reached an agreement to merge its T-Mobile USA unit with prepaid-only regional operator MetroPCS. The deal will give T-Mobile 9 million more customers and the spectrum it needs to create a fast, robust LTE network.
After the deal was announced, Bloomberg, citing unnamed sources, reported that Sprint Nextel was considering making a counter offer for MetroPCS or even purchasing the new combined T-Mobile plus MetroPCS.
I do like Sprint, they've been the most aggressive and innovative of the four major carriers in the prepaid space. Sprint pioneered unlimited monthly plans with Boost Mobile and low cost unlimited data with Virgin Mobile.
But for the sake of consumers, I hope that MetroPCS merges with T-Mobile and not Sprint. I want to see both T-Mobile and Sprint survive as independent operators. Having four carriers, two GSM and two CDMA, encourages competition and competition drives innovation and helps keep pricing in check.
If Sprint gets MetroPCS, T-Mobile will be in an even weaker competitive position than they are now, way behind Sprint number of customers and lacking the spectrum to field a competitive LTE network. T-Mobile needs MetroPCS' spectrum, Sprint doesn't, it will have plenty once it replaces iDEN with LTE next year.
It's especially important that the US has a least two national GSM operators. GSM, the cellular technology used by AT&T and T-Mobile is more Bring Your Own Device friendly and thus customer friendly than Sprint and Verizon's CDMA.
There's nothing technologically wrong with CDMA, the problem is the way phones are activated on CDMA networks in North America. Unlike GSM, CDMA doesn't use SIM cards and users can't easily change phones by swapping SIMs. To switch phones on a CDMA network you have to give your carrier the phone's Electronic Serial Number (ESN). The carrier looks up the ESN in a database and determines if it's one of their phones and if it's allowed on your rate plan. That gives the carrier absolute control over which phones can be used on which plans. Sprint uses that power to keep you from using a smart phone on Boost pay as you go or a Sprint or Verizon phone on Boost or Virgin.
CDMA is going away, slowly. LTE is part of the GSM family and LTE phones from Verizon and AT&T do use SIM cards and you can swap SIMs between LTE phones. (In a move that makes no sense to consumers, Sprint is using embedded non-removable SIMs in their LTE phones.) But there are very few prepaid LTE phones and none that cost less than $100. It will be years before prepaid LTE is ubiquitous and you see $20 prepaid LTE phones hanging on the pegs at Walmart.
T-Mobile needs MetroPCS to survive and provide a GSM alternative to AT&T. The FTC blocked the AT&T/T-Mobile merger in part because it would have given AT&T a monopoly in providing GSM in the US. If Sprint gets MetroPCS, I believe that T-Mobile will also eventually be acquired and AT&T will end up with a GSM monopoly, which will not be a good thing for customers and international visitors.