Sprint is Rumored to Acquire T-Mobile

There are reports that Sprint is looking into acquiring T-Mobile. 

In my opinion, Sprint is going to end up as WorldCom did. In fact, Sprint and WorldCom were going to merge, which was announced in 1999. In 2000, the merger was barred by the feds.

I used to work for Sprint back in the day of Sprint ION. That was one cool idea – the first commercially launched VoIP/VoATM service for small business and residential customers. The project ended in a spectacular bust, with Sprint losing billions of dollars. They spent about $100,000 per residential customer in capital expenditures, and ended up killing the program in 2001, with only about 3500 customers being recruited. Sprint had spent close to $5 billion on that project when they killed it.

Their cellular business has always been a disaster, even back 12 years ago when I worked for them, it was one of the worst cell phone services – Sprint PCS. They were one of the biggest long-distance providers in the US, but that business started collapsing in 2000, and by now there’s almost no profit left to be made in long distance. I remember in 2003 Sprint was still trying to charge 20 cents per minute for long distance calls within the US when others were already charging pennies per minute. Sprint coined the “pin-drop” moniker to try to bamboozle their customers into paying many more times for their long-distance calls than the competitors charged. Sprint knew back then that they were in trouble. Even though they are the ILEC in some areas, where they own the wires in the ground and are still making some money on DS1, DS3, PRIs, etc., this field is quite a bit more competitive now than it was a decade ago. Therefore, the revenue is slowing down and profitability is collapsing from that business as well.

Don’t forget the Wi-Max fiasco with Sprint heavily investing in Clearwire and then acquiring Clear to become Sprint’s 4G technology. All of the money spent on Clearwire/Clear was wasted as well.

Sprint never had great engineers working for them. Sprint has always had huge aspirations, and could borrow billions for all these nebulous ideas, but none of the projects amounted to anything that Sprint could draw a profit from. Verizon is run by geniuses compared to Sprint’s management.

So, this acquisition of T-Mobile by Sprint is one disaster company trying to broaden its market share by buying another underwhelming company, not to mention that the two companies run on incompatible technologies – CDMA vs GSM. Maybe Sprint wants to buy T-Mobile for their LTE deployment because Sprint is really behind on 4G due to the Wi-Max detour they took for over 5 years. Perhaps they want T-Mobile’s frequencies and/or towers. In any case, Sprint is up to its neck in debt, which keeps mounting with Sprint making the same stupid operational blunders time and again. They don’t have money to buy T-Mobile, but they are going to finance this deal by assuming even more debt on their books.

WorldCom was doing exactly the same thing until it went bust in 2002, and this is exactly where Sprint is heading. Next thing we may hear is that Sprint’s executives are on trial – you never know. Perhaps Sprint should shut down their customer-facing business altogether, and be a wholesale reseller for various MVNOs and CLECs.

I’ve Paid My Dues – Why Are You Charging Me the Same Monthly Fee? 

In the Fall of 2009, we got our first iPhones – iPhone 3GS. Two years later, when our contract with AT&T was over, and the iPhone 4S had just been released, we were happy to upgrade our phones to iPhone 4S, and had to sign another two-year contract. However, this time around, in the Fall of 2013, even though there are two types of new iPhones that have just been released – iPhone 5S and iPhone 5C – we are no longer compelled to upgrade our phones. Our iPhones 4S are still functioning as they did in 2011, and the hardware is good enough to run all modern apps without a hitch. Additionally, the rumor mill has it that there going to be an iPhone model released in 2014 with a wider screen, so why lock ourselves into another two-year contract?

Those were my thoughts when I called AT&T the other day to see what my options were. I told them I didn’t want to upgrade our phones yet, and that my contract had just expired. Then, I asked what my options were. They told me that I could continue using their service on a month-to-month basis. When I asked them about the monthly service fee, they told me that it would stay the same. 

