T-Mobile uses FWA and digital divide as latest Sprint merger justification

T-Mobile US has announced the launch of an LTE Fixed Wireless Access service, which could address the connectivity needs of 50 million people, assuming the Sprint merger is approved of course.

It hasn’t been billed as an Uncarrier move from T-Mobile, however it has the potential to be quite disruptive. The team has pointed to statistics which suggest 61% of rural customers either have no or only one home broadband services available to them, offering a significant opportunity for CEO John Legere and his magenta army, if they can prove the concept works effectively.

In the first instance, T-Mobile plans to invite 50,000 customers to participate in the live trial, though should the bureaucrats approve the Sprint merger, the team would be able to open this up to 9.5 million customers by 2024. And thanks to 5G, T-Mobile is promising speeds “in excess” of 100 Mbps to 90% of the forecasted FWA footprint, also by 2024.

“Two weeks ago, I laid out our plans for home broadband with the New T-Mobile,” said Legere. “Now, we’re already hard at work building toward that future. We’re walking the walk and laying the foundation for a world where we can take the fight to Big Cable on behalf of consumers and offer real choice, competition and savings to Americans nationwide.”

Although FWA is not a long-term, realistic alternative to fibre, at least not on the current airwaves, T-Mobile could certainly craft a useful position here. Pricing the service at $50 per month, the team suggests customers could save $360 per year, assuming the average monthly cost of home broadband is $80.

For T-Mobile this is perfect timing to plug the benefits of the Sprint merger and gain the interest of influential politicians. With the 2020 Presidential Election machine beginning to crank into first gear, potential candidates and the President himself will be looking for soundbites to rollout to the Middle America rallies. The FWA service ticks two boxes here.

Firstly, with so many rural consumers (and potential voters) either unable to purchase a home broadband service, or only having a single option, T-Mobile is providing an answer. In most cases, the reason home broadband is not available is due to an inability for the telco to prove ROI or the geographical landscape makes it incredibly difficult. FWA addresses these problems.

Secondly, $360 is a lot of money. T-Mobile has a track record of undercutting rivals while delivering a service which is at least on par. This might well be an offering which will attract the interest of many.

Should any politician be involved in forcing the T-Mobile and Sprint merger through, it would be an excellent anecdote for the ambitious politicians to take to potential voters. Not only are they delivering Middle America the internet, they are doing it cheaper than what is available to everyone else around the country.

T-Mobile is promising the merged company will use a low-cost structure to aggressively capture market share by undercutting rivals. This strategy is not only a chance for Legere to further irritate AT&T and Verizon, but it is a massive plug for the merger. In an FCC document, T-Mobile suggests by “monetizing available spectrum and leveraging off of other deployed network assets, the in-home service will be profitable on its own”. The underlying message is quite clear; look what we can do once you greenlight the merger.

Interestingly enough, T-Mobile seems to be fighting the competition concerns in the wireless market, with the opportunity to enhance competition in the wireline market. Soon enough, the merger judges will have to decide what is more important; maintaining the four MNO balance or creating more competition in the home broadband arena.

“These pro-competitive and pro-consumer in-home broadband benefits are clearly merger-specific, verifiable, and compelling considerations to inform the Commission’s overall review of the merger’s effects on competition and the public interest,” the statement to the FCC reads.

Another point which will gain the attention of the pro-consumer politicians and bureaucrats is the promise of free hardware. T-Mobile is promising the LTE router will be provided and installed at no-cost to the consumer, and as soon as 5G is available in the area, the upgraded 5G router will be provided free of charge.

The merger is still hanging in the balance, but the promise of increased competition in the broadband world, especially with the prospect of a race to the bottom, might turn some heads. The pros and cons of the T-Mobile/Sprint merger are starting to become very interesting