Here we go again. The U.S. carrier pot has once again been stirred up this week with talk of acquisition rumors. And while we all get prepared to break out the debates around whether such a move is good/bad, let’s take a step back and examine the big picture for a moment.
By now you have certainly read news from The Wall Street Journal that came out over the weekend suggesting Sprint executives could be working towards a bid to acquire T-Mobile. Shades of déjà vu certainly are at play here—it was just a few years back that AT&T tried (and ultimately fell short) in its attempt to acquire its GSM counterpart.
It’s hard to speculate on a rumor, and I am certainly not going to comment as to whether or not this is indeed true. But what I do want to address is the fact such talk, whether speculation or fact, starts up the debate about why such moves are good/bad for the market. Those on the con side obviously hold close the argument around competition, i.e., consolidation ultimately leaves the customer with fewer options. While those in the pro camp talk about a need for spectrum, the debate about 2G/3G/4G, and more; and how the only way for carriers to continue delivering relevant services to clients into the future is to find more spectrum, e.g., through acquisition.
Let’s focus in on that ‘G’ debate specifically. Of course any time we talk about carriers the talk instantly turns to how bigger, better, stronger mobile operators move us all closer to that perceived utopia of 4G LTE. But I think that should a Sprint/T-Mobile marriage ultimately ensue it could put a great deal of focus on 2G.
Think about this for a moment. Which carrier is most often associated with the rally cry around keeping 2G connections strong in the world of connected devices/M2M? T-Mobile. And earlier this year Sprint made a lot of press around its partnership with module maker u-blox for long-term CDMA network support. With the news, Sprint made a big statement that it is indeed committed to the 2G CDMA network for M2M customers and that it expects to maintain its 2G network “for the long term.”
Spend any time with John Horn, president of RacoWireless, and you realize that not only does he want his company to be “the easiest to do business with” but that the 2G opportunities in M2M remain very much alive and well. It is no coincidence that his company formed a service agreement with Sprint earlier this year, to complement its long-standing relationship with T-Mobile. It all falls under the umbrella that 2G opportunities remain vibrant in M2M and those that are willing to make the commitments could be in for a long prosperous run serving customers who crave this connection speed.
Naturally this all rivals carriers like AT&T, which in a June 2012 filing with the Securities and Exchange Commission, said it would work to redeploy spectrum to support 3G and 4G networks and that, “We expect to fully discontinue service on our 2G networks by approximately January 1, 2017.”
Such topics get the market riled up around the “2G Sunset” and how the industry must prepare. In a whitepaper published by Aeris Communications, the company called the sunset “a major issue for the M2M industry because such large numbers of GSM/GPRS devices have been deployed.” Aeris cites numbers in its report, saying that to maintain service, an estimated 10 to 12 million 2G GSM devices must be replaced in a little more than three years.
Going on, Aeris suggests that if you consider there to be 200 “working days a year” that would leave the industry with a task of replacing more than 17,000 devices per day. The assessments made by Aeris go much deeper, and I would encourage you to check out more here.
As customers you must all prepare. Could that be migrating to 3G HSPA or the big leap to 4G LTE? Or perhaps it’s a move to 2G CDMA (2G GSM is the focus on the “sunset” after all). Perhaps a Sprint/T-Mobile combo makes the migration that much easier and cost effective. Or perhaps it’s all speculation at this point and/or any proposition never gets far along in the process.
In any sense, it’s all about the network and even chatter about carrier consolidation simply stirs up the pot and reminds us all about that certain sunset on the horizon.