The carriers have been quiet recently. No major moves; very few press releases. This is about to change. When the T-Mobile/Sprint deal finally closes, many efforts and initiatives will become unfrozen, and the competitive chessboard will change.
Competition between the wireless carriers and the cable companies will have a long-term, ongoing impact. T-Mobile announced in March 2019 that “the New T-Mobile plans to cover more than half of U.S. zip codes by 2024 with the capacity for 9.5 million households to cut the cord.”
Two developments will underlie this change. First, the problem is not wireless speeds, as technologies of today – carrier aggregation, MIMO, and QAM – are already adequate for video and broadband. The issue is capacity. Sprint has a boatload of capacity in the 2.5 GHz band and has lacked the capital to adequately deploy it. The New T-Mobile will deploy it, and capacity for home and business internet will be adequate in areas that are not densely populated.
The second development is generational change, more of an evolution than a revolution. Linear channel programming – “57 Channels (And Nothin’ On)” per Bruce Springsteen – has ruled the roost for more than a generation. But younger consumers shun linear programming, and rely on over-the-top (OTT) services such as Netflix on Us. T-Mobile introduced Netflix on Us back in September 2017. And OTT services are springing up like kudzu. Hulu, Disney+, Peacock, YouTube TV, Apple TV+ -- the list goes on.
T-Mobile actually sells linear programming itself (apologies to Mr. Springsteen). The carrier bought Layer3 TV in 2017, and launched sales of linear TV services in eight markets, including top markets like New York, Los Angeles, and Chicago. It is sold in T-Mobile stores, although checks by Wave7 Research point to generally soft sales.
While the New T-Mobile ramps up, competition is a two-way street. Xfinity Mobile now has 2 million wireless subscribers, and Spectrum Mobile has 1.1 million wireless subscribers, while Altice Mobile has launched and is winning subscribers by the tens of thousands. Charter has expressed interest in gaining spectrum. The logic is clear. At some level of scale, wholesale arrangements make less financial sense, and cable companies will be increasingly incentivized to build out their own capacity. And they have the financial means to do so.
The number of wireless carrier stores is shrinking, as detailed in the Wave7 Door Report. The number of cable company stores selling wireless is growing.
It is worth noting that the 2018 variant of T-Mobile’s holiday video – reminiscent of the Grinch story – had three clueless foils being vanquished by “the Un-carrier” with the third resembling Comcast.
Other wireline providers
As the New T-Mobile sells connections to the home, how will AT&T and Verizon respond? As wireline carriers, AT&T and Verizon will also be on defense because they are competing for landline broadband service at most U.S. addresses.
When the deal is complete, multiple other initiatives will return to life, not unlike Saturday Night Live’s “Unfrozen Caveman Lawyer.”
We’ll see these initiatives play out in service offerings and marketing schemes. A T-Mobile Connect plan with 2GB of monthly data has been promised, pending deal closure. How will this impact prepaid competition?
T-Mobile eschews national retail, Costco aside. But Walmart and Best Buy feature Sprint, side by side with Verizon and AT&T. Will the New T-Mobile fill these slots?
Boost Mobile continues apace as a feisty, competitive brand, providing abundant value for the dollar across urban America. Under Dish management, will that change? Will Dish try to leverage Boost Mobile’s 6,000 stores for postpaid sales and satellite TV sales? And will sales of Xfinity Prepaid Internet be pulled from Boost Mobile stores?
When the T-Mobile/Sprint deal finally closes, a new chapter will open in competition between the wireless carriers and the cable companies. Multiple initiatives from the New T-Mobile will be afoot. Telecom competition is about to get very, very interesting.
Jeff Moore is Principal of Wave 7 Research, a wireless research firm that covers U.S. postpaid, prepaid, and smartphone competition. Jeff has 25 years of telecom industry experience, including 13 years of competitive intelligence work for Sprint. Follow him on Twitter @wave7jeff.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.