Carrier aggregation is a complex technology, to say the least, however the goal is relatively easy to understand. The basic idea is that LTE carrier aggregation technology allows independent carriers to pool their spectrum bands together to create a contiguous and wider band, resulting in a faster connection for subscribers and high data rates.
AT&T recently deployed an LTE-Advanced network in Chicago that makes use of both 700MHz and 2100MHz spectrum bands resulting (at least theoretically) in a very fast download speed (110- mbps). Sprint is currently working on something similar. Additionally, Verizon and T-Mobile are in the process of swapping spectrum that will enable each company to increase the efficiency of their networks by using contiguous bands. The wireless carriers are doing this not because they desire to be innovative, but out of necessity.
The FCC allows carriers to purchase spectrum, but packages it in small (“narrow”) bands across distinct geographic areas. Europe and other countries, on the other hand, allocate wider channels, and because of this, their need for carrier aggregation technology is not imminent, meaning that U.S. carriers will need to foot the bill and push the technology forward without any help from foreign companies who happen to be in a position to fund the effort, but currently have no need to.
None of the carriers who are currently working with LTE carrier aggregation technology are willing to publically state how much it is costing them (or how far they are willing to take it). According to Roger Entner of Recon Analytics, in 2013, U.S. wireless companies spent over $109 per citizen to upgrade or augment their networks. “AT&T’s attempt to overtake Verizon in network quality had the company spending roughly $11.5 billion on network improvements, while Verizon Wireless spent another $9.75 billion improving its network.” Obviously, this is good for the nation’s GDP and economic growth, but how long can the carriers sustain the expenditure? Some analysts say that wireless companies are already at their upper bounds as far as investing in new technology and upgrades goes.
If Sprint and T-Mobile are granted FCC approval to merge, they will need to consolidate their actual networks (which currently use disparate technology). This will not only take time, but will certainly be costly. Given their economy of scales and overlapping coverage, the thought is that they will expand outwards as opposed to simply improving their overlapping and competing existing networks to keep up with AT&T and Verizon.
Much of the fate of the Big Four (and other regional as well as new players) will rest on next year’s spectrum auction, as well as approval by the FCC regarding the proposed Sprint/ T-Mobile merger. Stay tuned and we’ll do our best to keep you updated.