Sprint, T-Mobile merger talks spurred by network sharing needs

Sprint, T-Mobile merger talks spurred by network sharing needs

Summary: Deutsche Telekom's T-Mobile and Sprint are reportedly talking about merging---again. However, this time the deal may make a little more sense since the two parties may ultimately share networks.

SHARE:
20

Deutsche Telekom's T-Mobile and Sprint are reportedly talking about merging---again. However, this time the deal may make a little more sense. Telecom executives have been talking non-stop about Sprint and T-Mobile somehow sharing networks to better compete with Verizon Wireless and AT&T.

Bloomberg reports that talks about a T-Mobile-Sprint merger are "on and off." For its part, Deutsche Telekom said all options are open with T-Mobile, which recently reported lackluster fourth quarter earnings.

So why should these Sprint-T-Mobile talks be any different than in previous years? Network sharing has become a big topic in the wireless space. Sprint has a network conundrum. It relies on Clearwire for 4G services via WiMax, but is pondering a move to Long-Term Evolution. T-Mobile runs on GSM, but ultimately plans to move to LTE. Both Sprint and T-Mobile need more bulk and spectrum to compete with Verizon Wireless and AT&T.

At first, Sprint and T-Mobile would be a network nightmare with multiple standards. The path forward would be LTE. Sprint's "Network Vision" roadmap points to a flexible network. Steve Elfman, Sprint's president of network operations and wholesale, said last week:

The flexibility in the technology, the multimodal technology, is radioheads at the top of the tower and base stations allowing us to put cards and really software-defined radios that can handle for us CMDA, LTE, WiMAX and others if we so choose. And as I said, with this type of technology, it really enables the opportunity for active network sharing, if we get into those kind of opportunities, rather than simply a passive sharing, where somebody just shares real estate as opposed to base stations.

Sounds like T-Mobile might be a match for this network sharing right?

Analysts have also noted that Sprint is considering a network sharing arrangement with LightSquared, which would contribute spectrum and cash in exchange for capacity on Sprint's network. Macquarie Research analyst Kevin Smithen noted that the most likely scenario would be for Sprint to buy out Clearwire and then overlay LTE.

Add into the mix that T-Mobile may buy Clearwire capacity. If T-Mobile and Clearwire teamed up, sharing a network with Sprint would presumably be easier.

Given all of these moving parts, it's not surprising that Sprint and T-Mobile are talking merger. The reality: A Sprint-T-Mobile combination would be incredibly messy in the short run. And rest assured Verizon and AT&T would market heavily against a network sharing deal or outright merger.

On Monday, Credit Suisse analyst Jonathan Chaplin asked Verizon CTO Tony Melone about a network sharing deal with Sprint, T-Mobile, LightSquared or Clearwire. Here's the exchange:

Chaplin:

There's been a lot of talk recently, just in the last few weeks, about network sharing, the prospect of Sprint getting into a network sharing deal with LightSquared or T-Mobile or Clearwire. Two questions on that -- do you think a structure like this could work in the US? And would you be interested in sharing your network with another carrier?

Melone:

I think no and no is as simple as I can put it. I really think that spectrum sharing is an interesting concept, or spectrum and network sharing is an interesting concept in theory. I don't think you have to look very far to see evidence that very, very few examples of where that has been effective for people. And where it has, it has been an environment where essentially the network is irrelevant to the value proposition. And we at Verizon feel like the network is at the core of the value proposition, so we don't see that in our future. And again, Clearwire and Sprint and what you've seen there -- there's plenty evidence to suggest it's very, very hard even for two players to coordinate, let alone three or four or five.

Obviously, Melone is a bit biased with his take. But he has a point. A network sharing deal---or merger---between T-Mobile and Sprint mean there will be a lot of network logistics complicating things.

Topics: Networking, Mobility, Telcos

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

20 comments
Log in or register to join the discussion
  • Dumb

    There's talks out there that Steve Jobs is looking to buy T-Mobile, remove all android devices and old school phones, and have Apple become a carrier for the iPhone...
    Hasam1991
    • Havent heard that one

      @Hasam1991
      John Zern
    • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

      @Hasam1991 I haven't heard that one either and I hope it's nothing more than a nasty rumor... in my area T-Mobile is crap.
      athynz
    • Steve Jobs would never do that

      @Hasam1991
      because then he can't blame iPhone's shoddy reception on the carrier!
      Will Farrell
    • I have heard that one a month or two ago

      @Hasam1991
      I think it might even have been here on ZdNet, an article about t-mobile being the best candidate for being bought out by a competitor right now and could actually benefit from a buyout as well... then there have been several posts on Apple buying into the cell market; however I doubt that is a near future plan with all the effort put into getting iPhones and iPads on verizon...
      aiellenon
    • Now that's a scary thought...

