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Comment by Xuzz | Hacker News Reader

I asked this on Twitter, but perhaps I'll get better responses here:

T-mobile is dying; it has no plans for the future. They don't have the iPhone (and are unlikely to get it, due to working on a different set of 3G frequencies). They don't have any plans for LTE deployment, unlike AT&T, Verizon, and Sprint. Their parent company wants to get rid of them.

To me, this just seems like the government has done very little here for consumers, they will still likely end up with only 2-3 carriers. Why is it better for consumers if T-mobile just dies out rather than is bought to improve AT&T? (Also, many people think AT&T has a worse network than Verizon. Wouldn't this deal have, then, increased competition?)

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To answer your question:

T-Mobile has a tiny bit more spectrum than Sprint and it's all standard (PCS/AWS) spectrum. T-Mobile has a decently standard GSM/UMTS stack. Sprint is running two non-integrated networks.

On a per-customer basis, T-Mobile isn't so bad on spectrum. 33.7M customers with 50MHz of spectrum. That's actually a better ratio than any other carrier. For comparison

    * T-Mobile: 1.48MHz/million customers
    * Sprint: 0.92MHz/million customers (excluding 100MHz+ via Clearwire)
    * AT&T: 0.93MHz/million customers (including pending 6MHz gain from Qualcomm)
    * Verizon: 0.82MHz/million customers*

* The Verizon numbers exclude substantial purchases recently announced which will probably increase Verizon's spectrum depth by nearly a third.

So, T-Mobile isn't in a terrible spectrum position and the spectrum AT&T has to give them as part of the break-up will only help that. Likewise, $3B is a lot of money that could go toward an LTE rollout.

In terms of LTE, Sprint didn't have an LTE plan until mid-October of this year and doesn't expect to have any LTE devices until the third quarter of 2012. If T-Mobile put together an LTE plan today, they wouldn't be behind the times. I mean, they'd be behind Verizon and AT&T, but they could roll out as fast as Sprint (which just raised $4B for its LTE rollout - barely more than the $3B in cash that T-Mobile is getting as a breakup fee). Plus, LTE in America is a bit ahead of the curve. Mostly that's because carriers in other countries can stretch HSPA+ (as T-Mobile is doing) to provide much higher speeds than 3G.*

So, T-Mobile does have the ability to move forward if DT wants to. It has the spectrum, it has $3B in new cash, and it's profitable (which Sprint isn't). I think DT wants to see T-Mobile a bit more successful if it is to stay on in the US, but it is profitable. If T-Mobile can forge a joint venture with Dish Networks (which is interested) it would gain 40MHz of unused spectrum from Dish and might have a partner who would promote the service to its customers. We'll see. I'm definitely not saying you're wrong. T-Mobile needs a bit of energy and momentum to start gaining customers again. However, I think T-Mobile has the assets needed to keep going.

The one area where I think you're spot on is in terms of competition with Verizon. When AT&T Wireless and Cingular merged, it increased competition. Verizon had been allowed to merge together greater assets than its competitors previously. Allowing AT&T Wireless and Cingular to merge meant that there was a real, nationwide competitor to Verizon with low-frequency spectrum that provided good coverage. Right now, AT&T and Verizon have decently similar assets (although the Alltel merger gave Verizon a slight edge). AT&T has a greater number of data customers which puts a bit of a strain on their network, but they should be able to manage it now-a-days (and the data shows that AT&T has a better dropped call/blocked call rate than Sprint, although slightly worse than Verizon's, and significantly faster data speeds). If the FCC allows Verizon to gobble up the licenses from Cox, Comcast, Time Warner, Leap, and others, it will again create an imbalance that will see Verizon having superior assets that make it hard for other carriers.

