After skipping 3G for LTE, MetroPCS is moving back to EV-DO

MetroPCS was unique in the U.S. wireless industry in its bold strategy to move directly from 2G to 4G. Now Metro is backtracking, making the odd move of launching 3G after it has nearly fully implemented a footprint-wide LTE network (CP: MetroPCS completes LTE footprint).

Speaking at a Bank of America Merrill Lynch financial conference, Metro chief financial officer Braxton Carter said the carrier is overlaying EV-DO Revision A over 20% of its CDMA network, which would allow customers without LTE phones to access faster data speeds. Carter explained that while LTE is its primary data network, it wants to expand data services across its customer base, much of which can’t afford the high-cost of an LTE smartphone.

“We’re in a grace period,” Carter said. “We’re putting a lot of smartphone activity onto a CDMA network. Between last year, this year and next year, we’ll have almost $1 billion deployed in a 4G LTE network. We really can’t start putting a significant amount of our customers onto that LTE network—which will bring a lot of efficiencies to us—until the ecosystem develops where we have affordable LTE handsets. But the good news is a lot of the investment is already behind us. The bad news is we’re in this transition period.”

The magic number seems to be $200. When MetroPCS can start buying LTE phones from vendors below that price, it can start marketing mobile broadband service to all levels of its customer base, Carter said. He added that he doesn’t expect to be able to hit that price point until late next year.

But the industry is chalk full of CDMA phones that sport EV-DO radios at a low price. Most CDMA radio baseband chips bundle in EV-DO and EV-DO Revision A bundled in regardless of whether they’re bound for a CDMA 1X only network. Many of the devices that MetroPCS offers may already be 3G capable. That would allow MetroPCS feature and smartphones with greater data capabilities for a fraction of the cost of its current LTE portfolio. MetroPCS already offers CDMA-only Android smartphones for $130 or less.

Carter said the 3G launch isn’t necessarily the beginnings of a footprint-wide launch of 3G. Metro is “surgically” implementing EV-DO in the most high-traffic areas converting 1X carriers into data-only EV-DO carriers. There’s probably, however, only a limited amount of network reconfiguring that MetroPCS can do.

Metro uses the same advanced wireless service and PCS spectrum for 2G, 3G and 4G services. In fact, its LTE network was built on the same 1.5 MHz increments into which it fit its CDMA 1X carriers. So for every EV-DO carrier it turns on, it must turn off a CDMA voice carrier or sacrifice some capacity on its LTE network.

“Our number one strategic priority is to acquire more spectrum,” Carter said. “It’s going to be a lot more costly to continue to grow over the next few years, given the explosion in data, unless we obtain some additional spectrum. To get the full benefit of LTE we need more spectrum. We’ve deployed narrowband LTE so even our LTE is not comparable from a speed standpoint to what Verizon has done.”