According to Analyst, Verizon Eyed Sprint's 2.5 GHz Spectrum

There are four regional cellular carriers in the United States of America, divided up into the two bigger players, AT&T and Verizon, combined with the two smaller players, Sprint and T-Mobile US. These four networks jostle for position in a competitive market and amongst these four, Sprint are known as having great potential as they have spectrum across three different frequencies, but for one reason or another, have yet to effectively deploy this spectrum. Sprint own coverage at the 800 MHz, 1,900 MHz and 2,500 MHz points of the spectrum. The lower the frequency, the longer the range and the greater the penetration through solid objects such as walls and similar. However, the lower the frequency, the slower the potential data transfer speeds. Sprint have used spectrum across all three frequencies in their Spark high-speed technology, but the opinion across the industry is that their 2,500 MHz spectrum is underdeveloped and underutilized. We are aware that Sprint has plans for a significant network upgrade but meanwhile, J P Morgan analyst, Philip Cusick, has written a report stating that Verizon considers Sprint's 2,500 MHz spectrum something that could fit into its network portfolio.

Philip's report follows a meeting with Verizon's Chief Executive Officer, Lowell McAdam, where he writes that although Sprint's spectrum is an option, no discussions have taken place between the two businesses. Earlier in the year, Tony Melone, formerly of Verizon, said to analysts regarding the 2,500 MHz spectrum that, "provided the spectrum is a fairly common industry band and we have significant enough spectrum where we can deploy it fairly ubiquitous, it's certainly a spectrum that we would consider." In other words, Verizon recognizes that high-frequency spectrum could most definitely play a part in its network plans. However, Philip wrote in his report that Verizon do "...not have a driving need for more spectrum and would rather have mid- to high-band spectrum than 600 MHz..." Verizon has not ruled themselves out of the up and coming 600 MHz auction, but appear to be playing it cool with the FCC and their competitors.

Verizon is also buying AWS-1 (advanced wireless spectrum) from a group of cable companies; of these, Comcast, Time Warner Cable, Cox Communications and Bright House Networks have the option to become MVNOs (Mobile Virtual Network Operators) using Verizon's network although so far, none have done so. It is important that Verizon continue to develop their LTE network as going forwards, it seems likely that the business will face LTE congestion issues as customers use more and more of their bandwidth. In Philips report, he writes Verizon "is determined to maintain its network advantage and is willing to [increase capital expenditures] as necessary to maintain superiority; this superiority justifies a continued 10-15% pricing premium that customers seem content to pay." Verizon's expanded coverage includes investing in pico cells and Distributed Antenna Systems to improve coverage and capacity in busy areas.

Perhaps the most interesting and noteworthy item in Philip's report is that he does not believe a four regional player cellular telephone environment is sustainable in the longer term - the two smaller companies will be unable to adequately invest in their infrastructure when combined with cheaper prices. This may force the FCC to allow consolidation, which is more likely to be between the two smaller players rather than one of the larger networks and a smaller carrier.

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About the Author

David Steele

Senior Staff Writer
I grew up with 8-bit computers and moved into PDAs in my professional life, using a number of devices from early Windows CE clamshells and later. Today, my main devices are a Nexus 5X, a Sony Xperia Z Tablet and a coffee cup.