• Mapping out the proposed business’ $40bn, three-year splurge.

With aggression a key theme of their bid for approval, Sprint and TMUS executives were not backward about coming forward on the infrastructure overhaul plan they have come up with, to follow on from the merger. The seldom bashful Ray declared the NatCo’s intent to create the “mother of all networks”. Legere trumpeted the merger as the basis for an Un-CarrierSupercharged” programme.

TMUS and Sprint, with eyes firmly set on being first with nationwide 5G, sought to accentuate that their respective spectrum assets fit nicely together. Their plan appears to envisage a joint dovetail of low- and high-band frequencies.

Their claims are compelling. Sprint’s impressive haul of ‘high-band‘ 2.5GHz airwaves complement TMUS’s substantial low-band holdings, encompassing Personal Communication Services (PCS) spectrum at 1900MHz and Advanced Wireless Services airwaves ranging from 1.695GHz to 2.2GHz, as well as the 600MHz frequencies TMUS acquired in 2017’s Broadcast Incentive Auction (Deutsche Telekomwatch, #62 and passim). Throw in TMUS’s sizeable stash of mid-band airwaves and the proposed New T-Mobile network would have a breadth and depth of spectrum unmatched by its rivals in the sub-6GHz frequency-band categories. AT&T and Verizon would be at a rare disadvantage.

Legere, even allowing for his hyperbolic tendencies, was convincing when he claimed that the merger – should it get the regulatory green light – will offer up a “unique combination of resources”. He insisted that New T-Mobilewill be able do things that neither T-Mobile nor Sprint could do on its own”. TMUS previously had plans to build a nationwide 5G network on the back of its 600MHz assets, while Sprint voiced similar coverage aspirations by leaning on 2.5GHz frequencies.

The main question is whether TMUS and Sprint get the go-ahead from regulators to merge, and, if so, whether spectrum disposals will form part of regulators’ pound of flesh.

5G: this is how we do it

While the last few years have seen TMUS loudly talking up its 5G potential as a standalone entity, its messaging has changed significantly and executives now insinuate the assimilation of Sprint’s network assets is key to realising its 5G goals. To integrate the two networks would be a huge undertaking and likely to put even TMUS’s massive recent 4G network transformation effort in the shade.

  • By pooling together spectrum assets of TMUS and Sprint, the idea is to extend high-speed mobile broadband even to rural parts of the country – furthering recent years’ push by the NatCo to extend beyond its largely urban coverage base. Plans are afoot to offer 5G-delivered national average speeds of 450Mbps, using a combination of 600MHz and 2.5GHz airwaves, along with re-farmed PCS spectrum. This would enable New T-Mobile to mount a challenge to cable operators – contrasting with previous TMUS executive dismissals of 5G fixed-line replacement as an unimaginative use-case, and long claims of disinterest in opportunities to expand around converged services (see below). “[450Mbps] is not peak speed or urban speed… that includes every town, village, and hamlet in this country on average”, said Carter.
  • New T-Mobile will get a leg-up on massive multiple-input, multiple-output (MIMO) antenna configurations, something which Sprint is deploying extensively at 2.5GHz to enhance network capacity. John Saw, Sprint’s Chief Technology Officer, said the operator was in the process of upgrading existing 2.5GHz cell sites with massive MIMO, to support both LTE and 5G. The massive MIMO radios deployed by Sprint are software-upgradable to 5G New Radio. “You kill two birds with one stone. We can move really, really fast. That technology will be used in [the] combined company. That’s one of the ways that we can move fast… many of the 85,000 towers [of T-Mobile] will have massive MIMO capability that will allow us to cover big territories with 5G”, Saw added.
  • Where New T-Mobile currently falls short, in terms of resource is in higher-range millimetre wave (mmWave) spectrum that is earmarked for use in certain urban locations, to add extra capacity. Here, the prospective new entity’s increased finance-raising heft would come into play. In the 28GHz and 39GHz frequency bands, where suppliers are apparently concentrating their 5G mmWave efforts, Sprint brings nothing to the table (see chart) and TMUS has displayed concern about its relatively weak position versus AT&T and (especially) Verizon in the run-up to the USA’s mmWave auctions. TMUS has been lobbying the FCC not to auction mmWave frequency bands in a piecemeal fashion – preferring instead a ‘big-bang’ approach. This would reduce exposure to AT&T and Verizon’s greater fiscal muscle and might encourage suppliers to pay greater 5G attention to other mmWave spectrum bands (Deutsche Telekomwatch, #71 and #72). TMUS asserted that any bidding in the FCC’s initial mmWave auctions (of 24GHz and 28GHz concessions) will be conducted independently from Sprint. Awkwardly, the sale of 24GHz licences is slated to start in November 2018.
  • Separate to merger plans, but as an evident headstart towards network integration, TMUS and Sprint struck an LTE roaming agreement. The main focus, said Ray, is to provide LTE service to Sprint customers in areas currently lacking 4G signal. He evidently had no worries about possible adverse impact on TMUS capacity, and disruption for existing TMUS customers, perhaps because there are some “provisions” in the deal that mitigate risks. Legere enthused that the Sprint roaming arrangement, by monetising TMUS’s available network capacity, represented incremental revenue flow and was accretive to the NatCo’s bottom-line. However, he admitted that this all assumes Sprint “turns it up and starts to use it extensively”.

