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Spectrum

Sprint & T-Mobile: A Tale of Two Maps

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.

Sprint & T-Mobile Coverage Overlap
Source: Mosaik Solutions
Source: Mosaik Solutions

Sprint & T-Mobile's Aggregate Spectrum
Source: Mosaik Solutions
Source: Mosaik Solutions

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

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sarahthomas1011 6/6/2014 | 12:50:51 PM
What's Son's secret? Son must know something that we all don't know. It just seems like such a risky acquisition, because, even if it does go through, they'll have to divest SO much. Either he knows a secret way of getting approval or Sprint really can't survive without T-Mobile.
sarahthomas1011 6/6/2014 | 1:05:42 PM
Mosaik More details on the maps from Mosaik:
  1. The coverage map depicts the owned and operated marketed 2G, 3G and 4G network Coverage by each carrier. 
  2. The aggregate spectrum maps represents all of the licensed or leased spectrum holdings in the bands defined, regardless if any technology has been deployed.
zooropean 6/6/2014 | 1:09:55 PM
Re: What's Son's secret? Son must be confident due to the rumor of a $1 billion break-up fee.  I don't think Sprint just has that $$ sitting around.

This to me is an attempt to kill off a competitior plain and simple.  Son wants to buy customers AND continue to become more like AT&T and Verizon (i.e. less consumer focused).

On a personal note I would not be thrilled if this happened.  2 months ago I moved to T Mobile after 15 years with Sprint.  Even with Spark coming to Chicago, I simply was more impressed with T Mobile network-voice and speed wise.  Sprint to me just didn't deliver with Network Vision.

 

Hopefully the DOJ puts a stop to this (not confident in the FCC) since having 4 "national" carriers in the best interests of consumers.  Going down to 3 leads me to believe the likelihood of more collusion to the benefits of the carriers.

 

 

 
smkinoshita 6/6/2014 | 1:27:30 PM
Re: What's Son's secret? Do you think it could have anything to do with the rual expansion opportunities?  I keep hearing a bit of buzz about rual expansion despite also hearing that rual expansion isn't very profitable.
mendyk 6/6/2014 | 3:02:41 PM
Re: What's Son's secret? Son has more money than most countries. $1 billion more or less won't matter.
tb100 6/6/2014 | 4:32:33 PM
Re: What's Son's secret? On a personal note I would not be thrilled if this happened.  2 months ago I moved to T Mobile after 15 years with Sprint.  Even with Spark coming to Chicago, I simply was more impressed with T Mobile network-voice and speed wise.  

 


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.

 

 
zooropean 6/6/2014 | 4:41:38 PM
Re: What's Son's secret? Well I am not thrilled with 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.

 

 
KBode 6/6/2014 | 5:21:17 PM
Re: What's Son's secret? "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."

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.
Ariella 6/6/2014 | 7:34:46 PM
Re: What's Son's secret? @Kbode <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 will all the data from history there's really any doubt that eliminating a major player at a time they're being so disruptive for end badly for users.>

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. 
keithj123 6/7/2014 | 9:42:38 AM
look back the 3 long distance companies Take a look back at the consumer long distance wars in the 1990s. AT&T would raise price for its basic long distance service, MCI and Sprint would follow to fund the promotions at the expense of the low volume customers and while the promotions were loud in the market place, the effective discounts were not that generous and all the prices after the promotions between the competitors were pretty much the same. This is what will happen when mobile service consolidates to three. The capital intensity of this business does not allow the customers to receive all the benefits.
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