Sprint & T-Mobile: A Tale of Two Maps
Comment (15)Sprint's reported $32 billion bid to acquire T-Mobile is about a lot of things -- more customers, scale, and resources to build out its network among them. But, like all the wireless mergers of the past year, it's also about spectrum. (See Sprint, T-Mobile Settle on $32B Price.)
Spectrum has been the stated catalyst for most of the big US wireless mergers, including AT&T Inc. (NYSE: T)'s purchase of Leap Wireless and its own attempted T-Mobile US Inc. buy, and T-Mobile's acquisition of MetroPCS. Only with Sprint Corp. (NYSE: S) and T-Mobile, the spectrum -- and coverage -- story is a bit complicated. (See FCC Green-Lights AT&T's Leap Buy, T-Mobile Doubles MetroPCS Coverage, AT&T Wants to Buy Sprint's WCS Spectrum, T-Mobile Spends $2.4B on Verizon Spectrum , and US Spectrum Outlook: Smooth Not Crunchy?)
For one thing, Sprint operates a 3G CDMA network and T-Mobile is GSM. Both are building out LTE networks, but are also using some different swatches of spectrum here. They both stand to gain up to 30MHz of 600MHz broadcast TV spectrum that the Federal Communications Commission (FCC) is setting aside for smaller carriers in an auction next year. However, they would likely lose this privilege if the merger goes through.
What they do have in common is most of their coverage to date has been in major cities, not rural areas. That won't change simply by the two companies merging. What will help, independent of the merger, is a deal Sprint inked with the Competitive Carriers Association and the NetAmerica Alliance LLC that would see it form reciprocal roaming agreements with rural carriers and even help fund their LTE deployments.
T-Mobile, also a CCA member, is not yet part of the agreement. But, in a bid to win merger approval, that is a likely next step. (See Sprint Joins Forces With Rural America on LTE, Rural Carriers: SoftBank Will Fund Your LTE, and Leading Lights Finalists 2014: Best Deal Maker.)
To get a better feel for the third- and fourth-largest US carriers' coverage and spectrum positions, coverage map maker Mosaik Solutions LLC has developed the following helpful images depicting Sprint and T-Mobile's overlap in coverage and spectrum.
It is clear from the maps that this acquisition isn't about a bigger footprint out of the gate. The two would have a lot of integration work to do, and the most likely result would be the shuttering of one of the two 3G networks.
The acquisition will still have to pass regulatory muster, which many agree will be a formidable challenge. If it does, significant divestitures from Sprint will likely be required to make it palatable, which could end up changing the make-up of these maps even more. (See DT Asks for $1B Prenup for Sprint, T-Mobile — WSJ and Is SoftBank Ready to Reunite With Legere?)
— Sarah Reedy, Senior Editor, Light Reading
T-Mobile has 3 long term cost issues going on as they drive growth. Adding spectrum as they add customers. Continuing to update the network right now to VoLTE and LTE-A. Building out the network to address their biggest deficiency - coverage and or coverage with something other than GPRS/Edge outside of metro areas.
As things stand right now they will hit a wall without financial help. DT wants out or they wouldn't have agreed to sell.
consumer market price compression less so, even when the local phone companies got into the long distance market. they really didnt have to discount long distance much since they owned the local relationships and offered the better bundle of local and long distance. If you look at the long distance pricing now, you are probably looking at the similar prices as late 90s/early 2000s. Why? because of the consolidation of local and long distance companies. there is less incentive to discount when there are less players. You will see a lot of promotion that gives the appearence of large discounting, but the effective cost per customer will move in a narrow range.
As for rural expansion, I don't see that being the point here. This is about making urban networks stronger and more data-capable.
Unfortuantely, I believe you're right. Certainly, I see that in the complacency of the only 2 companies to offer high speed internet in my area. They have no other competition, so prices stay high. And when they offer discounted rates, they're for new customers only to be lured in for an affordable rate for a year or 18 months and then pay the higher rates after that.
I tend to agree. Son is claiming that a combined TMO and Sprint creates a more viable competitor, but time and time again we're shown that the elimination of a competitor and consolidation results in the remaining companies competing less ferociously. It's astonishing that with all the data from history there's really any doubt that eliminating a major player at a time they're being so disruptive will end badly for users.
Especially when we're talking about Sprint doing the aquiring. They've yet to even prove they can run a top-shelf LTE network, much less do it while integrating T-Mobile AND continuing T-Mobile's disruptive practices in the face of less competition.
Sure, it *might* be that the T Mobile team calls the shots, but Son is very hands on. He doesn't even have Sprint in a good place at this point yet he wants to pursure an acquisition which will kill off a competitor.
What's to say the combined SprinT Mobile will be the maverick carrier? With only 2 competitors now what would stop them from raising prices and stopping things like unlimited data? And I can just see MVNOs disappearing as well.
Then you should be thrilled. This isn't Sprint taking over T-Mobile. This is Softbank taking over T Mobile. Indications are that T Mobile will be in charge of the end result. T Mobile is about to get a huge infusion of capital if this goes through.
