Sprint is bouncing back from its ill-advised attempt to merge with T-Mobile with a better idea.
Today, the company turned to its old friends in the cable TV world, inking a deal with Altice (better known as Cablevision and Suddenlink) to combine their networks and sell wireless packages bundled with cable service.
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This is a great idea, because, unlike with the T-Mobile deal, it doesn't reduce competition—it increases it. Other than Comcast, with its Xfinity Mobile, cable companies have maintained their profitable stranglehold over the US broadband market but have been reluctant to dive whole-hog into the intensely more competitive cellular market.
And for Sprint to succeed as an independent business—which it must—it could really use some help continuing to improve its network. The Altice deal gives Sprint access to Optimum WiFi hotspots in the Northeast and to cable infrastructure throughout its 21-state service area. Sprint needs the cable lines to provide backhaul and locations for small cells, filling in its 4G network and starting a 5G system.
Sprint's major challenge in improving its 2.5GHz network has been finding locations to plant cells and land-lines to attach them to. That's part of why it's trying to put Magic Box micro-cells (above) into customers' windows; the Magic Boxes get around the painful months of requesting siting permits from every tiny town council in the country. In 21 states, Altice could really help with this.
This also isn't an exclusive deal. Sprint could tie up with other cable and phone companies (that aren't Comcast), planting small cells on their networks. There, I'm more optimistic than Fierce Wireless editor Mike Dano, who says "Altice is by no means a nationwide salve for Sprint's wireless build-out." It may not be a nationwide salve, but it's a heck of a tonic, and one that could get others to belly up to the bar.
We've Seen This Before, What's Different?
Folks with long memories will remember that this happened before. In 2005, Sprint made a deal with a bunch of cable companies to form a joint venture called "Pivot." That fell apart by 2008, without much progress, in part because the cable companies and Sprint bickered with each other too much, and in part because people turned out not to want to buy their wireless service from their (generally disliked) cable company.
There's still a danger with a joint-venture rather than a purchase; a struggle over control could end up dooming the whole thing. In general, businesses run better with one boss, not two.
As regards market demand, Comcast is taking a reasonable view with Xfinity Mobile, which now has about 250,000 subscribers. The company sees its wireless business as a way to keep cable customers in the fold, a smart view from its perspective. It can charge relatively low fees for wireless because its cable profit margins are so high. If Comcast declares this success, other cable operators will feel the need to follow.
The cable industry isn't growing. Cord cutters will switch away from expensive TV bundles to somewhat-less-expensive (but still too expensive) internet service and streaming options. If cable companies want to grow, they're going to have to find new business—in wireless, for instance. Sprint needs help building out its network, and every one of those Sprint/cable customers is someone who didn't switch to T-Mobile.
This is the kind of vibrant competition that makes us glad that Sprint and T-Mobile called their merger off. After AT&T abandoned its ill-fated attempt to merge with T-Mobile, T-Mobile became the UnCarrier and leapt to new heights. Maybe Sprint can become the partner-carrier, and the competition will benefit everyone.