The approval of the T-Mobile and Sprint merger has both near-term and long-term impacts for the market. The near-term impact is one of confusion, fear, uncertainty, and waiting. The long-term impacts revolve around change, integration, and the risk that when merged they may still fail to be as relevant as their two leading competitors, AT&T and Verizon. Both companies need to realize that their individual status quo failed, and neither’s individual strategy should be a continuing mantra. The biggest challenge is whether the two organizations can take their new-found size and capital resources to be a parity challenger to the market leaders, or will it become a better run, number three in the market.
Let’s look at the consumer impact, the business impact, and look at a business impact case study.
Consumers of T-Mobile and Sprint will experience confusion, fear, uncertainty, and a lot of waiting. T-Mobile and Sprint position themselves, and their customers (may be similar), as contrarians to the market leaders. This makes customers and employees passionate about their brand loyalty and increases the need for these two unique brands to find harmony in the combined company, not only for consumer, but for company leadership and all employees. It is a challenge inside and out.
The promise of more competition in the market will trail the waiting game of device, plans, and service assimilation across the companies. These are hard battle lines that in the most cross-needing mergers can be challenging. In T-Mobile and Sprint, there are two sets of employees passionate about their brand, and now accommodation and compromise will be stuck in their workflows for years to come.
Technically, consumers will have a transparent experience in the coming months, but in time, they too will find change as a result of the business compromises being made at the respective merger parties. Will all the T-Mobile Uncarrier partnerships survive? Will Sprint’s plans and pricing continue? And from a retail point of view, which stores will be consolidated in a changed retail footprint of the combined company?
For all the loyalists of consumers, one of the key questions may be, yellow or magenta? Or will they go merged to an orange, like AT&T’s legacy Cingular color?
The business impact is one of change and integration. The core technology partners of each company likely have a lot of overlap, so it is not a matter of technical achievement for the merger, but of the artistry of deploying, securing, and providing the services to the always-on marketplace. Agreement on the methods and tools is much harder than agreement on the goals, and the challenge of integrations lies in merging the methods and tools employees use. Passionate agreement rather than succumbed acceptance is hard to achieve.
Mid-market and enterprise businesses are used to the slow drive to change during integrations, either internally or from other vendors. These businesses understand that T-Mobile and Sprint’s technical realities will be far behind the marketing presentation of the combined company. The companies will be standing up significant teams to review the requirements, risks, and impacts to businesses, and these reviews are not answered in our immediate resolution expectations but measured in months and years. Some recent technology mergers struggle to integrate CRMs and pricing solutions well after a year of merger integration activity.
Of all the changes businesses will go through as a result of this merger, security continuity across the companies from private networks, to cloud provider cross-connects, to public safety requirements will be the paramount resolution and the biggest review for current and potential customers to be comfortable with.
Business Case Study:
The Public Safety market is one of critical importance to all providers such as the 2019 roll-out of FirstNet solutions, to alternate solutions like Verizon’s often rebranded but currently named Responder Core, and T-Mobile’s new Push to Talk solution. There are many aspects to the mobility needs of First Responders, but one of the growing needs is Push to Talk over Cellular. AT&T’s FirstNet solution and Verizon’s focus on Public Safety in its advertising makes this market an interesting one to evaluate through the lens of the T-Mobile and Sprint merger.
AT&T’s Enhanced PTT and Verizon’s PTT+ solutions are driven currently by Motorola’s Kodiak solution. Sprint had historically used ESChat’s PTT solution but has changed to the Kodiak platform as well. T-Mobile has been the slowest to enter this market and partnered recently with ESChat. So, here is a clear example of the product, partner, and technology assimilation and decisions to be made by the new company. Which technology partner do they align with? What do they do with the installed base of the losing technology partner? How do they make those customers whole? And in the case of First Responders, how does the new company ensure there isn’t any disruption of service during service migrations.
One of the interesting things we think about in technology is where the pendulum is in its technological swing. Technology is forever trying to improve, change, or eliminate its weak spot and where that spot is in a technology solution is always changing like a pendulum’s swing.
There has been much talk about network capacity as a result of the merger. How does the merger effect that capacity balance in the US? Who has what spectrum volume? But one of the highly under-represented discussions is device to tower connectivity. Be it 4G LTE or 5G technology, all the successes of spectrum and network backbone capacity starts with the tower connectivity from an individual device. Many years ago, mobility leaders sold off their company-owned cell towers to companies like Crown Castle and American Tower to generate cash for network core development and deployment. Now these towers, as proliferated as they appear across the cityscape and landscape, are the pinch point to mobile communications and are not in the hands of the mobility carriers. The limitations of connectivity and ingress and egress throughput of these towers are the capacity issues.
The concept of tower connectivity and limitations will be a key point of interest of ours as we attend IWCE 2020 in Las Vegas in April. For all the focus on Public Safety solutions, until device to tower reliable bandwidth, at peak periods, all the underlying solutions are suspect. Running speed tests while in a congested environment such as rush-hour traffic, a sporting event, or a parade, will highlight the concern, and remember the results you see are not in an emergent situation which would be significantly worse. We’ll be looking to understand how carriers are addressing tower accessibility rather than broadband capacity, priority, and preemption.
As T-Mobile and Sprint finalize the merger, we will be watching for the combined solution changes for consumers and businesses and pressure testing the reality of integration, over the potential of integration.
Author: Jim Caldwell, Director of Technology Research Fletcher/CSI