So T-Mobile and MetroPCS merged after AT&T’s failed takeover attempt of T-Mobile.  SoftBank’s bid to take over 80% of Sprint got the stamp of approval from shareholders.  Dish Network is searching for a wireless carrier to merge/buy out so it can get into the game.  Verizon Wireless’ parent Vodofone is looking for options.  And AT&T…well who knows?  So what does it all mean?

The first thing we need to look at is what carriers will be left in the market place.  After all the merger dust settles there will still be Verizon Wireless, AT&T, Sprint, T-Mobile, Cricket Wireless (Leap), and US Cellular.  I’ve only included the national carriers and excluded Tracfone because they are a virtual operator of 4 of the 6 carriers I just mentioned and do not have their own network capacity.  There are, however, also some very formidable regional carriers that can carry their own weight in the markets they serve, including C-Spire, Cincinnati Bell, Bluegrass Cellular, and nTelos.  If we start to factor in all of the virtual network operators we end up with over 50 wireless providers in the U.S.  So in the end consumers have plenty of choices to fit their wireless needs.

With so many wireless carriers, most of which offering the same/similar types of service, there is an inevitable contraction in the number of carriers.  Many of the smaller virtual network operators will silently fade into the abyss of wireless forums.  Some regional carriers may merge with others.  Leaving the tier 1 national players to control the space.  But it is the changes in the tier 1 category that will truly affect the landscape.  At the scale of an AT&T or Sprint it becomes difficult to convince 30,000,000 people to come to your service.  Barring another iPhone-esque event, instant carrier growth is highly unlikely.

So how can a Sprint expect to compete with AT&T or T-Mobile to compete with Verizon Wireless?  The traditional business model of filling a niche is not an option when you’re talking about a U.S. market that has 110% wireless adoption penetration.  All that is left is consolidation.  But who will consolidate with whom?  Regulators made it clear that AT&T could not buy T-Mobile for fear that there would be a super-carrier, nay, a wireless monopolist.  So if we take AT&T and Verizon Wireless off the table, that leaves Sprint, T-Mobile, U.S. Cellular, and Cricket.  The smart money would have Sprint buying both Cricket and U.S. Cellular.  The combination of the 3 carriers would put Sprint easily at 65 million subscribers, a strong third place to AT&T.  Cricket already has a wholesale contract with Sprint plus plenty of spectrum for Sprint to re-farm for use with LTE.  And U.S. Cellular just exited some midwest markets, selling 585,000 customers to Sprint, showing that they needed to focus their efforts on markets they can compete in.  USC also has spectrum to spare as well as LTE service for Sprint to acquire.  Also, with Sprint’s growing prepaid brands Boost Mobile and Virgin Mobile, the addition of Cricket makes the prepaid group stronger and solidifies Sprints hold of the no-contract segment.

That leaves T-Mobile to fend for itself…. Deutsche Telecom has made it clear that they want out of the U.S. market.  And Dish Network just swung and missed at purchasing Sprint and Clearwire.  So if Dish Network were to make that $25 Billion offer for T-Mo that they made for Sprint, they might get a positive reaction from DT.  This would give Dish the added spectrum they’re looking for plus the opportunity to enter the wireless space.  I’m sure Mr. Egren and his team have grand plans once they get into the wireless business.  The possibilities of that kind of relationship are endless, including subsidized streaming service across devices, extending the advertising opportunity across multiple platforms, etc.

So what happens in the end?  In the end there will be still be 4 national carriers, Verizon Wireless, AT&T, Sprint, and Dish Mobile.  The regionals will still exist out of necessity and because they are entrenched within their respective markets.  And there will be the staple MVNO’s that aren’t going anywhere because either they’ve built up a strong following or they’ve been around for so long, aka Tracfone, PagePlus (now a Tracfone brand), PlatinumTel, AirVoice, Ting, and Credo Mobile.

Disagree? Ok, well I never said I could predict the future…

3 thoughts on “Evolution of the Wireless Landscape

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