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Trailblazing US operators coming close to using up available spectrum

Much has been made of the perceived spectrum shortage in the US. While operators will arguably never be satisfied with the amount of spectrum they possess and will always welcome more, in terms of MHz available per subscriber in the market, the US does look as though it is lacking in comparison to other major markets.

“US operators see that within a few years, they could be in trouble with regards to spectrum if they don’t act now,” warns Mike Roberts, principal analyst and head of Americas at Informa Telecoms & Media.

Help is on hand though, as US regulator the FCC has ambitious plans to make more spectrum available to the market. The regulator aims to make 500MHz of additional spectrum available within ten years, predominantly through freeing up spectrum used by television broadcasters in the country. While the plans have gained approval, they will take time, and operators will seek out short term solutions in the meanwhile .

Each carrier is going about boosting their spectrum portfolios in different ways, using different bands, strategies and even different technologies to deploy 4G services. “Advanced Wireless Spectrum (AWS) is one of the big bands here, for sure,” says Roberts. “Another big band is the 700MHz band, which is being deployed with LTE.” Verizon is leading the race to reach full nationwide LTE coverage, deploying it in the lower band of 700MHz spectrum that it recently acquired. At the end of 2012, Verizon’s LTE network covered 260 million people, and there are around 300 million people in the country.

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The operator is reaching remote rural areas by partnering with regional providers, as part of its Rural America programme. In November last year, Verizon announced that it had entered into an agreement with regional carrier Cellular One. Under the agreement, Verizon Wireless is leasing its 700MHz upper C block wireless spectrum in parts of Texas.

Using the spectrum, Cellular One will construct and operate an LTE network serving its own customers, Verizon Wireless customers, and customers of other LTE networks that are Rural America participants. Cellular One customers will also have access to Verizon Wireless’ 4G LTE network throughout the United States.

In January 2013, Verizon also signed a deal with rival AT&T to sell its excess 700MHz spectrum licenses for $1.9bn in cash plus AWS licences in several states. The 700MHz licenses cover 42 million people in 18 US states including California, Florida, New York, Texas and Washington.

According to AT&T the acquisition complements its existing holdings in the 700MHz B band and will allow the operator to quickly expand its 4G LTE services to meet demand. The company announced that it plans to reach 300 million people in the US with its 4G LTE network by the end of 2014.

AT&T has been aggressively pursuing more spectrum after its bid to take over T-Mobile USA failed last year. Not only was the transaction blocked by authorities, AT&T had to pay its rival $4bn as a consequence. In response, AT&T has looked to acquire smaller firms for more spectrum, such as the retail wireless operations of Atlantic Tele-Network, which operates under the Alltel brand, which it bought for $780m in cash.

Under terms of the agreement, AT&T acquired wireless properties, including licenses, network assets, retail stores and approximately 585,000 subscribers. The move took AT&T’s subscriber base to just over 107 million, putting it about seven million customers behind market leader Verizon.

The operator does not plan to stop there though, and in November, AT&T announced plans to expand its LTE network over the next three years in an initiative dubbed Project Velocity IP, or VIP. It will spend $14bn over the course of the project, with $8bn going on wireless connectivity and $6bn on wireline. It said the aim was to enhance its network to support the growth of mobile applications and cloud services.

Meanwhile, Sprint has also expanded its LTE service in the country, as it continues to develop its Network Vision project. The operator introduced its 4G LTE network in July 2012 and in late January 2013 it extended its coverage to include Austin and Bryan/College Station in Texas; Columbia, Tennessee; Emporia in Kansas; Fort Wayne, Indiana; Gettysburg, Pennsylvania and Framingham and Boston in Massachusetts.

The operator has also significantly improved its 3G service in Puerto Rico and expanded 4G LTE to reach more regions in the country, including Aguadilla, Isabela, Cabo Rojo and Mayagüez.

Sprint also looked close to sealing an acquisition of Wimax player Clearwire; after it gained ownership of a 50 per cent stake in the firm and made a bid of $2.2bn for the remaining shares. However, the deal is now up in the air after US satellite player Dish Network Corporation made a competing bid at a higher price than Sprint’s offer.

T-Mobile USA, the last of the four major national carriers, announced in January 2013 that it would switch on its LTE network in Las Vegas very soon. But the carrier will not officially offer any LTE enabled devices at launch.

“There will be a period when networks are up but we don’t have devices yet,” T-Mobile’s CTO Neville Ray admits. The firm has been making do without LTE thanks to a widespread HSPA+ network offering up to 42Mbps downloads, which is faster than LTE in some areas. However, the operator said it hopes to cover a population of 100 million with LTE by summer 2013.

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