Today T-Mobile and MetroPCS announced that they are now one company. The new company operates under the name, T-Mobile US, Inc and trades on the New York Stock exchange using the ticker symbol TMUS. There were the usual press releases and speeches promising that the merger would be a good thing for the companies and their investors and customers. But was does it really mean for MetroPCS and T-Mobile's prepaid customers?
Initially very little will change. The MetroPCS brand is being retained and MetroPCS stores, plans and pricing will stay the same for now. The same goes for T-Mobile's prepaid customers as well as those of T-Mobile's subsidiary brand GoSmart and T-Mobile MVNOs like PTel.
According to T-Mobile, sometime this year MetroPCS customers with LTE phones will be able to use the nationwide LTE network that T-Mobile has started rolling out. That will mean faster data in more locations.
The real changes will begin early next year. That's when T-Mobile will start switching MetroPCS's 2G CDMA and 3G EVDO technology to the 2G GSM and 3G EVDO standards that T-Mobile uses. The switchover will be gradual. The chart below was part of a presentation T-Mobile made to the SEC last fall. It shows MetroPCS CDMA and EVDO service (the gray bars) lasting until mid-2015.
If T-Mobile is able to hold to this aggressive schedule most MetroPCS customers will need new phones by the middle of 2015. T-Mobile is counting on the fact that customers tend to upgrade their phones every couple of years. To speed the process up, I expect that T-Mobile will eventually start offering free phones and steep phone discounts to MetroPCS customers who switch to a GSM phone. T-Mobile expects to begin offering GSM phones in MetroPCS stores starting within the next three months
None of MetroPCS's phones can use the GSM or HSPA+ technology that Metro is switching to. Many of Metro's phones do support LTE which isn't going away. However T-Mobile currently only uses LTE for data, not voice.
MetroPCS does have several phones that support Voice over LTE (VoLTE), including the LG Connect, LG Spirit, Huawei Premia and Samsung Galaxy Admire 4G. T-Mobile hasn't said whether it will continue VoLTE on their network past 2015. Even if T-Mobile adopts VoLTE it's unlikely that T-Mobile will deploy LTE in rural areas anytime soon. So at best a MetroPCS legacy VoLTE phone will only work in urban areas once the CDMA to GSM migration is complete.
Other than having to replace their phones within the next two years, MetroPCS customers should see only positive changes as a result of the merger. When T-Mobile opens up its LTE network to them in a few months, MetroPCS customers with LTE phones will experience faster data speeds and more LTE coverage. The switch to GSM will mean being able to use any T-Mobile or unlocked GSM phone and being able to easily switch phones by swapping the SIM cards. Customers who travel internationally will no longer need a separate GSM phone for travel.
MetroPCS was an aggressive competitor and a major force in driving mobile service pricing down. The merger makes the US prepaid market a little less competitive and some analysts think that could lead to price increases. I don't see that happening. Sprint and T-Mobile are desparate to gain market share and are using prepaid as a major weapon to get their subscriber numbers up. There are signs that Verizon and AT&T are finally starting to take prepaid seriously and there are more lean and hungry prepaid MVNOs than ever before. Mobile prices, especially for unlimited plans and pay as you go data, have been falling for years. One less competitor may so slow the downward pricing trend but I don't think it will stop it.
Sources: T-Mobile, MetroPCS, SEC, PCMag