* Before someone says, "but HSPA+ is offering 3-6Mbps while LTE is offering 20Mbps" I want to explain a bit. HSPA+ is backward compatible with HSPA and UMTS. So, when AT&T upgrades its UMTS network to HSPA+, there are tens of millions of voice and data customers on it. By contrast, the LTE networks we've seen have only had a couple million customers on them. As more customers use it, the spectrum will get more crowded and speeds will likely drop as a result. Likewise, there are many different HSPA+ versions. AT&T is running HSPA+ at 21Mbps while T-Mobile has it up to 42Mbps in some areas. However, even HSPA+ 14.4 has been showing average real-world speeds on the iPhone 4S of 3.2Mbps (http://www.macrumors.com/2011/11/18/nationwide-study-shows-a...). That's on a loaded network using 5MHz channels. The LTE speeds we're seeing are on a near-empty network using 10MHz channels (from launch to the end of the third quarter, Verizon has sold less than 3M LTE devices). None of this is to say that HSPA+ is superior, just that we're seeing LTE showing better numbers than it would under the same load HSPA+ networks are experiencing and that means the gap is actually smaller and explains how overseas carriers are using HSPA+ in the interim to offer customers a better experience without the cost of LTE (and it is a cost to the consumer as well as one can see from the price of HSPA+ devices against the cost of LTE devices).

How does Sprint's "Network Vision" impact the MHz/million figures? Can we expect to see improvements there? (Excluding challenges due to backhaul off the towers....)

It doesn't. Sprint isn't getting new spectrum. Depending on how things fare with Clearwire, it might gain some additional capacity, but it looks like Sprint is going to be mostly alone for LTE. Clearwire will help a bit, but it isn't going to be as close as it was in the past. Sprint's current plan is to build its own LTE network and give Clearwire money for the use of Clearwire's network in high-traffic areas.

It's hard to say what Sprint's "network vision" is. Sprint announced it in December 2010 as integrating their SMR, PCS and Clearwire's spectrum and services. Since then, Sprint and Clearwire have gone their own way and come back a bit, but Clearwire will be building its own network. Sprint's efficiency will increase when it gets rid of iDEN and refarms that spectrum for CDMA, but it doesn't change the MHz/million figure. In fact, it mostly means that Sprint is running a less efficient network right now than the MHz/million would suggest.

I like that Sprint has a concrete plan to roll out LTE and has raised the money to do it. However, it's going to be challenging. AT&T and Verizon have a decent head start. If you're wondering, "will Sprint be able to become big like Verizon and AT&T?" the answer is no. Sprint doesn't have the spectrum nor the capital right now.

That said, there's a lot of value in smaller carriers. Sometimes people think that "competition" is about winning. It isn't (at least in terms of economics). Having smaller carriers around can mean better pricing for customers whose usage patterns differ, a different mix of services that match different people in different ways, etc. Millions of people have chosen Sprint and T-Mobile. As long as those companies continue to make their customers happy (and can find a way to be profitable), that works. I think Sprint's future won't be as big as AT&T or Verizon's, but I think their commitment to LTE will help them continue to make their customer base happy if they're able to accomplish it in a timely manner.

EDIT: I should note that Sprint is in around the same range as AT&T and Verizon in terms of MHz/million customers. There are some economies of scale there due to how wideband channels fit into the spectrum, but Sprint isn't unduly spectrum poor. I believe they have 10MHz of PCS adjacent spectrum they aren't using right now that they're targeting for their initial LTE rollout. As customers start getting LTE equipped devices, more spectrum can be allocated to LTE use.

Two years ago, I was a Sprint customer. I left with the Nexus One.

At the time, in CDMA land, because Sprint had a roaming agreement with Verizon, and Sprint did not bill me for roaming on Verizon, my (voice) network was Sprint + Verizon. Which was actually pretty darn great.

Is any of that possible or likely to happen with LTE?

Where Sprint or any carrier, should it sign the right papers, can allow customers to roam off their LTE network onto another one (and the phones will work just fine?)

T-mobile, of which I am a customer, offers something that none of the large US carriers offer - a monthly discount if you own your own phone rather than purchasing a subsidized phone (of course it is not the easiest thing to find on their website).

A quick search reveals news that indicates that one is required to enter into a two-year contract to receive this discounted rate.

