Sprint, T-Mobile Look to Gain Ground
Sprint and T-Mobile lag behind top two carriers Verizon and AT&T in the U.S. market, but if the two companies make the right moves, this year may be the year of the underdog.
Number-three carrier Sprint is expected to beef-up its network to make a showing in the 4G race this year, boosting spectrum and increasing network speed. CEO Dan Hesse has named customer satisfaction as the company’s number-one priority for this year, and the carrier will likely be retooling plans, network and device offerings to meet that goal.
T-Mobile reportedly walked away from the quashed AT&T merger with $4 billion in its pockets, but its future remains uncertain. This year will likely prove to be a year of transition for the number-four carrier, which enters the year lagging in competitive might as the only national carrier without the iPhone. T-Mobile is expected to make big moves and enter into new deals if it hopes to turn its fortunes around.
More Merger Madness Ahead
Struggling in the wake of the top two U.S. carriers, Sprint and T-Mobile could combine forces in this year, potentially creating a stronger third competitor. AT&T’s failure to acquire T-Mobile leaves opportunity for Sprint to make its own move, continuing partnership talks the two companies began before the AT&T deal attempt was even in the works.
T-Mobile’s parent company, Deutsche Telekom, is reportedly still shopping the fourth-place U.S. carrier around, and Sprint is in a position to snap it up, boosting its competitive power against giants Verizon and AT&T and gaining valuable spectrum assets. A deal between the two companies would garner them roughly a quarter of the total wireless market, turning the combined company into a more viable competitor against AT&T and Verizon.
Federal regulators needs approve a Sprint/T-Mobile deal, which is where AT&T’s merger met its death. However, since both Sprint and T-Mobile account for a smaller share of the market than giant AT&T, a merger between them may more easily pass antitrust scrutiny.
The Federal Communications Commission could welcome creation of a third challenger to the “duopoly” of AT&T and Verizon, so all eyes await signs the two carriers will enter negotiations in coming months.
Network Improvement Hinges on LightSquared
Sprint is expected to enter the 4G race with launch of its own LTE network this year. The Overland Park, Kan.-based carrier will also phase out devices powered by older network technology WiMax in favor of newer, faster LTE-powered 4G phones.
Sprint needs a successful 4G LTE rollout to catch up with rivals, but its success partly depends on whether partner LightSquared gets FCC approval to build the network Sprint needs to fuel planned improvements.
The carrier recently gave LightSquared a 30-day extension to get FCC approval, breathing new life into their agreement. If the deal succeeds, the two companies will share spectrum and equipment for 15 years, and LightSquared is expected to pay Sprint $9 billion for hosting the carrier’s network.
On Sprint’s end, analysts speculate the agreement will likely save the carrier billions and transform it into a competitive presence in the 4G race.
Not Like Other IPhone Providers
This year marks Sprint’s first full year offering Apple’s iPhone. Sprint committed billions of dollars to Apple for licensing rights to the iPhone 4S. This risky financial move raised investor concerns, but is expected to help the carrier bring in new customers and reduce subscriber churn in the year ahead.
In an effort to differentiate itself from other iPhone carriers, Sprint greets the new year with a custom suite of apps and services for the iPhone 4S, called the “Sprint Zone.”
All the apps in the world, however, probably won’t make iPhone users feel better about the slow speeds they experience on Sprint’s network, making Sprint’s network improvement plan even more imperative, particularly if they hope to support the new, 4G iPhone expected from Apple later this year.
Until its 4G LTE rollout kicks off, Sprint is expected to reduce network strain by continuing to phase out unlimited data plans. The carrier capped tablet plans late last year, and likely will follow suit with smartphone data plans soon.
T-Mobile Earns Consolation Prize, Still Underdog
Despite gaining a multi-billion dollar consolation prize from AT&T, T-Mobile’s future in the wireless marketplace is anything but certain. The company is expected to enter into another buyout or team up with a partner in need of spectrum assets and a 4G network, such as satellite television provider Dish Network.
The number-four U.S. carrier has been operating at a loss for nearly a year and has been steadily losing both customers and revenue. T-Mobile’s parent company, Deutsche Telekom, is expected to shop the carrier around to potential buyers as the year progresses.
A second venture with AT&T also isn’t out of the question. AT&T is hinting at plans to participate in a joint venture with the carrier that would allow both companies to enjoy the benefits of a merger while avoiding legal and antitrust scrutiny, since they would compete on handsets, prices, and features, but not on cellular coverage.
T-Mobile is expected to make use of the assets it already has this year as it plots future moves. For example, the carrier is exploring expanding Wi-Fi calling services to more Android phones in an effort to provide more reliable network coverage.
T-Mobile is the only top U.S. carrier offering Wi-Fi calling, and recently rolled out a software update allowing HTC Amaze 4G and Samsung Galaxy S2 users to participate in the program.
By adding Wi-Fi capabilities to best-selling smartphones, T-Mobile expects to improve call quality and reduce dropped calls in areas where network signal is weak or where it doesn’t yet have 4G coverage, helping it hang onto subscribers in a market where having the biggest, fastest network makes all the difference.
