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Regulators are skeptical that eliminating the uncarrier, rolling it into Sprint would be "good for consumers"

Japan's Softbank Corp. (TYO:9984) is used to winning, and doesn’t take no for an answer very often.  Last year it climbed from third place up to second in Japan's mobile subscriber rankings and it also entered the U.S. market, taking a majority stake (78 percent) in Sprint Corp. (S) with a cash-heavy $21.6B USD offer.
 
I. The Death of an (Un)Carrier?
 
But the new Sprint is looking a lot like the old Sprint over Softbank's first couple quarters in charge, bleeding money and customers.  In the face of this growing headache, Softbank isn't backing down. It's instead opting for an unusual and some would say troubling solution to Sprint's problems.
 
It's in serious pursuit of America's fastest growing carrier, Deutsche Telekom AG's (ETR:DIE) T-Mobile USA.  Deutsche Telekom has been eager to dump T-Mobile for some time.  Despite its recent success -- the payoff of 2013's merger with MetroPCS -- T-Mobile USA's German owner reportedly remains fairly interested in a sale.
 
One crucial question is whether such a deal would possibly fly.  Just a couple years ago, the U.S. Federal Communications Commissions (FCC) and U.S. Department of Justice (DoJ) won a hard-fought war against AT&T, Inc. (T), who had sought to gobble up T-Mobile.
 
This week, Softbank's Chairman and CEO Masayoshi Son was in Washington, D.C., trying to convince federal regulators at the FCC that a Sprint-T-Mobile union would be good news for consumers.  Mr. Masayoshi brought Sprint's embattled CEO Dan Hesse in tow.

Sprint and Softbank
Softbank CEO Masayoshi Son (left) and Sprint CEO Dan Hesse [Image Source: Kyoto Newscom]


According to Reuters, the crux of the Japanese executive's argument is that Sprint and T-Mobile are too small to compete separately.  T-Mobile has 45 million customers, while Sprint is currently at around 54 million subscribers.  Both are still a long ways away from AT&T's 76.2 million subscribers and Verizon Inc. (VZ) subsidiary Verizon Wireless's 96.2 million customers.
 
But there are a couple weaknesses in the argument.  First, Sprint is midway between AT&T and T-Mobile in subscribers, raising the question of why it should be allowed to buy T-Mobile if the AT&T purchase is verboten.

T-Mobile wide
Sprint

Softbank wants to put an end to the "uncarrier" and roll T-Mobile into its Sprint brand, according to reports. [Image Source: Flickr (top); Getty Images (bottom)]

Second, it would be an odd couple to say the least.  Compared to deals like the Softbank-Sprint tie-up -- which leveraged international business synergies -- or T-Mobile USA and MetroPCS -- which combined largely non-overlapping businesses -- Sprint and T-Mobile USA are direct competitors.  And the idea that handcuffing the market's brightest rising star (T-Mobile) to the biggest loser in the U.S. mobile market currently (Sprint) is also rubbing many the wrong way.
 
II. FCC Stands Opposed
 
For new FCC Chairman Thomas ("Tom") Wheeler -- an official who hails from a background as a former wireless industry lobbyist -- the talks mark a key test. 
 
Despite his background, Mr. Wheeler has called himself an "unabashed" supporter of competition, and hinted that he will follow in his predecessor Julius Genachowski's footsteps, looking to wield his authority to block further concentration in the mobile market.  The potential bid to consolidate America's third and fourth largest carriers is perhaps the new Commissioner's biggest chance yet to leave his own regulatory mark on the industry.

Tom Wheeler
FCC Chairman Tom Wheeler is reportedly "highly skeptical" of a Sprint-T-Mobile merger.
[Image Source: Reuters]

Reuters reports that an unnamed FCC official, who was not at the meeting, but was familiar with Mr. Wheeler's discussion with Mr. Masayoshi and Mr. Hesse, said that the FCC Chairman was "highly skeptical" of the deal. Reuters also cites an anonymous high-level source close to Softbank as saying:

I'm not unduly surprised by the FCC chairman's skepticism. I feel it's a rather typical reaction.

