Sprint's spiral is almost over as DoJ approves T-Mobile merger - The UpStream

Sprint's spiral is almost over as DoJ approves T-Mobile merger

posted Friday Jul 26, 2019 by Scott Ertz

Sprint's spiral is almost over as DoJ approves T-Mobile merger

The story of Sprint has been long and often tragic. That saga could be coming to an end, however, as the Department of Justice has approved the purchase of Sprint by T-Mobile USA. The FCC has already approved the merger. At this point, the only thing standing in the way of the $26.5 billion deal is a lawsuit filed by a dozen attorneys general claiming that the merger would reduce competition and raise prices.

The agreement with the DoJ will likely help alleviate some of the fears of these state representatives. While the combination of the #3 and #4 would reduce the number of current carriers, a new challenger has appeared in the form of DISH Network. The company has purchased spectrum in several auctions, with rumors circulating that the company planned to launch its own wireless network, but that has never come to fruition. This deal, however, brings the rumors to fruition, with DISH purchasing Boost Mobile, Virgin Mobile, and Sprint prepaid from Sprint.

In addition to purchasing existing customers, in the form of the prepaid brands, DISH has also made some promises of their own. Between now and 2023, the company has promised to build out a 5G network that will cover 70 percent of the population. They will also gain access to T-Mobile's networks for 7 years, which will allow them to continue to operate the existing prepaid business, and even begin building out their own service in the short term. T-Mobile has also made promises, including holding pricing for both the Sprint and T-Mobile sides of the merger steady for at least 3 years. In addition, everyone involved promises to allow phone unlocking following a pretty liberal set of rules.

Ironically, this merger will leave T-Mobile in a familiar position, and one that began the downfall of the Sprint brand nearly 15 years ago. T-Mobile's current network is 5G, 4G LTE, and 3G and voice on GSM, while Sprint's network structure is 5G, 4G LTE, and 3G and voice on CDMA. This means that T-Mobile will have to maintain two competing networks for many of Sprint's existing users, while some Sprint phones (like iPhone) will be able to be migrated seamlessly. T-Mobile has experience with this, as their purchase of MetroPCS came along with CDMA technology (the PCS in MetroPCS), which they eventually retired.

Sprint's similar situation did not go as well. In 2005, the company purchased Nextel. Calling it a merger of equals, the two companies became Sprint Nextel, and both networks were maintained. At the time, Sprint was running entirely on CDMA, while Nextel was running on a completely incompatible system called iDEN. Sprint was an entirely digital network, while Nextel was entirely analog. This mistake cost the company dearly, causing network quality issues for both networks, ultimately damaging the brand image of Sprint, from which it never really recovered. The Nextel network was eventually retired, dinging the image even more.

At the dawn of 4G technology, the company wanted to get out ahead of the trend. Since the current network was based on CDMA, they decided to continue down that path, supporting the 4G WiMax standard. While Sprint was first with 4G, they bet on the wrong horse, meaning that they couldn't make any agreements with the other network for 4G roaming, nor could they participate in shared towers and repeaters. Eventually, they had to abandon the WiMax network and build a second 4G infrastructure, this time supporting the LTE standard, based on GSM technology.

So, while dueling networks caused Sprint's current troubles, T-Mobile's experience supporting and retiring Metro's CDMA network suggests that this could ultimately work in everyone's favor. However, it is far from a sure thing, and could still be shot down by the collection of states still fighting.

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