Android Central

The U.S. wireless industry

Let’s be honest, the U.S. wireless industry is a tough market to break into, even for so-called “established” brands. Dozens of carriers have come and gone over the last decade, all falling to the giant duopoly that is Verizon and AT&T. With over 210 million subscribers between the two, it’s an almost insurmountable number for any single entity to overcome.

Although you could consider T-Mobile part of “the big four” carriers in the U.S., it’s hard to argue that they’re on the same scale as the top two. With just 34 million subscribers, T-Mobile is seen more of a target for buyouts and acquisitions than a viable challenger. In the eyes of most people, T-Mobile isn’t even a viable carrier option.

Whether you want to personally use T-Mobile or not, you should really want T-Mobile to stick around. With Sprint’s buyout by Softbank all but confirmed, T-Mobile is the so-called “last line of defense” before we see competition all but completely disappear from the U.S. wireless industry. Read on to see why MetroPCS is T-Mobile's best chance.

Why MetroPCS?

So what does a reverse merger with MetroPCS do for T-Mobile? There are three main positives to the transaction. First, subscribers and income. MetroPCS, although small, is a profitable company with almost 10 million subscribers. There’s no downside to T-Mobile having around 45 million subscribers and a new income stream. Improving and expanding networks is expensive.

Second, it’s spectrum. Much ink (erm, pixels?) has been spilled over the fact that MetroPCS operates on CDMA and T-Mobile operates on GSM. In reality, that doesn’t matter for the success of this merger. From the day that the merger is finalized -- by the end of Q2 2013 -- the new company will begin selling GSM handsets that operate on T-Mobile’s nationwide network from existing MetroPCS stores. At the same time, it will begin sunsetting its CDMA network, which will be completely shut down by 2015.

MetroPCS currently operates an LTE network -- it’s small, but it’s there -- and it operates on the same frequencies that T-Mobile already owns spectrum in (AWS, if you're keeping track). This network can quickly be expanded post-merger and fit directly into T-Mobile’s current network roadmap, which has a nationwide LTE rollout started by the end of 2013 and refarming of HSPA+ service to the 1900MHz band in the same time period.

Lastly, a change of structure. T-Mobile is currently a private company, owned and operated by Deutsche Telekom, headquartered in Germany. MetroPCS is a publicly traded company, based here in the U.S. With the way that this merger is structured, MetroPCS is actually buying T-Mobile (which is why you'll see "reverse merger" used to describe it). It’s a bit hard to understand because T-Mobile is so much larger, but the end result is that the new entity -- which will still be called T-Mobile -- will be a publicly traded company still. Deutsche Telekom will be the majority shareholder of the new company.

It’s pretty well known that Deutsche Telekom has been eyeing an exit from the U.S. market, and it’s hard to blame them considering the way things have been going. After the failed buyout by AT&T, things seem to have changed a bit, but you have to imagine Deutsche Telekom wouldn’t mind dropping a less than profitable sector of their business given the chance. The new T-Mobile -- now being a publicly traded company -- can be easily sold all at once or in part to multiple investors without much hassle. If Deutsche Telekom doesn’t want to take on the responsibility of running T-Mobile, then they don’t have to. The worst thing for a company is owners and leadership that aren’t completely behind it.

Android Central

The future of T-Mobile

So will T-Mobile merging with MetroPCS solve all of their problems? Certainly not. What it will do is give T-mobile the tools it needs and a little bit of wiggle room to get back into the conversation and actually challenge the larger carriers. The U.S. wireless market without T-Mobile is one of higher prices and inferior service, with only two options for carriers. As I said before, whether you use T-Mobile personally or not, that’s not a market you want to be a consumer in.

 
There are 33 comments

mech1164 says:

I have to agree here. T-mobile is needed to get bigger and keep the other two honest. As far as Sprint that at the moment is a WTF is going here company. I hope they figure out where they are going. ATM though I'm not sure they even know.

HAAS599 says:

I always enjoy your stuff, Andrew. Great job!

badkitties says:

I know this is never going to happen, but I think the only way to compete with
AT&T and VZW is to combine Sprint, T-Mobile, MetroPCS, and US Cellular. The
new entity will eventually switch to GSM & LTE only.

but like I said, it'll never happen.

Gator352 says:

We'll call em'....."Metro-T". Well I will anyways, then laugh at all the people complaining about coverage.

That is a crass, ignorant comment to make and it is an insult to this genuinely relevant article.

Gator352 says:

How is it a crass and ignorant comment? If it's true, it's not ignorant. How is it an insult to the article? Did I say anything about the article? No. The writer? No. It MAY have been an insult towards the "merger" about coverage but certaintly not about the genuinly relevant article.