5G FWA… hmm, perhaps not a bad idea after all

Despite ridiculing attempts by Verizon to claim 5G firsts on the back of fixed wireless access (FWA) – which TMUS previously dismissed as an inauthentic 5G use case since no mobility was involved (Deutsche Telekomwatch, #49 and passim) – there seems to have been a change of heart.

The prospect of the New T-Mobile network offering national average speeds of 450Mbps within what Carter called, somewhat vaguely, the “planning horizon of this business”, has got senior executives hatching plans for a 5G-fuelled assault on markets entirely new to the NatCo – cable-based broadband and TV. There is no indication that TMUS wants to launch a nationwide quad-play offering, at least not in the short term, but its aim is to target markets where home broadband customers are short on service provider choice.

“ So, what do you do with a nationwide average of 450Mbps. Well, first you recognise that’s way higher than most people get in to home broadband today. So of course, we can be a competitor in that space. And this is a market that is incredibly underserved. 53% of high-speed broadband customers only have one choice for high-speed broadband in their area. There’s a huge opportunity here for us to bring real competitiveness to that market for the first time. ” – Carter.

TMUS has already indicated serious interest in the digital video business by shelling out a substantial $325m (EUR274m) to buy Layer3 TV, an IPTV provider, in December 2017 (Deutsche Telekomwatch, #69 and #71). The purchase underpins TMUS’s upcoming T-Mobile TV product, and now looks a potential important move in helping to support quad-play ambitions.

“ We acquired Layer3 TV last year with the aspiration of entering the TV business. Those aspirations, obviously, get ratcheted up in the context of bringing together Sprint and T-Mobile. Because now you have a network where you can provide an IPTV service, not just through [customers’] home broadband connection or under their smartphone, but through a wireless alternative to their home broadband as well. T-Mobile’s in the position as a new T-Mobile to be able to offer a quad play if that’s what the market wants. ” – Carter.

“ The truth is, this combined network, the world’s most advanced 5G network, is going to be a game changer when it comes to our relative competitiveness and being able to finally bring real meaningful competition. Not just to AT&T and Verizon, but even to fibre companies, cable companies, and others who serve this space. That’s really exciting and really important. ” – Legere.

The New T-Mobile‘s push into convergence might instigate a flow of ideas and innovation from DT’s European businesses to the USA – paying back some of the mobile service advances TMUS has inspired in European NatCos in recent years (compressed streaming and “unlimited” offerings, for example). DT asserted that New T-Mobile‘s “intention is to focus on convergence products combining fixed and mobile communication offerings, a portfolio with which Deutsche Telekom is already very successful in Europe”.

