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What does AT&T's deal to buy Cricket mean to you?

What does AT&T's deal to buy Cricket mean to you?


More network capacity and a huge push for prepaid

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A Cricket-branded HTC One SV on display at CES earlier this year.

For years, MetroPCS and Leap Wireless — better known by its brand name, Cricket — went head-to-head as two of the largest independent regional carriers in a country dominated by the "big four," Verizon, AT&T, Sprint, and T-Mobile. Now, in the span of less than a year, both have been snapped up and taken off the market: MetroPCS by T-Mobile, and today, Leap by AT&T.

For T-Mobile — which struggled to deploy LTE with limited spectrum in its pocket — the MetroPCS deal made sense. But what did AT&T see in Leap, and what does it mean for customers?

Cricket's spectrum fits right in with AT&T's

On a call with reporters earlier this week, John Donovan, AT&T's senior VP of technology and network operations, heaped praise on the speed and reliability of AT&T's current 4G footprint in the wake of PC Magazine's nationwide network test and noted significantly improved dropped call performance, long an AT&T bugaboo. But he also acknowledged that major urban areas like New York City, San Francisco, and Chicago are perpetually squeezed — spectrum is limited as smartphone adoption, and data use, grow. Indeed, that could be part of the story behind today's acquisition.

In an interview with FierceWireless late last year, Leap CEO Doug Hutcheson noted that some 60 percent of the company's spectrum was not actively being used, much of it in the valuable AWS spectrum range — a block that both AT&T and Verizon started to engage as a way to supplement their existing 700MHz networks as they fill to capacity. In all, Leap owns AWS spectrum in 100 markets, spectrum that AT&T could turn into extra LTE capacity relatively quickly. Cricket already has 11 LTE markets live, covering about 21 million people.

Spectrum, though, is only part of the story. Once an afterthought for carriers, dominated by low-end plans and even lower-end phones, prepaid is now one of the hottest segments in wireless. T-Mobile has been pushing prepaid extraordinarily hard with its "uncarrier" moves, Sprint has both Virgin Mobile and Boost under its umbrella, and Verizon has been slowly making its prepaid offerings more attractive. Even iPhones, once relegated to lucrative postpaid contracts of $100 per month or more, have filtered into the market. AT&T has just started to take prepaid more seriously with the launch of its Aio Wireless brand in a small handful of markets, but Cricket — which specializes in contract-free service — instantly gives AT&T significantly more credibility and reach in the space. "Cricket's employees, operations and distribution will jumpstart AT&T's expansion into the highly competitive prepaid segment," AT&T's press release notes.

This deal will likely get plenty of regulatory scrutiny

The Leap deal is pending regulatory approval, and it will likely get more scrutiny than T-Mobile's acquisition of MetroPCS did. AT&T is significantly larger than T-Mobile, and also notably has a big failure under its belt in its attempted purchase of T-Mobile itself last year. Commissioners will need to weigh the apparent benefits of the deal against the possible downsides, including a loss of competition in markets where Cricket does business today, offering all-inclusive voice and data plans that are in some cases significantly cheaper than AT&T's. Advocacy group Free Press has already come out against it, saying in a statement "this takeover would result in fewer choices, higher prices and job losses."

But if it's signed off, the deal could go through by the end of the year. For Cricket's 5 million customers, this should mean access to a significantly larger LTE network (an AT&T spokesman wouldn't comment on when, or if, Cricket's older CDMA network would be turned off and its customers shuffled over to GSM). AT&T, meanwhile, gets some more breathing room for data-hungry customers in a number of large markets — and, assuming it doesn't whiff on pricing in a market segment particularly sensitive to it — a huge new prepaid presence.