Deutsche Telekom boss is wrong about 5G

It is hard to find a European telecom executive who gushes about 5G. Most people on the commercial side talk about the mobile technology as if it were a disagreeable relative with a couple of redeeming qualities. “It’s been hugely expensive but at least it’s brought extra capacity” replaces “he’s got appalling manners but at least he turns up with a bottle of wine.”

It may have seemed refreshing, then, to hear Timotheus Höttges, the CEO of Deutsche Telekom, offer a more positive assessment of 5G at the German operator’s capital markets day (CMD) last week. “Without 5G, T-Mobile US would never be that successful. We made our fortune based on 5G services,” he said in response to a question from a Bloomberg reporter. For the boss of Europe’s biggest telco, it’s not just about the US, either. In nearly all the places where Deutsche Telekom established a 5G lead, it has gained three to five percentage points of market share, he said.

Unfortunately, Deutsche Telekom’s gains in the US and Europe do not mean 5G has been a success. T-Mobile’s dramatic rise on the other side of the pond started in 2013, years before anyone knew what 5G would be, when its sales grew a quarter and it managed a small $35 million net profit, compared with a $7.3 billion loss in 2012. It owed its turnaround to former CEO John Legere and his “Uncarrier” strategy, which was all about breaking with conventional telco behavior and service practices.

T-Mobile has been able to sustain growth thanks to that reputation it built under Legere and by sticking to his principles, and not really because of anything it has done in 5G. For a long time, it was also competing against two inept telco dinosaurs – “Dumb and Dumber,” as Legere called them – in AT&T and Verizon. Each was distracted by catastrophic, multibillion-dollar bets on media businesses.

Blowing out the lights

There was, however, an important 5G development that has no parallel in any other country and was well described by Höttges last week. “We deployed the 2.5GHz back then across the country and we’ve blown out the lights of Verizon and AT&T in this environment, because we were able to provide a countrywide 5G service while these guys were waiting for the clearing of the 3.5GHz spectrum, which has totally different propagation, another buildout logic and is more expensive,” he said.

T-Mobile had been smart enough to merge with another telco, Sprint, that owned a huge amount of 2.5GHz spectrum suitable for deployment with 5G. Due to the physics properties of spectrum, signals travel further and penetrate walls more effectively in this 2.5GHz band than they do in higher ranges, such as 3.5GHz. By combining it with much lower 600MHz spectrum, T-Mobile has been able to provide a superior 5G service to AT&T and Verizon.

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