T-Mobile’s top executive this week sought to paint his rivals as greedy companies that are hungry to hog the airwaves in an upcoming spectrum auction that could fetch tens of billions of dollars.
John Legere’s scathing and uncensored rebuke of AT&T and Verizon Wireless may have been aimed at pressuring the Federal Communications Commission to further exclude the nation’s two biggest mobile-phone carriers from bidding on a portion of spectrum in the 2016 auction.
“Dumb [Verizon] and Dumber [AT&T] have been treating customers like crap for decades and now they’re pushing the government to look the other way while they play keep away with your mobile future by once against dominating a government spectrum auction — this one being the last government auction of low-band spectrum we’ll see for decades,” Legere said Thursday in a no-holds-barred video posted on YouTube, below (Caution: Language, discretion advised).
“They don’t give a damn about you or about making this industry better,” Legere declared. “They just want to jack up your bill and line their pockets. It’s the same old crap on a different day.”
AT&T and Verizon didn’t respond to requests for comment on the video in what signaled the latest round of attacks fired by T-Mobile, the Bellevue, Washington-based carrier that is said to be exploring a merger with Dish Network.
Wireless analysts interviewed by Channel Partners agreed that Legere’s video was intended to encourage the FCC to adopt spectrum policies that are favorable to T-Mobile.
In the 2016 incentive auction, broadcasters are expected to relinquish their spectrum in exchange for a portion of the proceeds. According to some estimates, the auction could fetch between $40 billion and $80 billion.
“The anger is strong in him,” wireless analyst Roger Entner of Recon Analytics said, referencing Legere’s remarks in the video.
But T-Mobile’s chief executive is making allegations without “a logical foundation,” including claims that AT&T and Verizon are stashing away unused spectrum, the analyst said in a phone interview with Channel Partners. Entner referenced Verizon’s $2.4 billion sale last year of 700 MHz spectrum to T-Mobile, while noting he is only aware of WCS spectrum that AT&T isn’t using because electronics are not available yet.
“The two biggest hoarders of spectrum that is not deployed are Sprint and Dish by a wide margin,” Entner said.
Jeff Kagan, a long-time telecom analyst, questioned the veracity of a speech that he said was intended to secure favorable spectrum policies.
“I don’t really understand this crazy claim …
… by T-Mobile that both Verizon and AT&T treat customers badly when they are the two largest and most successful competitors in the space with roughly 70 percent market share between them,” Kagan said in an emailed statement to Channel Partners.
“If they were treating customers badly, they wouldn’t be growing and as large as they are,” he added. “Customers have always had choice.”
But T-Mobile and others have argued AT&T and Verizon could monopolize the airwaves – and the future rights to serve America’s 180 million smartphone users – if the FCC doesn’t adopt fair spectrum rules.
T-Mobile has been urging the FCC to set aside more spectrum for smaller carriers in the 2016 auction even though the agency has already adopted rules that prevent AT&T and Verizon from bidding on 30 megahertz.
Neville Ray, T-Mobile’s chief technology officer, said AT&T and Verizon Wireless control approximately 73 percent of all low-band spectrum that is available for commercial use.
“Without a reserve of at least 40 megahertz, AT&T and Verizon will be able to increase their low-band spectrum holdings, entrench their dominant positions in the wireless marketplace, and choke off any threat of competition in the future,” he wrote in an FCC filing.
That T-Mobile wants more spectrum is no surprise to analysts who are familiar with its strategies. Frost & Sullivan research has indicated T-Mobile’s LTE customers use about 2.7 more gigabits of cellular data per month than the other big carriers. T-Mobile’s unlimited data plans are among the prominent offerings that distinguishes the Deutsche Telekom-owned mobile carrier from its competitors.
“In order for them to execute their strategic goals and growth strategy, they need to ensure they have the bandwidth to accomplish those objectives,” said Brent Iadarola, global program director for Frost & Sullivan’s Mobile & Wireless Communications Group, in a phone interview.
It wasn’t that long ago that T-Mobile’s contract customers were fleeing in droves. Amid the challenges, T-Mobile’s Deutsche Telekom inked a deal to sell T-Mobile to AT&T, but the $39 billion acquisition collapsed in late 2011 after the U.S. Justice Department moved in federal court to block it.
T-Mobile has been focused in recent years on attractive prices and offerings such as unlimited data plans that separate it from the other national carriers.
“I think T-Mobile essentially wants to be as disruptive …
… as possible,” Iadarola added.
The strategy has been resonating with consumers. For eight consecutive quarters, “America’s Un-carrier” has picked up more than 1 million customers, according to its 2015 first-quarter results.
T-Mobile, the fourth-largest U.S. carrier, now serves 56.8 million customers. That’s in the neighborhood of Sprint’s roughly 57 million wireless connections.
In a blog Thursday that addressed similarly controversial language used by Legere and entitled “Watch the Language,” Verizon addressed T-Mobile’s spectrum arguments. Although the FCC has set aside 30 megahertz for “smaller carriers,” Verizon pointed out that T-Mobile’s parent company Deutsche Telekom has a market capitalization of $76 billion.
“The FCC doesn’t need to give additional handouts to global companies with the financial wherewithal to compete,” Verizon said.
Precluding AT&T and Verizon from bidding on additional spectrum could undermine the 2016 auction because broadcasters may not receive as much as money for the spectrum as they expect, according to Entner of Recon Analytics.
“This spectrum is authorized through an Act of Congress. That means it can’t be re-auctioned if it fails,” the wireless analyst said. “Also, the spectrum the proceeds of the spectrum go to the broadcasters and the government. And if the result is not high enough that the broadcasters’ very lofty expectations are satisfied, the auction will fail.”