Why the Sprint and T-Mobile merger could be good for you

Contributing Editor
Yahoo Finance
A Sprint and T-Mobile merger could be beneficial to consumers.
A Sprint and T-Mobile merger could be beneficial to consumers.

Sprint (S) is no longer the slug of the wireless industry, according to two new surveys of network quality. And their underlying data suggest that a combination of the network with that of would-be merger partner T-Mobile (TMUS) would yield even better performance than simply adding up coverage areas would suggest.

Whether going from four nationwide carriers to three will leave enough competitive pressure in the market against the two biggest carriers, AT&T (T) and (Yahoo Finance corporate parent) Verizon (VZ), is another thing entirely.

Surveys like these don’t try to answer that question, but regulators will have to before deciding whether to approve the merger Sprint and T-Mobile announced in April. If they allow the deal to go through, a large economics experiment will begin to unfold.

We could pay more for service that’s not much better than what Sprint’s already delivering, or we could find that a stronger, combined firm both keeps the pressure on AT&T and Verizon, and even use 5G wireless to challenge their wired residential broadband. You have to ask yourself: Do you feel lucky?

Sprint’s progress

The two reports released Wednesday from OpenSignal and Speedtest, based on crowdsourced testing on phones running their eponymous apps, concluded that even as wireless has gotten faster overall–with T-Mobile and Verizon now essentially tied for their top honors–Sprint has staged an impressive comeback.

The two surveys each ranked T-Mo and Verizon in first and second place–for instance, OpenSignal found T-Mobile’s downloads averaged 21.57 Mbps and Verizon’s averaged 20.56 Mbps at the latter–but didn’t find AT&T and Sprint behind by much. OpenSignal, for example, reported AT&T downloads at 15.08 Mbps and Sprint’s at 14.46 Mbps.

“Sprint has delivered the most improved download speeds over the past year,” Speedtest’s report noted. Its uploads, however, continue to lag in Speedtest’s data, thanks to that carrier setting its network to favor downloads; OpenSignal’s found the same pattern.

OpenSignal also tracks “availability,” the time a phone running its app got LTE instead of slower 3G. This metric showed an even closer grouping: T-Mobile and Verizon tied at 93.67% availability, and AT&T and Sprint were almost even at 88.43% and 87.74%.

OpenSignal analyst Kevin Fitchard commended Sprint’s progress–two years ago, its LTE availability was below 70%. “You cannot knock the improvements that they’ve been making,” he said in an interview Tuesday.

PCMag.com’s “Fastest Mobile Networks” testing, based on automated surveys done in cars across the U.S., found a similar pattern. But a second study based on drive testing, RootMetrics, continues to rank Verizon well above all others, with T-Mobile third and Sprint fourth.

How would Sprint and T-Mobile’s networks mesh together?

So if T-Mobile can tout itself as the fastest and Sprint can point to its own progress, what would a combination of the two look like? To judge that, ignore coverage maps and instead look at the spectrum licenses each hold, and what the combined holdings would mean for LTE service now and 5G service in the future.

“It’s a case where one plus one equals more than two,” OpenSignal’s Fitchard said. “You’ve got this huge block of spectrum for 4G and 5G.”

He noted that T-Mobile has set a precedent of quickly incorporating another network’s spectrum: Its 2013 purchase of the regional carrier MetroPCS, which like Sprint employed a 2G/3G standard incompatible with the GSM standard employed by T-Mobile. Fitchard credited T-Mobile chief technology officer Neville Ray for shepherding a quick transition that improved the carrier’s own coverage: “He put that spectrum into the LTE network pretty quickly.”

In an April post, Milan Milanović, technical evangelist at Speedtest’s parent firm Ookla, made the same point.

“Sprint holds a massive 150 MHz of nationwide 2.5 GHz spectrum, which uniquely positions them to provide an outstanding consumer experience,” he wrote. “To date, most of that spectrum has been underutilized due to lack of funding, changes in leadership and unorthodox deployment strategies.”

Milanović added that T-Mobile could put that spectrum—which can reach farther than the millimeter-wave spectrum competing 5G plans rely on—to work across its broader network of cell sites.

If you think 5G will become the next big form of residential broadband—but without the data caps that today make relying only on mobile broadband a tricky proposition—this union may look even more promising.

Cost and competition matter too

But subtracting one of the big four carriers would still leave the U.S. wireless market a very different place. The competitive pressures that have led all four to switch to selling unlimited data (okay, with some limits on particular uses) might abate.

Sprint and T-Mobile say customers will still have plenty of choice by pointing to the dozens of wireless resellers—the firms like Republic Wireless and Consumer Cellular that often get better consumer ratings than the carriers from which they buy connectivity. But Sprint and T-Mobile have been far more open to resellers than AT&T and Verizon; combining them would leave many of these outside firms tied to a single network.

“Will having three operators affect the pricing structure?” Fitchard said. “We don’t know.”

We need to find out, and soon.

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Email Rob at rob@robpegoraro.com; follow him on Twitter at @robpegoraro.

 

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