
Sprint, SoftBank Said in Informal Deal Talks With T-Mobile - rayuela
https://www.bloomberg.com/news/articles/2017-05-12/sprint-softbank-said-to-start-informal-deal-talks-with-t-mobile
======
nradov
This goes to show how disastrous a single bad business decision can be. When
the 4G standards were still in flux, Sprint committed to WiMax and spent
billions building a new network around it. Then the rest of the industry went
with LTE, WiMax died, and Sprint had little money left to redo their network
again. They've been basically on life support since.

~~~
joecool1029
The only way this merger would work is if the entirety of Sprint's leadership
gets canned and replaced with T-Mobile's.

While Sprint has huge spectrum holdings to build out all sorts of network
technologies, quite a bit of it is practically worthless. The really high band
stuff is stopped by wet leaves.

They finally have some great new equipment coming online and things are
improving, but their IP network is a mess and they rely on terribad CDMA 1X
fallback for calls.

EDIT: I guess what I'm trying to say is this would only go through if DT
receives a deal valuing TMUS more than it is. T-Mobile doesn't need Sprint and
DT will continue to make money off TMUS. DT can wait to pick Sprint off when
they inevitably go bankrupt. Sprint, however... they seriously had to
advertise 'We're not that much worse than everyone else!'

~~~
rayiner
The industry is moving to high-band and small cells for 5G, so Sprint will be
well-positioned there. But building that is going to be insanely capital-
intensive, and the question is whether Sprint has the money.

~~~
joecool1029
>The industry is moving to high-band and small cells for 5G, so Sprint will be
well-positioned there. But building that is going to be insanely capital-
intensive, and the question is whether Sprint has the money.

They don't, but Softbank could pony it up. T-Mobile is also well densified
with Verizon also being comparable in this area.

AT&T is the one that sucks with densification right now and would most benefit
the most by a Sprint acquisition. Nobody wants the trash fire though, so it
comes down to what Sprint/Softbank might be able to afford. US Cellular would
be an awesome target as well but anyone in the industry knows that that would
have to be pried from the Carlson family's dead fingers.

------
grandalf
When the Nextel merger was allowed a few years ago, mobile phone plan prices
per minute in the US increased by about 50% within six months. Suddenly the
aggressively priced plans came with 600 minutes. What a joke.

There is absolutely no way that the DOJ antitrust division should allow more
consolidation in this space.

It's far better to have reasonable, meaningful antitrust enforcement than all
the perverse scenarios we end up with when we allow a small number of firms to
be overly entrenched.

~~~
Aloha
I'd love to see a citation for this, because it doesnt jive with my own
memory.

Nextel was not really competing on price.. at all. They were priced as a high
tier carrier (like Verizon), they also had the smallest network footprint out
of the national carriers at the time.

~~~
bogomipz
Nextel was very much competing on price though.

Nextel's selling point was that it allowed Nextel subscribers to call other
Nextel subscribers(via "push to talk") without incurring per minute
charges(this was in the days before unlimited plans.)

It was the phone of construction and maintenance crews since it was basically
a "walkie talkie." It wasn't a premium brand at all.

>"I'd love to see a citation for this, because it doesnt jive with my own
memory."

I think you mean "jibe with your memory":

[http://the-penultimate-word.com/2012/06/23/jibe-or-jive-comm...](http://the-
penultimate-word.com/2012/06/23/jibe-or-jive-common-error/)

~~~
Aloha
Yes, I did use it incorrectly.

But they were priced like a high-tier carrier, I was their customer at the
time (and worked in the telecom industry), and while you got unlimited Direct
Connect (and they also had plans for free incoming) you paid significantly
more for it - but you also got better customer service too (something which
Sprint badly munged in the merger). Also, pretty much every carrier in 2004-7
had free mobile to mobile minutes, so I don't think the free calling thing as
big as you might make it out to be - the selling point of direct connect was
that it was push to talk, and not a phone call.