Gator352 says:

"T-Metro" would be better....

Ryandroid86 says:

I get amazing service through T-mobile. Not being bias... my service is just as good as Verizon (ATT and Sprint suck in Vegas) I have had each carrier at some point in my life and I couldnt be happier. Although it may not be the case for each city. (Vegas is one of T-mobiles main areas)

drhere says:

Well written article. Deutsche Telekom has been trying for awhile to dump their US unit of T-Mobile, and it would be a shame if they disappeared, and dominated my ATT and VZW, (I cannot stand ATT).

willizen says:

I'm sorry, why are we discounting sprint as a competitor? So what if SoftBank buys 70% of Sprint? They're still going to be in business and with the new cash influx, they should be able to speed up their network vision rollout.

Sprint is in a far better position than tmobile to compete with the big boys. They actually offer nationwide coverage and their LTE rollout is under way. If you're going to root for the underdog that actually has a chance, root for sprint.

This is a wonderful article and makes perfect since. The overall growth of Tmobile is vital for all customers choice has always ruled. I have had all the carriers as well as various devices covering these last almost three year and just recently joined Tmobile June 28th. It's a wonderful gsm provider and it's service has been great for me here in the New York area something Verizon wasn't. Tmobile will have me as a customer for a long time until the wheels fall off...

adinofaries says:

Use punctuation.

dan4patriots says:

oh shut up, first you were a sprint fanboy and said verizon "sucked eggs" and then you switched to verizon and sang its LTE praises, now apparently you are all over tmobile

^THIS. Now where's that damn banhammer...

crxssi says:

>"Whether you want to personally use T-Mobile or not, you should really want T-Mobile to stick around. With Sprint’s buyout by Softbank all but confirmed, T-Mobile is the so-called “last line of defense” before we see competition all but completely disappear from the U.S. wireless industry."

Um, please explain to me why an investment in Sprint by Softbank is going to remove Sprint from being in the competition? If anything, it is going to make Sprint even more competitive. Your statement makes absolutely no sense to me at all.

DAS says:

I agree. Sprint is very much in the game and should not be disregarded in the discussion.

z0phi3l says:

Softbank makes Sprint stable, and they needed that stability more than T-Mobile, that being said, you still want to root for T-Mobile, combines Sprint and T-Mo are going to put some pressure on VZW and ATT and keep the honest, if there's only those two and one more it still does us no good, that third provider will eventually wilt away and creating a de facto duopoly with THE highest prices and then there's nothing anyone or the Government can do

vinny jr says:

"that's not a market you want to be a consumer in" bull shit, I am a consumer and use T-Mobile and in my opinion they are # 1. Best plans, faster speeds and cheaper prices. I am a consumer in this market and happy I am. This writer obviously is a customer of one of the other carriers that screw you with their ridiculous plans. I get over 20 mb down and 5 mb up, I have unlimited talk, text and data with no throttling my speeds. I pay $74.00 a month no matter how much data I use. Try that on the other carriers.
Thank You T-Mobile.

I think you severely misunderstood that last statement. I recommend re-reading it to properly understand my intention.

The actual intention of the statement being that whether you use T-Mobile or not, you don't want to be a someone looking for cell service in the U.S. if T-Mobile goes away. If T-Mobile goes away, the other large carriers will have free reign to take advantage of you.

jeres88 says:

Someone didn't read the article.

zorak950 says:

I think it bears remembering among those who consistently badmouth T-Mobile for it's smaller network footprint that putting up towers in lower-density areas costs money, and as there are fewer customers in those areas the additional towers bring in less revenue, and thus must be subsidized by higher prices in order to maintain the same level of service elsewhere in the company and network.

T-Mobile is cheap in the U.S. in no small part /because/ it doesn't try to be everything to everyone, everywhere. There are those of us who rarely leave the confines of a big city. I for one appreciate that there's a network which offers the service I need for half or less the price of the others. Metro PCS is proof that this model can be profitable, and I hope that a combined T-Mobile Metro PCS would continue to pursue it.

Those that need data coverage everywhere already have the big two; I believe that making T-Mobile a clone of that business model would have fewer benefits than a lot of people seem to think. Personally, I /enjoy/ having the option of paying $30 a month for my service. Why would I and others like me pay twice as much for coverage we don't need? If I wanted to do that, I'd switch to AT&T or Verizon.

