It’s a common misconception that Apple(s aapl) is picking winners and losers among the wireless operators by bestowing or withholding the iPhone, but U.S. Cellular(s USM) and its parent company TDS(s TDS) prove otherwise. TDS CEO Ted Carlson told attendees of a UBS analyst conference Monday that U.S. Cellular is waiting for Apple to offer a more “cutting edge” iPhone before U.S. Cellular would be willing to take the risk of selling it, FierceWireless reported. By cutting edge, U.S. Cellular means LTE.
In November, U.S. Cellular revealed that Apple had offered it the CDMA variant of the iPhone, but it declined, saying it couldn’t make the economics work. That makes a lot of sense in this case: selling the iPhone requires enormous upfront subsidies from wireless operators, leading U.S. Cellular to question the model’s profitability. In addition, the smartphone takes a tremendous toll on operators’ data networks.
Other regional operators like C Spire have risen to the challenge, but C Spire doesn’t have what U.S. Cellular has: a big, dense, data-hungry market like Chicago. U.S. Cellular only has 20 MHz of PCS spectrum in Chicago, with which it serves a tightly packed population of more than 13 million. U.S. Cellular doesn’t have that many 1X voice and EV-DO data carriers to go around. The iPhone’s enormous data impact likely would force U.S. Cellular to shift more voice channels to EV-DO, which might upset the delicate balance between voice and data services it has in Chicago.
The smarter thing to do, from U.S. Cellular’s perspective, is wait until Apple births an LTE smartphone, presumably the iPhone 5. U.S. Cellular plans to launch its own LTE network within the month, starting in smaller markets across its regional footprint.
But if U.S. Cellular does plan to support the LTE iPhone, it won’t launch it in Chicago – at least not with its current spectrum holdings. The operator failed to pick up any 700 MHz spectrum at auction in its flagship market, though it picked up licenses in all of the surrounding regions. U.S. Cellular and Verizon Wireless(s vz)(s vod) have filed a petition with the FCC to swap some of the former’s PCS spectrum throughout the country for some of the latter’s 700 MHz spectrum in Illinois and Indiana. If Chicago is part of that deal – and Verizon is flush with Windy City frequencies – then U.S. Cellular can build a complete iPhone-worthy 4G network.