MetroPCS to begin VoIP transition in early 2012
First VoLTE devices would spark a migration of legacy CDMA services to the new LTE network
MetroPCS will introduce its first carrier VoIP services in the first quarter of 2012, CEO Roger Linquist said today during Metro’s earnings call. Using its new long-term evolution (LTE) network, MetroPCS will take the first steps in migrating its circuit-switched voice service over to an IP Multimedia Subsystem (IMS)-driven voice-over-LTE (VoLTE) service, a process it has already begun with the migration of its SMS and MMS services to the same platform.
“We are planning to begin introducing VoLTE-capable handsets early next year to move voice as well as data traffic to our LTE network,” Linquist said. Linquist added that moving to VoIP will allow MetroPCS to use its limited spectrum much more efficiently. While MetroPCS already is one of the most efficient operators on a subscriber per megahertz basis, it is always looking for more ways to increase that efficiency as well as expand its frequency base through strategic acquisitions., Lindquist said.
MetroPCS runs both a CDMA 1X network and LTE networks in 14 major markets. Its CDMA network covers 146 million POPs. While its LTE network still falls short of overlapping that CDMA network completely, MetroPCS plans to complete that overlay by early next year. When MetroPCS deployed the LTE network last fall, it was forced to use primarily its existing advanced wireless service (AWS) and PCS spectrum, having acquired new 4G spectrum only in the northeast. That required to MetroPCS to split capacity between CDMA and LTE, resulting in variable carrier sizes from market to market. MetroPCS has 1.4 MHz, 3 MHz and 5 MHz downlink carriers deployed depending on the market, though most of its markets utilize a full 5 MHz-by-5 MHz carrier.
In comparison, Verizon Wireless has 10 x 10 MHz network and AT&T plans to launch a 20 x 20 MHz network if it can secure permission to acquire T-Mobile. In order to keep up, MetroPCS will need to allocate more spectrum for LTE. It is eyeballing any spectrum AT&T may be forced to divest post-merger (CP: MetroPCS unopposed to a combined AT&T-T-Mobile), but a transition of its legacy voice and messaging services from to LTE would free up most of its existing spectrum. Metro’s largest growing segment is the smartphone customer—encompassing 25% of its subscriber base. As it ramps up LTE smartphone sales and implements VoLTE clients into them, it can move its voice traffic gradually to LTE, allowing it to shut down CDMA carriers, shifting them to accomodate more LTE capacity.
On the earnings front, MetroPCS added 199,000 subs in Q2, a much lower rate than in previous quarters, but its average revenue per user (ARPU) continued to grow, reflecting the shift in its subscriber base to smartphones with higher-ARPU data plans. Its churn rate, however, rose from 3.3% to 3.9% year-over-year, reversing a three-quarter downward trend culminating in its lowest churn, 3.1%, in the first quarter.
MetroPCS also said it would boost its project 2011 capex to $1 billion, up from its previous estimates of $700 million to $900 million. MetroPCS has already spent $425 million in the first six months of the year, driven by the increased demands on both its CDMA and LTE network. The operator plans to use those funds not only to complete its LTE build out, but add new cell sites within it existing CDMA and LTE footprints.
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