A better network is nice, but if each incremental improvement means higher prices, low-cost carriers need to strike a balance. Blindly racing to catch up to the big two isn't going to get T-Mobile anywhere but further in debt.

giograves says:

rep points ++

blarelli says:

T-mobile may be losing their 2 year contract customers, but they are making headway in prepaid. In the two months I have been on prepaid, I have had just under 10 classmates approach me and ask me about it, and all of them have ended up switching to the same $30 plan I use with either a galaxy nexus or a used S2 or HTC.
I really think people are starting to realize that they don't need the latest and greatest and I know that people are sick of paying $100 a month for cell service.

turb0wned says:

T-Mobile needs to stop just trying to make the fastest network and worry about coverage. It seems like all they care about is the speed of their data.. Speed doesn't do anything if people ether have no signal or are stuck on Edge.

z0phi3l says:

I don't know where you live, but I can got from my home in WAterbury CT, go to Hartford or New Haven and only in a small section of area have anything but 3G/4G, and those areas with Edge are way out in the sticks, coverage wise they are doing great for me, heck I haven't been that way, but I doubt it would be any different if I were to go towards Danbury or Torrington and that easily covers a good half the State

Joet says:

Great post Andrew. AC is as thought provoking as ever.

I have been with 4 carriers since 1994. Each, for me, can be summed up in a few words.

AT&T for 2 years: Lousy network & customer service.
Sprint for 14 years: Decent coverage, nice people, what were they thinking about WiMax & the iPhone? It wrecked everything.
Verizon for 1 year: Great coverage, too expensive.

Today, T-Mobile. Great price, some compromise in coverage, but I can live with that. There is always a fun carrier unlocked phone to be had and more are on the way. My point here is that there is always some trade off in networks, we all have a choice and can pick whats best for us, or variety is good.

If this merger makes T-Mo stronger and it looks like it might, I say good for us T-Mo customers.

blarelli says:

Totally agree. Verizon has the best network, bar none. However, it is way too expensive. Sprint screwed me over with the wimax never reaching Phoenix, and their 3g has been painfully bad since the iphone launch.

I took hard stock of what I actually needed from a smartphone, and I found that T-mobile prepaid was the way to go. Great service, great price (saving $500 a year vs sprint), and the compromises really aren't bad at all. Yes, I don't get LTE speeds. I don't ever get less than 3 mb/s down and 1.5 mb/s up, and it is ususally double that. I don't get the good call quality of a CDMA network, but it's good enough

Joet says:

Interesting comment at the end on call quality. In Southern Wisconsin I cannot detect a difference in call quality at all from Verizon to T-Mo, and my recollection of Sprint here is the same.

The only real difference for me is mobile network speed.

I just ran a T-Mo speed test in Milwaukee on a local server with my GNex.
Ping = 107 ms
Down = 5.07 Mbps
Up = 1.55 Mbps

Yes, Verizon will come in faster, but the Wifi network/s I am in almost all day are even faster then that. When I am out & about, the T-Mo speed is fine.

blarelli says:

I noticed big differences in sound quality each time I switched from Verizon to T-mobile and from Sprint to T-mobile. That really is the only thing I miss about Sprint. Calls sounded better than a land line, but I mostly use skype for my calls now and sound quality for skype is exceptional.

evperry says:

Sprints biggest to mistake was agreeing to that God awful billion dollar deal with Apple. So stupid but necessary at the time.

TMobile best thing that happened to them was to not get the iphone and commit 5 year to that deal.

Prepaid is the wave and TMobile owns that market. I love TMobile, if you live us a major market its the best choice.

newmexican says:

People are complaining a lot about T-Mobile's coverage and living in Northern New Mexico I have to agree that it is spotty in places. But they have one thing going for themselves to make up for this: WiFi calling. I have quite a few places where I can use a WiFi network and still am connected in areas, where there is no cell coverage. AND this even works outside of the country (at NO extra cost!).
So they have a pretty good solution for a lot of scenarios to mitigate their spotty coverage.

joebob2000 says:

You lost me with the second sentence: "Dozens of carriers have come and gone over the last decade, all falling to the giant duopoly"

Who are these dozens of carriers that were prominent at some point from 2002 to 2012 that all "Fell"? Consolidation has been taking place since the mid 90s (and continues today) as carriers rise in subscribership and become ripe for takeover/buyout. Pre-pay "carriers" are on the rise as demand for more price discrimination continues to rise. But, where is this graveyard of "fallen carriers"? Can you name even a half dozen?

Biggnaa20 says:

Here's a quick list from Wikipedia. Hardly the end all of resources, but still more than a dozen.

http://en.wikipedia.org/wiki/Category:Defunct_mobile_phone_companies_of_...