
Sprint and T-Mobile Agree on Terms of $32B Deal - aburan28
http://dealbook.nytimes.com/2014/06/04/sprint-and-t-mobile-agree-on-terms-of-32-billion-deal/
======
potatolicious
I really hope this doesn't go through. T-Mobile has been great for me, and
shed a lot of the anti-consumer policies of the other carriers. I'd hate to
regress.

~~~
brownbat
I feel like it could have benefits, but like you I lean pessimistic.

I had a deeply discounted unlimited plan with Sprint (a couple family members
worked there).

I left when T-Mobile offered a lower price for unlimited web + text. The only
people I know who use voice use OTT services for it anyway. On top of that,
T-Mob offered BYOD, letting me run pure Android, without all of Sprint's then
unremovable NFL, NASCAR, and Facebook apps. It beat Sprint's employee discount
plan for me, and easily.

My family members who work there were frustrated by the news. They mostly
rationalized by bashing T-Mobile, claiming their prices were unsustainable,
arguing it must be a risky, poorly run business.

I think those prices are only unsustainable when you have a major carrier's
assumptions. Assumptions about acceptable levels of overhead and expected
levels of profit.

I think Sprint did some really bold things in its history. It fought the good
fight as MCI against an entrenched telecom monopoly, back when sentiment was
against them, when legislators were literally talking up how wonderfully
efficient the telecom monopoly was.* Today I feel like T-Mobile is more like
the scrappy startup that benefits consumers primarily by running aggressively
trim.

Unlike others posting here, I've never had any network issues with T-Mobile,
and had routine congestion based or coverage based issues with Sprint. But
that doesn't really matter. A larger network could offer more redundancy, and
faster speeds on both sides of the network.

Historically though, conglomeration of telecom companies has reduced
competition, and essentially led to monopoly rents for a service that is
especially susceptible to price competition. (There's a reason they try to
lock you in with contracts. Competition is the enemy.) Here, I worry that
Sprint's management has noticed that T-Mobile is unlike other competitors,
AT&T, and is competing on price, setting a dangerous precedent. I worry
they're trying to squash this unruly behavior through the purchase.

Potential benefits might be nice, I just worry the downside risk is very
large.

* Check out "The Master Switch" by Tim Wu, or at least this review: [http://www.nytimes.com/2010/12/12/books/review/Leonhardt-t.h...](http://www.nytimes.com/2010/12/12/books/review/Leonhardt-t.html?pagewanted=all&_r=0)

~~~
apendleton
"I think those prices are only unsustainable when you have a major carrier's
assumptions. Assumptions about acceptable levels of overhead and expected
levels of profit."

And assumptions about acceptable levels of service and coverage. I'm saying
that as a loyal T-Mobile customer, but it's readily apparent that when I visit
my parents in my small home town, or drive a few hours east to the beach towns
near me, or really go anywhere much outside a major city, my service is poor
or non-existent, and my Verizon-customer friends' service is fine. I'm okay
with that because I live in a big city, don't go to small towns often, and
think the mediocre coverage is worth it for the lower price, but there's
definitely a "you get what you pay for" aspect to all of this, at least in my
experience.

~~~
brownbat
> I'm saying that as a loyal T-Mobile customer, but it's readily apparent that
> when I visit my parents in my small home town, or drive a few hours east to
> the beach towns near me, or really go anywhere much outside a major city, my
> service is poor or non-existent, and my Verizon-customer friends' service is
> fine.

Yeah, I think more testimonials are on your side here, so I don't doubt that
T-Mobile subscribers face this issue, but it's strange to me, because I had
exactly the opposite experience in reliability. Moving from Sprint to T-Mobile
improved my reliability considerably.

Sprint would claim I had full bars, but downloads would stall out, webpages
would just die half loaded. This was near their headquarters in Kansas City.
T-Mobile's network has never crowded me off line, and has worked for me fairly
consistently on the east coast.

Neither seemed to work very reliably in the long rural gaps between Kansas
City and other metropolitan areas at the time. (Though I hear Sprint has I-70
covered fairly well now.)

I think part of my experience is driven by the fact on the spectrum of "voice
user" to "web user," I'm really far to the right, probably outside of the
mainstream. Could be T-Mobile's investments in data have come at the expense
of their voice reliability? I'm not sure...

I guess if the main issue is T-Mobile's lack of coverage, then on net, things
will improve after a merger. If the main concern is Sprint over-selling their
network so that it becomes congested and unusable around 6 PM, then a merger
is mostly just going to make things worse. It will be better in the short
term, but as Sprint takes on subscribers, unless they change their strategy,
they'll still overbook the lines.