Image: T-Mobile US.

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Contents

EXECUTIVE BRIEF

Q1 FY18

Management update

DT readies pitch for “Trans-Atlantic platform” [p6]

  • DT turns eyes beyond Europe, self-defines as “Trans-Atlantic”
  • Table 1: Deutsche Telekom strategy, FY14 versus FY17
  • Money pressures to weigh on strategic update; TMUS cost hand-off up in air
  • Table 2: Deutsche Telekom, financial summary, Q1 FY18

Headline data: an untimely fall off the boil [p8]

  • Out in the regions: Europe slowly regaining mojo, but drag has hurt DT

GROUP

M&A

Group begins push to make New T-Mobile dream a reality [p11]

  • Table 3: DT and TMUS advisory team
  • Figure 1: Revenue comparison, New T-Mobile, versus US majors, year to 31 December 2017
  • Figure 2: New T-Mobile ownership structure

Sprint-TMUS: out of giants’ shadow, and room to grow [p15]

  • A power-play across the Atlantic, too

Buckle-up: DT is testing the limits [p16]

  • Figure 3: Revenue comparison, Deutsche Telekom plus Sprint, versus US majors, year to 31 December 2017
  • Money manoeuvring ratchets up pressure on US delivery
  • Table 4: DT funding support to TMUS, 31 March 2018
  • Can DT find the $18bn pot at the end of the rainbow?
  • Table 5: Projected New T-Mobile free cash flow

Masayoshi Son: Can DT crack the enigma? [p19]

  • Embarrassment and shame

The approval effort: ingratiation mode selected [p21]

  • A few fences to mend
  • Table 6: New T-Mobile cost synergy ambitions

Four-year integration programme: main elements [p22]

The New T-Mobile network masterplan [p23]

  • 5G: this is how we do it
  • Figure 4: Nationwide split of available mmWave spectrum (%)
  • 5G FWA… hmm, perhaps not a bad idea after all

Huge partner opportunity for 5G thrust and IT meld [p27]

  • Ecosystem reaction
  • Table 7: Sprint vendor/partner agreements, where publicised, 2008-2018

Euro tower power: Cellnex-DT tower linkup ‘expands to Netherlands’ [p30]

  • Time for phase two
  • All in the execution

ngena continues to share network love [p32]

  • Building the future
  • Table 8: ngena ecosystem, May 2018
  • ngena: “like-minded” carriers sought; stuffy traditionalists need not apply

Legal and regulatory

DT joins chorus of criticism against EU digital reforms [p35]

  • Cracking the Code
  • Can’t ETNO satisfaction
  • Table 9: People movement highlights

Technology & Innovation

DT’s IP migration initiative hits two-year delay [p39]

  • Figure 5: Deutsche Telekom, European IP migration progress, FY15-FY17 (% of lines)
  • Being IP doesn’t yet square
  • Bumps in the road
  • Copper retirement now on agenda

DT welcomes prospect of fronthaul RAN disruption [p41]

  • Revamping the RAN
  • Katti remarks
  • A game of ‘Os’ and ‘Xs’

DT’s immmr rules out full UK launch [p43]

  • World domination takes back seat

GERMANY

Deals

Pressure on rise as Vodafone-Unitymedia deal agreed [p46]

  • Housing associations shun TDE at front door
  • Vodafone, Liberty focus fire on DT
  • Höttges risks being cast as the broadband bogeyman

Network

TDE deploys 5G antennae as standard in Berlin [p48]

  • BuyIn making a mark in Group 5G buying
  • Big in Berlin
  • 5G pieces falling into place?
  • Beyond Germany

EUROPE

Croatia

Hrvatski Telekom joins NB-IoT gang [p52]

