An Engineer’s View of the Department of Justice’s T-Mobile/Sprint/DISH Strategy
Tuesday, August 20, 2019
An Engineer’s View of the Department of Justice’s T-Mobile/Sprint/DISH Strategy:
The Solution Raises as Many Technical Questions as It Answers
To address the loss of a mobile communications competitor that will result from the proposed T-Mobile/Sprint merger, the Department of Justice (DOJ) has proposed a solution that seeks to enable DISH Network to emerge as a fourth national facilities-based wireless carrier.
From an engineering perspective, however, DOJ’s approach to enabling DISH’s deployment is not guaranteed to prove adequate to maintain competition comparable to that currently offered over Sprint’s network. DOJ’s preliminary announcement raises a host of unanswered technical questions and, from what we know now, DOJ’s proposed solution would require years to enable DISH to develop capacity and coverage on par with what Sprint has today—with no guarantee that the proposed solution would be successful. The approach also is overly optimistic about the execution of the DISH buildout and assumes a level of coordination and cooperation among competitors that is beyond anything previously observed in the U.S. wireless industry.
Taken together, these questions raise doubt about whether DOJ’s solution will really serve as a technically effective means to enable a fourth mobile competitor.
The following are some of the key technical issues that still need to be addressed:
- DOJ proposes that T-Mobile will spin off its pre-paid Boost and Virgin Mobile services to DISH – but this will succeed only if the terms are technically sufficient, and then enforced.
With the spin-off, DISH will ostensibly be positioned to become a mobile virtual network operator (MVNO) using Boost and Virgin Mobile’s devices and infrastructure. In this way, DOJ asserts, DISH will immediately become the replacement fourth competitor nationwide.
However, the terms of the MVNO arrangement—including the detailed terms of DISH’s access to T-Mobile’s capacity—have not been made public (or, possibly, they haven’t yet been developed). This is a critical point because any MVNO arrangement puts the facilities-based host (in this case, T-Mobile) in a dominant position. For example, an MVNO or roaming entity often faces more limitations in using capacity than does its facilities-based host.
For the DOJ solution to succeed, therefore, it will be necessary to guarantee that DISH will have sufficient capacity even where T-Mobile may itself have capacity limitations and that the capacity will be affordable. And beyond requiring robust terms, the Boost and Virgin Mobile spin-off to DISH will require robust enforcement.
- DOJ anticipates DISH becoming a fourth facilities-based competitor comparable to Sprint – but this will take many years and has many risks in execution.
Building a robust internal team, seeking and selecting contractors, and preparing detailed designs and engineering will require upwards of a year, and DISH will need more than four years to deploy tens of thousands of sites with robust fiber backhaul to develop a reliable footprint that is not highly dependent on T-Mobile. The process will require extensive design, planning, procurement, site acquisition, and approvals. And the 3GPP Rev 16 equipment that DISH Chairman Charlie Ergen has said would be central to building a highly-virtualized network with low operation costs, relies on standards that will not be available until 2020, with actual equipment possibly not available until late in 2020 or in 2021. Without that equipment, DISH would need to change its approach to a less virtualized network and, potentially, a different business model.
Activating infrastructure at tens of thousands of sites while relying on technologies that do not yet exist, creating and managing a large new team in a tight labor environment, getting permitting approvals, coordinating with T-Mobile (itself in the process of an ambitious build, drawing on a significant amount of expertise and network build capacity), handling procurement, and financing a project costing over ten billion dollars is a risky proposition. It is worth considering other, more fully-baked communications infrastructure initiatives (Google Fiber) that failed to execute according to plan.
- DOJ has suggested that this solution will enable DISH to compete robustly in the mobile market – but DISH will be required to serve only a portion of the population within four years, at speeds that will likely be exceeded by other providers.
DOJ’s solution requires that DISH serve only 70 percent of the population by 2023—and only at 35 Mbps. This speed is already exceeded in many 4G-served areas (including by Sprint) and represents a very low goal for 5G service. If 35 Mbps is the typical speed of the network in 2023, while the other three facilities-based wireless carriers offer service in hundreds of Mbps—and if this limitation is a baked-in technological limit because of fewer sites or less capacity per site—the result will not be a bona fide fourth network, but a niche network closer to the limited internet of things (IoT) network proposed by Mr. Ergen prior to the T-Mobile deal.
- Under DOJ’s solution, T-Mobile will provide capacity on its network to DISH for seven years on “favorable terms” – but those terms are not disclosed.
