After AT&T failed to buy T-Mobile, here’s why a Sprint/T-Mobile merger could make sense
In these United States there are essentially two carriers that offer “unlimited everything”: Sprint and T-Mobile. Both have advantages over each other, as well as the other major players in the cellular “game”. Then again, they both have some fairly obvious disadvantages as well.
After a failed bid by AT&T just a few short years ago, is another merger even possible? Could the advantages of both Sprint and T-Mobile somehow cancel out the disadvantages of the other? Here’s why a Sprint T-Mobile merger just might make sense.
Way back in 2011, AT&T decided to buy T-Mobile, and T-Mobile agreed to the purchase. After governors from over half the States signed a letter approving of the merger, the United States filed suit to block it.
On December 19, 2011, AT&T announced that it was “permanently” ending the merger. The announcement included a slap-in-the-face, claiming that this outcome would “increase costs to consumers” and “harm innovation in the wireless market”. I don’t know about you, but I’ve seen the opposite in the two years since the deal fell apart.
Ultimately, the failed merger meant AT&T had to pay Deutsche Telekom US$3 billion in cash and access to $1 billion worth of AT&T’s wireless spectrum, pursuant to the original acquisition agreement.
Fast-forward to today, and T-Mobile is doing pretty well. It offers pretty decent LTE, has good voice coverage, and (more importantly) is becoming a self-described “un-carrier”. Without getting into all the details which that entails, suffice it to say that what T-Mobile has done with their plans and rates over the last year or so is making the rest of the industry stand up and take notice — and T-Mobile still has more up its sleeve.
Sprint has had “unlimited” plans for quite some time now, and they’ve been pretty affordable priced, too. It was also one of the first to start rolling out widespread 4G (real 4G; not HSPA+ which is really 3.5G).
Unfortunately, Sprint’s variety of 4G was WiMAX. WiMAX is sometimes referred to as “Wi-Fi on steroids” and, as such, can be used in much the same way. Alas, due to a perfect-storm of conditions and circumstances, at CES 2012 Sprint announced that it would no longer offer devices using its WiMAX technology due to “financial circumstances”, and would roll out a 4G network using LTE instead.
Sprint, unlike half of the other major US carriers, uses CDMA to run its voice network (Verizon being the other). AT&T and T-Mobile both use GSM, which is arguably “more standard” than CDMA. When AT&T was in talks to buy T-Mobile, it made sense because the two networks were technologically “compatible” with one another. Sprint and T-Mobile, on the other hand, well, they’re not.
Rumors of a new merger
Lately there have been rumors that Sprint may be making a play to purchase (or in some way “merge” with) T-Mobile. Some sources have speculated that the union could happen as early as the first weeks of 2014. At this point you should probably consider them just to be rumors, and we’re not breaking any news in this article.
However, looking at the these two companies together could be interesting. Both Sprint and T-Mobile have standardized on LTE as their 4G technology of choice (just like the other two), but both are unique in the same way: unlimited plans. Each is breaking the Status Quo and driving the way carriers in the US do business — for the better.
Closing the gap
Right now, neither Sprint nor T-Mobile is “big enough” to break the strangle-hold that Verizon and AT&T have on the country. As of Q2 2013 Verizon Wireless had 117.194 million subscribers and AT&T had 107.884 million; compared to Sprint with 54.877 million and T-Mobile with 45.039 million.
However, if Sprint and T-Mobile were to merge (whether one would buy the other, or the two would become a new entity), the combination would be just shy of 100 million subscribers. That’s still quite a bit short becoming the “top” carrier, or even securing a seat as “number two”, but it closes the gap to the point where the “unlimited everything” and aggressive pricing of both Sprint and T-Mobile could finally be something the other two had no choice but to take seriously.
Most importantly though, since this merger wouldn’t create a “new leader” or even broaden the distance between numbers one and two, the FCC and FTC shouldn’t have too much heart-ache over such a deal — like ultimately happened with the last one.
In the end, both Sprint and T-Mobile seem to convey the message that “the customer is king”. That kind of sentiment is very attractive these days, and will retain customers — hopefully it will even garner some new ones. And yes, even though I may be a bit of a “hopeless romantic” to think that these two companies want what’s best for their customers, rather than what’s best for their stockholders, I still think a Sprint/T-Mobile deal would be a good one for current customers on both sides, as well as customers that would be attracted or recruited to the new venture.
Perhaps it’s all about money rather than doing what’s “best” for the customer. But, just like Skyler asked Walt in Breaking Bad, looking across a stack of bills she couldn’t even begin to count, when is it ever going to be “enough”? Perhaps the real goal should be happiness more than money.
Image Credit: Breaking Bad