  • Table 10: NB-IoT rollouts to date across the DT footprint
  • NB-IoT rollout gathering steam

USA

Legal and regulatory

TMUS lands huge fine over rural call dodge [p56]

Network

TMUS beefs up network with mid-band muscle [p57]

  • Mid-band momentum
  • Ray bands

FURTHER READING

INDEX

Index

Symbols

3rd Generation Partnership Project (3GPP) 48

A

AAA 18

Africa 18, 32, 37

– South Africa 32

Alcatel-Lucent 29

Alibaba Group Holding Ltd 20

Amdocs 27, 29, 43

American Tower Corp. 27

Americas

– Brazil 37

– Canada 34, 36, 50

– South America 18

– United States of America (USA) 6, 7, 9, 11, 15, 16, 17, 18, 20, 21, 24, 25, 27, 43, 44, 50, 53, 55, 56

– – Department of Justice (DoJ) 21, 56

– – Federal Communications Commission (FCC) 21, 24, 56

– – Government 21

– – States

– – – Kansas 22

– – – New York 21

– – – Washington 21, 22, 57

– – – Wisconsin 56

Apple 9

Aricent Inc. 43

Asia-Pacific 33, 34, 37, 42, 50

– Australia 50

– China 20, 21, 32, 34, 41, 48, 52

– India 28, 37

– Japan 19, 32, 34

– Singapore 34

AT&T 11, 15, 16, 21, 22, 23, 24, 25, 50, 56, 58

B

Bharti Group 37

– Bharti Airtel 37

Boingo Wireless 28, 29

Boku 29

BOKU Inc. 29

Bridge Alliance 33

Broadcom 21

BT Group 13, 20, 35, 42, 47

– EE 13, 37

Bundesliga 48

C

Cellnex Telecom 30

– Swiss Towers 30

CenturyLink Inc. 32

CGI Group Inc. 37

China Mobile 41

Ciena Corp. 29, 43

Cisco Systems 29, 32, 34, 43

Cleary Gottlieb Steen & Hamilton LLP 11

Colt Group 37

Comarch SA 32, 34

Comcast Corp. 15

– NBCUniversal, LLC

– – CNBC 21

Committee on Foreign Investment in the United States 21

CommScope Inc. 29

Computacenter

– Allnet 58

Crown Castle International Corp. (CCI) 27

CSG Systems 28

D

Deutsche Bank 11

Deutsche Telekom 6, 7, 8, 9, 11, 12, 13, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 27, 28, 30, 31, 32, 33, 34, 35, 36, 37, 39, 40, 41, 42, 43, 44, 46, 47, 48, 49, 50, 52, 53, 56, 57, 58