If Sprint's majority owner did score a majority bid in T-Mobile USA, a key question would be what its strategy would be.  While it might make sense to merge the brands under the faster-growing, more positively perceived T-Mobile USA banner, sources indicate that Softbank might instead look to tuck T-Mobile into Sprint, rebranding its stores and devices.
 

Sprint and Softbank are reportedly eager to bury the "uncarrier" campaign, which is costing them (T-Mobiel US CEO John Legere). [SOURCE: The New York Times]

Likewise, with T-Mobile forcing Sprint and AT&T to get more competitive with pricing, it is rumored that Softbank is keen on ditching T-Mobile's "uncarrier" strategy and aggressive rates, before it creates further woes for the Sprint brand.
 
T-Mobile might also have to sell off its MetroPCS unit if it were to be acquired.
 
All in all, any of these moves on their own could crippled T-Mobile USA, who is showing impressive growth, but remains a fragile recovery story. 
 
If Mr. Wheeler's stony silence was viewed as bad sign for Sprint and Softbank, then comments this week by William Joseph "Bill" Baer, the head of the DOJ's antitrust division, are an even harsher warning.  In a speech he praised T-Mobile's role in driving competition, not so subtly adding:

Merger litigation is costly and time consuming.  But the last few years demonstrate that we will not hesitate to challenge in court anticompetitive transactions where that is the right course.

It's increasing looking like even if Mr. Masayoshi does view T-Mobile as Sprint's ticket to fiscal rejuvenation, that Mr. Wheeler and Mr. Baer, along with the rest of the DOJ and FCC are unlikely to meekly bow to the plan.
 
As Lee Corso says, "Not so fast, friend!"

Source: Reuters



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By SAN-Man on 2/4/2014 8:09:46 PM , Rating: 3
I got 99 problems but Sprint ain't one. Or T-Mobile. Or ATT. Or Verizon.

The future is no-contract, flat rate, unlimited service for around $40-$45 a month per phone. It just is. It doesn't matter of Sprint buys T-Mobile or the other way around.

So T-Mobile shifts customers from Sprint, ATT, Verizon. It doesn't matter - they're all on life support unless they get off the variable rate contract services and get on the no-contract flat rate services.

A few years ago flat rate service only had crappy phones. These days they have them all, or can get them all. There is absolutly no reason to pay T-Mobile, ATT or anyone else $60, $70, $80, $90 or more per month plus taxes and fees for cell, data and messaging service. There just isn't.

Republic Wireless has the MotoX for $299 and unlimited service for $40 ($43.C with taxes). No, I don't work for them, or Virgin Mobile or anyone else - I just think it's sad people continue to get ripped off.

Let's hear your excuses, contract fanbois.




By ritualm on 2/4/2014 8:27:32 PM , Rating: 2
The future is one carrier, with many "brands" that give consumers the false belief that they are actively competing with each other. Very high chance of this happening too, given the dysfunctional nature of the US market. All of those "we want more competition, not less" are merely excuses for "we're saying no to this deal because we are not the buyers".


By Jeffk464 on 2/4/2014 10:32:21 PM , Rating: 4
Tmobile has been the only carrier willing to do the no contract thing you are talking about and I think the other carriers were interested in buying them out just to kill them off. No thanks, I say we force the German company to keep control of Tmobile.


By Reclaimer77 on 2/5/2014 8:01:33 AM , Rating: 2
As a Conservative, this issue is tough. On one hand, I would really like to see T-Mobile grow and continue the path.

On the other hand, I'm not sure how I feel about our Government forcing a company who wants to be bought to not sell.

Personally I'm thinking it's time to just pay Verizons goddamn ETF and switch to T-Mobile sooner than I planned. Once signed up, I'm assuming they'll have to grandfather in our plans for some time even if they sell.


