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A Game of Phones

As a T-Mobile customer with family on both T-Mobile and MetroPCS, and as a former wireless industry insider having worked with three wireless providers (one in Europe, two in the US) over a ten year period, I thought that I would weigh in on the proposed buyout of MetroPCS by Deutsche Telekom. It’s merger to T-Mobile US. And the spinning off the the combined company as a publicly traded entity.

This is actually a great deal for customers on both networks, and may actually work out to be a great deal for US wireless customers overall. And here’s why.

To start, for the foreseeable future, both companies will be operated as separate customer entities. No doubt this was put in place to appease the same activists and regulators who put the kabosh on the AT&T-Mobile merger. But the end result is still the desirable result for customers, as MetroPCS will not be immediately dissolved. Not saying that it will never be dissolved, just saying that it will be years before it comes to that. So if you are a happy MetroPCS customer, Metro will continue to operate independently as Metro for years on. And if you are a happy T-Mobile customer, T-Mobile will continue to operate independently as T-Mobile for years on. So there is not a reduction of customer choice in the marketplace as a result of this merger. And that is the very first major win for everyone.


 
The big takeaway here, is that both companies will begin sharing their spectrum, and infrastructure. Once again, very good news for customers of both carriers, especially with the combined migration to LTE. Thanks to an infusion of $4 billion from AT&T (the breakup ‘tax’ they paid to Deutsche Telekom for the failed AT&T-Mobile merger), as of February of this year, the entirety of those funds have been allocated to building out T-Mobile’s LTE network. Combine that with the LTE that Metro was also building out, and once again it is win for customers of both carriers. 20×20 MHz LTE is not to be disregarded, and is far better LTE penetration than either MetroPCS, or T-Mobile were already attempting to deploy. And with Verizon, AT&T, and Sprint each deploying 10×10 MHz, the combined efforts of MetroPCS and T-Mobile, is going to create the strongest LTE network anywhere on the continent, as everywhere the two networks overlap, you are going to be getting 20×20 MHz LTE. The fact that the two networks also happen to overlap in the ten largest markets in the United States, markets that include NYC, Boston, Los Angeles, Dallas, Atlanta, Las Vegas, and San Francisco, is pure gold. If you live in Providence, Miami, Detroit, Tampa, and Philly, you can count yourself in on this sweet deal as well.

Now where things get interesting, is that T-Mobile has been setting up to phase out 2G for years. Almost every device they carry at this point, supports wireless VOIP of some nature. Most existing devices should be able to carry voice over 2G, 3G, 3.5G (HSPA+), WiFi, and thanks partially to the merger with Metro PCS, soon 4G (LTE). So there really is no longer a need for 2G services on the network. Tmo most likely have lacked the spectrum to make that transition as smoothly as possible. But now with MetroPCS’ spectrum added to their own, they can carry forward with phasing out 2G, and 3G services completely. This in effect is only going to free up 100% of their PCS and AWS spectrum, which will be converted to 3.5G (HSPA+) and 4G (LTE). Same goes for MetroPCS. Tmo will begin selling MetrocPCS branded T-Mobile phones to MetroPCS customers; the very same phones with VOIP built into them. This will allow MetroPCS to begin to phase out their 2G (CDMA) network as well, and convert the spectrum over to HSPA+ and LTE; something Metro was already attempting to do anyway. Once again, this is a good deal for customers of both companies, because in practicality should this merger go through, then by 2014 the combined network will be the most technologically advanced network in the nation, having completely shed 100% of it’s legacy 2G, and 3G protocols, and replaced them with far superior HSPA+ and 20×20 MHz LTE. By way of comparison, Verizon, the nation’s largest network, is not even expected to start phasing out 2G and 3G until 2016, and won’t be complete until 2021. And AT&T, the nation’s second largest, won’t have 2G/3G phased out until 2017. Essentially this merger makes it possible for customers on the network to go from the second least advanced national network (T-Mobile’s HSPA+ network has been benchmarked faster than Sprint’s WiMax network, and is available in hundreds more areas than Sprint’s LTE network), to the most advanced national network over a two year period, with tons of spectrum for all it’s 45 million customers to use. And they are going to need it, because . . .

T-Mobile just went to true unlimited data last month. Should they decide to keep true unlimited data in place throughout this entire process of merging with MetroPCS and phasing out 2G, and 3G, then they will have the nations only true unlimited, nationwide, LTE network. And with what everyone else is charging for LTE, you cannot tell me that true unlimited LTE is a bad move for consumers overall. But it gets even sweeter than that, as apparently in the wake of this merger, T-Mobile will be adopting MetroPCS’ unlimited pre-paid services to it’s own lineup. Yep, that’s right, unlimited, nationwide, pre-paid LTE from not one, but both companies. Once again, another win if you are already a Tmo customer. And a move that may add pressure to the other three major carriers to take steps to lower their prices on LTE.