– Deutsche Telekom Capital Partners 15, 17, 19, 30

– – DocuSign (see separate) 15

– – Fireglass (see separate) 17

– – Mojio (see separate) 50

– – Morphisec (see separate) 17

– – Next Generation Enterprise Network Alliance (ngena) 32, 33, 34

– – Swiss Towers (see separate) 30

– Europe

– – Austria 9, 37, 49, 50, 52, 53

– – Croatia (Hrvatski Telekom) 52, 53

– – Czech Republic 9, 48, 53

– – Greece (see OTE) 9, 42, 53

– – Hungary (see Magyar Telekom) 9, 53

– – Netherlands 12, 30, 36, 39, 53

– – Poland (Polska Telefonia Cyfrowa/PTC) 53

– – Slovakia (Slovak Telekom/T-Mobile) 37, 44, 53

– – UK (EE) 13, 37

– Executives

– – Abolhassan, Ferri 37

– – Al Saleh, Adel 9

– – Budwilowitz, Frank 37

– – Dannenfeldt, Thomas 6, 17, 31, 35, 39, 50

– – Gopalan, Srini 9, 37

– – Höttges, Timotheus 6, 11, 13, 19, 30, 35, 46

– – In der Rieden, Tom 37

– – Jacobfeuerborn, Bruno 31

– – Lange, Peter 37

– – Lauterbach, Thomas 37

– – Legere, John 9, 11

– – Manepalli, Surya 37

– – Melchor, Erik 37

– – Nemat, Claudia 44, 48, 50

– – Pruchnow, Johannes 41, 47

– – Ray, Neville 13, 57

– – Salacki, Andreas 37

– – Sievert, Mike 9, 13, 23

– – Singh Ahluwalia, Kanwardeep 37

– Germany 6, 9, 30, 37, 40, 44, 46, 47, 48, 49, 50, 53

– Investments

– – Magyar Telekom (see separate) 9, 53

– – OTE (see separate) 52

– Product and Innovation

– – hubraum 53

– Products and services

– – Entertain 48

– – immmr 43, 44

– – QIVICON 42

– – StreamOn 9

– – T-Mobile TV 25

– Systems Solutions 8, 9

– – T-Systems 6, 15, 32, 37

– – – South Africa 32

– – – Telekom Security 37

– T-Mobile International 37

– USA 6, 7, 8, 9, 11, 12, 13, 15, 16, 17, 18, 20, 21, 22, 23, 24, 25, 27, 28, 37, 44, 53, 56, 57, 58

– – Un-carrier 13

Deutsche Telekom Capital Partners 15, 17, 30

DLA 11

DocuSign 15

E

eBay

– PayPal 17

Emblaze Group

– European Telecom 36

EMC

– VMware 29

Ericsson 29, 35, 37, 42, 48, 49

Europe

– Austria 12, 37, 49, 52, 53

– Belgium 39

– Croatia 52, 53

– Czech Republic 46, 53

– Eastern Europe 37

– Germany 6, 7, 8, 9, 11, 21, 30, 31, 32, 34, 37, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 50, 53

– – Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen (BNetzA, RegTP, FNA, or German Federal Network Agency) 46, 49

