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Fast, unlimited wireless at last? What a combined T-Mobile-MetroPCS means to you

Fast, unlimited wireless at last? What a combined T-Mobile-MetroPCS means to you


With the FCC's approval this week, the biggest wireless deal in years is drawing near

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T-Mobile Germany (STOCK)
T-Mobile Germany (STOCK)

Immediately after the failure of AT&T's attempt to buy T-Mobile USA from German conglomerate Deutsche Telekom, things were looking bleak for American's fourth-largest wireless network. "There's no Plan B. We're back at the starting point," said a DT spokesman at the time. It had no LTE deployment strategy to speak of (thanks in part to AT&T, which had insisted during the buyout attempt that T-Mobile had "no clear path" to making it happen). The carrier undertook a massive restructuring that shed thousands of jobs in 2012. CEO Philipp Humm wasted no time departing for greener pastures at European rival Vodafone.

But this isn't 2012. There's a new CEO, a clear path to LTE, and a ton of new, desperately needed spectrum that has flowed in from a variety of sources. The FCC this week signed off on T-Mobile's proposed merger with MetroPCS without even taking it to a full Commission vote, and the Department of Justice has signaled that it won't be trying to block it. The biggest hurdle that remains is a vote on the deal by MetroPCS shareholders early next month.

In other words, we could be just months away from the biggest transaction in the US telecom industry in years — a transaction that would be great news for T-Mobile. But what does it mean for customers?

An extremely fat, fast data pipe that isn't overloaded

The Verge spoke with T-Mobile senior vice president Brad Duea late last year about the logistics of the deal, which involves compatible spectrum — both carriers use the 1700MHz AWS band — but incompatible technologies (T-Mobile uses GSM, while MetroPCS uses CDMA). "The nice thing is, we can immediately move people over to the T-Mobile network," Duea said. "[MetroPCS] has a very high handset turnover rate each year. So about 60 percent, 65 percent of their customers change handsets, so we can get them into a T-Mobile handset right away... then we'll actually turn off the CDMA network."

Turning off MetroPCS's network has major advantages: by not having to support two entirely different kinds of networks on the same bandwidth, the combined company can eventually devote most or all of its AWS spectrum to LTE — 20MHz of it in some locations, Duea points out, which is an extremely fat, fast data pipe. By comparison, neither Verizon nor AT&T have more than 20MHz of LTE spectrum active in any market, and each of those carriers has more than twice the number of subscribers that a merged T-Mobile-MetroPCS would.

T-Mobile has been collecting valuable spectrum in droves

Shutting down an entire network might be a scary prospect for existing MetroPCS customers, but Duea notes that it has committed to keeping CDMA running at least through 2015; in the meantime, it'll likely stop selling new CDMA phones almost immediately. 2015 is an eternity away in phone years, particularly for a subscriber base that turns over handsets so quickly — and odds are good that T-Mobile will shower straggling legacy users with deals and incentives to switch over.

But the roll-in of MetroPCS's airwaves isn't the only thing going for T-Mobile right now — it's been collecting valuable spectrum in droves since AT&T called off its doomed deal last year. "With our breakup from AT&T, we got spectrum there. Then we did the Verizon deal, and that closed, so we got additional spectrum there. Then we did some swaps with Leap, so additional spectrum there. So that was over a 20 percent lift in spectrum. Then with our move with Metro, that deal closes, that's over a 40 percent lift in spectrum," Duea notes. A 40 percent boost in available spectrum in a single year is utterly unheard of, particularly nowadays as data-rich smartphones choke networks and cause network operators of all shapes and sizes to fight over every scrap of spectrum they can find.

"It would be better if the wireless market was not so distorted that the loss of a competitor is a win for competition."

So on the surface, this looks like a win for just about everyone: spectrum will be better utilized to deliver fast wireless data nationwide, T-Mobile will be better positioned to counterbalance the enormous firepower of giants Verizon and AT&T, and its strong moves toward cheap, prepaid, unlimited data should carry forward into the new LTE network. Tellingly, John Bergmayer of public interest group Public Knowledge — which strongly opposed T-Mobile's tie-up with AT&T — writes that the organization is "glad" that the FCC has pushed the deal through. "It would be better if the wireless market was not so distorted that the loss of a competitor is a win for competition," he continues. "Nevertheless, that is the case, and given these facts this particular merger is in the public interest."

MetroPCS's shareholder vote is scheduled for April 12th.