      @Hasam1991
      T-Mobile is now known for having budget minded pricing plans. I can see it now should Apple buy them out. My $39.99 per month, 1000 minute plan would now set me back 2x as much.

      The one thing Apple is known for - they're not budget friendly.

      I can see myself and a lot of other T-Mo subscribers jumping ship in droves.
      Wolfie2K3
  • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

    I like the idea of Sprint's unlimited data plans for cheap, my only issue with this is that neither company has good coverage in my area.
    Loverock Davidson
  • This would be an abysmal failure just like the Nextel merger..

    Nextel nearly killed them and now they are killing it off..this would fare about the same. T-Mo needs to stay far away from the cancer that is Sprint.
    JT82
    • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

      @JT82. I used to feel this way but TMo has gone downhill. They and Sprint need each other to survive.
      Holmes9999
  • Sprint is hardly a cancer...

    Sprint is hardly a cancer since it's the only telecom company in 4th quarter 2010 to report net gain, 12 consecutive quarters of improved customer satisfaction and was rated the #1 Wireless carrier in 2010 by JD Power and top 40 in all industries. It can definitely be said Sprint has few knicks in it's body from the past but to call the only carrier that's improving a cancer is a bit of an exaggeration...
    mdcarron
    • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

      @mdcarron

      I guess I'm the exception. Sprint gives GAWDAWFUL customer satisfaction. I could be prejudiced, since they sold me a defective phone *model*, knowing it was defective, just weeks before a replacement model came out.
      hiraghm@...
    • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

      Wonderful goods from you, man. I've understand your stuff previous to and you're just too fantastic. I actually like what you've acquired here, certainly like what you are saying and the way in which you say it. You make it enjoyable and you still care for to keep it sensible. I can not wait to read far more from you. This is actually a terrific website. <a href=http://gates-millenium-scholarship.com/>gates millenium scholarship</a>
      gates08
  • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

    As a several year T-Mobile customer, I hope whatever happens doesn't mess things up. We have an unlimited data plan for 24.99/mo/line. I would hate to have to watch my time, even though I don't use it extensively enough to justify it, yet. I haven't had much trouble, as their network has grown over the last few years, so just about anywhere we have been, we have a signal. One gets out in the boonies, where no tower exists you lose signal, yes, and inside some buildings as well. I don't keep track of who's who in the telecom business. One thing I like about TM is its no roaming charges, their badic rates tend to be a liitle less than the other carriers, as well. That is the main reason we have them. Bottom line--the phone works when I need it.
    dhays
  • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

    Does this mean T-Mobile will be infected by the same crappy customer support as Sprint.
    rswapp
    • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

      @rswapp or vice versa. And maybe Sprint's network, which finally got it's kinks worked out of the KC area, would go to hell again thanks to T-Mobile's failsauce service.
      nix_hed
  • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

    cancer does grow...
    (fyi I have been on sprint since 1998 or 1999 continuously).

    but what I see would happen is the two would sign a 5 year deal, to work together to roll-out LTE nationwide sharing towers 50/50, after 5 years the two would merge into a single entity and shut down 3G service for voice communications.
    aiellenon
  • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

    I would oppose such a merger, because Sprint's customer service makes even the worst customer service out there look wonderful! While T-Mobile's customer service is far better than other carriers.
    cmwade1977
  • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

    I was about ready to quit Sprint to go to T-Moble. Why TM rather than Verizon (I love the Droid X...) ? Because "unlimited". T-Mo only throttles your bandwidth if you go over their limit, which isn't as good as Sprint who give you real unilimited with tethering on their phones, but better than everyone else.

    Now, the two are going to merge. As usual, I'm screwed.
    hiraghm@...
  • RE: Sprint, T-Mobile merger talks spurred by network sharing needs

    Network sharing, with 2 imcompatible technologies in CDMA and GSM, makes little sense.<br><br>This would be like a merger between Amtrak and Continental Airlines.

    NB There is a precedent in the UK for T-Mobile to merge with a rival, as last year they merged UK operations with France Telecoms's Orange. However, as both have GSM based networks, as no-one in Europe was dumb enough to have 2 totally incompatible standards, infrastucture sharing of masts, data backbone is a practicality.
    neilpost
  • T-mobile sucks though

    They have no real 4G, they have the worst network, and they run on completely different technology than Sprint. Why would they want to merge with a company that has nothing to offer them?
    Jimster480