By Cheesew1z69 on 2/5/2014 8:31:58 AM , Rating: 2
quote:
Personally I'm thinking it's time to just pay Verizons goddamn ETF and switch to T-Mobile sooner than I planned.
If only I could :/


By Reclaimer77 on 2/5/2014 9:02:41 AM , Rating: 2
Well there are other ways buddy. I heard if you call them up and say you're leaving the country, they can terminate the contract.

I just have this thing about lying, so I can't do it lol.


By maximuslyricus on 2/5/2014 12:35:52 PM , Rating: 3
You can. T-mo will pay your fees.


By Reclaimer77 on 2/5/2014 12:39:46 PM , Rating: 2
AFAIK that's only for family plans.


By Camikazi on 2/5/2014 7:19:26 PM , Rating: 2
It's for individual accounts too.


By dgingerich on 2/5/2014 9:02:27 AM , Rating: 2
quote:
Personally I'm thinking it's time to just pay Verizons goddamn ETF and switch to T-Mobile sooner than I planned.


I just did that from AT&T to T-mobile a year ago. If Softbank buys them out, I'm out once again. I've dealt with Sprint, and I don't want to repeat that. I don't want to deal with AT&T or Verizon, either. I don't know what I'm going to do.

Sprint screwed me over by not covering a malfunctioning phone less than 2 months into the contract. I had to buy a total of three phones full price over the course of my last 2 year contract with them. Verizon has horrible coverage in the southern Denver area, to the point I couldn't actually use the phone anywhere near my home or my employer at the time. Then they screwed me over and charged me an ETF a month after my contract was supposed to have ended. (My contract got reset when I made a customer service call to complain about the coverage.) AT&T'd CEO offends me the most with the way he constantly insults and blames his own customers for his management incompetence. I don't want to do business with any of them.

Maybe I'll go with Cricket??


By dgingerich on 2/5/2014 9:12:31 AM , Rating: 2
Just found out Cricket's parent company was bought out by the worst of them: AT&T. Is there any decent carrier these days?


By Reclaimer77 on 2/5/2014 9:30:59 AM , Rating: 2
quote:
(My contract got reset when I made a customer service call to complain about the coverage.)


WHAT!!!???? I would have been livid. How could they do that!?

Well for my experience, Verizon's service has been outstanding coverage and fidelity wise. They just assrape me once a month lol.

But T-Mobile...man. No contract? Up to two free phone upgrades a year? I feel like I wanna switch right now, but of course, now I'm stuck waiting to see if the FCC blocks the sale or not.

quote:
Maybe I'll go with Cricket??


Nah, if T-Mobile goes under I think Straight-Talk would be the next best option. Now that they allow you use whatever (compatible) phone you want. Unlocked GSM I believe?


By Seriuqs on 2/5/2014 3:17:07 PM , Rating: 2
I just double checked the website after making my last post because I wanted to make sure I didnt give bad info. The TMo website says this under the Switch Carriers FAQ "Who is this offer designed for?":

"Individuals and families (up to five lines) who are currently under a postpaid contract at carriers including AT&T, Sprint or Verizon and want to switch to T-Mobile."

Source: http://www.t-mobile.com/offer/switch-carriers-no-e...


By maximuslyricus on 2/5/2014 12:34:54 PM , Rating: 2
You do know that T-mo will pay your ETFs up to $350, right?


By Reclaimer77 on 2/5/2014 1:34:20 PM , Rating: 2
No they wont. I walked in there a few weeks ago and they told me that was only for Family Plans, and ONLY if the person who's name it's under switches every line to T-Mobile.

Now if that's wrong, or if they changed the policy, let me know.


By Seriuqs on 2/5/2014 3:09:22 PM , Rating: 2
I just switched to T-Mobile about 3 weeks ago and haven't looked back. The service is great here in northern AL - way better than my previous Sprint service. They paid my ETF and its only me on this plan, so I can confirm they will pay ETFs for single person.