That's fair enough. The normal on-contract rate is subsidizing the $300+ discount on your phone. If there's no phone to subsidize, it's logical that the subsidy gets bounced back to you.

This may have changed, but that wasn't the case when I bought my G2 and switched to a 500 min/unlimited data plan about a year ago.

Some big assumptions in this post:

1. Assumption #1: T-mobile "has no plans for the future."

You can't possibly know that. If anything, the negotiated spectrum transfer and payout on deal failure is a small indication that they do have some plans for the future.

2. Assumption #2: Any carrier without the iPhone is doomed to failure.

Metro PCS does not offer the iPhone. I don't think they are going away anytime soon.

3. Assumption #3: The government needs to plan for cellular market consolidation in order to benefit the consumers.

Actually, cellular market consolidation is not good for the consumers. Consumers benefit the most when there's more competition. Having more carriers leads to more competition and gives consumers lower prices and better service -- it's simple economics.

My point here is that T-mobile, as it currently is, just isn't competition for AT&T and Verizon anyway.

1. The only thin I can find at all on Google related to T-mobile building is this post, suggesting they need a partner to start working on LTE in — get this — 2015: http://www.slashgear.com/t-mobile-lte-plans-suggest-spectrum...

2. It's certainly helpful; I don't believe this alone would doom a carrier, but without other benefits (Metro PCS, your example, has very cheap pre-paid plans and is really a different service than AT&T, Verizon, or T-mobile) this does hurt them. Just look at the millions of customers that switched to AT&T from 2007 to 2010 before Verizon got the iPhone.

3. I didn't say and, in fact, do not believe that "consolidation" will necessarily benefit customers. My only belief here is that that the government did here — keep a independent — is not useful because T-mobile is simply not competition. If T-mobile isn't actually competition in the future for AT&T or Verizon, how does it help for it to exist or be broken up among other companies?

(I do, however, believe it is possible (definitely not guaranteed, but possible!) that this move, in fact, could help consumers: AT&T currently has the generally accepted worst coverage, and so if they improved that by acquiring T-mobile, Verizon now would have both a slower network and a worse telephone network, and would need to improve to compete with AT&T's faster speeds and now-better coverage.)

1. See mdasen's comment in this thread about the LTE rollout. TMo may not be as far behind compared to others.

2. You're assuming that unlike Metro PCS, TMo has no "other benefits". Not sure if that's true. Personally, I prefer TMo because they offer decent service at a good price -- at least in my area. I also like that they're not evil -- they're not actively trying to squeeze every last penny out of customers like some of the others companies I dealt with. Certainly many other TMo customers must see some value in TMO and their offerings, otherwise they'd not be customers and TMo would not be as large as it is.

3. TMo is competition to the largest players -- in the markets where TMo operates. If I didn't have TMo available in my market I'd opt for something else -- probably Verizon. So at least as far as I am concerned, in this market TMo (small co) is competition to Verizon (large co). The fact that TMo does not compete in as many markets as some of the other guys does not mean they are less meaningful competition in the markets where they do operate.

Also, there are some contradictions in your post.. one paragraph states you don't want consolidation, but the one immediately after has you pondering how to consolidate TMo and ATT to improve ATT's service. Reading between the lines (I apologize if I'm misrepresenting your position) it seems you believe that ATT is the "worthy" competitor based on size. My opinion is that it doesn't have to be a game of giants at the expense of the small players. Small players can survive as well in niches. Metro PCS / TMo are examples.

I'm saying that I don't necessarily want consolidation, but I don't have anything against it: I can see potential scenarios where each option here could both help and hurt consumers.

We'll see about LTE. From my understanding — and the fact that they recently tried to sell the company — Deutsche Telekom isn't interested in transforming T-mobile USA into a competitive player. We'll see, maybe with an extra $4B from AT&T they'll re-evaluate and attempt to stay competitive, but otherwise I can't see a disinterested parent company want to invest heavily in LTE rollout.

