T-Mobile’s Ray says ‘tough year’ ahead for DSS

T-Mobile’s president of technology indicated this year might not be so shiny for much anticipated dynamic spectrum sharing (DSS) technology, citing vendor delays and technical challenges.

DSS is a technology that allows operators to deliver both LTE and 5G on the same radio without having to dedicate spectrum to one particular technology. Competitor Verizon has previously indicated the technology is key to its strategy for rolling out broader, low-band 5G coverage in 2020 using its existing spectrum.

“It’s going to be a tough year on DSS,” said T-Mobile’s Neville Ray, speaking on the company’s fourth quarter earnings call, adding that one of the major network equipment vendors is “very late” on delivering the capability.

The primary concern right now, according to Ray, is the radio software that would be deployed on towers.

RELATED: Vodafone tests DSS using 700 MHz, 800 MHz spectrum

He stressed that T-Mobile has been a proponent and one of the early drivers of DSS technology, but noted that as they start to fully test software and capabilities, issues have come to light including detriments to spectrum capacity.

“We’re seeing as we learn more, that as you deploy DSS it kind of eats away on the net capacity of the shared radio,” Ray said. “If you rush into that now, some of the early rollouts and work arounds…that we’ve seen are pretty corrosive and would suck up capacity just by rolling out the feature.”

“The good new for us is that we clearly, as we demonstrated, don’t have to wait for DSS for our low-band [5G] deployment,” he said.

RELATED: T-Mobile tallies 1.9M net adds in Q4

T-Mobile has been rolling out 5G using its low-band 600 MHz spectrum, which the operator positions as its foundational layer for 5G, now covering more than 200 million people and 5,000 cities and towns.

While Ray said T-Mobile and the industry will continue to push on DSS, he again called out Verizon for its focus on 5G using high-band millimeter wave spectrum and its reliance on DSS to offer low-band 5G. 

“Verizon’s stuck to date, they don’t have the ability without DSS to deploy in low-band, they don’t have enough spectrum to go do it,” he said. “DSS is not going to materially help [Verizon], it’s just going to be enable them to put something out there so they can talk about 5G coverage.”

RELATED: Verizon CEO defends mmWave strategy for 5G

Verizon’s CEO Hans Vestberg defended the carrier’s millimeter wave strategy last week, saying Verizon is “building a unique 5G experience with our millimeter wave that nobody else is building” or has the capability to do.

In a detailed January report analyzing Verizon’s spectrum position, LightShed Partners said the carrier’s network strategy needed to address the two main goals of launching 5G-NR and supplying capacity for 35%+ data growth of its subscribers.

“It’s not clear how DSS solves capacity concerns for Verizon, but if DSS works, it could at least answer the questions about how operators can build a 5G coverage layer without vacant spectrum. This should increase the focus on DSS and its delivery dates,” wrote Lightshed’s Walter Piecyk and Joe Galone at the time.

Of major vendors supplying U.S. operators, only Ericsson has launched a commercial DSS product, though Nokia has also said it would introduce DSS software this year.

T-Mobile for its part is hoping to build on its coverage layer with 2.5 GHz spectrum from Sprint, as it waits resolution of its pending merger outcome, and eventually more mmWave. A district judge must still rule in the companies’ antitrust merger trial brought on by a coalition of state attorneys general, but CEO John Legere said on the call that he remains confident the deal will be approved.

T-Mobile’s Q4 results largely aligned with preliminary results released last month; here are some highlights:   

  • In 2019 T-Mobile reported 7 million total net customer additions, bringing total customer count to 86 million.
  • 1 million postpaid phone net adds and 77,000 branded prepaid net adds. Postpaid phone churn was 1.01%
  • Service revenue for the quarter was up 6% year over year to $8.7 billion, contributing to a 4% bump in total revenues which hit $11.9 billion in Q4. For the full year total service revenues increased 6% to $34 billion, which T-Mobile said represented its best quarterly and full-year performance ever.
  • Net income of $751 million in Q4 was up 17% year over year. T-Mobile said net income was impacted by $105 million in merger-related costs for the quarter and $501 million for the full year – that compares to $180 million in merger-related costs for 2018.
  • Diluted earnings per share (EPS) up 16% to $0.87 and Adjusted EBITDA increased 9% year over year to $3.2 billion.