~~~
commandar
T-mobile's strategy has generally been a higher _quality_ network over a
limited footprint. If your within their limited coverage area, coverage tends
to be quite good. Wander outside it and it degrades rapidly.

Sprint coverage tends to be better, but their network has generally lagged
behind in terms of technology.

------
ashbrahma
Good news is if this deal doesn't go through, T-Mobile gains to make over a
billion dollars to make its network better/faster. * AT&T paid about 4 billion
in cash and spectrum when the last merger fell apart..

~~~
bicknergseng
Best business model ever.

~~~
gtremper
next up, Verizon.

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DevX101
Breakup fees seem to be T-mobile's new business model

~~~
ulfw
It worked really well before ;)

------
L_Rahman
I am cautiously optimistic.

To get some context for what the new Sprint/T-Mobile might do, it's worth
watching this fantastic interview of Masayoshi Son, CEO of Softbank (majority
owner of Sprint).

[http://www.theverge.com/2014/5/29/5761020/i-love-america-
and...](http://www.theverge.com/2014/5/29/5761020/i-love-america-and-i-want-
to-buy-t-mobile)

He compares American internet to Chinese air pollution, goes on to lambast
Comcast, and admit how bad Sprint's network is and how much work there is
ahead.

~~~
jychang
I'm curious of the technical side of things, though.

Sprint is CDMA, Tmobile is GSM. That doesn't mix well, at least compared to a
ATT/Tmobile merger. As a current Tmobile user, I'd like to keep the ability to
switch out SIM cards, but if Sprint buys out Tmobile and replaces it with
their network, that may not be possible.

~~~
akiselev
4G LTE is based on GSM technology so as devices get more and more bandwidth
heavy most of the network load will be on GSM derived technology. There are
likely infrastructure differences on the switching side between TMobile/Sprint
but the RF technology is the same since Sprint is moving away from WiMax based
4G to GSM 4G LTE.

~~~
makosdv
LTE has handover capabilities with CDMA, EvDO, GSM, and UMTS. The handovers
are simpler for GSM and UMTS though since LTE is also a 3GPP standard.

~~~
apendleton
Can a single LTE node/tower/whatever handle handover for both CDMA and GSM? In
other words, could a hypothetically-merged company provide the LTE part of the
service to both TMobile and Sprint customers using the same equipment?

~~~
greg5green
T-Mobile already does something similar in the US with their MetroPCS network.
They've started to open the old MetroPCS network up to T-Mobile users and vice
versa by broadcasting multiple MNC (mobile network codes) from the same
antennas. If a phone call comes through, it'll hand off to T-Mobile's GSM
network or the old MetroPCS CDMA network.

I think Orange and T-Mobile do something similar in the UK with their shared
EE network and Verizon with their LTE in Rural America partners in the Great
Plains/Maine/etc.

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byoung2
My (rather large) gut tells me the regulators will say no, and T-Mobile will
yet again use the breakup money to invest in more spectrum, and come out on
top.

~~~
DAddYE
noob question warning, I don't understand how a breakup fee works in america.
If the deal can't happen due to regulators, why Softbank should be accountable
for that?

EDIT: typo

~~~
JoshTriplett
There's no legal obligation to set up a breakup fee, and it's not specific to
the US; it's a conventional term in potential merge agreements when there
might be an expectation of regulatory interference.

The announcement of a merger has major market effects, which tend to improve
the standings of one company and not the other; the announcement of that merge
failing will have similarly large market effects. The breakup fee is simply a
term in the negotiated contracts that specifies what happens if the merge
fails to go through; the company whose market standing will fall as a result
of the merge failure would negotiate to get paid a breakup fee.

------
zw123456
I am not an expert on this but I do not believe that this merger will pass the
Herfindahl–Hirschman Index,test which I think the DOJ takes pretty seriously.
That is what I think tripped up ATT when they made the same move.
[http://www.justice.gov/atr/public/guidelines/hhi.html](http://www.justice.gov/atr/public/guidelines/hhi.html)
[http://en.wikipedia.org/wiki/Herfindahl_index](http://en.wikipedia.org/wiki/Herfindahl_index)
I have not done the calcs (too lazy) but maybe someone out there has. My guess
is it fails on this test.

