If all goes according to Deutsche Telekom’s plan, T-Mobile USA and MetroPCS(s pcs) will become one some time in the second quarter of 2013. A lot has to happen between now and then: the MetroPCS board needs to vote and the FCC and US Department of Justice need to weigh in. But this is no AT&T-Mo.
This deal purportedly makes a struggling nationwide operator more competitive, rather than eliminate a nationwide competitor from the market. This is the kind of merger regulators want to encourage. The other thing that could potential muck up the deal is a counter bid for MetroPCS from Sprint(s s). But so far the company has held off, and at the moment Sprint seems to have its hands full dealing with its own potential acquirer Softbank.
Assuming this deal gets blessed, what implications does the combined company – which I shall refer to as “T-Metro” for the rest of this post — have for its customers? On day one of the merger’s closing, subscribers won’t notice anything at all. T-Metro will maintain both networks and doesn’t plan to interrupt services in any way. But soon after, customers on both networks will start seeing gradual changes to services, devices and coverage. Let’s break them down.
If you’re a MetroPCS subscriber
MetroPCS customers should expect to see the biggest changes for the simple reason that their networks and devices they use will simply cease to function in a two-to-three year period. By the end of 2015, T-Metro plans to remove all traces of Metro’s CDMA and LTE infrastructure from the grid, and it plans to replace every CDMA phone with a new HSPA device.
But T-Mobile CTO Neville Ray pledged to make transition as seamless and painless as possible. MetroPCS customers can keep using their current CDMA phones all the way into 2015, which is the final sunset date for Metro’s systems. T-Metro may even continue to sell new CDMA phones for a short period while it gets its device portfolio and distribution chain in order, Neville Ray.
But not too long after closing, customers browsing in MetroPCS stores and on its Website will notice those old CDMA handsets disappearing, replaced by the GSM/HSPA available to T-Mobile’s customers. There will be a lag between the merger’s finalization and the deployment of the unified T-Metro LTE network, which will roll out in the latter half of 2013 and in 2014. But once those new 4G systems are up, those new handsets will include LTE radios as well.
At that point, MetroPCS customers with CDMA-LTE phones should also experience a big boost in both 4G speeds and coverage. MetroPCS customers will get a firmware update on their phones that will allow them to access the new T-Metro LTE network. That means they will eventually see 4G connections nationwide, instead of merely in MetroPCS’s 14-city footprint. And as T-Metro shoehorns Metro’s 4G spectrum into its combined super-LTE network, Metro customers will start seeing speed increases as much as four times greater than what they experience today.
Sometime in 2015, customers holding onto their CDMA phones will have to relinquish them, but T-Mobile’s Ray doesn’t expect to many of those customers to remain. More than 60 percent of Metro subscribers upgrade to new handsets each year. And once you factor in the normal churn of departing customers, T-Metro should have replaced the large majority of its CDMA install base by the time the shutdown countdown reaches zero. The remainder should start receiving offers from T-Metro for free or discounted devices to entice them over to the new network.
It’s not all roses, though. T-Metro will start shutting down portions of the CDMA capacity in 2014, long before the official sunset date. That means customers will have to vie with one another for fewer 2G signals to place their voice calls. T-Metro, however, plans to mitigate this by coordinating the shut down of 2G capacity with the migration of customers off the network – fewer CDMA devices mean fewer overall calls that need to be supported.
Finally, the single big casualty from the merger may be Metro’s voice-over-LTE service. Ray said T-Metro would support the mobile VoIP service until the last MetroPCS handset is switched off, but hasn’t decided whether it will continue its aggressive VoLTE plans.
MetroPCS plans to put VoLTE to more handsets and roll out the service to its entire coverage footprint in the next few months, so by the time the merger closes it could have an extensive VoLTE subscriber base. T-Mobile has promised that VoLTE will work on its LTE networks as well, expanding the service’s coverage nationwide. But what will most likely happen is T-Metro will wind VoLTE down naturally as customers switch to GSM/HSPA handsets. A year or two later, T-Metro will launch its own unified VoLTE platform available to all of the carriers’ customers.
If you’re a T-Mobile subscriber
For most T-Mobile customers the creation of T-Metro will mean business as usual. They’ll keep the same handsets, voice and data plans and coverage. Their device selection won’t change, but there may be one immediate benefit to customers in service plan choice. CEO John Legere has said the new T-Metro would maintain the prepaid contract-free unlimited data plans that are MetroPCS’s specialty.
Currently T-Mobile offers truly unlimited data tiers for its contract customers, but all of its prepaid plans have soft caps (if you go over your monthly data allotments, connections are throttled down to 2G speeds). Such an unlimited prepaid option would be a boon for month-to-month customers and the growing number of subscribers that bring their own unlocked smartphones to T-Mobile’s network.
T-Mobile customers who happen to live in a MetroPCS market will eventually get access that to a big fat 4G pipe. Combining the two carriers’ 1700 MHz/2100 MHz Advanced Wireless Service (AWS) airwaves will allow T-Metro to deploy an LTE network with as much as 40 MHz of capacity in 10 of the largest markets in the US, including New York City, Los Angeles, Dallas, Boston and San Francisco. To put that in perspective, Verizon(s vz)(s vod) and AT&T currently use 20 MHz of spectrum for their LTE networks.
If you happen to live in a non-MetroPCS market like Chicago or Seattle, the new T-Metro will still give you LTE just not in such plentiful bandwidths. The above map from Mosaik Solutions shows just where MetroPCS owns spectrum. In general, the darker the color in a city, the more powerful the future 4G network will be.
Unfortunately, there is one immediate benefit to the merger that the two carriers won’t take advantage of. The day the deal closes in the spring, T-Metro will own a 14-market LTE footprint long before T-Mobile’s own LTE network is complete. Earlier, I speculated that would be welcome news for T-Mo customers who bring their own unlocked LTE-capable devices like the iPhone 5. T-Mobile has confirmed, however, that those customers won’t get access to MetroPCS’s 4G networks.
T-Mobile’s LTE systems will already be under construction at that point, but there will still be a lag – anywhere from three months to well over a year – before the unified LTE network rolls out in individual markets. So if you live in New York or San Francisco and buy an unlocked iPhone 5 for use on T-Mobile’s network, expect to wait a bit longer before that LTE icon pops up on your notification bar.
Question links image courtesy Flickr user Oberazzi.