Thoughts on the T-Mobile/Sprint Merger
The years of merger discussions between T-Mobile and Sprint look to finally be coming to fruition. The outcome of that merger will result in drastic changes in the cellular competitive landscape in America. One challenge faced by the FCC in approving the merger was a reluctance to see that landscape shrink from four major carriers to just three. In order to maintain a greater competitive balance, the FCC required that the merger agreement contain measures to ensure the development of a fourth competitor.
The fourth competitor is a questionable choice on the surface, but actually makes a lot of sense when you dive deeper. Believe it or not, the fourth competitive major carrier in America is pigeon holed for Dish Network per the merger agreements. Dish Network has been quietly buying up spectrum in the various government auctions for over 25 years now. Moving into the cellular arena has long been a goal of theirs and this merger created a unique opportunity. Over the next several years, Dish Network will be building a 5G network and utilizing the loads of spectrum they have stockpiled. The agreement details what coverage they are required to offer at certain intervals over the coming decade including 70% population coverage by 2023. Dish also purchased the former Boost mobile from Sprint as part of the merger agreement giving them 9 million subscribers.
This offers an interesting competitive landscape in the cellular industry over the coming decade. Based on the announcements from each carrier and the spectrum positions they hold, it is not difficult to piece together some assumptions. AT&T and Verizon have announced 5G networks utilizing millimeter band spectrum in the 24Ghz to 30Ghz range. The major advantage this spectrum range offers is speed. Ghz speeds will be commonplace and extremely low latency opens the industry to untold new solutions and applications. The downside is that the physical build will be extremely expensive and time consuming due to the sheer number of physical bay stations that must be constructed. The current 4G LTE networks required approximately 40,000 bay stations in order to offer 90% population coverage. By contrast, these millimeter band networks will require approximately 10 million bay stations to offer the same coverage! Needless to say, these networks will take time to complete and will mainly operate densely populated areas.
Another challenge with these networks is building coverage, as the millimeter band spectrum doesn’t penetrate walls well. The clear strategy by AT&T and Verizon is to compete with network/cable providers such as Comcast. This opens massive new revenue streams for companies in an industry that is not seeing the tremendous growth it saw in the traditional handset market over a decade ago.
The new Sprint/TMO company has taken a vastly different approach to 5G. Sprint has announced plans to utilize 2.5Ghz spectrum and TMO has rolled out 5G in their 600/700 Mhz spectrum. While these networks will not be able to offer the speeds promised by the millimeter band networks, they have major advantages in speed to deploy and coverage. They clearly are targeting the handset market currently dominated by AT&T and Verizon. TMO’s 600/700 Mhz network will expand their coverage and offer great in-building coverage. We will see if Sprint continues down their current 5G path as they seem to be lagging the other three in time to deploy. It wouldn’t be surprising to see the 600/700Mhz network become the 5G network for the new Sprint/TMO as it is already rolled out in many markets.
Finally, we don’t know what the Dish Network 5G network will look like yet, but it will likely focus on densely populated areas and use a range of spectrum to offer a combination of high speeds and coverage based on the application. They have the advantage of starting from scratch and deploying network infrastructure that is purely 5G. They have no legacy infrastructure to manage. It will certainly be an interesting option to watch over the next several years as it grows into a true fourth carrier.
The competition will be fierce over the coming months and years. A recent Verizon commercial documented speed tests in a major city between TMO’s 5G network and the current Verizon 4G network with Verizon’s network testing almost twice as fast. While interesting that the 4G network beat the 5G network, I find it more interesting that Verizon is basically saying it is going to be a while before they offer a 5G solution, so you may as well use their awesome 4G network. Look for more stones to be slung as these carriers attempt to find their niche in the new landscape.
One outcome of the chaos: the consumer will benefit by having more choice. Coming from a time when (for the most part) 4G was 4G, we’re moving into an era with many flavors of 5G from which to choose. Understanding which flavor is best for your business will be important and require the right partner with the expertise required to navigate all the choices.
That’s another evolution you’ll likely see—the growth and development of partners designed to offer product expertise and tools to help manage the increased complexity—in terms of spend—that will result from this industry change. There will certainly be new solutions to explore, and new potholes to avoid. vCom will, of course, be ready, willing, and able to help our customers take advantage of this changing landscape.