Let me start with gently informing the reader that this is a complete rip-off. In the US, when one gets a new iPhone on a contract-based plan, the initial price that one pays to get a phone is heavily subsidized by the cellular carrier. To recoup the price paid to Apple (or any other phone manufacturer) by the wireless carrier, they design a monthly-payment plan and add that price to the price of the actual service that they provide. This is why we arrive at the exorbitant monthly fees to the north of $175 for a two-phone account. We end up paying hundreds of dollars more in two years for the smartphones than we would have paid if we had bought unsubsidized phones bypassing the cellular carriers. This is how the rest of the world buys phones. They pay the full price upfront, but then have a low monthly fee and no contract. The phones they buy are not locked, so people can switch carriers very easily. Unfortunately, in the US even if one buys an unsubsidized phone (for example from an Apple store), one cannot avoid paying the same exorbitant monthly fee as one would be paying had one bought a subsidized version of the same phone from a cellular carrier. This applies to all major carriers except for T-Mobile, which allows you to buy an unsubsidized (and unlocked) smartphone and get a lower monthly fee, or alternatively, buy a subsidized version of the same phone and have a higher monthly fee. This is exactly the way that subsidies provided by cellular carriers should be handled, but that is not the case with the major three US cellular carriers: Verizon, AT&T, and Sprint.

So, what do I do now? Paying AT&T the same exorbitant monthly fee while using my old iPhones 4S does not make much sense. I am satisfied with the service that I receive from AT&T, and I’m not planning to switch to any other major carrier, so I don’t really care about being locked into a contract for another two years? Why not just get new iPhones and sell mine on eBay for about $450 each? It would actually pay for the new iPhones, and I will continue paying the same monthly service fee.

The answer to this question is as follows. When you get a subsidized phone from a US cellular carrier, the phone comes locked. Actually, it’s not that simple – if you buy a Verizon iPhone 5S or 5C, the GSM hardware in the iPhone is unlocked, but the CDMA hardware (the system used by Verizon) is locked to Verizon. Therefore, you can actually get an AT&T (or T-Mobile) SIM card that has a plan associated with it, stick it in a Verizon iPhone, and get service on AT&T (or T-Mobile). Unfortunately, iPhones purchased from (and subsidized by) AT&T are locked, so you can’t use an AT&T iPhone 5S or 5C on T-Mobile. This is not so bad if you are satisfied with the AT&T service and never travel overseas, but if you do travel, then you will have to roam on your AT&T phone in a foreign country, which will cost you a fortune. There are two ways to avoid this: wait for your two-year contract to complete and then ask AT&T to unlock your iPhone, or jailbreak your iPhone and use a jailbroken app to unlock it. The latter option is not yet available for iPhone 5S or 5C (at the time of this writing), and so if I sell my iPhones 4S and get iPhones 5S or 5C, I will seriously affect my ability to use my iPhones abroad.

What other options do I have to keep my existing iPhones 4S but not have to pay exorbitant monthly fees to AT&T? I could try a pre-paid plan with some no-name reseller, but all the reviews I have read so far left me with an impression that the service I would receive from a pre-paid reseller would not be worth the savings. I do want to save on my monthly cellular bill, but I’m not prepared to receive substandard service in return.

There is one interesting option that I am currently trying out. The gist of this is to get a data-only plan (or a data plan with a low monthly allotment of voice minutes) and use a VoIP service over data, which is similar to what Americans have been doing for close to a decade now with Vonage and other VoIP offerings (including ones from TV cable operators). In fact, it is possible to create a plan that will allow you to have one account that covers your home number and several mobile numbers on the same plan. You can even get free minutes on all inbound calls to any of those numbers, and then buy one pool of outgoing minutes (including unlimited outgoing minutes for $20/month) to be shared among all numbers on the account – you home number, and your mobile numbers.

What you will need to do is:

1. Get a data-only plan. AT&T has one for tablets at $30/month for 3GB of data. T-Mobile has one for smartphones at $30/month for 5GB of data and 100 voice minutes.

2. Get a VoIP account at one of the companies that allow to bring your own device. You can try Callcentric or a similar VoIP provider.

3. Create several “extensions” on your account, and register each “extension” to the phone number that you can either obtain from this VoIP provider or port to this VoIP provider.

4. Purchase a VoIP app. Groundwire by Acrobits is a good choice.

5. Spent a few hours on setting everything up. If you are technically inclined and understand VoIP and SIP, you can get yourself a setup that allows you to make and receive unlimited calls on your home phone and your mobile phones.

Your investments into creating such a setup will run about $25-$75 to pay setup fees and purchase the VoIP app. You can get your monthly bill covering two mobile phones (with large data allotments and unlimited voice minutes) and even a home phone with unlimited minutes for under $90/month.