The fact the combined network is a national network, is a win for exiting MetroPCS customers, who get to “roam” outside of their local areas, anywhere nationwide on the newly combined network. And with MetroPCS actively creating an update to allow it’s existing LTE phones to work on T-Mobile’s burgeoning LTE network, means that MetroPCS customers can start “roaming” to certain areas outside of their local areas, sooner than later. Another win for MetroPCS customers. And another win for MetroPCS customers, is that T-Mobile has better backhaul infrastructure than not only Metro, but better than half the other carriers on the market. You can have the fastest wireless network protocols in the world, you can have more spectrum than all of your competitors combined, and none of it will amount to spit, if your backhaul connecting that wireless network to the rest of the internet is rubbish. And most of T-Mobile network is supported on the back of a 10gbps, all fiber infrastructure. T-Mobile has backhaul out of the yingyang. And now MetroPCS customers get to take advantage of having some of the best infrastructure on the entire continent.

And yet another win for MetroPCS customers, is that as new T-Mobile compatible devices enter the MetroPCS retail chain, these devices are 100% compatible with T-Mobile’s HSPA+ network. This is crucial for MetroPCS customers, as T-Mobile has already deployed HSPA+ in every major population center nationwide, and continues to deploy the network further, as they refarm all of their spectrum. In the meantime, it is going to take a couple of years for LTE deployment to catch up to as many locations as HSPA+ deployment is currently. But that is not going to stop MetroPCS customers who purchase a new device from being able to use the combined network, nationwide. And if that were not good news enough for MetroPCS customers, the fact that T-Mobile’s HSPA+ network has been benchmarked by more than a few independent sources, to run significantly faster than Metro’s existing LTE network, should come as very good news to Metro customers.

What many people do not realize, is that there is more than one version of LTE; or more accurately, there are limitations to LTE depending on which frequency you choose to broadcast over. Now one of the disadvantages to being a regional player in the field appealing to a budget clientele, is that even when you deploy something like LTE, you cannot always afford to deploy the best version of the technology. And then there is the matter of placing speed caps on the LTE that you do deploy, to insure that more people can utilize the network. So like anyone else on a tight budget, you go with what you can afford. And well, MetroPCS on their own, could not afford to deploy the same level of LTE that someone like Verizon has been deploying. Consequently, even though Metro has LTE, it’s not very fast. Matter of fact, many benchmarks has Metro’s LTE only as fast as other carrier’s 3G services. Sadly, that is not next generation at all. Which is why even MetroPCS’ LTE customers will see a significant speed boost after the merger with T-Mobile, if they purchase a new T-Mobile compliant device. Like I said, this bit is a major win for MetroPCS customers.

With an estimated 45 million paying customers, comes greater buying power for the entire company. This is only going lead to customers from both companies getting better phones across the board; and no longer everyone else’s hand me downs. Once again, yet another win for customers on both networks. This increased buying power also means getting better deals on a lot of behind the scenes activities that keep the network running, B2B services, network equipment, etc. And when both Metro and Tmo are attempting to keep prices as low as possible for their end consumers, every advantage they can get in the back field, and every penny they can save, only makes it that much easier to support their profit margins while continuing to give their customers the best deals in wireless.

And finally, the almost three million customers of MVNO SIMple Mobile (a division of TracFone) will also benefit from everything mentioned above. So that is yet another company entirely who’s customers will benefit from this merger.

While I am sure there are some downsides to this merger (every merger usually has SOME downsides to it), the overall trend here for existing customers of both carriers, is upward benefits, should the merger go through. This merger will also make the combined company a substantially more important player on the national arena. Which is a good thing for customers of the other wireless giants. Post-merger T-Mobile will continue to operate as the underdog national carrier, which technically, they will still be. But they will be an underdog carrier with greater buying power than they have today, a larger network than they have today, more spectrum than they have today, the most advanced network on the continent having shed all it’s legacy 2G and 3G protocols in favor of HSPA+ and 20×20 MHz LTE, and a very aggressive stance on pricing of both services and devices. In other words, an underdog carrier with teeth; a REAL choice for consumers fed up with the high prices (Verizon), or spotty coverage (AT&T) of the mobile giants in this market. There is a win in there for almost everyone.

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