The other thing I'll note, having been in over 1000 cell sites for each of the
carriers, the Nextel sites were 'gold plated' build outs, they were very
clearly not built on a budget (almost all indoor sites (mostly in andrews
shelters), most sites had a generator on site, much more extensive grounding,
higher performance power systems, over provisioned power and backhaul for
future expansion) - the only other carrier that comes close to this is
Verizon.

[https://blogs.wsj.com/deals/2007/10/09/sprint-nextel-
anatomy...](https://blogs.wsj.com/deals/2007/10/09/sprint-nextel-anatomy-of-a-
failed-merger/) [https://www.scribd.com/doc/2621922/Sprint-Nextel-Merger-
Anal...](https://www.scribd.com/doc/2621922/Sprint-Nextel-Merger-Analyzed)

------
weston
After reading Tim Wu's "The Master Switch" a few years ago, this can only be
bad for consumers leading to less choices in the marketplace. Just one step
closer to returning to the monopoly days of Ma Bell.

More competition leads to better innovation and better pricing for consumers.

~~~
lotsofpulp
It depends, sometimes the product involves so much infrastructure that new
competition is basically impossible. Water, sewage, electric, gas, internet,
wireless internet all require very heavy investments in infrastructure that
make it impossible for newcomers to come in and compete.

These are the things that should be classified as utilities and just operated
by taxpayers, since everyone needs it and everyone benefits from it.

~~~
rayiner
How did four separate companies come into the market in the first place if
"new competition is basically impossible?"

Many businesses are extremely infrastructure and capital intensive. Should the
government also run shipping carriers like FedEx? What about retailers like
Amazon?

~~~
bluGill
4 companies come into existence because historically the first US cell phone
band was given in two parts, one to the local land line monopoly, one to
someone else. All these were in small blocks of geographic area. The winners
of this frequency started building cell towers and selling phones and quickly
discovered their customers didn't like roaming changes. As a result they
started consolidating: lots of little merges and buy outs. The land lines
mostly became Verizon over the years as land line companies realized that
running a cell phone network and land line are different enough that they
couldn't do each effectively and so they spun the business off. In the mean
time another block of frequencies was opened up and the result was 4 more
companies got spectrum in each area (not the same areas of the first), and
they too started merging. The big 4 are big because they have merged and/or
bought enough spectrum to be essentially nationwide. There are some smaller
regional companies left that are not nationwide.

~~~
merb
well telekom/t-mobile bought itself in (more or less)

------
xbmcuser
Its a tough call on 1 hand you have two carriers that have almost double the
subscribers of the 3th and 4th carriers. So combining 3 and 4 would make it 3
big telcos competing for subscribers. On the other hand the users will loose a
realistic choice from 4 to 3. Personally I wouldn't allow 1 or 2 to buy 3 or
4. But 3 or 4 combining I feel something people could live with.

~~~
gnicholas
I agree that this is a tough call. One additional wrinkle is Comcast's
impending entrance, as a Verizon reseller that will also be leveraging their
own wifi network. Comcast will start out as a small player in cellular, but
because they're a big company and will be leveraging a large existing wifi
network they may be able to grow relatively quickly.

I am generally not a huge fan of Comcast [1], but in this case I welcome their
entrance to the cellular market and look forward to seeing how this shakes
things up.

1: [https://medium.com/@nicklum/how-my-hatred-of-comcast-
drove-m...](https://medium.com/@nicklum/how-my-hatred-of-comcast-drove-me-to-
buy-their-stock-a17ca03a832f)

------
JoshTriplett
This could be interesting for Google Fi, since they currently contract with
both carriers to provide the majority of their coverage in the US.

~~~
jldugger
If by interesting you mean 'well, I guess rates are going up.'

~~~
darkstar999
Would that be legal? I don't know the terminology or the regulations, but the
only reason Fi exists is because the carriers are required to share their
infrastructure.

~~~
jldugger
And these regulations stipulate a price?

~~~
darkstar999
I don't know, but you'd think so. Otherwise the carriers would set their price
at $100/MB or something ridiculous.

------
mwexler
Should the fact that T-Mobile is GSM while Sprint is CDMA (as far as I recall)
matter? Is 5G going to make that distinction go away (ignoring frequency
issues, which I thought I read was still a concern)?

