NSN and Ericsson win T-Mobile's $4bn deal

Nokia Siemens has finally achieved a key goal, of gaining a tier one LTE contract in the fastest moving 4G market, the US. The vendor lost out in the first wave deals at Verizon, AT&T and Sprint, on all three occasions to Alcatel-Lucent and Ericsson, but in the case of T-Mobile USA's $4bn network modernization program, it has gained a share of the spoils, along with Ericsson.

NSN was thwarted in its previous US LTE win, at LightSquared, when the satellite venture first swapped its own build-out plans for a hosting deal with Sprint, and then had its plan blocked altogether by the FCC. TMo, of course, had its own share of regulatory setbacks last year, when its parent Deutsche Telekom's bid to sell the unit to AT&T was refused. There may be alternative deals ahead for the fourth US cellco, but in the meantime, it has been forced to pursue its own roll-out strategy for its own spectrum, and the substantial AWS holdings it is gaining as part of the break-up fee from AT&T.

TMo is well behind in LTE, though it has the most modern HSPA+ system in north America, albeit it currently in a non-mainstream band which has denied it the benefit of an iPhone. The cellco now plans a complex modernization program which will migrate the HSPA+ services to its 1.9GHz PCS frequencies - presumably netting it an Apple handset in the process - and will deploy LTE mainly in its own AWS spectrum, and the assets gained from AT&T, which cover 128 markets, including 12 of the top 20. These were officially transferred last week.

Deutsche Telekom says it will invest $1.4bn in deploying LTE in the US next year and plans to roll out LTE in most of the top 50 US markets from 2013, with 20MHz service targeted for 75% of the top 25 markets. Unlike Verizon and AT&T, TMo will not have the luxury of building its first wave of 4G in virgin spectrum, and as Jan Dawson, chief telecoms analyst at Ovum, recently said: "T-Mobile will be late to the LTE party, and its coverage will lag its major competitors for some time. Marketing the service will be tough when it has spent the last several years convincing its customers it is already offering 4G. And in addition, spectrum refarming is needed before it can carry out its strategy, something which competitor Sprint knows is painful and costly."

The aim is to turn off 65% to 75% of TMo's GSM channels in PCS bands within two years, leaving a small sliver for legacy services and M2M. Moving HSPA+ to 1.9GHz should achieve a 33% increase in data speeds and improved indoor coverage, says TMo.

For Ericsson and NSN, all this will represent substantial business. TMo aims to invest in 37,000 new 3G+ and/or 4G cell sites in 2012-2013 and move most of its HSPA+ services into the PCS band. Some HSPA+ will remain in the current AWS band, but much of this will be converged with the AWS frequencies obtained from AT&T and then turned over to LTE - Release 10 from day one, with a software upgrade to LTE-Advanced, which TMo hopes to reach ahead of AT&T.

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