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tottenhm
The article suggests that regulators will feel pressure to accept at least one
major merger and reject at least one. Among them, a merger of #3+#4 wireless
carriers (Sprint+TMobile) to form a new #3 seems less pernicious than a merger
of #1+#2 cable operators (Comcast+TimeWarner) to form a new super-#1. (The
~40mil combined customers is almost 10x bigger than runner-up Cox's ~4.5mil.)
My fear is that regulators could find the reverse conclusion by focusing on
metrics that don't really reflect the competitiveness in each market.

~~~
r00fus
Horrible psychology to this kind of logic, but it makes sense if you're only
thinking in terms of "FCC corporate whoring that can pass the PR smell test",
not unlike the "friday news dump".

------
ulfw
Aaaand there goes choice again. Seems in the US landline (at&t/Verizon vs
Comcast) and wireless data (at&t vs Verizon vs Sprint) will be available on a
oligopoly basis only. Very sad to see Deutsche Telekom finally leave the
States. They were the only real innovators in that market.

~~~
zanny
I like what Freedom Pop, Republic Wireless, and Ting are doing. It is likely
that if T-Sprintle was as big as Verizon or AT&T they would entirely drop
their support of 3rd party providers and screw over the competitive market
under their shoes.

~~~
bruceb
Same on T-Mobile side with companies like PTEL

------
jboydyhacker
You can't take two networks with bad build outs and combine them and get one
big great network. Many of the places each is spotty are very similar.
Additionally they both use two sep air interfaces which will make integration
even more complex. More troubling is that this market needs more competition,
not less. To enter the market you need huge swaths of spectrum and having that
in the hands of three large competitors vs allowing more competition is unwise
for consumers. This deal should be quickly shot down by the FCC/ DOJ. We need
more entrants in the space, not less.

------
ISL
Any perspectives on what's likely to happen to Ting's Sprint MVNO status?

They're awesome, and T-Mobile's been slowly adopting pieces of Ting's
pricing/openness policies.

~~~
maxsilver
> What will happen to Ting?

Nothing.

Ting has a contract MVNO agreement. Unless Sprint goes out of business
entirely, or breaks their contract (very unlikely), nothing will change for
Ting at all.

Ting might have to make folks buy new devices (if T-Mobile can succeed in
finally shutting off Sprint's legacy 1X and EVDO CDMA stuff), but nothing
should happen to Ting that would prevent them from operating.

EDIT : Ting themselves commented on this at [https://ting.com/blog/what-would-
a-sprint-t-mobile-merger-me...](https://ting.com/blog/what-would-a-sprint-t-
mobile-merger-mean-for-ting/)

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JoshTriplett
Fast-forward 6-12 months from now, and one or more regulatory agencies will
nix this just like they did the AT&T deal.

~~~
jmgrosen
Would that be good or bad, though? I'm still not sure what to make of it.
There's the "viable third competitor" argument, but four is more than three...

~~~
JoshTriplett
More competitors isn't always a good thing. This would solve significant
problems for T-Mobile, making them a more viable competitor. I'd love to see
T-Mobile become the #1 carrier with corresponding expectations of coverage.

The AT&T/T-Mobile deal made sense when it was attempted, if only in terms of
network coverage. This deal only makes sense if Sprint and T-Mobile plan to
merge their LTE networks, since CMDA and GSM don't overlap.

------
thehme
Sprint promised LTE service a while back and had a slew of phone with this
technology as an option that could be enabled. On the East Coast, Sandy came
and destroyed much of the infrastructure we were told, so the LTE technology
hasn't really been working as we wish and we told it would. With recent
mergers, it may be true that these "small" big companies don't "have the
financial resources to compete against...larger players [(Verizon, AT&T)], nor
the suite of offerings to attract customers who can get a whole host of
services from other rivals. As a result, both sides believe that the only way
to remain relevant is to combine."

I have had Sprint for over 10 years and I like Sprint, my service is fine, and
the price that I pay is great. I hope this does not change if this deal gets
past the antitrust regulators.

------
stormbrew
Cell phone company mergers should come with a requirement that their entire
combined spectrum block go back up for open bid, with some of it set aside for
new entrants.

