T-Mobile and Sprint have taken the expected step of formally presenting to the Federal Communications Commission their plans to merge with a request that the agency approve the transfer of licenses so that the two companies can operate as one.
But of course, there’s more to a telecom merger than a few radio licenses. The parties involved have to convince the commission that the action would be good for consumers, not break any laws and result in a net gain for the nation’s communications infrastructure.
That document, the Public Interest Statement, describes in detail how the merger will be structured, who would end up owning various assets and what the anticipated effect on the public would be.
The companies have already claimed that the merger would create a company that’s large enough to compete with Verizon and AT&T, that the wireless spectrum holdings of the two companies would be complementary, and that T-Mobile’s culture would force the other carriers to lower prices, improve service and generally behave more like T-Mobile in the wireless market.
But there’s a lot more in the statement than that. For example, T-Mobile and Sprint revealed that once the two companies merge, they plan to make a major marketing push for to win enterprise and government customers.
To accomplish this, the New T-Mobile would leverage Sprint’s existing landline and fixed broadband operations along with T-Mobile’s broader coverage and higher speeds to provide an enterprise offering that’s much less expensive than can be offered by AT&T or Verizon, while also offering better 5G coverage than either.
Of course, 5G is the major driver of the proposed merger. The companies are saying that they can deploy 5G nationwide faster and more effectively than either of the two larger companies. They also claim that and that the 5G they deploy will be far more useful. because they'll operate on three bands, T-Mobile's low frequencies, the mid-range frequencies owned by both and the millimeter wave owned by T-Mobile.
The companies assert that they will be able to combine their networks while serving their respective customers and also building out 5G.
These are not easy tasks. But this is also a time to look at T-Mobile’s track record when it comes to combining operations while also rolling out a new technology, because unlike the other companies, T-Mobile has experience in integrating other company’s wireless networks.
When T-Mobile acquired MetroPCS in May, 2013, it faced a situation similar to what it now faces with Sprint. Its customers were on an incompatible network and T-Mobile was starting its move to 4G LTE. The estimated time to complete the change was two years, but it was substantially done in 15 months and was complete in 26 months.
In addition to changing out the entire customer base’s old CDMA handsets, T-Mobile also had to upgrade all of the old MetroPCS CDMA points of presence (cell towers) while also keeping enough during the transition to support existing MetroPCS customers. It was a complex task, but T-Mobile managed to pull it off with relatively few problems.
In some ways, the task of moving Sprint customers to T-Mobile will be less of a problem. Most modern smartphones will already support T-Mobile with nothing beyond a software upgrade that will enable them to operate on T-Mobile cells. The two carriers share some common frequencies, and if you look at the specifications for your smartphone, you’ll see that these devices already support the same LTE bands.
Of course there are still some CDMA handsets out there and those will need to be replaced or upgraded. There are other cellular devices, such as hotspots, that will need to be upgraded, but the task won’t be as big as what T-Mobile has already done before, which means they already know how.
Both companies will also be working on their 5G plans while the merger is being examined, and there the differences will provide a strength for the combined companies. T-Mobile is starting its 5G transition with its 600 MHz band, while also using some millimeter wave cells in urban areas. Spring is using its mid-band for 5G, which will complement what T-Mobile is doing.
From an engineering viewpoint, T-Mobile’s plans look rational, but that’s not the same thing as getting approval from the FCC and the Department of Justice. Both agencies have to sign off on any such merger and there will be some tough questions.
But while all of this is going on, FCC Chairman Ajit Pai has just issued a blog entry urging that carriers take action to move ahead with 5G. His comments about taking advantage of the ability to use low, mid and high bands for 5G seems to call for exactly what T-Mobile and Sprint are offering in their filing. It’s also not what AT&T and Verizon are planning, which mainly focuses on millimeter wave services.
The Justice Department’s Antitrust Division also has a say, but the last word from that quarter was that there’s no reason that four major carriers is some sort of magic number.
Furthermore, T-Mobile’s track record of forcing the wireless industry to adopt lower prices and better customer service even while kicking and screaming about it, gives it some credence in its claims that it can make the rest of the industry reduce costs and improve service this time too.
While I’m not going to predict a win for the merger at this point, I think its chances look good. How good? The recent court approval of the AT&T and Time Warner merger seems like a good example.