Sprint, SoftBank Said in Informal Deal Talks With T-Mobile | Hacker News Reader

Sprint, SoftBank Said in Informal Deal Talks With T-Mobile

bloomberg.com

72 pointsrayuela74 comments

This goes to show how disastrous a single bad business decision can be. When the 4G standards were still in flux, Sprint committed to WiMax and spent billions building a new network around it. Then the rest of the industry went with LTE, WiMax died, and Sprint had little money left to redo their network again. They've been basically on life support since.

The only way this merger would work is if the entirety of Sprint's leadership gets canned and replaced with T-Mobile's.

While Sprint has huge spectrum holdings to build out all sorts of network technologies, quite a bit of it is practically worthless. The really high band stuff is stopped by wet leaves.

They finally have some great new equipment coming online and things are improving, but their IP network is a mess and they rely on terribad CDMA 1X fallback for calls.

EDIT: I guess what I'm trying to say is this would only go through if DT receives a deal valuing TMUS more than it is. T-Mobile doesn't need Sprint and DT will continue to make money off TMUS. DT can wait to pick Sprint off when they inevitably go bankrupt. Sprint, however... they seriously had to advertise 'We're not that much worse than everyone else!'

The industry is moving to high-band and small cells for 5G, so Sprint will be well-positioned there. But building that is going to be insanely capital-intensive, and the question is whether Sprint has the money.

>The industry is moving to high-band and small cells for 5G, so Sprint will be well-positioned there. But building that is going to be insanely capital-intensive, and the question is whether Sprint has the money.

They don't, but Softbank could pony it up. T-Mobile is also well densified with Verizon also being comparable in this area.

AT&T is the one that sucks with densification right now and would most benefit the most by a Sprint acquisition. Nobody wants the trash fire though, so it comes down to what Sprint/Softbank might be able to afford. US Cellular would be an awesome target as well but anyone in the industry knows that that would have to be pried from the Carlson family's dead fingers.

As someone with a great deal of first hand familiarity with the Sprint network - in the western region, the last network upgrade was a forklift upgrade - out went the ALU (alcatel-lucent) hardware, and in went brand new shiny Samsung hardware, with brand new shiny tower top radios, and brand new shiny antennas, all connected over a fiber backhaul.

In my market, even the 1x network is hugely improved (as well as EV-DO) - I also take issue with you using 1x fallback to imply that on the sprint network there is another way to make phone calls other than 1x - there is no VoLTE footprint on the sprint network.

In some ways I believe WiMax was the right choice technically, but the wrong choice politically. Sprint though didnt spend as much as you think building out the WiMax network.. clearwires network was built very much on the cheap, but still provided a remarkably resilient service.

How much do you think I think Sprint spent on WiMax? If it wasn't very much then why was their LTE network so shitty for so long?

I was a Sprint early adopter when they were the first ones to launch a nationwide CDMA network and stuck with them for years even when it became clear that 3G GSM was technically superior (no simultaneous voice and data over CDMA). But I finally had to switch when they dragged their heels on deploying 4G LTE.

WiMax is why sprint didn't have an LTE network for so long, my market (Seattle) didn't get LTE until Q2 2013 in any form, and it wasn't even fully turned up until like Q4 2014, if not into early 2015.

I don't have a dollar estimate though. I know that having to do site development for all those non-shared sites, was very very expensive. I also know that Sprint made other network upgrades too in that time.

I disagree with your assertion however that GSM is superior to CDMA - GSM has the advantage of being more extensible, because its a collection of loosely coupled network elements working in tandem, but in terms of network construction CDMA is much more forgiving for poor deployment engineering, and offers (in my opinion) much better audio quality compared to GSM. CDMA also has one more advantage for the future, you can build a market out on it, and put all the sites on a single CDMA carrier (frequency), allowing you to more aggressively reallocate your spectrum to other uses (like LTE).

The reasons Sprints LTE network sucks is spectrum, in most of their markets, they don't have enough spectrum in the right band (1900 MHz PCS Block) to cram enough bandwidth into a macro site, meaning you have to do things like densification, which Sprint is very well positioned for with spectrum, but poorly positioned for in customer counts - its this math that really leads me to believe that there is no room for 4 competitive national networks, there are just not enough customers to pay the bills and keep the lights on.

