T-Mobile/Sprint Carries Risks, Maybe Some Rewards, for Rural Telcos

“What they’re promising they can’t deliver,” said Carri Bennet, Rural Wireless Association general counsel who was speaking only on her behalf, of the companies’ plans to build a 5G infrastructure across rural America. But for those rural communities where a new T-Mobile does enter, small carriers could have new opportunities, she said. “To the extent that the new T-Mobile is building out in rural areas, for backhaul purposes for 5G, they’re going to need fiber.” T-Mobile could work with rural LECs to get data services connected to their networks where it doesn’t want to deploy its own new fiber, said Bennet, also a lawyer at Womble Bond. “In many rural areas, there’s not enough money to build two sets of fiber.”

The wireline and wireless telecom markets continue to converge, said Chip Pickering, Incompas CEO, and both require much more fiber infrastructure in rural areas and not just urban and suburban markets. “If you look at the new architecture of 5G, it will be fiber rich, fiber deep and fiber intensive.” Incompas opposes T-Mobile/Sprint (see 1904180018). T-Mobile didn't comment immediately Friday.

Wireline broadband providers and wireless carriers could be complementary rather than competitive in some markets, Bennet said. Fiber-to-the-home broadband services are stable and reliable, so some consumers won’t drop the service even where a mobile broadband product is available, she said. There’s still a market for those who want to use mobile service from their tractors, Bennet said.

A residential 5G fixed wireless broadband service from a new T-Mobile could compete with residential broadband services in rural communities, said Debbie Goldman, Communications Workers of America telecom policy and research director. But the number of households it would be able to support would depend on available spectrum, and the companies said they plan to reserve most of their spectrum capacity for mobile wireless rather than fixed wireless services, she told us.

Some NTCA members provide fixed wireless broadband through arrangements with Sprint, said Vice President-Legal Jill Canfield. “They’re concerned that the new T-Mobile won’t honor those agreements or only honor them in very limited circumstances.” If the new company didn't honor the Sprint agreements with rural providers, she said, subscribers would lose their broadband service unless the NTCA member provider were able to procure other spectrum compatible with that provider’s equipment.

If T-Mobile/Sprint is approved without any commitments to protecting mobile virtual network operator agreements or mobile roaming arrangements, that would dramatically slow and harm broadband competition in the heartland, said Pickering. “Consumers would face higher prices and less investment if we went from four to three [national] wireless providers.” Incompas is working to make sure the wholesale market is protected and served in the event of the deal. The companies haven't announced such wholesale commitments as part of the conditions offered for FCC or DOJ approval, Pickering said. While wholesale conditions might be easier to monitor because they would be more immediate than a multiyear 5G deployment commitment, Pickering is skeptical any conditions on T-Mobile/Sprint could ultimately be enforced.

If a new T-Mobile uses its market power to charge more for wholesale agreements, that could lead to higher prices for rural consumers and slow the rollout of broadband in rural markets, said Phillip Berenbroick, senior policy counsel at Public Knowledge. “The dollars we’re spending for higher wholesale rates are dollars we’re not spending on fiber buildouts."

The promise of helping to bridge the digital divide between rural and more populated communities is seen as a primary driver of the push to deploy 5G nationwide (see 1905240039). Some proponents of broadband access have raised concerns that a new T-Mobile would have less incentive to build out rural broadband services if the deal goes through. Deb Socia, executive director for Next Century Cities, doesn't think this takeover improves the circumstances of rural Americans. “I don’t think the conditions are enforceable,” she said. “Just saying it will happen doesn’t make it so.”

Consequences to rural consumers from T-Mobile/Sprint will be “fairly minor,” said Christopher Mitchell, Institute for Local Self-Reliance director-community broadband networks. “But I think they’re mostly negative.” He cites the loss of innovation that tends to come with industry consolidation. “We don’t know what we’ve lost when we give up competition,” he said. Mitchell said all the talk about rural infrastructure deployment from T-Mobile/Sprint is for the government’s sake “and almost entirely fiction. We don’t see that investment.”

The FCC signaled its approval for the acquisition (see 1905200051). DOJ continues to evaluate the antitrust aspects and is said to favor an arrangement that would see a new fourth national wireless competitor to AT&T, Verizon and a new T-Mobile if Sprint were to leave the market (see 1905300058). Analysts last week were looking at larger cable operators as well as Amazon as possible fourth players to buy the prepaid business the combining carriers agreed with the FCC to jettison (see 1905310048).