Breaking down the T-Mobile / MetroPCS Merger

What a combined T-Mobile / MetroPCS could mean for West Michigan

This past week, news broke of the upcoming T-Mobile / MetroPCS merger. I won't go into the financial details, since everyone else is already covering those, and beside the fact that both companies are modestly profitable, there isn't much to report. However, I would like to go into some of the details into West Michigan networks:

T-Mobile in West Michigan

For those who aren't aware, in West Michigan, T-Mobile has 70mhz of total spectrum: 40mhz of PCS, and 30mhz of AWS spectrum. The 40mhz PCS spectrum is mostly unused (10mhz runs GSM, about half of which is EDGE "2G", and half of which is GRPS "1G"). Of T-Mobile's 30mhz of AWS, 20mhz is currently in-use for their HSPA+ 3G/"4G" and 10mhz sits unused. This means T-Mobile has 50mhz of unused spectrum.

T-Mobiles network covers about two-thirds of what's considered "Metro West Michigan" and the majority of this is GRPS or EDGE only. T-Mobile runs 3G/"4G" HSPA+, but it only covers a small portion of Urban/Suburban West Michigan. In fact, the list of areas T-Mobile doesn't have 3G in, is longer than the ones they do. Locations such as Byron Center, Plainfield, Rockford, Caledonia, Hudsonville, and Allendale all have no 3G service at all. Additionally, the freeways between all of these cities (I-96, I-196, US-131, I-69, I-94, US-31) are all EDGE or GRPS only, outside of city limits.

(Allendale has a single tower, next to GVSU, that technically runs HSPA. But it has only a few T1's worth of backhaul, it's not really comparable in speed to the rest of their 3G HSPA+ network).

There are even places within the city limits of Grand Rapids that are GRPS / EDGE only ("Knapp's Corner", for instance, is GRPS only. Same too with the area of Wealthy Street by Diamond.)

What's worse, there are significant amounts of West Michigan with no coverage at all. The entire area of Grand Haven, Muskegon, and Spring Lake, for instance, has no coverage. (That's roughly 300,000 people)

In some areas, they allow roaming on AT&T when they have no service. (Muskegon and Grand Haven are examples of this). But their roaming agreement is strictly regional, as soon as you cross into Kent County, AT&T roaming disappears. This means there is no fallback when T-Mobile coverage fails you in any larger areas, which is particularly painful in suburban areas -- as these are places T-Mobile believes they have coverage, but doesn't.

So, to clarify, T-Mobile has 40mhz of spectrum which sits completely unused, and has been for a few years now. They have a great fiber backhaul network, but very few towers -- significantly less than they ought to for the population and area needed to cover West Michigan, and very poor data coverage outside of downtown Grand Rapids and downtown Holland.

MetroPCS in West Michigan

MetroPCS, on the other hand, covers almost all of Metro Michigan. Every one of the cities/suburbs listed above as EDGE/GRPS only on T-Mobile has LTE coverage on MetroPCS, including most of the highways mentioned. (Coopersville, Allendale, Byron Center, Rockford, and others are EDGE only on T-Mobile, but full LTE on MetroPCS)

MetroPCS coverage can vary (they sometimes use too few towers for an area, like T-Mobile). However, they usually make the right choices on which tower to drop out on, where T-Mobile can often make the wrong ones. (For instance, T-Mobile only has one tower covering Rivertown Mall, where *every* other provider, including MetroPCS, has two towers on either side.)

MetroPCS also has strong dual roaming agreements, both of which are nationwide. MetroPCS gets talk / text / 1x data on Sprint, and talk / text on Verizon, everywhere in the nation. With a T-Mobile phone, if you happen to be in a poor coverage area, your phone simply dies. No AT&T in-market roaming, even if you wanted to pay for it -- you simply arent allowed this choice. With MetroPCS, your effectively never without coverage. You may have to pay more for it (Verizon minutes are not included in the base plan cost), but your never without that choice -- the sheer volumn of networks available at disposal on your single MetroPCS device makes it close-to-impossible for your phone to ever be in a place where it can't make a call or receive a text message.

However, MetroPCS has one big problem. They have just 10mhz of spectrum. Total. Just 10mhz. That's 1/7th of the amount T-Mobile has. Not only that, Metro's spectrum is shared between their 1x CDMA and LTE deployments. This means their LTE network is extremely spectrum constrained. No Verizon/AT&T style 10x10 LTE here, not even 5x5. West Michigan runs off just 1-3 mhz of spectrum on both sides. This gives them much slower speeds than T-Mobile. Where T-Mobile 3G/"4G" speed tests at around 2-8mbps down in Grand Rapids, MetroPCS speed tests average around 100-500k down. Even the fastest speed tests on unused towers never get above 1-2mbps.

We often hear providers mention that they need more spectrum. Usually, this is completly untrue, most providers hoard lots of spectrum they don't actually use. MetroPCS is the rare case where this is not true -- they truely do need more spectrum.

Comparing MetroPCS and T-Mobile Coverage, as of Sept. 2012 (click image for full size)

So, MetroPCS needs spectrum and (in heavily populated places) backhaul. They have a well built out network, with reasonably placed towers. T-Mobile has a good fiber backhaul in place in heavily populated places, and tons of unused spectrum. But they need a well built out network, with better coverage, more towers, and more reasonably placed suburban/freeway towers.

See a pattern?

Depending on what "NewCo" chooses to do with these assets, they could become a powerful alternative network to AT&T in West Michigan.

With just the spectrum they have free right now, "NewCo" could use their combined tower holdings, and deploy HSPA+ on all of them using T-Mobiles unused PCS spectrum. (This would be a 30mhz HSPA+ network, very comparable to what AT&T uses here now). This means T-Mobile gets "4G" AT&T phone support (including 3G/"4G" iPhone support, with speeds at-or-above current AT&T network speeds).

Then, on each of those same towers, "NewCo" could deploy 5x5 LTE now (which would be competitive with all of Sprint, and some areas of AT&T).

There's so much spectrum between the two, that all existing MetroPCS 1x CDMA and LTE could stay as-is for existing customers, and all AWS HSPA+ could remain too. All existing devices would stay as-is, and new devices could be even faster.

If MetroPCS moved their CDMA devices to GSM pentaband devices (through typical yearly customer device turnover), they could repupose that spectrum and jump up to a 20x20 LTE network in West Michigan.

This isn't to say that this is a guarantee. "NewCo" could botch this transition, badly, if they don't execute properly, or become frugal before its completion (see Sprint/Nextel or Sprint/Clearwire for examples of both.). But at this point, they have all the customers, cash, towers, spectrum and backhaul they could ever need to surpass Sprint, and be competitive with AT&T. The ability to succeed has been handed to them, all they need to do is choose it.

The future for these two companies is looking bright, especially for us in West Michigan.