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T-Mobile will offer nearly nationwide coverage on its super-fast 5G network by the end of 2021, company executives said on Thursday, a move that could pressure rivals Verizon and AT&T to keep pace.
At the end of next year, the network will blanket an area where 200 million people live, the company promised. Previously, it had said that its network, which is currently available to 30 million people, would expand to a potential market of 100 million people by the end of 2020.
The planned growth in coverage is partly a result of T-Mobile acquiring Sprint earlier this year. It gave T-Mobile more airwaves that could provide higher 5G speeds.
“We’re off to the races and came out of the blocks super quick,” Neville Ray, T-Mobile’s president for technology who is overseeing the 5G rollout, tells Fortune. “We’re now adding on top of that (more of the spectrum) we secured in the combination with Sprint. That’s moving really, really fast. Thousands of sites on air today, thousands in construction, and thousands more ready to go into construction.”
Verizon has deployed its 5G using higher frequencies than T-Mobile’s that don’t travel as far and only in parts of 55 cities. Analysts say Verizon’s network covers about 2 million people so far. AT&T hasn’t said much about its fast 5G plans lately, but it has coverage in parts of 35 cities.
With the latest iPhones and Samsung Galaxy phones both now compatible with 5G, a growing number of consumers are now able to get 5G service. Still, there aren’t many apps that take advantage of 5G speeds yet and most consumers stream their music and video instead of downloading it.
T-Mobile’s 5G promise for 2021 came as the company reported third-quarter earnings that surprised analysts. Revenue jumped 74% to $19.3 billion thanks to the Sprint merger that closed in April. Those sales were nearly $1 billion more than analysts expected.
Meanwhile, T-Mobile’s profits of $1.00 per share were almost double what Wall Street had forecast. T-Mobile’s stock jumped 6% to $124.75 in after-hours trading on Thursday, an all-time high.
The carrier’s higher-end 5G network offers speeds averaging over 300 megabits per second, about six-to-eight times faster than the average 4G speed and fast enough to download a high-definition movie in under one minute. T-Mobile also offers much slower 5G service via low-band airwaves in most of the country.
The challenge for Verizon and AT&T is that they don’t own many airwave licenses in the mid-band. Both have deployed 5G technology in low-band airwaves like those used for 4G, but that provides minimal speed increases. And both have deployed high-frequency 5G, but coverage is minimal. The Federal Communications Commission is auctioning off more mid-band spectrum starting next month but that could take years to deploy.
“In 5G, T-Mobile won’t just catch Verizon on network quality; we expect they will pass them by,” longtime industry analyst Craig Moffett at MoffettNathanson Research, wrote after the announcement. “Worst-to-first stories are rare. You don’t have to believe that 5G is ‘the next big thing’ to believe that T-Mobile itself is, well, ‘the next big thing.’”
Still, the ad industry’s self-regulatory board on Thursday chastised T-Mobile for overpromising its 5G service in recent TV commercials. T-Mobile agreed to drop claims that it had the “best” or “most reliable” 5G network for now.
One reason that T-Mobile can deploy mid-band 5G more quickly and more cheaply than its rivals is that it can spread coverage by adding new radio gear on its existing cell towers. Deploying high-frequency 5G typically requires building entirely new small cell sites that blanket urban areas.
“I’m not trying to build hundreds of thousands of small cells,” Ray says. “That’s going to decades to complete.”
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