None of the efficiency of CDMA matters from a customer experience standpoint. If it couldn't do simultaneous voice and data then it was inferior technology.

When the Nextel merger was allowed a few years ago, mobile phone plan prices per minute in the US increased by about 50% within six months. Suddenly the aggressively priced plans came with 600 minutes. What a joke.

There is absolutely no way that the DOJ antitrust division should allow more consolidation in this space.

It's far better to have reasonable, meaningful antitrust enforcement than all the perverse scenarios we end up with when we allow a small number of firms to be overly entrenched.

I'd love to see a citation for this, because it doesnt jive with my own memory.

Nextel was not really competing on price.. at all. They were priced as a high tier carrier (like Verizon), they also had the smallest network footprint out of the national carriers at the time.

Nextel was very much competing on price though.

Nextel's selling point was that it allowed Nextel subscribers to call other Nextel subscribers(via "push to talk") without incurring per minute charges(this was in the days before unlimited plans.)

It was the phone of construction and maintenance crews since it was basically a "walkie talkie." It wasn't a premium brand at all.

>"I'd love to see a citation for this, because it doesnt jive with my own memory."

I think you mean "jibe with your memory":

http://the-penultimate-word.com/2012/06/23/jibe-or-jive-comm...

Yes, I did use it incorrectly.

But they were priced like a high-tier carrier, I was their customer at the time (and worked in the telecom industry), and while you got unlimited Direct Connect (and they also had plans for free incoming) you paid significantly more for it - but you also got better customer service too (something which Sprint badly munged in the merger). Also, pretty much every carrier in 2004-7 had free mobile to mobile minutes, so I don't think the free calling thing as big as you might make it out to be - the selling point of direct connect was that it was push to talk, and not a phone call.

The other thing I'll note, having been in over 1000 cell sites for each of the carriers, the Nextel sites were 'gold plated' build outs, they were very clearly not built on a budget (almost all indoor sites (mostly in andrews shelters), most sites had a generator on site, much more extensive grounding, higher performance power systems, over provisioned power and backhaul for future expansion) - the only other carrier that comes close to this is Verizon.

https://blogs.wsj.com/deals/2007/10/09/sprint-nextel-anatomy... https://www.scribd.com/doc/2621922/Sprint-Nextel-Merger-Anal...

After reading Tim Wu's "The Master Switch" a few years ago, this can only be bad for consumers leading to less choices in the marketplace. Just one step closer to returning to the monopoly days of Ma Bell.

More competition leads to better innovation and better pricing for consumers.

Agreed. However, and not to be political but a realist, if this is the only merger we see in the mobile providers in the next 4 years, I would consider it a win.

>Agreed. However, and not to be political but a realist, if this is the only merger we see in the mobile providers in the next 4 years, I would consider it a win

There are only 4 American non-virtual mobile providers.

If you expect 1 merger every 4 years, and there are only 4 providers, then you expect the entire market to re-monopolize in roughly a decade?

People forget that in America, there are only 4 major mobile network builders only.

I would consider it a win if we stayed at 4, or increased to 5+.

Anything else is a cataclysmic loss from my perspective.

Perhaps I'm mistaken but I think the parent was implying that the current political climate (Trump presidency) is going to encourage aggressive/expedient MnA activity, particularly in wireless/similar.

It depends, sometimes the product involves so much infrastructure that new competition is basically impossible. Water, sewage, electric, gas, internet, wireless internet all require very heavy investments in infrastructure that make it impossible for newcomers to come in and compete.

These are the things that should be classified as utilities and just operated by taxpayers, since everyone needs it and everyone benefits from it.

If they were regulated as utilities, maybe. But under the current political administration, that's not going to happen. We can't let them have it both ways - ideally there would be both competition and consumer protection regulations, but if one is certainly gone we can't compromise on the other.

How did four separate companies come into the market in the first place if "new competition is basically impossible?"

Many businesses are extremely infrastructure and capital intensive. Should the government also run shipping carriers like FedEx? What about retailers like Amazon?

When a new market comes about, there's enough profit to go around for everyone, but once the network effects kick in, then new competitors can't come in, and if they try to, existing ones can just lower their prices and drive them out. So barring any killer secret or patented exclusive technology, I don't see how its viable for a new company to come in, and that's why you haven't seen any.

