2012
10.12

Just when we think we have this whole carrier race figured out, something like the past week and a half takes place where the future for two of the top-four in the United States suddenly seems up for grabs. While most of the market isn’t really discussing what proposed deals for both T-Mobile USA and Sprint could ultimately mean for data connections, I think it is fair to address the issue, knowing full well that data is driving any and all carrier plans in this connected world.

Coming off the heels of a proposed deal announced last week that would merge T-Mobile USA with MetroPCS, according to the parent companies of each, Deutsche Telekom, and MetroPCS Communications, respectively, we are now trying to digest the news that Japanese-based carrier Softbank is in discussions to acquire Sprint.

On the surface, the two deals are much bigger than M2M, particularly the Sprint proposal due simply to the fact that a Softbank deal could really introduce Sprint to more of an international stage. That, and the fact that Softbank is the third largest carrier in Japan, which means a financial injection that could help Sprint make further investments into all aspects of the business, M2M included.

As Robin Duke-Woolley of Beecham Research points out to me, Softbank has recently emerged as a leading player in the M2M market in Japan and he believes it seems likely that this recent high interest would be pursued also through the Sprint business.

Of course 4G is front and center in the discussion, and as Duke-Woolley says, the prospect of folding Clearwire (of which Sprint owns a large percentage) into the mix means connectivity options could increase beyond cellular. He raises an interesting point when he says that this may mean not only a stronger position on M2M and 4G/broadband, but also with regards to multiple connectivity plays.

But here is the million-dollar question: Could this ultimately create a more powerful competitor against the likes of AT&T and Verizon in the United States? Duke-Woolley certainly believes this would be the case. To me there is no doubt that it would be a tough road to toe for any carrier to compete against these two, but it’s not unthinkable. And that is the type of move that would certainly allow Sprint to compete on such a level.

And that is the idea, of course. When you get down to it, this is all about the idea to better compete. To me Sprint has always done a fine job in M2M but still always has that uphill battle to climb against the two big carriers. In fact, you could say in the M2M world, it is three carriers. When we came out with our whitepaper last year, ‘The Coming Age of M2M and Connected Devices’ in which we ranked the U.S., carriers based on data connections, it’s safe to say more than a few were surprised when we revealed that T-Mobile eked out ahead of Sprint in terms of data connections. Since that time, however, you cannot help but admire the charge Sprint has made in the market in landing some key data connections, most notably Chrysler’s Uconnect access.

Now you take a carrier like Softbank that comes from a part of the world where data connections are growing tremendously and you have something interesting coming together. Steve Hilton of Analysys Mason calls the Japanese market very “gadget-centric” with some big enterprises already deeply entrenched in the M2M world. I would tend to agree, having just completed our 2013 Sourcebook to see multiple analysts reports predicting big things for the Asia-Pacific region when it comes to M2M connections in the coming years.

While Hilton would expect Softbank to bring some interesting experiences from the Japanese market to the table, he also believes Sprint can really help Softbank. He points to Sprint’s desire for always wanting to be first-to-market with solutions as being an aid to help Softbank quickly launch new M2M solutions and drive additional product-based innovation.

But here is one of the most interesting discussion points around the proposed deal: The idea of maybe creating a multinational CDMA alliance. As Hilton points out, GSM operators are forming multi-national alliances all over the globe. He believes CDMA carriers are at a disadvantage in offering truly multinational M2M solutions. Could this deal prompt a start to a multinational CDMA M2M alliance? Hilton certainly raises an interesting question to ponder.

The multinational approach begins a whole new ballgame, and as M2M and connected devices take on a more international flavor this will ultimately play a huge role in fueling the market. The global alliances being formed aim to take on the likes of Vodafone, for instance, which has a huge multinational approach all its own.

In fact, this is where a company like Vodafone has really taken charge as of late. I like the evolution it has made in the past year from having a more horizontal-centric model to one that is more vertical-focused and solutions based, to include a service delivery platform that goes across different markets and application segments. The idea is to focus around application capabilities and to interface with enterprise applications. And this is just another good approach to servicing companies that wish to connect devices on a multinational level. 

Then you even have reports in the Wall Street Journal that suggest that if indeed Softbank buys into Sprint, the larger company could ultimately make a play to gobble up the merged T-Mobile/MetroPCS company, should that deal be completed.

It’s fun to think where the market for M2M and connected devices is headed. Without a doubt the carriers are the ones leading the direction, and it makes for interesting times when those that are chasing the top spots make bold efforts to change the landscape of the market. If and when these two deals come together it will reset the discussion and make some of these possibilities more reality. But until that time we can only ponder what it might all mean for data connections around the globe.

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