The advertising is a little confusing, but I went into the store and asked - they confirmed that anyone is eligible up to families of 5.

The whole process took less than an hour to port my number, erase and turn in the old phone, fill out the paperwork, and get my new Note 3 setup and ready to use. The customer service in the store was pretty good too, though they lose some points for trying to talk me into posting a public "Breakup letter" to my previous carrier via FB.

Hope this helps!


By Reclaimer77 on 2/5/2014 4:19:32 PM , Rating: 2
Thanks!

Unfortunately it's a moot point. I went back today on lunch and they made it clear my old Razr with a cracked screen wasn't "eligible".

No matter, my ETF from Verizon shouldn't be too bad as I'm about a year through my contract.


By Seriuqs on 2/5/2014 3:19:10 PM , Rating: 2
(Sorry for the double post I responded to the wrong thread on accident)

I just double checked the website after making my last post because I wanted to make sure I didnt give bad info. The TMo website says this under the Switch Carriers FAQ "Who is this offer designed for?":

"Individuals and families (up to five lines) who are currently under a postpaid contract at carriers including AT&T, Sprint or Verizon and want to switch to T-Mobile."

Source: http://www.t-mobile.com/offer/switch-carriers-no-e...


By inperfectdarkness on 2/5/2014 6:25:17 AM , Rating: 2
That's one future, but it's still a monthly charge. Fine for people who use their phones as frequently as they breathe--not great for people who only use them as a point of contact and utilize them infrequently at best.

What I have now, and would like to keep for the future, is a flat-rate plan that has no monthly fee. I pay per text or minute. I end up paying less than 100 euro per year for my phone (probably less than 60 euro)--and I can use it almost anywhere in Europe--rates vary only slightly country to country.

I do however, agree that the USA cellular business models are all woefully antiquated and badly matched to customer demands.


By Dr of crap on 2/5/2014 9:08:04 AM , Rating: 1
So let's see -
I buy a phone at full price - let's say $500.
So using existing platform its cost is spread over 24 month payments - thats $21 a month. Then its $40 a month for the service. Total is $61 a month. My plan has 4 phones on it. That's $245 a month charge. Then add on all those fees and it over $260.

Right now with Sprint, I pay total cost per month - $225. So where is this savings your talking about?


By Jeffk464 on 2/5/2014 1:13:23 PM , Rating: 2
Nexus 5 is $350 to buy outright so no $21 a month.


By ven1ger on 2/5/2014 2:21:21 PM , Rating: 2
I'm assuming that you're basing 4 lines and buying 4 phones on contract. $61*4 = $244 ($245).

T-Mobile family plan for 4 lines is $100. Add in your cost for 4 phones (24 month payment option), that's $100 + $21*4 = $184. Still see a savings about ~$41 ($225-$184) per month plus you don't get stuck with a 2 year contract if you feel the need to change carriers. You can also buy your phone from whomever you feel if you don't like your carriers phones or their prices and have it connected to T-Mobile.


By euclidean on 2/5/2014 2:55:29 PM , Rating: 2
You're forgetting that on Sprint, we have Unlimited Data with no throttling or limits...

So, add the cost of Unlimited and that is where you lose the savings on T-Mobile.


By ven1ger on 2/6/2014 2:01:09 PM , Rating: 2
Actually didn't forget but since there was no mention if that is included in the stated cost I didn't mention it. Is it included in the basic family plan with sprint or is it additional cost like T-Mobile? T-Mobile's basic family includes 500MB per month for each line, $10 for 2GB per month for each line and $20 for unlimited per month for each line.

In my case 2 lines have 2GB per month, and the other two lines are basic. So my bill comes out to $120 per month for 4 lines.


