FierceWireless columnist and industry analyst Mark Lowenstein helps us kick off 2019 with his assessment of the key strategic priorities for the leading U.S. wireless operators. Yesterday’s column focused on Verizon and AT&T, while today’s piece discusses T-Mobile, Sprint, and cable's wireless strategy.
Things have been comparatively quiet on the Un-carrier front in recent months, at least as far major product announcements are concerned. But TMO has been pretty heads-down on three fronts: getting the Sprint deal done; deploying its 600 MHz spectrum; and developing/executing on its plan for Layer3 TV.
Clearly, much hinges on the "if" and "when" of the Sprint deal getting through. Both companies have had to develop plans for flying together or remaining solo. And given the uncertainty of the timing (the government shutdown is not helping matters), if the deal gets approved during the first half of 2019, the rest of the year will be more focused on reorgs, putting a plan in place to eliminate network redundancies, and complying with what are likely to be some conditions attached to the merger.
T-Mobile’s “multi-spectrum” approach is the pillar of its strategy to differentiate on 5G. In the early days, this will look more like AT&T’s 5G Evolution, in what will be a rather generous Venn diagram of gigabit LTE and early 5G services. Further than that, much hinges on whether T-Mobile gets access to Sprint’s 2.5 GHz spectrum. With those assets, T-Mobile has indicated plans to offer a fixed wireless service—which will be very interesting given Verizon’s 5G Home rollout, and other FWA initiatives.
I also expect T-Mobile to use the Layer3 TV service to showcase 5G & Extended Range LTE. The company’s anticipated service enters an already crowded landscape, but it will be interesting to see if and exactly how they’re able to pull off an OTT TV service on a wireless network. T-Mobile’s opportunity to truly disrupt here is leveraging the full breadth of network capacity it will have if the Sprint deal gets done, where we can actually see the possibility of carrying that much video over a wireless network.
One final strategic priority for T-Mobile in 2019 is building its enterprise business. T-Mobile has historically not been at the table outside of the consumer/small business segments. But “New T-Mobile” plans to be much more competitive in the enterprise. To do so, however, requires building a significant sales and marketing organization—which will get a jump start if T-Mobile is able to leverage Sprint’s much larger enterprise group.
Finally, if the Sprint deal gets done, the combined companies’ MVNO/flank brand/prepaid strategy will need to undergo a strategic review. There will be overlap and channel conflict between Metro PCS, Virgin, Boost, and some of others in a combined entity. On the other hand, there will be opportunities to do something bigger and better with cable, building on Sprint’s arrangement with Altice and the growing disenchantment that Comcast and Charter have with Verizon’s terms.
Sprint is towing a delicate line—certainly some priorities have an eye toward the T-Mobile deal closing, while also planning for the possibility of continuing on a standalone basis. Encouragingly, the network spending plan continues to move forward.
A key priority is laying the foundation for 5G, especially at the 2.5 GHz band (Sprint has not been an active participant in the mmWave spectrum auctions). This involves rolling out 2.5 GHz to the majority of cell sites, densifying the network with small cells, and deploying massive MIMO. With all these cylinders firing, Sprint will be able to offer a pretty compelling urban wireless service, either mobile or some flavor of FWA. The millions of installed Magic Boxes are an asset that can be leveraged there as well.
Sprint’s share in the enterprise has been a distant third to AT&T and Verizon for some time. But the operator does have enterprise products and a fairly significant enterprise sales force, which will be important assets to New T-Mobile.
The Altice wireless service, using Sprint’s network, will be likely be launching during the first half of 2019. This is more of a partnership model than that between Comcast/Charter and Verizon. I believe that over the next couple of years, Sprint (and/or New T-Mobile) could become the anchor of an evolved cable wireless service, where the entities work out an arrangement that makes sense for all parties.
More broadly, Sprint will need to assess its wholesale/MVNO strategy, especially in a New T-Mobile clothing. There will need to be some rationalization of the various brands, especially if Metro PCS is thrown into the mix.
A final priority is less sexy, but foundational to Sprint’s survival as a company. Sprint’s back office architecture and systems have fallen behind the competition. This is hindering the introduction of new services and is certainly an impediment to Sprint’s future viability as a standalone operator. With new CFO Andrew Davies in place, there has certainly a focus on prioritizing which of these digital transformations move forward, and which get put on hold pending the merger.
Cable’s efforts in wireless started to bear fruit in 2018. Even though they have yet to materially affect the business of the major wireless operators, cable did account for 19% of industry net adds through the first three quarters of 2018. During 2019, Altice will launch its service, under an MVNO arrangement with Sprint.
There are some important strategic questions facing cable as they contemplate the next phase of their wireless strategy. First, if Comcast and Charter want to ramp significantly, they will need a more favorable economic arrangement than the one they currently have with Verizon—a scenario that isn’t very likely as Verizon continues to attack their broadband business.
The second key question is whether cable decides to be less dependent on wholesale deals with wireless operators by bidding on spectrum themselves. CBRS could provide an interesting option, with the twin potential benefit of MVNO offload and alternative to in-building Wi-Fi. Having some position in the in-building market could also give cable another option for their enterprise business, which has become a nice growth sector over the past couple of years.
At some point, if cable stays in the wireless business, they are going to need a 5G strategy. It’s not clear that the current MVNO arrangements allow them to resell 5G, and I can envision a scenario whereby cable is relegated to second-class 4G citizen by their host wireless operator. At some point in the early 2020s, cable will need a new strategic approach: closer deal with a host wireless operator; some hybrid facilities/wholesale arrangement; acquisition; or partnership with a new player, such as (ironically) DISH.
Mark Lowenstein, a leading industry analyst, consultant, and commentator, is managing director of Mobile Ecosystem. Click here to subscribe to his free Lens on Wireless monthly newsletter, or follow him on Twitter at @marklowenstein.
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.