And, once every other carrier and most phones are on LTE (I'd say maybe 2013 or 2014, although I don't have any backing for that timeline), then T-mobile USA will be uncompetitive (without LTE). I've used LTE, and I don't think T-mobile can compete with ~4Mbps real-world speeds when I've (already!) used LTE at up to ~25Mbps, even if the prices are cheaper.

And I completely agree that small players can survive (I'd even say that T-mobile USA has a distinct possibility to survive and thrive), but in their current situation, I feel that it would take more than just not being purchased for that to happen: more interest from their parent company, an agressive (and probably expensive) LTE rollout, and maybe even the iPhone would be necessary to keep them competitive in a few years.

I think a lot of people said the same thing when the banks started merging, too. And look where that got the US economy because of "too big too fail banks".

I would've preferred capitalism followed its natural course, and let one or two smaller banks die, than to get in a situation where a handful of huge banks can wipe out the entire economy if they are allowed to fail.

The thing about capitalism is that it needs to let parts of it fail, so it can thrive overall and in the long term.

Also, I don't think T-mobile will disappear. Worst case scenario it will be bought by an international carrier, but at a smaller price.

I would've preferred capitalism followed its natural course, and let one or two smaller banks die, than to get in a situation where a handful of huge banks can wipe out the entire economy if they are allowed to fail.

I'm curious what makes you think one outcome is the "natural course" of capitalism, while the other is not.

When one outcome is influenced by market forces and the other is not.

What's a non-market force?

Government

Gravity?

There has to be the risk of failure in the market. Otherwise a lot of money would be wasted and invested badly. Failure gives the incentive to be efficient and to do the job properly.

If you remove the existence of failure by saving them everytime, you teach them that doing the actions that led to failure are not that bad, and they can continue to do them, as long as it makes the people at the top wealthy.

There is really no such thing as too big to fail. In the case of the "financial crisis", the few failing banks should have been allowed to fail. Some were and the sky did not fall. There were plenty of sound ones who were not involved in the nonsense. The same can be said for the automotive industry. The bailouts were nothing more than a transfer of wealth orchestrated by the government. From the middle class and the wealthy, to the incompetent clowns in the government and private industry who created the mess in the first place.

There is absolutely nothing worse for the people at large than the collusion between government and the private enterprise. It is very simply the definition of corruption. Read the Wealth of Nations by Adam Smith for more love.

As for AT&T and T-Mobile, the government created the problem in the first place. By selling spectrum, they necessitate the existence of large massive companies in the space. They're the only ones who can afford the spectrum. If the government instead chose to keep the spectrum open, like say the way they do for WiFi, you would literally be able to start your own cellphone company in your garage ... and there would naturally be quite a bit more players in the space. They would still need to cooperate to make things work, but having more choices is the goal here.

If you look hard enough, behind every market problem and failure, you'll find a fat bureaucrat and fat "business man" working together to keep each other fat and the rest of us miserable.

Not sure how we got onto the financial crisis, but the idea that the banking system was outright saved is a fallacy. Tons of banks failed and continue to fail:

http://www.fdic.gov/bank/individual/failed/banklist.html

The big banks were provided funds from the Fed-- whose job it is to lend money in such crises--the majority of which was paid back and has returned a tidy profit to the Treasury. The public perception of events is out of whack on this one.

As far as the OP, there's a long way to go before the US is Canada as far as crappy cell service provision, but this is a step in the wrong direction.

Edit: "this" referring to T-Mobile having a negative future outlook.

The money was 'paid back' by banks who got zero-interest loans from the Fed discount window. This way, they get to say "Hey, we paid back TARP", the Obama administration gets to say "The bailout wasn't a boondoggle", and the banks also borrow money from the government for free (from the discount window) and then loan it back to the government at 2% (by buying 10-year T-Bills.) Wholesale rate arbitrage for doing nothing. Must be nice to be "too big to fail".

> There is really no such thing as too big to fail.

Yes, actually there is. Too big to fail means that when an institution fails, its default will cause a cascade failure of other institutions relying on it -- and still other institutions relying on those -- including otherwise healthy ones whose only mistake was being integrated with the world economy.

