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Why Blocking the AT&T--T-Mobile Merger Won't Save Sprint

Steven Blum
4

There's been a lot of resistance, recently, to the proposed AT&T – T-Mobile merger. Even the U.S. government is claiming the deal will stifle competition and hurt innovation. At the heart of many of these arguments is the fact that the merger will force Sprint out of business. But even if the merger does not go through, Sprint has arguably already lost to Verizon and AT&T.

The struggling carrier faces difficulties securing the same high-level technology as the big guys. Perhaps as a result, its market share dropped to 13 percent in 2010, down from 17 percent in 2008, according to Barclays capital. The company also reported a net loss of $847 million in the second quarter.

Sprint was the first carrier to offer 4G coverage on their WiMax network by teaming up with the internet providor Clearwire. But the effort soon stalled, in no small part because of Clearwire's rocky financial situation. Since then, Verizon has overtaken Sprint as the nation's largest 4G providor.

As Verizon's 4G LTE network is rapidly becoming the industry standard, and Sprint will likely face problems trying to convince smartphone manufacturers to create devices for its ailing WiMax network. If and when Sprint switches to LTE, eight to 10 million customers will have to be supported on the older network.

In order to secure the spectrum it needs to build its network, Sprint will need to make very large investments, and it might not have the cash to do so.

Their best hope, in my opinion, is to market the hell out of their unlimited data plan and hope that people listen. Certainly we're using more data than ever; if Sprint can emerge as the one carrier with a reasonable data plan, it will win big. 

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Comments

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  • Jean M. Sep 7, 2011 Link

    Sprint is in a very difficult position right now. They've got to fight with all their effort against the merger, but at the very same time they are already quite vulnerable to fail. It would be sad to see them go, but I think that they have failed to offer the consumer something unique, something that would differentiate them from their competition. The best route for them would be to hire an amazing PR and ad company to really change their look. They need a face lift and they need it NOW.

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  • Yan Matusevich Sep 7, 2011 Link

    I agree with you Jean. In the world of wireless carriers, it's virtually impossible to try playing catch up. Once someone like Verizon or AT&T gains a lion's share of the market it is extremely difficult to make a break through. It's real shame, but that's how this business works.

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  • red dragon Sep 7, 2011 Link

    So here is what I am seeing. One I was a T-Mobile user till about 2 months ago. Been with them for 4+years. Whenever I would walk into any of their stores I could walk right up and get assistance immidiatly no lines ever. Now that I have switched to Sprint I have to stand in line, actually give my name and wait. The store is always packed with new customers or people getting upgrades.

    I guess what I am trying to say is that for a years now T-Mobile seems to have been loosing ground. My family and a lot of my friends and relatives have all jumped from T to S and are loving it. And right now Sprint will be rolling out LTE to on multiple frequencies via one tower. Just look up their "Network Vision" plans and see how they really plan to expand. I just picked up the Photon and there is a major debate right now on this phone supporting LTE. It looks like it might, but neither Sprint or Moto is saying it does or doesn't. Also all Sprint phones released today going forward will have the multi chip in them to use both Sprint lower signals and higher signals and will be firmware upgradable.

    I think Sprint will live on regardless of the ATT junk and being the carrier with the most towers will easily be able to take on the competition. And I'm not saying this because I'm a customer, as I weighed in ATT and big V and neither fit my budget or phone wants.

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  • Foo S. Sep 8, 2011 Link

    @ red dragon

    Why did you switch over to Sprint two months ago if you had such good customer service with T-Mobile?

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