~~~
yaantc
LTE has made the distinction go away. LTE is the next generation for both the
3GPP camp (GSM, UMTS/HSPA) and the 3GPP2 camp (CDMA, EVDO). From LTE onward,
it's 3GPP only.

~~~
joecool1029
Yeah, except no. Sprint does all their calls over the CDMA network because
they sucked too hard to launch voLTE (see:
[https://en.wikipedia.org/wiki/IP_Multimedia_Subsystem](https://en.wikipedia.org/wiki/IP_Multimedia_Subsystem)
)

If you don't have IMS in place, it's going to be much harder to make the
transition into a modern LTE network since you can't do calls over it.

~~~
yaantc
Yes, I know. I was only replying to the second question of the parent really,
pointing that there is no need to wait for 5G to see a 3GPP/3GPP2 merge.

The fact that Sprint has decided to keep their voice on CDMA for a while will
not stop a merger like that IMHO. It will just mean more work for the merge
(if it goes on).

Moving away from CDMA and supporting VoLTE is bound to happen even if Sprint
stays solo. Other operators have plans to sunset CDMA (e.g. end 2019 for
Verizon), and at some point it doesn't make sense to stay with a now legacy
standard with no traction.

~~~
joecool1029
>Moving away from CDMA and supporting VoLTE is bound to happen even if Sprint
stays solo. Other operators have plans to sunset CDMA (e.g. end 2019 for
Verizon), and at some point it doesn't make sense to stay with a now legacy
standard with no traction.

They backed themselves into a corner because they use unusual spectrum and
don't have the funds to upgrade all their towers to modern technologies. It
makes sense when you can't afford to upgrade.

T-Mobile has no plans to sunset GSM yet because it costs them very little to
maintain, uses little spectrum, and allows legacy equipment to stay on the
network. Some even predict they'll sunset WCDMA before GSM.

~~~
Aloha
Sprint spent 5 years on the network vision project, it rolled LTE out to their
entire footprint, and was an all but forklift upgrade to their field
infrastructure. The only components left from the original site usually was
the power cabinet, and the tower structure itself, everything else was new.

CDMA costs no more for sprint to keep on the air then GSM does for T-Mobile.

------
em3rgent0rdr
I love my $3/month T-Mobile no-data "senior" plan with 30 minutes/texts a
month + 10 cents for minute or text after that, which fits my needs exactly.
As long as I can keep a similar plan, I'm happy. I think T-Mobile should be
rewarded for being an innovator.

------
kylehotchkiss
Ugh.

Say goodbye to the wonderful world of free international roaming :( Why do
good american businesses always end up merging? Feels like you can never win
as a consumer even if you stick with businesses you support.

------
panzer_wyrm
I somewhere read that you need at least 4 big mobile operators to have real
competition. Less that that and they behave like oligopoly/cartel

Hiw much is US left with?

~~~
mig39
Canada has 3 big mobile operators, and there is zero competition.

In provinces that have local operators, they _do_ compete.

The difference between markets is so large that people pretend to live in
Manitoba or Saskatchewan just so they can have cheaper plans.

[http://www.cbc.ca/news/technology/wireless-black-market-
offe...](http://www.cbc.ca/news/technology/wireless-black-market-offers-cheap-
plans-outside-manitoba-saskatchewan-1.3166491)

~~~
joecool1029
Yeah that situation is probably going away since MTS got oligobbled up by
Bell. I guess Sasktel is still around...

I remember trying to pull off the Koodoo (Telus) trick some years ago claiming
I was from Winnipeg and traveling (when I am actually American). :)

------
rayuela
Why was the title I used changed on this post? It was originally "Sprint Corp.
has started preliminary talks to merge with T-Mobile US Inc.," which is
literally the first sentence of the article....

~~~
dang
When a title is misleading, the first sentence is often an excellent choice.
But in this case it (i.e. the shortened version of it you used) was more
misleading: it states a rumor as if it were a fact, where the original title
includes "said".

~~~
rayuela
Thanks, I appreciate the response.