– Greece 52, 53

– Hungary 46, 50, 53

– Ireland 43

– Italy 32, 34, 42

– Netherlands 12, 30, 33, 36, 37, 39, 53

– Poland 53

– Romania 9, 46

– Slovakia 37, 50, 53

– Spain 30, 32, 34

– Sweden 48

– Switzerland 30

– United Kingdom (UK) 13, 32, 33, 34, 37, 43, 47

European Telecommunications Network Operators’ Association (ETNO) 35, 36

European Union 35, 36, 52

– European Commission 12, 35

– European Parliament 35

F

Facebook 42

– Telecom Infra Project 42

Fireglass 17

Flash Private Mobile Networks 39

France Télécom 35

– Orange 16, 35, 37, 41, 49

– – UK (see EE, DT) 13, 37

Fujitsu 43

G

Gemalto NV 29

Gilat Satellite Networks Ltd 29

Goldman Sachs 11

GSM Association

– Mobile World Congress 44, 46, 50

GSM Association (GSMA) 56

H

Hewlett-Packard 17

Hrvatski Telekom (see DT, Croatia) 52, 53

Huawei Technologies 48, 49, 52

I

IBM 29

IDEMIA 29

Ingram Micro 36

Inmarsat 32

Intel 43

Interxion 29

ISS Group 31

J

JPMorgan Chase 56

Juniper Networks 29

K

KPN 12, 32, 33

L

Liberty Global

– UPC Austria 12

Liberty Global Inc. 46

– Unitymedia GmbH 37, 46, 47

– UPC Broadband 12

– – Germany (Unitymedia) 37, 46, 47

LivePerson 28

Lookout, Inc. 29

M

Magyar Telekom (see DT) 9, 53

Market segments

– Machine-to-machine (M2M) 29

– Mobile virtual network operator (MVNO) 39, 43, 44

– Multinational corporations (MNCs) 33

– Over-the-top (OTT) 43

– Value-added services (VAS) 29

Mavenir Systems 29, 43

McGraw-Hill Companies, The

– Standard & Poor’s (S&P) 7, 17

Metaswitch Networks 29

MetroPCS Communications Inc. 22, 58

– Carter, Braxton 13, 57

Microsoft 19, 29, 37

Middle East 32, 37

– Saudi Arabia 19

Mojio 50

Morgan Stanley 11

Morphisec 17

MTN 32, 33

N

NEC 43

Nokia 29, 43, 48, 49

O

Openwave Systems 29

Oracle 37

OTE (Hellenic Telecom. Org. SA, see DT) 52

– Cosmote 9, 42, 52, 53

– – Greece 9, 42, 53

P

PCCW 32

PCTEL 28

Peoplesoft 37

Providence Equity Partners

– KDG Holding GmbH (Kabel Deutschland) 46

Q

Qualcomm 21, 29

R

Red Hat 29

Reliance-Anil Dhirubhai Ambani Group

– Reliance Communications (RCom) 6, 32

S

SafeBreach 17

Samsung 29, 37, 43

SAP 37

Schellenberg 42

Sequoia Capital 17

SK Telecom 32, 43

Slovak Telekom (see DT, Slovakia) 37, 44, 53

Smith Micro Software 28, 29

SOFTBANK CORP. 11, 12, 13, 16, 17, 19, 20, 21

– Son, Masayoshi 13, 19

Sprint Corporation 6, 7, 11, 12, 13, 15, 16, 17, 18, 20, 21, 22, 23, 24, 25, 27, 28, 29, 56, 58

– Boost Mobile 22

Strabag International 31

Sunrise 30

T

Technology

– 2.5G 23, 24

– 2G 23, 24, 48

– – GSM 56

– 3G 48

– – Evolved HSPA (HSPA+/I-HSPA)

– – – MIMO 24, 42

– 4G 23, 24, 39, 41, 42, 48

– – Long Term Evolution (LTE) 24, 28, 29, 48, 57, 58

– 5G 6, 7, 13, 17, 21, 23, 24, 25, 27, 28, 30, 41, 42, 48, 49, 50, 58

– Billing 29

– BSS 28, 32, 34

– CRM 29

– Ethernet 32

– Fibre 6, 7, 25, 35, 41, 42, 47, 50

– IMS 29

– IP 6, 7, 39, 40, 41, 42

– IPTV 25, 48

– M2M 29

– NaaS 34

– Narrowband Internet of Things (NB-IoT) 52, 53

– NFV 29, 33, 34, 42

– OpenStack 32

– OSS 29, 32, 34, 48

– “Push-to-talk” 39

– RAN 41, 42, 43, 48

– R&D 52

– SDN 33, 34

– SIM 39, 53

– Smartphone 25

– Spectrum 24, 58

– – 700 MHz 58

– – 1900 MHz 23, 57

– – Advanced Wireless Spectrum 57, 58

– WAN 29, 32, 33, 34, 52

– W-LAN 28, 29

Tele2 12, 30

– Netherlands 12, 30

Telecom Italia 18

Telefonica Group 18, 35, 41

– Europe 37

Telekom Austria 32, 33

– Austria

– – A1 32, 33

Telit 29

Telstra 32, 43, 50

Telus 32, 34, 50

Texas Instruments 43

Time Warner 21

Twitter Inc. 20, 21, 57

V

Value-added services 15

Verizon Communications 13, 15, 16, 21, 22, 23, 24, 25, 43, 56, 57, 58

– Verizon Wireless 13, 57, 58

– – McAdam, Lowell 21

Virgin Group

– Virgin Mobile 22

Vodafone 13, 18, 33, 42, 46, 47

– Africa, Middle East, and Asia Pacific Region (AMAP)

– – India 37

– Europe Region

– – Germany 46, 47

Voxbone 43

Z

Zscaler 29

About

About Deutsche Telekomwatch

Report: #73
Published: May 2018
Next report: June 2018
For more information visit: Deutsche Telekomwatch