This can ripple through the whole economy and work in tandem with the Paradox of Deleveraging to effectively cause a GDP death spiral. (See also: Great Depression.)

The more accurate term would be Too Big To LET Fail * , but the acronym starts getting unwieldy.

* [Or The #### Will Really Hit The Fan]

T-mobile's US assets are worth a significant amount, so they're unlikely to simply shutter and go away. Think about this regulatory hurdle not as dooming T-mobile, so much as sending their assets to some company other than AT&T.

I wasn't upset at all about the merger (quite the contrary), but I don't think the outcome is as bad as you say it is.

Other carriers, Leap Wireless, Cricket, ... seem to want Tmo's assets, and ... AT&T had offered to sell it to them. http://www.mobileburn.com/17966/news/att-reportedly-having-d...

But if AT&T doesn't buy Tmo, one of these might merge instead with Tmo or buy those assets directly.

At other times, there has been speculation (or even work done) on a Sprint / Tmo merger which would bring two weak players together but also allow for more direct competition between the GSM and CDMA world with an LTE path going forward.

They use completely different technologies with incompatible handsets and cell towers, so a Sprint/T-Mo merger is likely to be worth considerably less together than separate.

Actually in the past 4 days or so, there have been reports that T-Mobile is "refarming" some of its towers and there is now 3G support for iPhones in some parts of the northwest.

http://www.tmonews.com/2011/12/unlocked-iphone-spotted-runni...

Also the iPhone 4s is a quad-GSM phone with HSPA+ support and so could conceivably, if I just mix and match acronyms, get 14M to 42M down on Tmo's network.

I am not sure of the magic behind this, but I believe it's the same as bringing over a quad band GSM Galaxy Nexus from Canada/Europe and putting it on Tmo's network, with the exception that the Nexus is carrier unlocked and the iPhone 4s is not. (I believe.)

You can actually buy the iPhone 4s unlocked straight from the Apple website. I just did last week as an xmas gift for my dad, with the intention of trying it out with his current account on Cincinnati Bell Wireless.

I believe they use the same frequencies as T-Mobile.

Ah ha. Thank you.

galaxy nexus is penta-band, which is why it works on tmo.

Yup, and which is why the iPhone won't work on T-Mobile. No support for the frequency. Maybe they have a bit of spectrum in a market or two, but there is no way they will ever get full 3G coverage in the frequency that the GSM iPhone expects.

P, or Bryan,

Would one or both of you expand on your responses. I don't quite get it yet. (Also, lots of googling finds lots of "quad band Galaxy Nexus" references.)

Thanks,

All of the frequencies that cellphones operate (well at least 3G and 4G, I'm not 100% sure on GSM/CDMA frequencies) on are regulated (unlike the bands that WiFi networks work on which are unregulated). Phones need to be able to deal with these frequencies. They need to have antennas that can pick up those frequencies, as well as chips that can handle them.

This is the reason that you can use a AT&T GSM phone on T-Mobile's network, but not be able to access the 3G or 4G portions of the network (basically only ever be able to use Edge). Those phones aren't built to be able to receive/transmit in the bands that T-Mobile's towers are using for 3G and/or 4G.

Talking about quad-band and penta-band phones are talking about newer generation phones that can operate on more bands than just the ones used be a specific carrier's network. Note that the bands used can vary between countries, etc. Just because a country is using GSM for all of their cell networks doesn't mean that their 3G or 4G bands are the same as the one that your phone knows how to deal with.

Someone else can probably follow up with some Wikipedia links. Specifically there is a table in Wikipedia listing carriers from a huge list of countries and the bands that they are using.

http://en.wikipedia.org/wiki/UMTS_frequency_bands#UMTS-FDD (scroll up slightly from there to see the five "major" UMTS bands identified.

NOTE: GSM/EDGE band support is different from UMTS band support. Except where explicitly stated, the rest of this is about UMTS bands.

