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Studies show Sprint and T-Mobile need to expand U.S. coverage

Maybe a merger of the 3rd and 4th largest U.S. carriers makes sense?

March 7, 2014 03:32 PM ET

Computerworld - Two major studies released this week of the nation's largest wireless networks put Verizon Wireless on top in nearly every technical network measurement, with AT&T close behind and Sprint and T-Mobile trailing.

The studies by JDPower and RootMetrics point to the nationwide wireless dominance of Verizon and AT&T, which serve a combined two-thirds of all subscribers.

The two studies might arguably give federal regulators a technology rationale to allow Sprint, the third-largest U.S. wireless carrier, to merge with fourth-place T-Mobile, as Sprint's parent company SoftBank of Japan clearly desires.

A profile of SoftBank Chief Executive Masayoshi Son in the Wall Street Journal reports that he is working on a bid for T-Mobile despite strong opposition by U.S. antitrust officials, who are concerned with reduced competition. It was the Justice Department that rejected AT&T's offer to buy T-Mobile in late 2012.

The question regulators might want to weigh is whether combining T-Mobile and Sprint would enhance wireless network coverage of the combined entity -- not just in the months after the two would merge, but in a few years, if that new entity could grow profitable and use cash to buy up new spectrum. Today, both companies have customers in many of the same cities and need to reach beyond their existing footprint, which more spectrum could make possible. Two spectrum auctions are scheduled in the next two years, one in September for what's called high-frequency AWS-3, and another later on for low-frequency 600 MHz currently allocated for broadcast TV.

The timing might not be right for T-Mobile and Sprint. It could take months to win what would likely be a protracted merger review from federal officials and then still bid in those two auctions. However, additional spectrum outside of major cities is where Sprint and T-Mobile need improvement, which is borne out by the JD Power and RootMetrics results.

As good as T-Mobile has been in attracting customers with no contract plans amid the attention-getting tweets and press conference remarks of its CEO John Legere, it has a similar problem faced by Sprint: Namely, it is hard to travel nationwide and get consistent network performance over either T-Mobile or Sprint. Sometimes it is hard to get consistent performance from either carrier when traveling from a city center to the suburbs or inside of large steel buildings.

JD Power and RootMetrics both pointed to a strong broad, nationwide network by Verizon, with AT&T in second and Sprint and T-Mobile both trailing.

In the JD Power study, based on a survey of 25,142 wireless customers from July to December 2013, Verizon held the top ranking in all six regions nationally with AT&T consistently in second place, and with T-Mobile in third place in four of six regions and Sprint in third place in two of the six regions. The regions were Northeast, Mid-Atlantic, Southeast, North Central, Southwest and West.

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