T-Mobile USA merger with Metro PCS - the implications for M2M

So the big news in the wonderful world of mobile this week was the announcement of a merger between T-Mobile USA and Metro PCS. So I've mulled over the implications for M2M and come to the following conclusions...

When looking at T-Mobile it’s impossible to ignore the fact that the implications for M2M are all tied up with the abortive AT&T merger. All of T-Mobile's M2M capability was effectively farmed out to RACO Wireless in expectation that T-Mobile USA would cease to exist. At that point T-Mobile and M2M virtually parted ways in the US. In the near future one of two things will happen. Either this move will be reversed and RACO will be brought in-house, or T-Mobile USA will have to build its capabilities back up again. It's certainly something that the group is looking at right now. That all needs resolving before we can even think about what the Metro deal might mean for M2M.

That aside, the deal will leave us with a bigger, stronger T-Mobile. The ideal scenario for T-Mobile would have been a merger with another 3GPP player, which would have given it a further boost in differentiating from AT&T’s sunsetting 2G network. 2G is fine for much M2M and AT&T’s decision to switch off GSM in 2017 would have left T-Mobile as the sole major GSM/GPRS/EDGE operator in the US. A robust set of roadmap guarantees around continued support for 2G can help T-Mobile differentiate. A bigger T-Mobile with those guarantees and a reduced requirement for national roaming (and thus dependence on other operators’ roadmaps) would have been a better outcome. As it is, the benefits of scale across this CDMA/GSM marriage are all about LTE and for the most part M2M does not need LTE, other than for high bandwidth applications such as digital signage and CCTV. Some automotive OEMs are also building in LTE simply because of the long development cycle for cars. So as far as the nitty-gritty of delivering M2M is concerned, the announcement doesn’t mean a great deal. No-one has really had serious cause to deploy multimode GPRS/CDMA devices (although Sprint and Orange started flirting with the idea this year) and I don’t anticipate a big rush to do so from the new T-Mobile/Metro entity.

However, a bigger stronger T-Mobile USA does mean that the company is likely to be around for a long time. It indicates that the German parent company is not looking for a quick exit. Deutsche Telekom is in the US, in the form of T-Mobile, for the duration. That being the case, the deal has the potential to reinvigorate the wider group’s pursuit of the M2M opportunity in the US, which has been largely on hold (or farmed out to RACO Wireless) since the AT&T merger was announced. It also spurs the DT M2M team on to taking advantage of the asset that it has in its North American operation. Other than Vodafone/Verizon there are no other groups that span the two regions. Between them, Europe and North America account for more than 55% of the global opportunity for M2M. The ability to address both markets is critical. It is this potential in Deutsche Telekom, through the T-Mobile USA ownership, that is part of the reason why DT ranks number 2 in Machina Research's M2M Leaderboard.


Comments