By ven1ger on 2/6/2014 2:36:34 PM , Rating: 2
Just checked, their Framily plan, and for 4 lines at basic, with 1 GB data included, anything additional data will cost extra per month. So, under the Framily plan, I'd probably pay about $40 more per month, for the basic, and if I upped 2 lines to 3 GB per line, that's $20 more per month. So, the way I see it is that I'm still saving about $40-60 per month on T-Mobile versus comparable Sprint services.


By Rukkian on 2/5/2014 12:43:48 PM , Rating: 2
While it may sound good, and maybe even works for you to have to low rate plans, it does not work for everybody. Yes, you can get the service for ~45 per month, but also have to buy the phones (either monthly fee or upfront), and then have issues with most of the providers if you actually use the phone, and the coverage is horrible outside a big city.

I live in Iowa, and outside the 2-3 biggest cities (still pretty small), there are 2 carriers with decent data service - Verizon and USCellular. They have both have the exact same price points, and basically the same coverage in Iowa (however USC has pretty much nothing just about anywhere else). Since neither of them give their 4g (the 3g is horrible) to MVNO's, they are out.

Even If I could switch to tmobile, once you add in the $50/month for the iphone 5s (wife) and my phone (currently LG G2), then have to pay for the other 2 phones, it would still be about the same price ($200/month) I pay currently. I have one line with unlimited data (mine, which I use arounnd 9GB/month of streaming), and one with 2gb (my wife, who barely uses 1gb) and 2 dumbphones, all with unlimited texting. We are on the 1400min/month plan (no longer available) and due to friends and family, and night/weekend we only use like 100min/month, so I do not need unlimited talk.

This is not about defending contracts, for some people the choice is - lower prices with little/no service, or pay a little more and get awesome service everywhere I would ever want to go. In the end, after taxes/fees, I am paying ~50/line per month.


By ven1ger on 2/5/2014 2:43:07 PM , Rating: 2
The problem a lot of people have recognizing is that if the cost of the phone is wrapped into the cost of what you are paying monthly for your lines, that the numbers tend to blur a bit.

Not even factoring in the cost of your phones, T-Mobile for a family of 4 lines starts at $100 for 500MB per line. Now if I changed it to 4 lines, 1 unlimited data, 1 - 2GB data, and other 2 lines no change, it comes out as $130 per month.

I have a family plan of 4 with 2 lines at 2GB, other 2 lines no change and I pay $120 per month. I only use a regular cell flipphone but I still make out better with the T-Mobile plan than the Sprint plan I was on a bit over a year ago. For something similar on Sprint it was going to cost over $200 per month.

Other than service there is no real good reason that customers should be staying with Sprint, Verizon or AT&T, the cost of service is just too outrageous if T-Mobile's coverage is at least on par. I won't dispute that if T-Mobile's service sucks in your area or virtually non-existent then you have to go with what you got available.


By Rukkian on 2/5/2014 3:06:38 PM , Rating: 2
I would love to go to t-mobile, as I really like what they are doing. If they could just expand data coverage along the main interstates in my area (I-80 and I-35), I could deal with the rest, as I don't travel to the boonies that often. I have a 60 mile commute (one way) along I-80 everyday, and ride a vanpool, so that time is where I use 75% of my data (netflix), however T-Mobile only has 2g (edge) just outside of Des Moines, and shortly after that only has partner coverage, meaning little if any data.

I would love to support what they are doing, and save some money along the way. Just wish they would get off their arses and expand outside of just big cities.


By euclidean on 2/5/2014 3:09:03 PM , Rating: 2
That's my pain point...T-Mobile's lack of service in Rural America.

They have a long ways to go to compete with Verizon/Sprint on Rural coverage...


By eagle470 on 2/5/2014 4:58:42 PM , Rating: 2
If only these other carriers you mentioned had USABLE coverage in Omaha, Nebraska. Sprint is spotty at best, I get tons of dropped calls and data utilization runs near it's peak almost all day, but I won't down grade any more to switch ot one of the other 'carriers' that only work downtown.


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