DOJ’s solution stipulates network capacity sharing so that DISH devices using the DISH network core can obtain capacity on the T-Mobile network. T-Mobile will also be required to provide “transition services” at cost. However, the exact terms and means of enforcement have not been disclosed. Capacity sharing of the scale contemplated has not been done in the U.S. among wireless providers, and we are not aware of an existing model for this type of collaboration and coordination between competitors. T-Mobile will also be required to provide “transition services” at cost. However, the exact terms and means of enforcement have not been disclosed.
These requirements would ostensibly provide DISH with more control over its network operations than the MVNO deal alone—and could support the evolution path for DISH to activate its own facilities-based network, but DISH needs an enforceable guarantee that it will have sufficient (and affordable) capacity even where T-Mobile itself has limited capacity. As with the MVNO terms, T-Mobile will be in a dominant position.
- DISH has options to purchase 20,000 Sprint and T-Mobile sites – but the utility and 5G-readiness of these sites is not guaranteed.
DOJ’s solution assumes that granting DISH site options will enable DISH’s network expansion. However, those sites are T-Mobile and Sprint’s discards—sites that are being deactivated, likely because they are in less desirable locations, may not have high-quality fiber backhaul or backup power, or might be otherwise suboptimal for 5G. In fact, the DOJ’s judgment speaks to “microwave backhaul” at the sites—implying that many sites may require extensive investment to become 5G-ready with fiber. The sites might accelerate DISH’s deployment but might also re-create some of the deficiencies of Sprint’s network on the DISH network.
- Spectrum hosting could facilitate DISH’s emergence as a mobile competitor – but it is not part of DOJ’s proposed solution.
One additional step that could be required of T-Mobile, that would reduce the risk of DISH’s deployment, accelerate the deployment, and reduce cost, would be spectrum hosting. In this context, spectrum hosting is T-Mobile adding DISH antennas and equipment to the sites it is using for its own network and enabling DISH to connect through the backhaul fiber network used by T-Mobile. T-Mobile would construct DISH infrastructure while it performs its own expansion. This approach would accelerate DISH deployment on new and optimal sites—and may be faster and cheaper than new site acquisition – and would be better for DISH than options to purchase discarded Sprint sites. That said, even this superior arrangement would entail delays. For example, DISH would still need permitting and approvals for adding antennas at the sites, and DISH’s schedule may be superseded by T-Mobile pursuing a faster rollout. Differences in network architecture between the two networks may also make spectrum hosting difficult. And spectrum hosting would again put T-Mobile in a dominant position—for site access and potentially also for access to backhaul.
- DISH will be able to purchase Sprint’s 800 MHz Sprint spectrum licenses – but the small band would not create a huge benefit relative to competitors and would not speed the time to deploy.
Purchasing Sprint’s spectrum licenses would increase DISH’s total capacity by approximately 10-15 percent. But the band’s small size (13.5 MHz) is not compatible with providing high-speed broadband. DISH simply will not have capacity comparable to its competitors. And this would only be a spectrum license sale; DISH would still need to purchase and install equipment to activate the spectrum at its sites—so the new spectrum will not provide a shortcut for DISH’s broadband rollout.
Some of these technical issues can be resolved through detailed, enforceable agreements between DISH and T-Mobile, including through the transition services, master network services, spectrum purchase agreement, and option agreements. Some terms may also change if the many state attorneys general opposed to the merger opt to end their opposition in return for new requirements.
But what is clear is that DOJ’s solution raises considerable technical questions and will require far more definition and then very robust enforcement to truly enable emergence of a fourth mobile competitor. From an engineering perspective, execution remains a risk, and we are a long way away from a solution that removes the technical hurdles and risks on the road to DISH becoming a facilities-based provider comparable to Sprint.
Andrew Afflerbach (Ph.D., P.E.) is CTO of CTC Technology & Energy.* He specializes in the planning, design, and implementation of communications infrastructure and networks. He has specified fiber optic and wireless networks for large cities, counties, and regions, as well as for national governments such as that of New Zealand. Andrew is a member of the FCC Broadband Deployment Advisory Committee Disaster Recovery and Resilience Working Group. He has also provided expert testimony to the FCC on technical issues including 5G small cell deployment, the T-Mobile/Sprint merger, wireless net neutrality and LTE-U interference in unlicensed spectrum and 700 MHz broadband.
* Joanne Hovis, member of the Benton Foundation board of directors, is president of CTC.
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