When a limited public resource needs to be shared, such as wavelengths and pipes running to each home, then there must be some mechanism to allocate them fairly, and the most obvious solution to me seems to make it work like a utility, which it is.

Amazon and FedEx don't seem quite comparable since they're not quite using a shared public resource, or at least not one as constrained as wavelengths and wires/pipes to your home. I actually do wonder why UPS allowed FedEx to even exist, and why Sears/Walmart allowed Amazon to come in, but they're not quite utilities (yet) as in they're not the only vendor around.

I don't think it's quite as simple as keep the government out or have the government run it, but when markets don't have numerous buyers and sellers, they don't work, so you need to have something tip the scales to make it benefit society as a whole.

4 companies come into existence because historically the first US cell phone band was given in two parts, one to the local land line monopoly, one to someone else. All these were in small blocks of geographic area. The winners of this frequency started building cell towers and selling phones and quickly discovered their customers didn't like roaming changes. As a result they started consolidating: lots of little merges and buy outs. The land lines mostly became Verizon over the years as land line companies realized that running a cell phone network and land line are different enough that they couldn't do each effectively and so they spun the business off. In the mean time another block of frequencies was opened up and the result was 4 more companies got spectrum in each area (not the same areas of the first), and they too started merging. The big 4 are big because they have merged and/or bought enough spectrum to be essentially nationwide. There are some smaller regional companies left that are not nationwide.

well telekom/t-mobile bought itself in (more or less)

On the other side if for some reason Sprint and T-Mobile fail then Verizon/AT&T grasp an even stronger hold on the market.

T-Mobile has been having a fine job of bleeding Verizon and AT&T of subscribers.[1]

Keep in mind, T-Mobile also just won a ton of 600mhz spectrum that will allow them to plug a great deal of the underserved rural areas without having to densify the network. First bits of that should be online at the end of the year.

CapEx is where T-Mobile is putting its money, not buying satellite companies (DirecTV), launching a failed mobile television service (go90?), or buying crappy mexican carriers (mexico nextel/lusacell).

If T-Mobile were to merge with someone to their benefit, it would be Dish as they have a nationwide AWS-3 license and won a good chunk of 600mhz as well. They could also start to pull the bundle shit AT&T/Verizon do.

[1]http://nypost.com/2017/04/20/verizon-is-bleeding-subscribers...

It's funny, because I took away exactly the opposite from that book. It painted a very flattering picture of Theodore Vale and his "enlightened monopoly." After all, it was Ma Bell wired up the whole country and built a network that was, for its time, state-of-the-art.

"Enlightened monopolies" have historically been great for technology. Bell Labs created so much of the basic technology we depend on. Same thing for Xerox PARC (which was bankrolled by Xerox's copier patent monopoly). Maybe consumers would have paid somewhat less for phone service or copiers without those monopolies, but would the world have been better off? Conversely, competition has killed innovation in e.g. the PC market. With their razor-thin margins, Lenovo/HP/Acer/Dell/etc. have no money to innovate.

What makes you think that any of the wireless networks will act as a enlightened monopoly?

I'm more talking about "going back to Ma Bell" wouldn't be so bad, not saying that is what would happen with more consolidation.

I agree with the theory behind this, but if you talk to anyone who is working at Sprint, I think you'd start to realize that it is a zombie company at this point. In my opinion, Sprint is nothing more than uncollectable collateral for Softbank debt.

The best possible solution for consumers is to let T-mo acquire sprint & let Tint take a swing at things.

Its a tough call on 1 hand you have two carriers that have almost double the subscribers of the 3th and 4th carriers. So combining 3 and 4 would make it 3 big telcos competing for subscribers. On the other hand the users will loose a realistic choice from 4 to 3. Personally I wouldn't allow 1 or 2 to buy 3 or 4. But 3 or 4 combining I feel something people could live with.

While I agree that going from 4 to 3 isn't a good thing, realistically Sprint has been a viable choice for some time now. Terrible coverage and pathetic data speeds.

I agree that this is a tough call. One additional wrinkle is Comcast's impending entrance, as a Verizon reseller that will also be leveraging their own wifi network. Comcast will start out as a small player in cellular, but because they're a big company and will be leveraging a large existing wifi network they may be able to grow relatively quickly.

I am generally not a huge fan of Comcast [1], but in this case I welcome their entrance to the cellular market and look forward to seeing how this shakes things up.

