
T-Mobile seals merger deal with Sprint - robbiet480
https://www.cnbc.com/2018/04/29/t-mobile-seals-merger-deal-with-sprint-that-values-the-company-at-26-billion.html
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tzs
Using the HHI [1], this would be classified as a highly concentrated industry,
and the proposed merger increases the concentration quit a bit. I'd expect
this to have a rough road with antitrust regulators.

[1] [https://www.justice.gov/atr/herfindahl-hirschman-
index](https://www.justice.gov/atr/herfindahl-hirschman-index)

~~~
dheera
I feel like antitrust should _like_ the merger because it actually gives hope
for a third real player in addition to Verizon and AT&T. Otherwise the market
is effectively 2 players and some noise.

~~~
bobthepanda
Reducing competition to increase competitive liability has generally not been
good for consumers. See: airline consolidations.

We've seen in other markets that going from four to three results in increases
in costs for consumers, while keeping investment levels flat:
[https://www.economist.com/news/business/21699143-country-
mer...](https://www.economist.com/news/business/21699143-country-mergers-
blocked-mobile-phone-firms-europe-must-now-find-other-ways)

~~~
Trundle
I was under the impression that air travel was an extremely competitive market
with slim profit margins. Am i wrong?

~~~
rayiner
Everybody is mad that airlines are temporarily making profits during the lag
between fuel prices dropping from peaks and ticket prices catching up.

~~~
alsetmusic
> Everybody is mad that airlines are temporarily making profits during the lag
> between fuel prices dropping from peaks and ticket prices catching up.

I knew nothing about this. My irritation towards the airline industry is
entirely based on poor quality / service, which seems (to me) to be the result
of my having no meaningful options as a consumer.

~~~
Trundle
Nah it's because most of us are cheap as fuck and book flights by whichever is
cheapest. So it's a race to the bottom for pricing which means cost
minimisation ie. Shit support and service.

~~~
refurb
Exactly.

Try starting an airline with free checked baggage, free meal and more legroom.
If your ticket price reflects the added cost you'd be bankrupt in a few
months.

~~~
carlivar
Southwest has two out of three though. Just no free meal.

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jzymbaluk
I'll be happy if John Legere stays on as CEO. I was working at a T-Mobile
technical support call center when he came on, and it was really amazing how
quickly and effectively he turned the company around after becoming an
independent company

~~~
noobermin
Not happy for the merger, but kind of happy with Legere. I am a t-mobile
customer and I noticed a definite shift in the quality of customer service
from the late 00's to the mid 10's too, it's interesting you're basically
giving me independent verification of that fact. I still am not happy with
consolidation of the telecom industry as much as Legere is a good fellow.

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ac29
Interesting implications for Google Fi if this goes through, since T-mobile
and Sprint are their 2 main providers.

~~~
stu2010
Google could have ended up paying for some of the R&D needed for phones to
work on both existing networks at the same time.

~~~
cptskippy
The technology has always been there, Google just paid T-Mobile and Sprint
enough to convince them to set it up.

~~~
amluto
As far as I can tell, Google’s technology is a giant hack, and I doubt a
merged Sprint/TMO would want to use it.

~~~
cptskippy
I haven't looked into how Find works but a roaming profile on one carrier and
clever APN configs seem like they'd get the job done.

~~~
phamilton
The seamless phone call handoff is the tricky part. As I understand it, Google
Fi does the equivalent of a remote screen session. The call is originated from
a google server and the phone connects and reconnects to that server.

~~~
cptskippy
T-Mobile has been evaluating and deploying that technology since early 2006, I
would be surprised if Google developed this technology themselves.

I was part of an early Beta for T-Mobile using Nokia flip phones that would
work over a regular WiFi router. Part of the testing involved originating
calls on WiFi and then transitioning to Cellular and vice versa.

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c22
I was on Nextel which I adored until they merged with Sprint and a dark
pattern in their technical support flow tricked me into relinquishing a
favorable data plan I had grandfathered in. I switched to T-mobile to get away
from Sprint, so this news was somewhat concerning, but it sounds like they're
keeping Legere on as CEO and hopefully retaining a fair amount of T-mobiles
culture, so I'm willing to give it the benefit of the doubt.

~~~
giancarlostoro
Yeah it's Sprint the one being bought out and taken over by the looks of it.
Sprint has been improving their network recently, so you'll wind up with nice
technology and strong leadership. Hopefully it kind of goes through and
doesn't get screwed up.