Band IV is T-Mobile USA's high speed data band.

Bands II and V are AT&T's high speed data bands.

The Galaxy Nexus has bands I, II, IV, V, VIII http://www.phonearena.com/phones/Samsung-GALAXY-Nexus_id5595

iPhones (the GSM versions, not the Verizon versions) omit band IV, so they won't work on T-Mobile USA's UMTS data network.

T-mobile phones typically (and varyingly) omit bands II, V, and/or VIII.

I suggest searching phonearena for a handful of modern phones and comparing the supported GSM (& EDGE) bands (where most/all smartphones are quad-band) and UMTS bands (where supported bands are much more varying).

Thank you!

T-Mobile is still a very valuable target for a buyout- just not from one of the existing cellphone companies.

I would not be at all surprised if someone like Time Warner Cable (or Dish, as the TechCrunch article mentions) took an interest. Verizon can offer a "quad-play" internet/home phone/cellphone/TV plan, and I suspect their competition would love to do the same.

Also, don't forget that T-Mobile just earned $4bn from AT&T. That can do them a lot of favours.

DT the parent company gets the $4B, not T-mobile USA. (which is actually $3B + spectrum)

Presumably T-Mobile USA gets the spectrum, right? What would DT do with random spectrum in the USA outside of T-Mobile?

sell it or lease it.

In terms of selling or leasing, isn't the spectrum most valuable when combined with all of the other spectrum T-Mobile USA owns?

It might be a long shot, but I would not be surprised if Google bought T-Mobile. Maybe that's just wishful thinking though.

I, for one, love T-Mobile and would be very very disappointed if they died. They have a 4G network that I'm making use of right now. I can use Android's built-in WiFi hotspot at no additional cost. And they are the only phone company that I know of that discounts plan prices for out-of-contract customers:

http://deals.t-mobile.com/no-contract-plan

Prior to their purchase of Motorola, and I'd have laughed at the idea. Now, it at least seems possible. Does T-Mo have any meaningful wireless patents?

it's unlikely to be about the patents as much as it is to be about actually operating a carrier.

You'll get your service for free, with an Android phone, but have to endure ads.

whether or not they have patents, they do have spectrum, which is valuable by itself from my understanding.

You are predicting the future as a starting point for your argument. But you are basing that on assumption that may not be true in the future: that the iPhone will continue to be important, and that LTE will be a selling point for customers.

As a T-Mobile customer, I follow iPhone news pretty closely and there's been so many reports of T-Mo reps claiming to get the iPhone. I mean, they already have unlocked ones running under them at 2G speeds. But, they're also upgrading to HSPA+ 42 Mbps (instead of LTE) and in the process supposedly changing the bands to iPhone 3G compatible.

Of course, this doesn't change that they are dying. They've seen positive trends from their new value plans and hopefully upcoming Droid + Ice Cream sandwich launches lets them catch up.

T-Mobile will never have Droid phones. Droid is a marketing brand that is used by Verizon to sell android phones.

On the other hand they were the first Network in the US to carry Android phones.

http://en.wikipedia.org/wiki/Android_(operating_system)

What makes you think that one of the biggest telecom conglomerate with backing of the German government will disappear?

I think it is good that this deal did not go through, good for the consumers. Because T-Mobile as well as AT&T have to stay creative to keep customers happy and prices down. In general I think there is to much concentration of power into single large cooperations anyway.

I heard from a T-Mobile engineer, back when this whole thing started, that it didn't significantly change their network engineering plans for the next couple of years. Indeed, they were planning on expanding regardless. Again, just what I heard.

I don't know why Deutsche Telekom has decided it doesn't want to invest more money in T-Mobile, but some other foreign wireless operator might be up for it. Carlos Slim's América Móbil has already dipped its toes in the U.S. market with its TracFone subsidiary and might conceivably be interested in T-Mobile for a low enough price.

Reducing the number of carriers reduces the amount of competition. Improving the quality of AT&Ts network has nothing to do with increasing competition amongst carriers.

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