Softbank to give up on Sprint-TMobile merger

Oh, thank heaven. Even though I’ve railed against a potential Sprint/T-Mobile merger over and over again, I still thought it was going to happen. After all, it seemed just too stupid to avoid. Now it seems that for once, the telecommunications industry is doing something smart. The original report from Nikkei doesn’t give a lot of details, only saying that Softbank’s board (Softbank owns Sprint) is going to propose ending merger talks at this time. So it’s possible that talks could start again, but at least for now, call that a dodged bullet.

People unfamiliar with the cellular industry often assume that a merger of T-Mobile and Sprint would move the combined company quickly into easy reach of rivals AT&T and Verizon, but they ignore the massive difference in technology between T-Mobile and Sprint. The two companies share almost no important technologies when it comes to actual communications, and only the most expensive phones out there are capable of using both networks. Most people’s 2nd-tier Androids won’t do it. Any merger between these two companies would be accompanied by half a decade of accommodation and re-investment, while AT&T and Verizon moved onto the next big thing.

Sure, this still leaves Sprint and T-Mobile as distant #3 and #4 players in a two-horse race. That’s not a good position to be in, but it gives both companies the freedom to innovate. We’ve seen T-Mobile change the entire industry over and over again by pushing the envelope, doing things that everyone assumed were against the rules. They take the lead, and the big boys follow. As for Sprint, they’ve carved out a decent niche by claiming that you shouldn’t care about whether our network is 98% reliable or 99% reliable. They’re probably right, especially in suburban areas where everyone has enough signal anyway.

As for myself, I’m glad to not have to go through another year or so of stories written about these two also-rans. They’re fine right where they are, but together they would be a huge mess, inevitably failing and actually reducing competition. So, although I rarely say so, here’s my tip of the hat to Softbank… you actually did good for once.