1: https://medium.com/@nicklum/how-my-hatred-of-comcast-drove-m...

I dont think there is enough spectrum, capital or subscribers for 4 healthy cellular carrier in the united states.

This could be interesting for Google Fi, since they currently contract with both carriers to provide the majority of their coverage in the US.

If by interesting you mean 'well, I guess rates are going up.'

Would that be legal? I don't know the terminology or the regulations, but the only reason Fi exists is because the carriers are required to share their infrastructure.

And these regulations stipulate a price?

I don't know, but you'd think so. Otherwise the carriers would set their price at $100/MB or something ridiculous.

Should the fact that T-Mobile is GSM while Sprint is CDMA (as far as I recall) matter? Is 5G going to make that distinction go away (ignoring frequency issues, which I thought I read was still a concern)?

Sprint isn't CDMA-only any longer. They're running an LTE network.

CDMA as an access method is dying in the US. I'd expect it to be completely gone in a couple of years.

>Sprint isn't CDMA-only any longer.

They are for calls.

voLTE coming soon! (Maybe in 2025)

LTE has made the distinction go away. LTE is the next generation for both the 3GPP camp (GSM, UMTS/HSPA) and the 3GPP2 camp (CDMA, EVDO). From LTE onward, it's 3GPP only.

Yeah, except no. Sprint does all their calls over the CDMA network because they sucked too hard to launch voLTE (see: https://en.wikipedia.org/wiki/IP_Multimedia_Subsystem )

If you don't have IMS in place, it's going to be much harder to make the transition into a modern LTE network since you can't do calls over it.

Yes, I know. I was only replying to the second question of the parent really, pointing that there is no need to wait for 5G to see a 3GPP/3GPP2 merge.

The fact that Sprint has decided to keep their voice on CDMA for a while will not stop a merger like that IMHO. It will just mean more work for the merge (if it goes on).

Moving away from CDMA and supporting VoLTE is bound to happen even if Sprint stays solo. Other operators have plans to sunset CDMA (e.g. end 2019 for Verizon), and at some point it doesn't make sense to stay with a now legacy standard with no traction.

>Moving away from CDMA and supporting VoLTE is bound to happen even if Sprint stays solo. Other operators have plans to sunset CDMA (e.g. end 2019 for Verizon), and at some point it doesn't make sense to stay with a now legacy standard with no traction.

They backed themselves into a corner because they use unusual spectrum and don't have the funds to upgrade all their towers to modern technologies. It makes sense when you can't afford to upgrade.

T-Mobile has no plans to sunset GSM yet because it costs them very little to maintain, uses little spectrum, and allows legacy equipment to stay on the network. Some even predict they'll sunset WCDMA before GSM.

Sprint spent 5 years on the network vision project, it rolled LTE out to their entire footprint, and was an all but forklift upgrade to their field infrastructure. The only components left from the original site usually was the power cabinet, and the tower structure itself, everything else was new.

CDMA costs no more for sprint to keep on the air then GSM does for T-Mobile.

Don't fool yourself about LTE being compatible between carriers. They each implement custom authentication/authorization/signaling developed in the 90s still running on mainframes :/ Each carrier implements a portion of the LTE specification and adds/removes parts of it as they see fit

Got any sources to back this up? Because all of the gear carriers use is off the shell Ericsson/Siemens/Huawei stuff, and LTE mandates LDAP for subscriber information (most of them use OpenLDAP) - the only thing that really differs in their infrastructure is their billing software that manages subscriber data in the directory.

The only physical difference really is RF spectrum, and most phones released these days just cover every last LTE band their chipset possibly can (putting out tons of different versions is expensive, yo) - maybe limited to the specific bands used in the target region at worst.

In late 2014 bought an LG Optimus G E970 Unlocked 4G LTE phone, and it never connected with LTE on TMobile's network. So I had basically shit coverage except in major cities, but even in major cities it never used LTE.

Soon thereafter I got a Motola Moto G (XT1540) and even in podunk mountain towns I get LTE connections with the same Tmobile service.

I also tried that. I got a phone off contract for really cheap (I think it was Verizon) and then tried to port it to T-Mobile. My connection was really flaky. I finally filed a claim on my insurance for my phone and switched to a nexus 5x. That solved the majority of my problems. Also each network is divided between bands, and phones sometimes only focus on specific bands. It doesn't really make a difference if your phone was made for a specific carrier, but if you are trying to transfer networks your radio might not be able to fully take advantage of the new network.

