Sprint, T-Mobile Merger Talks Continue as Softbank Pushes for Deal

By Wayne Rash  |  Posted 2014-07-14 Print this article Print

T-Mobile is a GSM carrier. Sprint is a Code Division Multiple Access (CDMA) carrier. Although it's possible to operate both technologies at least for a while, eventually one or the other must prevail, if only because of the costs involved with operating both types of networks at the same time.

When T-Mobile took over the smaller MetroPCS, those customers were moved to GSM as their devices needed to be switched out. But what will happen with Sprint and T-Mobile? With Sprint being the larger company with the most customers, you'd assume that T-Mobile customers would be forced to move to CDMA, but perhaps that wouldn't happen in this case.

The reason it might not happen is twofold. First, Sprint was already planning to switch out customer devices so that they would work with the new Spark LTE when it came online. Now they would still switch devices, but it would be to GSM/LTE devices instead.

In addition, it's a simple process for T-Mobile customers to simply move to arch-rival AT&T if they don't want to do business with the combined companies. All that's required is to change to a new SIM card. Sprint customers can't simply switch to the other CDMA carrier, which is Verizon because the frequencies aren't necessarily compatible.

What that means is that the process of changing out the devices for former Sprint customers has much lower risk than changing former T-Mobile customers to CDMA, especially for those customers who signed on for the ability to use their devices overseas with unlimited data. After all, T-Mobile's phones and devices will work anywhere in the world, but most of Sprint's won't.

But leaving aside all of those questions, there's still the elephant in the room. Make that two elephants, once named the U.S. Department of Justice and the other named the Federal Communications Commission. For any purchase that would combine Sprint and T-Mobile into a single carrier, regardless of its name, those two agencies have to be convinced that it's in the best interests of customers and that it wouldn't reduce competition.

The inability to satisfy the DOJ and the FCC that a merger would be in the best interests of consumers and wouldn't hurt competition is what doomed the merger with AT&T. Since that merger failed, T-Mobile has shown a remarkable ability to compete and begin to overtake larger competitors. Would that continue if there were fewer companies, and Sprint was the owner?

It's going to be difficult for these two foreign companies to prove to the regulators that dividing up the U.S. wireless market to suit themselves is in the best interest of U.S. consumers. The way things look right now, I don't think they'll be able to pull it off, Softbank's PR campaign notwithstanding.



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