In a joint statement yesterday, Deutsche Telekom, the owner of T-Mobile USA, and MetroPCS, a budget carrier based in Texas, confirmed the two companies would merge under the T-Mobile banner. The merger would boost T-Mobile's subscriber count by 9.3 million subscribers, giving the carrier approximately 40 million subscribers in all. That's far behind the numbers claimed by Verizon and AT&T, but a boost nonetheless.
Now comes news that Deutsche Telekom isn't the only one interested in MetroPCS. According to BusinessWeek, rival Sprint is "crunching the numbers and holding talks with its advisers to weigh the feasibility of a higher offer" for MetroPCS. (Deutsche Telekom was reportedly ready to pay $1.5 billion for MetroPCS; MetroPCS would also have a 26 percent stake in the new company, Engadget says.)
Sprint reps have declined comment, and Businessweek attributes its report only to three anonymous sources with knowledge of the talks. Still, this seems like the real thing. So would a Sprint/MetroPCS merger make sense?
Kevin Fitchard of GigaOM isn't so sure. As Fitchard points out, both Sprint and MetroPCS operate networks with CDMA technology. However, "many of Metro’s 2G networks and the majority of its 4G LTE networks occupies the 1700 MHz/2100 MHz bands Advanced Wireless Service (AWS) band, to which Sprint is a complete stranger. Sure, spectrum is spectrum: Sprint could just expand into the new band. But it’s not simple."
Moreover – and this gets sticky, so bear with us – the MetroPCS network, Fitchard writes, currently comprises a "patchwork of licenses" that crisscross the country. "In order for Sprint to make full use of Metro’s LTE networks it would need to fill in those holes with new AWS [a type of spectrum band] airwaves," he writes. "But no one happens to be selling. The remaining AWS licenses have been locked up T-Mobile, Verizon Wireless, AT&T and Leap Wireless."
So yes, there are some potentially major compatibility issues.
As the Times notes, Sprint was close to a merger with MetroPCS earlier this year, but the Sprint board killed the deal in the 11th hour. There is some industry "skepticism," the Times reports, that Sprint would be able to pull it off this time around.
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