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T-Mobile and Sprint Making Big Promises If They’re Allowed to Merge

September 21, 2018, 4:45 PM UTC

T-Mobile was planning to attack the cable TV industry even before it agreed to combine with wireless rival Sprint, but says it can expand the effort more broadly and more quickly if regulators approve the merger.

Using the upcoming, faster 5G wireless technology, a combined T-Mobile and Sprint could offer an alternative home Internet service to cable by 2024 in 68% of the territory of Comcast (CMCSA), the largest cable provider, and 64% of the area serviced by Charter Communications (CHTR), the number two cable player, according to T-Mobile chief operating officer Mike Sievert. Nationwide, the service would cover 52% of all zip codes and could have nearly 10 million subscribers in 2024, he said.

“Our business planning has confirmed that there is a large market for New T-Mobile’s in-home broadband offering at the anticipated pricing and service levels,” Sievert wrote in a filing on Friday with the Federal Communications Commission, which must approve the merger.

T-Mobile hasn’t said much about how it plans to take on the cable industry since buying startup video provider Layer 3 TV last year for $325 million. T-Mobile CEO John Legere said at the time that the cable market, with its high prices and poor customer service, “looks a lot wireless from a few years ago.” In general, the carrier plans to use the same “un-carrier” strategy it used in wireless, which meant dropping practices customers didn’t like, such as two-year contracts and data overage fees.

To be sure, companies have often made extravagant promises about enhancing competition to encourage merger regulators to approve their deals and haven’t always followed through. And some opponents fear that whatever the impact on cable, the wireless phone market would become less competitive if the two carriers merge. Also, even without T-Mobile and Sprint, Verizon and AT&T are working on significant 5G offerings to compete with cable.

But T-Mobile (TMUS) and Sprint (S) say that by combining they will have more resources and more airwave licenses to enhance their 5G network. The faster and higher capacity wireless 5G networks could replace traditional wired Internet and video services from the cable companies, they say.

In another section of Friday’s FCC filing, authored by T-Mobile chief technology officer Neville Ray, the company said the combined company’s 5G network would have an average speed nationwide by 2024 of 451 megabits per second, fast enough to download a high-definition movie in about 1 minute. But without the merger, T-Mobile’s projected average speed would be 100 Mbps and Sprint’s 116 Mbps, Ray said.

Sievert disclosed a key detail about T-Mobile’s promised home Internet and video service competitor to the FCC: how much cheaper it will be overall compared to services from cable companies. But the detail was blacked out from the publicly-disclosed version of T-Mobile’s filing. “These speeds and coverage areas will be offered at a significant discount to the prices of traditional broadband providers, with monthly prices planned to be generally [redacted] lower than traditional services,” Sievert wrote.