Thursday, August 23, 2012

Sprint & T-Mobile, wake up and smell the network sharing!

When Vodafone and O2 recently announced the merger of their 2G & 3G networks in the UK, as well as collaboration on 4G build-out, it meant that four out of five carriers in the UK are now part of network sharing JVs. This is part of an ongoing trend among wireless carriers in Europe and elsewhere, but so far, this trend has not reached the major carriers in the US.

It is time that the US carriers take a second look at this strategic option because it provides many benefits to the carriers, as well as consumers, and is a clear sign that carriers are aligning themselves to face the future of wireless communications.

Network sharing provides many benefits to carriers. Some are obvious, such as lower costs and more efficient spectrum use which would increase the flexibility of the sharing carriers. 

Less obvious are the more esoteric benefits from network sharing such as less internal and external carrier focus on the network, and more focus on the actual offering to their customers.

Network sharing would also be unlikely to stoke concern at the FCC or other agencies because the carriers would still operate separately.

Among the most likely candidates in the US wireless carrier market to join networks are Sprint, T-Mobile and possibly Clearwire. A network sharing between Sprint and T-Mobile combined with a T-Mobile buy-out of the Cable ownership in Clearwire would create an opportunity to build a network that could compete with AT&T and Verizon, provide a clear and obvious 4G path for both operators and solve the Clearwire headache for Sprint.

A deal like this would create one of the strongest spectrum positions for future data growth in the US as well as an opportunity for Sprint to shed another legacy network technology (CDMA) in favor of 4G and HSPA, cutting costs and increasing service flexibility.

While a deal like this still appears very unlikely based on the decision making track-record of the Sprint board and management as well as the very complex relations within the Clearwire ownership group, it could instantly create strategic opportunities for the carriers involved, with few regulatory risks.

If T-Mobile and Sprint think that they can go on doing business as usual and be able to compete with AT&T and Verizon they will be very disappointed. They need to change the game in order to be able to apply any kind of competitive pressure on the big two.

No comments:

Post a Comment