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klondike_
As a Sprint customer, I think this deal will be good for competition in the
wireless market. Both Sprint and T-Mobile struggle to compete with AT&T and
Verizon in coverage, so hopefully the merger will allow T-Mobile to invest in
greater coverage and speed.

~~~
joe_the_user
I switched from Sprint to T-mobile a while back. My impression of Sprint then
was they were essentially milking their customers for whatever they could get
while offering inferior service - requiring the renewal of their lousy
contracts to continue at any one point and naturally having an inferior
collection of phones you could only use with them, having goofy conditions for
getting a replacement phone etc.

T-mobile's sell was offering no-contract service and having a network that you
could buy broadly available GSM phones for (where with Sprint, you to switch
carriers, you had to throw your phone away).

I really hope the merger will be more a mass transfer of Sprint customers to
T-Mobile (and the existing T-mobile approach) but it could well involve the
opposite; A big accumulation of customers could wind-up be squeezed for all
they have as the combined effort is run into the ground. (that is a strategy
that yield cash for investors, it's not more "irrational" than spending a
bunch for growth, indeed, "build monopoly with low margins, exploit monopoly
with high margins, little service and little capital investment" is natural
for many companies and industries.)

I mean, keep in mind the two carriers have incompatible networks, incompatible
phones and so-forth so soon or later, there will have to be a "reconning"
where one ex-carrier's phones become useless, yay!.

~~~
brownbat
I once switched to T-Mobile from the plan Sprint offered to families of
employees.

At one point T-Mobile had better plans for the public than Sprint had as a
private perk.

I sometimes wonder what would happen if a Bezos or Walton wandered into
telecommunications, seeking the lowest possible margins, what mad havoc it
would wreak.

~~~
rayiner
Ultra low margins works in retail because it’s less capital intensive and risk
is low. If Wal-Mart stopped innovating they’d still dominate for what, a
decade or two? If a carrier decided to sit out a round of cellular evolution
(let’s save $20 billion and skip 5G)? Even Verizon couldn’t do that. Or, if
they bet on the wrong technology, like Sprint. In the 3G era they had about
equal market share to Verizon and Cingular (which became AT&T), but bet on
WiMAX for 4G and never recovered from that.

~~~
brownbat
I find that theory really compelling... but if I look around for businesses
sorted by margins, I find several counterexamples.

Oil and gas as a sector has pretty mediocre margins. Energy generally, even
when it's not a utility with government stipulated rates.

[https://seekingalpha.com/article/269679-oil-industry-
profit-...](https://seekingalpha.com/article/269679-oil-industry-profit-
margin-ranks-fairly-low-there-are-bigger-fish)

It's possible that the counterexamples are just outliers and you're still
right.

Or maybe there's another factor, like you mention, how static is the industry
and how much continual innovation or development is required.

Regardless, padded margins isn't necessarily an indicator of long term health.
If you can safely charge your customers a significant premium, to pay for
research or expansion for the health of the business in 10 years, there will
be pressure from some shareholders and short term execs to raid the piggy
bank. Keep prices high while lowering future investment.

The other odd thing about this as a hard law is MVNOs. Low cost competitors
are renting space on existing networks. They're probably not paying lower than
cost? I suppose they could be, but subsidized by the high paying customers of
that network...

Hmm. I generally have a visceral feeling of being gouged any time I've paid
any telecom provider, but maybe you're right and that's not entirely fair.
I'll definitely have to give it some more thought.

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perseusprime11
If there was one CEO who worked really hard in the industry, it is John
Legere. From one man marketing to creating a cult around him, he worked his
ass off to get T-Mobile to where it is today. I wish more CEOs are like him-
in the front lines, working hard and setting a great example for their
employees.

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xienze
It’ll be interesting to see how this works out. They’re combining a fast GSM
network with an abysmal CDMA one. The customer experience is going to be
rather inconsistent I would think.

~~~
Aloha
The modern Sprint network is nowhere near as awful as you think - Sprint falls
down in the same place T-Mobile does - in coverage. Sprint does beat T-Mobile
in densification in some markets.

Sprint and T-Mobile are now mostly LTE carriers with each of them having a
certain (small) percentage of their spectrum allocated for either GSM or CDMA
carriers.

This slide deck makes it clear that their plans are to rapidly refarm the CDMA
only subs to VoLTE as soon as possible.

[https://allfor5g.com/content/uploads/2018/04/CREATING-
ROBUST...](https://allfor5g.com/content/uploads/2018/04/CREATING-ROBUST-
COMPETITION-IN-THE-5G-ERA.pdf)

~~~
stefan_
That slide deck is great.

 _More than $6 billion expected run-rate synergies_

 _JOB CREATOR FROM DAY ONE_

How? Magic!

~~~
Aloha
Sprint is considerable under-resourced in many areas, they dont have enough
bodies.

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rayuela
This is bullshit. The last thing we need is more consolidation in the telecom
market.

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foobaw
This is great news for OEMs - one less carrier to work on. Sprint was a pain
to work with - their network requirements were the worst and they had horrible
bloatware no one used that required to be extensively tested.

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bandito11
This can only be good for TMobile clients like myself. Hopefully now they
become a real opponent to Veshitzon and ATT.

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halfnibble
I don't know how this helps T-Mobile be more competitive. Sprint uses an
incompatible network, has a horrible brand, and its customers hate their
carrier. Seems to me like this would slow down a 5G network implementation.

