T-Mobile + Sprint = 5G

Posted on April 30, 2018 by Paul Thurrott in Cloud, Mobile with 22 Comments

T-Mobile + Sprint = 5G

After years of failed attempts, T-Mobile and Sprint announced over the weekend that they had reached an agreement to merge. What’s different this time? Now, they have a good story to sell to antitrust regulators.

“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience,” T-Mobile CEO John Legere said in a prepared statement, “and do it all so much faster than either company could on its own. As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf.”

Based on each company’s share price at the close of trading on Friday, the deal values Sprint at $59 billion and the combined new company, which will be called T-Mobile, at $146 billion.

If approved, the merger will upend the competitive situation in the U.S. carrier market, which has two giant companies, Verizon and AT&T, and two smaller firms, T-Mobile and Sprint. With one fewer carrier, the new T-Mobile would be big enough to take on Verizon and AT&T directly.

The new company would be based at T-Mobile’s current headquarters in Bellevue, Washington, but it would also maintain a second headquarters in Overland Park, Kansas, where Sprint is currently located. It would be run by Mr. Legere and his current lineup of top-level executives.

The merger is certain to face antitrust scrutiny, and there is ample evidence that reduced competition near-universally leads to higher prices for consumers. And on that note, the firms are, of course, talking up the types of “cost-saving synergies” that never actually pan out in the real world.

But the timing of this latest merger attempt is right, and T-Mobile and Sprint have a better card to play: With the U.S. government fixated on its xenophobic policies aimed at thwarting China, the carriers and pushing the notion of a U.S. company leading the charge to 5G networking, beating China in the process. And T-Mobile/Sprint are promising a $40 billion investment along those lines.

Smart.

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Comments (22)

22 responses to “T-Mobile + Sprint = 5G”

  1. Avatar

    SmithPM

    T-Mobile US, Inc., commonly shortened to T-Mobile, is a United States based wireless network operator whose majority shareholder is the German telecommunications company Deutsche Telekom.

  2. Avatar

    Winner

    Another opportunity for less competition. Bend over everybody.

  3. Avatar

    spraguex

    Thanks Paul for this article. It actually saved me the price of your premium content package. I have followed you for sometime and while I appreciate your knowledge and context you bring I find it unprofessional and narrow minded to alienate your users with inflammatory, partisan talk of xenophobia simply because you disagree with current policy.

    • Avatar

      Greg Green

      In reply to spraguex:

      “Nearly 30 U.S. solar-manufacturing facilities had closed in the past five years, they said, as China plotted to flood the global market with cheap products to weaken U.S. manufacturing.” Inc dot com


      To paraphrase T Jefferson, A little ‘xenophobia’ now and then may be a good thing.

  4. Avatar

    harmjr

    I just hope this will make it easier for taking your phone to another network.

    Always hated how sprint handled activation of phones. Here to hoping they will get on board with removable sim cards.

  5. Avatar

    skane2600

    I don't see how this merger would necessarily accelerate 5G development. Of course there is no consensus on the technical definition of 5G anyway.

    • Avatar

      Waethorn

      In reply to skane2600:

      Real "5G" is supposed to be these things, depending on who you ask:


      1) Gigabit cellular data.

      2) Requires fibre backbones everywhere: no fibre = no 5G. Expect cellular and/or landline fibre ISP prices to jump.

      3) Has really short broadcast range, needing access points everywhere (see #2), more like street-lamp WiFi than long-range cellular that we have now.

      4) Has really high power output (see #3) and potentially-hazardous radiation levels, with zero health studies done on it yet.

      • Avatar

        jrickel96

        In reply to Waethorn:

        Speed has yet to be officially defined. It likely will focus less on overall speed to qualify as 5G and more on latency.


        It doesn't necessarily need a short broadcast range, depending on deployment. That will be a part of it.


        The 600 Mhz band was added to the preliminary standards at the end of last year and that is T-Mobile's initial focus, though merging with Sprint changes things and allows them to push a mixed case 5G. The final standard will be issued in June.


        T-Mobile is already deploying 5G ready equipment in the 600Mhz band and will also be deploying millimeter wave equipment. The 600Mhz band is not going to allow the super high speeds, but it will allow for greater coverage and can be aggregated with higher bands for faster speeds.


        T-Mobile's advantage is they have spectrum to roll out 5G that will not affect LTE coverage, so they can deploy nationally without winding down LTE networks. AT&T and Verizon can do this is populated areas, but they don't have the spectrum to do many upgrades in less populated or rural areas. A merger with Sprint gives them more upper end spectrum. I suspect T-Mobile will also be big players in the 3.5GHZ spectrum, the place where they think most 5G deployment will happen.


        As for T-Mobile's vision, I suspect they see a network that will be fully 5G when it comes to latency and device connectivity, complying to standards opening the door for independently connected IoT devices even in rural areas. In places where only the lower bands offer coverage, speeds will not be anywhere near as fast as mixed bands.


        However Sprint/T-Mobile has the spectrum in most populated areas to have a strong mix of bands that could provide very fast connections above 1gbps. I suspect rural coverage in the 600Mhz band will likely tend more towards 100-150mbps, though that is faster than most coverage available for wired connections in those areas.


