T-Mobile, Sprint and 100 million customers
Now that a federal judge in New York has ruled that T-Mobile and Sprint can combine their companies, their roughly 100 million customers are left wondering: What will happen to my cellular service if this matchup does go through?
There remains the possibility of an appeal by the attorneys general from 13 states and the District of Columbia who filed the lawsuit seeking to stop the merger. And there are other bureaucratic obstacles. For example, the California Public
Utility Commission, which has yet to rule on the deal, and must give its blessing if the combined entity wants to do business in the most populous state in country.
But assuming the merger goes through, there will be three major wireless service providers in the United States: AT&T, Verizon and T-Mobile. As part of an agreement with federal regulators, a fourth carrier will be spun off out of Sprint’s Boost Mobile subsidiary, which is being sold to Dish Network. T-Mobile executives have said the merger could close as early as April 1.
Here’s what your new wireless landscape will look like, if the deal goes down.
New name, attitude?
The combined company will get a new name. Well, really, it’s an old name with “new” added to it. T-Mobile CEO John Legere is already using “The New T-Mobile” when referring to the postmerger entity.
And Legere will no longer be the company’s chief executive when his contract is up in April. Mike Sievert, T-Mobile’s chief operating officer and president, will take over the role. Legere, a non-traditional chief executive who hosts a slow-cooker webcast and has the #IAmBatman hashtag on his Twitter bio, has been the driving force behind T-Mobile’s “Un-Carrier” persona and competitive approach.
In his ruling on Tuesday, U.S. District Judge Victor Marrero cited T-Mobile’s aggressive competitive approach in ruling against the attorneys general lawsuit: “T-Mobile has redefined itself over the past decade as a maverick that has spurred the two largest players in its industry to make numerous pro-consumer changes. The proposed merger would allow the merged company to continue T-Mobile’s undeniably successful business strategy for the foreseeable future.”
Same pricing — for now
Traditionally, mergers of
big companies mean prices have gone up. Consider that, after its controversial merger with Time Warner, AT&T raised the price of its streaming TV service not once, but twice last year.
But as part of its efforts to assuage federal regulators, T-Mobile agreed not to raise prices on its services for three years, and it has hinted that prices could go lower. That includes pricing for its next-generation 5G service, which launched nationwide — including in Houston — last year.
And included in those concessions is a new, lower-cost T-Mobile Connect plan that provides 2 gigabytes of monthly data for just $15, about half the price of its current offering. Each year, the amount of monthly data allotted goes up by 500 megabytes, so in year two it’s 2.5 GB, year three is 3 GB and so on. And T-Mobile promises not to raise the rate on this plan for at least five years.
T-Mobile has not yet said just what will happen to existing Sprint service plans, but they have said it will take about three years to fully integrate the two networks.
Better 5G service
One of the key arguments T-Mobile and Sprint made for their merger as that combining would allow them to compete better on 5G service. The two carriers are using different spectrum for 5G, and bringing those together with smartphones and data hotspots that supports both will give them an advantage.
T-Mobile lit up its 5G service in December, using lower-band 600 Megahertz spectrum. That’s much slower than the superfast, millimeter wave 5G service offered by Verizon and AT&T — but that flavor of 5G can’t travel far and doesn’t penetrate barriers, including foliage. T-Mobile’s 5G can travel much farther and pass through buildings, but it’s not that much faster than its current LTE service.
Sprint’s 5G service, also turned on in Houston last year, uses mid-band spectrum that can deliver speeds in the 1-gigabit per second range. It can travel farther than millimeter wave, but doesn’t have as good building penetration as T-Mobile’s service.
Combined, the companies will be able to offer hardware with fast 5G that works well anywhere. In fact, the smartphones T-Mobile unveiled with its 5G launch will also work in combination with Sprint’s spectrum, once the two carriers are one. The same is true for Samsung’s new Galaxy S20 phones, unveiled Tuesday.
And T-Mobile has promised to use this approach to provide 5G service to rural and underserved communities. It promised the Federal Communications Commission that its 5G would reach 97 percent of the country in three years, and 99 percent in six years.
T-Mobile in your home
Legere has long threatened to disrupt the cable TV and home broadband business in the same way his T-Mobile has upended
wireless carriers. The combined 5G spectrum of T-Mobile and Sprint is key to that.
In a news release issued after Tuesday’s ruling, T-Mobile promised inhome broadband 5G service with speeds of 100 megabits per second or more would be available to 90 percent of the U.S. by 2024. There was no indication what that might cost, but T-Mobile currently offers a home internet service based on its LTE network for $50 a month. There are no data caps, extra fees or hardware costs.
A new fourth carrier
As part of its concessions to regulators, Sprint will sell its Boost Mobile service to Dish Network, which will then start out with 9 million subscribers. Yes, that’s a fourth carrier, but one that is noticeably weaker than Sprint, which is currently No. 4. Analysts are skeptical that it will thrive, much less survive.
Jeffrey Moore, principle analyst at Wave7Research, which tracks and analyzes the wireless industry, said Dish faces “a tremendous uphill battle” as it competes AT&T, Verizon and a merged T-Mobile/Sprint.
“The analogy I would use is that it’s like a high school football team taking on the Kansas City Chiefs,” Moore said. “The wireless game is one of scale, and Dish would not have that.”