Spectrum Have-Not MetroPCS: Making It Work
"We can scale indefinitely with our existing spectrum assets, you just don't have as much flexibility as if you had more spectrum," Chao said.
Its spectrum shortage was the impetus to move to LTE, since it’s more efficient than 3G, and the company’s network deployments are a case study in making-do.
For instance, MetroCPS has used large-scale outdoor distributed antenna systems (DAS) in larger markets where it needs a dense network to handle capacity. Chao said the entire core of MetroPCS' Philadelphia market is comprised of outdoor DAS, as well as large parts of Boston, New York and Los Angeles.
MetroPCS' LTE service isn't as fast as its larger competitors – a company spokesman says it is as slow as 1 Mbps in some markets, going up to 10 Mbps on the "very high end" –but that's not the point for the prepaid provider.
Chao says there is a "point of diminishing returns" with high-speed mobile broadband service. "We offer $60 for all-you-can-eat. Are you going to care what speeds you're getting?" he said.
By Chao's logic, giving customers a fatter pipe will only encourage them to use more data, clogging up the network and forcing MetroPCS to spend more money on capacity. Chao said MetroPCS customers need the latency advantage that LTE provides, but they don't really need a super-fast data connection.
"If you look at the hierarchy of needs for mobile wireless consumers, in reality the peak data rates are low on the scale," he said. MetroPCS customers so far seem content with the data rates they're getting, Chao said.
MetroPCS' thinking stands in contrast to its larger competitors, whose marketing trumpets the speed advantage of their mobile broadband services. Verizon Wireless calls its LTE service "America's fastest and most reliable" and AT&T claims to have the "nation's fastest mobile broadband network."
MetroPCS can't compete on speeds, so it's not competing on speeds. It's sticking to its core competency: providing low-cost wireless service to underserved urban communities. To judge by its subscriber growth, it's a strategy that seems to be working.