Why US carriers have an insatiable appetite for new spectrum

Spectrum is the oil of the wireless industry. Carriers need large quantities of spectrum to fuel the networks that support hundreds of millions of Americans using their smartphones many times every day to listen to music, stream video, or to communicate. The more data traffic Americans generate through their enthusiastic smartphone use, the more spectrum carriers need, otherwise the overall speeds experienced by users will fall.

The outcomes of the imminent U.S. spectrum auction planned for December 2019, and of the vital new mid-band auction in 2020, are critical for the future of Americans’ wireless experience and for the competitive positions of each carrier. Opensignal’s latest analysis demonstrates the importance of the type of spectrum carriers have for today’s experience and hence why these auctions matter for the future.

How users’ speeds differ by type of spectrum

Users connecting on higher frequency spectrum enjoy very significantly higher speeds than those on lower frequency bands. For example, on every band over 1GHz our users’ average 4G Download Experience was greater than 23Mbps bar one Sprint band, while on bands above 2GHz the average user speed on each band topped 29.9Mbps. By contrast on bands below 1GHz the average speeds experienced varied from 3.9 - 18.8Mbps.

Sprint and T-Mobile have complementary spectrum holdings

The nearly approved T-Mobile-Sprint merger illustrates how carriers need a mixture of spectrum types. For example, lower frequency bands like 600, 700 or 850MHz offer advantages like longer range in rural areas and better penetration inside buildings despite slower typical speeds. The overall speed experience of Sprint’s users is highly dependent on Sprint’s extensive 2.5GHz holdings which allows Sprint users to enjoy average 4G download speeds of 41Mbps when on that band, which is higher than the average speed on any current T-Mobile band.

However, T-Mobile users benefit from higher speeds on low-band spectrum: 15Mbps and 7.4Mbps on T-Mobile’s low bands compared with 12.2Mbps and 3.9Mbps on Sprint’s equivalent bands. By combining the two carriers’s holdings, the new T-Mobile will have a better mix of frequencies which should improve the experience of both current Sprint and T-Mobile users.

AT&T and Verizon need new spectrum too 

While AT&T has a good mix of different types of 4G spectrum it still needs new spectrum to support users, especially in the 5G era. Currently, the company is using mmWave for a limited 5G service, but is having to repurpose existing 4G spectrum on 850Mhz to offer a widely available 5G service which means this spectrum will not be available for 4G users. Plus, this low band spectrum will not support the best speeds of which 5G is capable. Verizon similarly has a good range of types of 4G spectrum, but faces similar challenges for the future. Both carriers needs the new spectrum in the “goldilocks” range of  3 - 6Ghz which carriers internationally are using to add 5G capacity with good reach in Korea, Australia and Europe . 

The U.S. needs new 5G spectrum to enable much higher average speeds

A key reason why users connecting on higher frequency spectrum bands enjoy higher average speeds is that on higher bands there are wider channels, which allow for more data to be transmitted simultaneously. There’s simply more spectrum available at higher bands which is why it is so attractive to wireless operators despite its shorter reach and worse signal propagation inside buildings, meaning that operators have to deploy a greater number of costly cell towers.

Opensignal users experienced 4G Download Speeds of 37.2Mbps on bands with a channel bandwidth of 20MHz compared with 18.1Mbps on bands with 5MHz in use. Typically, low-band spectrum blocks below 1GHz have channel bandwidths of 5 or 10MHz, although occasionally higher (for example some of T-Mobile’s 600MHz holdings). Above 1GHz, today typical 4G spectrum blocks are 10 or 20MHz wide, but 5G is different.

However, when we look at the new 5G mid-band spectrum not yet in use inside the U.S. such as those above 3GHz, it’s routine to have holdings of 50-100MHz per wireless operator. For extremely high frequency mmWave bands — which are deployed by Verizon, AT&T and T-Mobile — there are hundreds of MHz available. These wider channels offer massively increased capacity and much higher average speeds, but extremely limited geographical reach.

Without the availability of new 5G spectrum that’s not currently used for 4G, U.S. wireless operators will have to decide how best to use existing spectrum. Do they re-purpose it for 5G users or maintain support for existing 4G users? With the new 5G spectrum that will be available through the upcoming auctions, carriers will be able to add significantly more capacity to ensure Americans continue to enjoy a great mobile network experience as their mobile data usage rises.  

Opensignal’s real-world analytics show the varied speeds users experience on different types of spectrum. Wireless operators in the U.S. need a mixture, and now with 5G it’s critical for them to acquire new higher frequency bands that offer much increased capacity. The U.S. has been relatively slow to make available the 3 - 6 Ghz bands available internationally and needs to accelerate to help U.S. carriers meet the mobile needs of Americans.