LTE leap suits a small carrier, MetroPCS chief says

MetroPCS, with a customer base of just 7.6 million, doesn't seem the most likely mobile operator to launch the first commercial LTE networks in the U.S., but its small size actually was one of the reasons the carrier jumped on the new technology, MetroPCS Chief Operating Officer Thomas Keys said Thursday.

LTE is expected to become the most widely deployed 4G (fourth-generation) mobile network technology in the world over the next several years. Verizon Wireless, which dwarfs MetroPCS with more than 92 million subscribers, plans to offer LTE in 25 to 30 markets nationwide by the end of this year. But MetroPCS was first out of the gate, launching service on the next-generation technology last week in Las Vegas and on Wednesday in Dallas. It is offering the high-speed service for a flat monthly charge of US$55, with no contract.

MetroPCS made the decision to move to LTE about 24 months ago, Keys said in an interview on the sidelines of the Mobilize conference in San Francisco. Partly, the carrier wanted to make sure it could get the attention of infrastructure and device vendors before more established mobile operators stole the stage.

"We wanted to make sure the ecosystem would come our way," Keys said. Unlike Verizon, which is using large blocks of spectrum in the 700MHz band to cover its metropolitan markets, MetroPCS is using relatively small channels in different spectrum bands. In most markets, each of the paired bands it uses will be just 5MHz, 3MHz or 1.4MHz wide.

Competing with the top U.S. carriers is a "David and Goliath" experience for MetroPCS, Keys said. The small carrier's network, subscribers and plans all set it apart from the established leaders. It targets consumers who are looking for value and no contracts. 68 per cent of them walk into MetroPCS stores each month and pay cash for their service, Keys said. In January, it introduced new rate plans that include all taxes and fees within a flat monthly charge. MetroPCS calls its plans "pay in advance," because subscribers pay for service one month at a time.

MetroPCS also skipped 3G, so except for its emerging LTE footprint, its entire network is based on CDMA2000-1xRTT, the early Code Division Multiple Access mobile data network that typically delivers speeds well below 200K bps (bits per second). This also gave a sense of urgency to its LTE plans.

"90 per cent of our customers utilize data, and 50 per cent of those use our phone as their only connection to the Internet," Keys said. Those customers were starting to demand video, which required a faster infrastructure. Keys declined to quote a speed for the LTE service, other than saying it should probably be three to four times as fast as its CDMA network. Verizon has said test results have shown speeds of 5M bps to 12M bps on its LTE network.

MetroPCS has lined up at least two network suppliers -- Samsung and Ericsson -- and already has an LTE handset in the market from Samsung, the Craft. Keys did not share sales figures for the Craft, which doesn't run a smartphone OS, but he said that so far about 50 per cent of buyers have been MetroPCS customers who upgraded. The Craft costs $349, with a $50 rebate.

The carrier expects to introduce an Android device next year. But unlike other budding 4G providers, which have emphasized use of the fast network on laptops, netbooks and USB data cards, MetroPCS is focused on "the small-screen experience," Keys said. "We do not have a road map today to support dongles or cards," he said. After the market for such services has settled out at other providers, MetroPCS may consider releasing tablets or other larger devices, he said.

To satisfy user demands for multimedia, MetroPCS has introduced MetroStudio, a content offering that allows for access to multimedia, ringtones and streaming video for a flat monthly fee. The LTE plans currently include unlimited monthly data. MetroPCS will re-examine this approach as consumption grows, but it would prefer to use rate throttling rather than monthly caps, Keys said.

Keys believes the direction of the economy is helping to drive some consumers toward "pay-in-advance" plans.

"We see the economy as not quite back yet," Keys said during an on-stage conversation on Thursday at Mobilize.

MetroPCS expects to offer LTE across its whole current network footprint, which now covers 96 million U.S. residents, by the end of next year. He said the service should be available in San Francisco by the end of this year.