You’re not reading an article from 2014. Although, I wouldn’t be surprised that you’d think that. I’ve certainly wrote this article before. Once again, several media outlets including engadget report that the nation’s #3 and #4 cellular providers plan on merging to counter a perceived threat from AT&T and Verizon. Once again, I think it’s a dumb idea. Let’s dig down, again.
The good: more competition is better.
AT&T and Verizon shouldn’t fear this merger. They’re both strong companies that have become even stronger through competition with each other. T-Mobile has come up with some innovative ideas in the last year that have led directly to things like the AT&T Unlimited Plans, which include free streaming of DIRECTV content as well as discounts on bundled products. It’s hard to know if that would have happened without some competition from T-Mobile.
As for Sprint, uh, well, I don’t know what they’ve brought to the competitive table before but if you can take the T-Mobile mentality and successfully apply it to Sprint’s customer base, you’ll have something truly interesting. Of course, that’s a pretty big “if.”
Another possible positive move would be Sprint finally saying goodbye to some of its bizarre legacy technologies. That’s going to be a painful step but it’s for the best and it needs to be done.
The bad: pretty much everything else.
I’ve compared Sprint and T-Mobile to two drunks walking down the street leaning on each other, and I still think that’s a pretty valid comparison. T-Mobile has been tossed around a potential partner over the years for several different companies. A merger with AT&T seemed likely until the government put a stop to it. T-Mobile itself was originally a product of the German national phone company (believe it or not) and struggled for years to find an identity before its outspoken leader gave it the “disruptor” title. The company has made a number of sharp decisions but has still failed to reach the level of acceptance that AT&T and Verizon have.
Sprint, oh Sprint, what can I say about you that I haven’t said a dozen times. The company has turned left when it should have turned right, so many times that they’ve made a full circle. They bought useless technologies that have left it supporting generation after generation of useless phones. The biggest faux pas, in my opinion, was the purchase of Nextel, maker of those phones you remember from 20 years ago that chirped every 10 seconds. While they’ve worked to streamline their services in the last several years, it’s still going to take another couple of years before they can finally walk away from the bad choices they made back in the 2000s. Imagine if you still had your hair the way you wore it in 2005 — that’s the hell that Sprint’s still living.
Will 5G level the playing field?
T-Mobile spent a lot of money to acquire 5G licenses in the last FCC auction, and that could help the company grow in the future. Everyone agrees that 5G opens up a massive number of possibilities. It gives any carrier the ability to deliver internet anywhere, as fast as your home wired internet today. It is the future, and it’s coming fast.
However, Verizon and AT&T both have content to offer, as well as an existing base of “terrestrial” customers to migrate. This puts them far, far above T-Mobile in the fight for 5G. Having more 5G will make things more competitive, but I don’t see customers replacing their home internet with T-Mobile unless there’s content in the bundle. Which would you rather have: 5G internet that includes 100 channels of live TV plus 20,000 on demand programs, or just 5G internet? That’s the choice between AT&T and T-Mobile. Simple as that.
Will the government even allow this?
The US Government isn’t terribly friendly to outside investment in tech right now. So, we’re talking about a company owned by Japanese investors (Sprint) merging with one whose majority owner is affiliated with the German government (T-Mobile.) This hardly sounds like the kind of business proposition that the Executive Branch is going to rubber stamp. Not only that, the FCC Chair is a former Verizon lawyer who has been accused of putting Verizon’s needs ahead of the people’s. Again, not exactly a recipe for an easy deal.
The one thing I can say is that we’ll probably be reporting on this for another 5 years unfortunately. This is not going to go away anytime soon. As we have seen with other telecom mergers it’s not going to go quickly or easily.
It’s going to be a long slog through this process. Are you ready?