 years of getting spectrum licenses. But during that 10-year ownership period, spectrum winners can do whatever they want, including nothing.

Spectrum as an investment

Although most companies that participate in FCC spectrum auctions intend to build a network with spectrum licenses as quickly as possible, some don’t.

For example, Columbia Capital acquired a substantial amount of 600MHz spectrum licenses during and after the FCC’s 2017 auction. A few years later, T-Mobile bought those licenses for $3.5 billion – roughly double what Columbia spent to acquire the licenses. That’s a pretty good return on Columbia’s spectrum investment.

NextWave is the premier example of a company that bet heavily on spectrum as an investment. NextWave walked away with $4.2 billion in licenses in the FCC’s PCS spectrum auction in the 1990s, but it quickly fell into bankruptcy. After a protracted legal battle with the FCC, the company eventually sold much of its spectrum holdings to Verizon, AT&T, T-Mobile and others.

To read the complete article, visit Light Reading.