        T-Mobile's concept is to overtake terrestrial wire providers and offer services for phone and data that extend beyond portable devices, but into the home. I suspect they will also offer a T service of some kind based on prior acquisitions and seek to be a one stop shop for modern life by offering data for home and portable devices, connecting IoT, and offering streaming services with TV subscription as well.


        The idea here is in most significant populated areas, T-Mobile will offer super fast, low latency internet. Outside of those, the speeds will decrease and the latency will be better than current systems, though not as good as in the populated areas. However, it will create better rural coverage and we'll likely see more band aggregation is less populated areas to create better speeds there (maybe in the 500mbps range).


        Their argument is the New T-Mobile can basically lead the way in deploying much faster wireless tech and that a part of that is much faster speeds in rural areas than is currently experiences.



      • Avatar

        skane2600

        In reply to Waethorn:

        The key phrase is "depending on who you ask". Operators have taken the position that a change in cellular technology that isn't compatible with the previous technology is all that is needed to qualify an increment to the generation number. Thus "4G" isn't really based on a standard, but rather it's a cellular technology that is newer and incompatible with "3G".

  6. Avatar

    jrickel96

    They definitely did a good job refining their pitch to get past US anti-trust regulators. Bringing up the MetroPCS merger and jobs created (I didn't fact check), widening the idea of competition to Comcast, Spectrum, etc, and making the argument that only they can get the US ahead in 5G deployment. They did a good job stressing lower costs for businesses and consumers, so they know how consumer focused the anti-trust regulators are in the US.


    How much of it is true, I don't know. But they definitely put together a compelling presentation and both CEOs did a good job getting out in front and putting a face on it. I think it gets through based on the force of Legere and the reputation he has built. He can argue that T-Mobile has driven lower prices and forced the return of unlimited data plans - and his company does have a good reputation with consumers.

  7. Avatar

    dcdevito

    I don't know, to me, you merge/acquire if it's advantageous to at least one party, but in this case, I just don't see what it is other than just saying they will cover more of the country and have more users (combined). I'd love for them to put a dent in AT&T and Verizon but I just don't see how they're going to do that. At least when Sprint had WiMax it could have given them a technical advantage over the other carriers.


    I just checked my cell bill (Straight Talk) and I'm only using ~2-3GB/month. I think I'm taking my Pixel 2 XL to Fi.

  8. Avatar

    Daekar

    You know... I'm torn on this one. My initial response is to say "no, we've had enough mergers and megacorporations thank you very much." I've spent my whole life watching companies be devoured and more and more monopolies develop. On the other hand, I really hate Verizon and AT&T and would love to see another company enter the ring with them for real.


    I don't buy for a second that this will create jobs or any of the other garbage they're tossing around. This merger is no different than any other, ever.

  9. Avatar

    ben55124

    Project Fi will be just another single carrier mvno (they may as well buy up US cellular). Perhaps that will open up handsets for Fi.

  10. Avatar

    jwpear

    I'm not a fan of reducing choice, but I'm not sure T-Mobile and Sprint were really choices for many up to this point. Certainly wasn't for me. I'd absolutely jump over to T-Mobile if they had decent coverage in my area.  Hoping this merger helps bring it quickly.


    I like Legere and would love to see more of their disruption. It'll be interesting to see if they continue to act as the little company with nothing to lose or if they start playing like a big carrier.


    • Avatar

      evox81

      In reply to jwpear:

      Reality is, they'll still be the 3rd place company with the name/reputation of when they were 4th place. While T-Mobile coverage is within a few percentage points of Verizon in most places, people still believe their coverage is awful. They've got a long way to go before they can start playing like a big carrier.

      • Avatar

        Rick Foux

        In reply to evox81:

        Can confirm. T-Mobile's "4G LTE" coverage in my area usually equals 1.0 Mbps or less. Granted I don't live in the heart of an urban area, just a small suburb of one, but meanwhile I have no issues with Verizon or AT&T on the same device.

        • Avatar

          evox81

          In reply to RawkFox:

          I was with T-Mobile from 2006 to 2015. Up to that point I always liked T-Mobile but I would only recommend it with caveats regarding rural areas. I switched back to T-Mobile in late-2017 and the difference (both compared to AT&T who I had for those two years and my prior experience with TMO) is surprising. Data performance consistently outperforms AT&T by 200% to 300% around my home. Traveling to visit my family in the country was an eye opener as well, going from no service (not even 2G/3G) to ~3Mbps of LTE. They've come a long way very quickly.

      • Avatar

        Stokkolm

        In reply to evox81:

        They're only going to be 20-30 million (~115 million based on the 2015 numbers I found for each company) subscribers less than AT&T/Verizon. I think they'll definitely be able to start playing like one of the big boys.

        • Avatar

          evox81

          In reply to Stokkolm:

          Reputations tend to have a fair amount of inertia. Outside of forums like this, absolutely no one knows the subscriber count of wireless carriers, nor do they care. It's reputation that people care about.


          Regardless of what the facts and figures say, regardless of their subscriber count, in the court of public opinion T-Mobile has crappy coverage. Someday they'll probably be able to turn that around, then I'll worry about them acting like AT&T or Verizon. That will likely take years.

  11. Avatar

    Praveen M

    I'm not American but does this mean T-Mobile will support RCS? I only care because it's one step closer to RCS going worldwide

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