Sponsored By

5G Devices

Will the Sprint/T-Mobile merger accelerate demand for 5G devices in the US?

by Blogs & Opinions
Article Image

The eagerly anticipated merger between T-Mobile and Sprint has finally been approved by the FCC and the federal court. While initially there were concerns that the reduction of major US operators from four to three would stifle competition, the emergence of a fourth challenger brand, Dish, does look to have appeased the judge in this case.

The merger has fascinating implications for the 5G race in the US. AT&T and Verizon have both led the way in terms of nationwide 5G deployments. Each carrier is following its own strategy according to the spectrum each one possesses and the cities they choose to prioritize. As with all new mobile technology deployments, 5G availability has been gradual, but promises to build fast. This has had an impact on 5G device demand and could explain why the first 5G iPhones aren't expected to hit the US market (or indeed any global market) until later this year.

The spectrum each carrier possesses is also significant to the 5G deployment strategy each will follow, and the impact on 5G device demand. AT&T and Verizon are looking to combine high-band millimeter wave spectrum with the low-band spectrum they own and currently use for LTE. While this approach is valid for AT&T and Verizon, they will both be aware however, that the merger between T-Mobile and Sprint could provide a 5G deployment advantage to the combined entity. This is because T-Mobile and Sprint also own mid-range spectrum which can provide faster speeds over the low-band spectrum and cover a larger range than high-band spectrum. The argument is that both carriers have the full range of spectrum to deal with all eventualities when offering nationwide 5G coverage in urban and rural areas across the US.

Unsurprisingly, T-Mobile's outgoing CEO John Legere has been keen to talk up T-Mobile and Sprint's potential 5G advantage. The industry will form its own opinion on whether he is right or wrong. During the delays over the ratification of the potential merger, both T-Mobile and Sprint have fallen behind in the race for 5G deployment. Now that the deal is approved, the range of spectrum at T-Mobile and Sprint's disposal could enable them to accelerate a cost-effective route to nationwide 5G coverage.

What is clear to most industry commentators is that any 5G acceleration by T-Mobile and Sprint will be matched by both AT&T and Verizon as neither will want to surrender the lead initiative they have created against the new challenger. All three carriers will be layering 5G capabilities on top of existing 4G infrastructure while also investing in standalone 5G networks. Fully mobile, fully available 5G broadband will very soon be available to US. consumers.

This has huge implications for the US 5G device market as industry data suggests that US consumers have been holding onto their current devices for longer. Some have cited the high cost of new devices, some the limited difference in functionality between new models and those they are replacing, and others are simply waiting for nationwide 5G.

The bottom line is that pushing out device upgrade cycles from every two years to every three years does not serve the industry nor its consumers well. The secondary device market will continue to play a critical role in accelerating upgrades. The ability to release latent value in old devices to help subsidize new devices will be vital in maintaining 5G smartphone affordability for consumers, while delivering vital new revenues to carriers, retailers and OEMs. The trouble is that a used device loses a further 50% of its financial value if upgrades are extended from two to three years. Therefore, if the average upgrade cycle stretches to longer than two years, this will have a massive impact on the value that consumers can realize from these pre-owned devices and therefore the level of subsidy that can be offered towards new smartphones.

If T-Mobile's merger with Sprint can help accelerate 5G deployments, while ensuring AT&T and Verizon also remain focused on the prize, then affordable 5G devices will flood the US market, the secondary market can realize lucrative returns from devices traded in and everyone will win.

At the end of the day, US consumers don't care about spectrum or network architecture. They care about access to the fastest speeds and the highest capacity at the most affordable prices. The secondary device market is eagerly awaiting mainstream 5G service availability in order to be the recipients of the traded in, more affordable 3G and 4G LTE devices that can be utilized in emerging markets to connect the unconnected.

— Biju Nair, CEO, HYLA Mobile

Photo by unsplash-logoPaul Hanaoka

5G Newsletter Sign Up


Sign Up