T-Mobile embraces new ‘rural’ carrier role in 4G debate

T-Mobile USA is asking the Federal Communications Commission to require that all LTE devices in the 700 MHz band be interoperable – meaning that if you roam across AT&T’s (s t) to Verizon’s (s vz)(s vod) to U.S. Cellular’s (s usm) 4G networks, your smartphone or hotspot should still work. The FCC is considering just such a rule to unify the 700 MHz band, and if implemented it would benefit a bunch of small operators. But one carrier who benefits little from the rule change is T-Mobile.

T-Mobile doesn’t own 700 MHz licenses, so it would appear to have no horse in this race. In the filing, which was first dug up by FierceWireless, T-Mobile said the whole industry stands to gain if the 700 MHz band was one big block party, where all devices could tap into every network:

Moreover, because of the concentration in the wireless marketplace, roaming is an increasingly important tool for carriers to be able to compete. Therefore, current carriers’ ability to provide roaming on 700 MHz systems will promote competition in the wireless marketplace, to the ultimate benefit of wireless consumers.

The thing is, T-Mobile’s future LTE devices are all going to run on the Advanced Wireless Service (AWS) band, which means it will have no interoperability problems with Verizon and AT&T, the primary advocates for allowing the 700 MHz band to fragment. Both Ma Bell and Big Red are using 700 MHz for their LTE networks today, but they plan to expand into AWS soon.

What’s T-Mobile’s motive here? We can only guess, but my bet is it’s taking its new membership in the Rural Cellular Association to heart by sticking up for the little guys — a club it now considers itself a part of despite its 33 million subscribers. What it comes down to is market leverage: the 700 MHz fragmentation issue isn’t just about roaming, it’s about device availability. By splitting 700 MHz into two – possibly even three – sub-bands, device makers will start tailoring their gadgets specifically for those frequencies. Just look at the two different versions of the iPad Apple(s aapl) just unveiled, each customized for AT&T and Verizon’s individual pieces of 700 MHz.

If vendors start building smartphones and tablets for specific operators, their initial tendency will be to focus their best work on the big operators, where the potential payoff is much bigger. But with a unified 700 MHz band, any device made for Verizon could be sold by any CDMA/LTE operator’s network and any device made for AT&T could be sold by any GSM/LTE operator.

There’s a flip side to the argument as well. You may think AT&T and Verizon are just trying to stifle competition by promoting fragmentation, but they have legitimate business and technical reasons for doing so. 700 MHz is a big band. Supporting its entire breadth from top to bottom requires additional electronic components, which ultimately add cost to the device and compromise its battery efficiency. Most significantly, though, the more generic the industry makes its devices, the more poorly those devices perform (subscription required). If we’re facing a capacity crunch, as the operators claim, introducing less efficient devices isn’t a good way to solve it.

This is one of those problems that doesn’t have a clear-cut solution, and that leaves the FCC with a tough choice. It has to weigh the benefits of promoting competition and device access – which requiring 700 MHz interoperability would definitely bring – against the benefits of encouraging faster, more efficient mobile broadband.

iPhone 4S image courtesy of IHS iSuppli.