The E970 only supports LTE bands 4, 5 and 17; T-Mobile uses 2, 4 and 12.

>Soon thereafter I got a Motola Moto G (XT1540) and even in podunk mountain towns I get LTE connections with the same Tmobile service.

Band 12 (700mhz) made a HUGE difference in rural coverage in areas it covers.

Speaking of proprietary standards and stuf... Band 12 was held up in device support by AT&T (and some hw vendors) that claimed channel 51 television stations would interfere with their network without a new signaling standard and filtering. So they conveniently created a proprietary band 17 that cut off the lower-A block of spectrum that T-Mobile and other rural carriers owned. This had a filter in hardware so no devices supported Band 12 until early 2016.

AT&T of course, helpfully said they'd move to band 12 now that things are resolved. Didn't want to look anti-competitive or anything....

I used to work for Sprint?

Former Sprint Alumnus here as well

T-Mobile has successfully managed a CDMA merger (MetroPCS) and subsequent re-farming of spectrum to their GSM-based LTE stack with minimal disruption. (they basically put the CDMA 1X bands into the HSPA guard bands, announced a sunset date, and closed it)

Where Sprint's merger would suck (amongst other things) is that they were wholly too incompetent to launch a modern IMS (voice-over-LTE) network where MetroPCS was able to do so.

I love my $3/month T-Mobile no-data "senior" plan with 30 minutes/texts a month + 10 cents for minute or text after that, which fits my needs exactly. As long as I can keep a similar plan, I'm happy. I think T-Mobile should be rewarded for being an innovator.

Ugh.

Say goodbye to the wonderful world of free international roaming :( Why do good american businesses always end up merging? Feels like you can never win as a consumer even if you stick with businesses you support.

I somewhere read that you need at least 4 big mobile operators to have real competition. Less that that and they behave like oligopoly/cartel

Hiw much is US left with?

Right now there are four major providers: Verizon, AT&T, T-Mobile, and Sprint. There are other, smaller providers (Boost, Virgin, etc.), but I believe those generally don't have their own networks but rather lease access from the big four.

Boost and Virgin are all MVNO's that use other networks (the big 4)

Smaller regional providers are ones like US Cellular, and really tiny ones like Indigo Wireless.

Actually, Boost and Virgin in the US are owned by Sprint:

https://en.wikipedia.org/wiki/Virgin_Mobile_USA

Depends on where, but it would mostly make for three national carriers: Verizon, Sprint, and AT&T.

Major players: AT&T Verizon T-Mobile/Sprint

Smaller players (most/all of whom piggyback on the major players' infrastructure): Metro PCS Boost Virgin Cricket

MetroPCS is a wholly owned subsidiary of T-Mobile.

Cricket is a wholly owned subsidiary of AT&T.

Boost and Virgin are MVNO's.

EDIT: I stand corrected, Boost/Virgin are owned by Sprint.

Boost and Virgin are owned by Sprint, as well.

Ah, so we're more screwed than I thought!

Canada has 3 big mobile operators, and there is zero competition.

In provinces that have local operators, they do compete.

The difference between markets is so large that people pretend to live in Manitoba or Saskatchewan just so they can have cheaper plans.

http://www.cbc.ca/news/technology/wireless-black-market-offe...

Yeah that situation is probably going away since MTS got oligobbled up by Bell. I guess Sasktel is still around...

I remember trying to pull off the Koodoo (Telus) trick some years ago claiming I was from Winnipeg and traveling (when I am actually American). :)

With Sprint gone #4 will be US Cellular which isn't exactly nationwide, but they're growing leaps and bounds.

Why was the title I used changed on this post? It was originally "Sprint Corp. has started preliminary talks to merge with T-Mobile US Inc.," which is literally the first sentence of the article....

Because that is not the title of the article.

From the guidelines [0] > please use the original title, unless it is misleading or linkbait.

[0] https://news.ycombinator.com/newsguidelines.html

When a title is misleading, the first sentence is often an excellent choice. But in this case it (i.e. the shortened version of it you used) was more misleading: it states a rumor as if it were a fact, where the original title includes "said".

Thanks, I appreciate the response.

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