~~~
cryptonector
Easy: T-Mobile will probably take Sprint's customers, transition them to
GSM/LTE phones, and then throw away Sprint's network. I figure that takes
about 2 years to make happen. Why should this have any effect on the new
entity's investment on its (T-Mobile's) network?

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tbrock
It would have made much more sense for T-Mobile to merge with AT&T given the
GSM heritage of both wireless networks. This is one situation where the sum of
the whole is probably less than the parts. Bleh!

~~~
rizwank
GSM and CDMA are almost dead. It’s all LTE now. V and S phones all have SIM
cards now. Most carriers have run down their 2G fallback networks and taken
that low band spectrum for LTE with VoLTE. Pre-LTE devices will suffer, but
those guys would suffer in quality either way.

-source: run a large MVNO.

~~~
cjmoran
Any prediction on what this merger might mean for a T-Mobile MVNO customer
like myself? (MintSIM)

~~~
cliftonkmorris
Mergers like these will enable the company to renegotiate all contracts,
including lease agreements for larger assets like cellular infrastructure
(towers). Given this, it's highly likely that all the MVNO businesses like
MintSIM, BoostMobile, Virgin will also be reviewed.

Remember- MVNOs exist solely to sell excess capacity, and the contracted rate
for service is often renewed ever 3-5 years. This merger provides an
opportunity to accelerate that review.

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shmerl
Really nasty development. And current handicapped anti-trust regulation would
do nothing to stop it.

~~~
Robotbeat
Don't know why you were down-voted. Consolidation in the (relatively
expensive) US mobile market is likely to hurt consumers, especially as
T-Mobile has been the cheaper option for most people. And it's no secret that
US anti-trust regulation is limp-wristed nowadays.

EDIT: I'm down-voted as well? Are my observations incorrect?

~~~
scarface74
How much should cellular service cost that covers an area as wide as the U.S.?
I currently pay $220 a month on T-mobile all taxes and fees included for
unlimited data and voice on 5 phones and an iPad. 2G roaming in most of the
world and faster roaming in Mexico. I also get 10GB of 4G tethering on one
line and unlimited 512mbps tethering on all devices. We also get a family
Netflix plan included.

~~~
veridies
Width isn’t really the right measurement. Yeah, a carrier has to blanket the
US, but any given user only uses a small fraction of that, and they have users
all over the country. Density seems like a better standard.

~~~
scarface74
But it does make difference in rural areas. I have a family member that does
social work in south ga. When I go down there, I don't get a signal outside of
the city center with T-mobile. She travels a lot and she needs a good signal.
Verizon has a good signal everywhere. T-mobile signal is also infamously bad
within buildings. When I'm at work it's not a big deal - I just use WiFi
calling but if I were frequently visiting clients' sites it would be a big
deal.

People are willing to pay Verizon prices for that guaranteed coverage. There
are also places in north ga with bad coverage by T-mobile. They just happen to
go out of their way to have coverage in college towns, but once you veer to
far away - nothing.

The trade off is worth it for me, but not to other people.

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intrasight
I use Ting on both T-Mobile and Sprint. I assume this will just improve the
underlying network.

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IBM
This deal should be blocked unless they're forced to divest spectrum to
someone like Comcast or Charter. Comcast and Charter already have a
partnership for wireless and are doing MVNOs, so they might be interested in
it. Competition has been working well with 4 players in wireless, and prices
have come down.

~~~
SeoxyS
There is no world in which the government should be able to force a private
company to give something hugely valuable to, of all possible options, Comcast
(one of the worst companies in America).

~~~
mrkurt
Mergers are costly to society because they concentrate power. The government
should _absolutely_ prevent mergers that concentrate power, or otherwise
redistribute that power.

I'd rather them just block these things like they did up until the early 2000s
... but it's not unreasonable for them to break up the government granted
monopoly on spectrums if they do allow mergers.

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koolba
One could argue that a stronger combined company could better take on AT&T and
Verizon. It’s not simply “mergers are bad for customers”.

~~~
martinald
The EU did a lot of analysis about this between member states.

It concluded that markets with 4 or more providers were far better served
(price, quality, coverage, etc) than those with 3 (which effectively is what
the US will have now).

The UK blocked the merger of 3 and O2 on these grounds, as it would leave only
3 providers.

~~~
kennethologist
Do you have some source for the EU analysis would love to read this in depth?
Googling doesn't turn up anything related.

~~~
martinald
[http://europa.eu/rapid/press-
release_MEMO-16-1705_en.htm](http://europa.eu/rapid/press-
release_MEMO-16-1705_en.htm) is a starting point, but I can't find the EUs own
source.