Mergers of companies that control scarce resources have some serious tragedy
of the commons problems. There should be a significant cost to doing it.

~~~
rayiner
In theory, the whole point of privatizing the spectrum is to avoid the tragedy
of the commons problems. This seems to have been the winning economic
consensus in the 1980's and 1990's, which led to the FCC adopting the auction
model for spectrum.

Read Tom Hazlett. Or back to Coase:
[http://old.ccer.edu.cn/download/7874-1.pdf](http://old.ccer.edu.cn/download/7874-1.pdf)

~~~
stormbrew
I definitely agree that that was the intent, but that was in the wake of the
biggest breakup of a telecom monopoly in history.

------
erichurkman
Have two major utilities/companies ever merged and consumers/taxpayers come
out with a better company, better product, and cheaper offerings?

~~~
corin_
In the UK, T-Mobile and Orange merged into Everything Everywere (now just
'EE') 4 years ago.

I can't give an objective statistical answer (or even a first hand subjective
answer, as I haven't been a customer of theirs - I left Orange a couple of
years before that), but from people who are customers to other random
conversations, I've heard lots and lots of people say coverage got better due
to the merger, and quite a few say prices got better. Don't think I've heard a
single person complain (specifically about the merger - some complain about
the company, but that's true of any phone company).

Edit: there's also the formation of Virgin Media, which has been a major force
in the UK for 6-7 years now, and is made up of a couple of mergers (NTL +
Telewest to form NTL: Telewest, then a few months later a merge with Virgin
Mobile). I've no idea if this made it better or cheaper, but certainly I don't
remember ever hearing specific complaints against the merger (either when it
happened, or afterwards)

------
fishywang
T-Mobile was great, but recently I experienced more and more data drops (have
full bar of H or LTE, but unable to connect to anything) around the Bay Area.
So I do hope they can have some money (either from acquisition or breakup) to
improve their network.

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fredliu
IMO, if this is approved, would be a better deal than the failed Att-tmobile
deal.

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arfliw
Weird that the NY Times would make such obvious mistakes.

AT&T Wireless and AT&T are separate companies (AT&T Wireless is not buying
DirectTV)

The same with Verizon and Verizon Wireless.

They discussed four different companies as if they were two.

~~~
gorner
You may be working with outdated information. The separate publicly-traded
"AT&T Wireless" company disappeared in 2004, and its successor has been
wholly-owned by AT&T Inc. since late 2006.

Meanwhile, Verizon Communications has always been the majority shareholder in
Verizon Wireless, and sole owner since February.

Whatever separation there may still be between these operations in the
corporate structure (e.g. AT&T Inc. vs its subsidiary AT&T Mobility LLC) is
only that - corporate structure. It does not ultimately change what each
parent company owns / does.

------
flavor8
As long as Legere remains at the top I'm cautiously optimistic. TMobile are so
much better than Verizon it's not even funny.

------
phragg
So this isn't an acquisition of a company correct? It's more of a potential
merge (ex: Activision + Blizzard)

~~~
presty
seems like Sprint is acquiring T-Mobile

"Sprint would pay about $40 a share in cash and stock for T-Mobile, about a 17
percent premium to Wednesday’s price, according to the preliminary agreement."

"The deal is sure to face regulatory scrutiny, and the early terms of the deal
would include a breakup fee of more than $1 billion that Sprint would pay
T-Mobile if the deal is not consummated."

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thrillgore
Time to crash the FCC's servers again.

------
wkdown
Wonder what changes, if any, come to the infrastructure, what with Sprint
being CDMA and T-Mobile being GSM.

~~~
kdot
That matters less with LTE and VoLTE

------
yalogin
Sprint and Tmobile are non compatible networks (GSM and CDMA based). Why does
this make sense for them?

~~~
Relic22799
Sprint has some quasi-GSM technology; they acquired Nextel some years back.
Nextel utilized the iDEN protocol. iDEN used a time division multiple access
(TDMA) network. TDMA is sort of a precursor to GSM. It's small, but there's
some overlap.

------
yellowapple
I switched from Sprint to T-Mobile a week ago.

Oh well.

~~~
wmf
If iDEN is any indication, it will take them eight years to merge the networks
and by that time your 17-band 6G phone will probably be able to seamlessly
bond all the T-Sprint spectrum to provide awesome throughput.

~~~
georgemcbay
And they'll still throttle his data speed after the first 2 gigabytes.

------
ewang1
Just as long as they keep the unlimited free overseas texting and data, and
not raise the prices!

