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What would happen if Sprint and T-Mobile Merged?

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Are you curious about the merger and what it will bring? Do you want look into the future and see what could happen? This report covers the future and the past to give you a history as well as makes some predictions on a potential merger. If it does happen, would they downsize? Would they strike a blow to Verizon and AT&T? Would they improve financially? Would Sprint finally set a plan in place to sunset CDMA? Only one way to find out!

This is a report by Wade Sarver and the opinion of the writer. This blog is a partial of the full report. The full report can be purchased as a PDF on Gumroad or Sellfy.

Summary

We all know that Softbank wants to merge Sprint and T-Mobile. We all saw that Softbank CEO Masayoshi Son met with USA president-elect Donald Trump. We also know that the FCC under President OTower Safety for all your safety training!bama did not like mergers between major carriers. Let’s go in-depth to cover what would happen is the merger happens. This report will cover not only how the carriers and their technology will play together, but the trickle-down effect to the OEMs, service vendors, and tower companies will be affected. I have included links to resources for you to verify the history and facts while the speculation of what will happen is just that, speculation based on my experience in the industry.

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Meeting between Softbank Owner and the USA president-elect:

I am sure most of you saw Softbank CEO Masayoshi Son meet with President-Elect Donald Trump. One thing that Masayoshi Son has seen is an opportunity to merge T-Mobile and Sprint. This has been a goal of his and I think that he has seen T-Mobile as a key to getting Sprint out of the slump it’s been in. Let’s look at the meeting and then what it means.

Mr. Son has been frustrated with the prior administration’s FCC and SEC in the USA mainly because he thought that merging the 2 carriers would make a lot of sense. Guess what, it does for so many reasons, but the implications are more than just financial. Not everything about the merger will be good, I will explain below. For now, let’s look at what this meeting means.

Mr. Son W4W Cover 4swand President-Elect Trump are both going to look at growth of business in the USA. Sprint, while Wells Fargo keeps telling us how Sprint is bouncing back and the future is so bright we gotta wear shades, I don’t see it that way. Sprint has done the bare minimum on the network. However, what they have done has greatly improved their network for the least amount of money.

Back to the meeting, Masayoshi Son has offered to put $50B into the USA, not all of it is his money. He is raising $100B from investors around the world. From what CNBC says most of the money comes from Saudi Arabia, to invest. Trump obviously expects to see $50B of this come to America, and it appears that Son agreed to this.

Resources:

http://www.cnbc.com/2016/12/06/trump-says-softbank-will-invest-50-billion-in-the-us-aiming-to-create-50000-jobs.html

http://www.forbes.com/sites/chloesorvino/2016/12/08/after-trump-meeting-softbank-billionaire-masayoshi-son-gains-2-billion-becomes-japans-richest/#1b549a3614ac

https://www.bloomberg.com/news/articles/2016-12-06/softbank-s-son-said-to-plan-meeting-with-trump-in-new-york

http://www.forbes.com/sites/chloesorvino/2016/12/06/trump-claims-japans-richest-tech-billionaire-will-invest-50-billion-in-u-s-business/#7f4502c875f5

http://www.wsj.com/articles/softbank-investors-cheer-ceos-meeting-with-trump-1481095552

Did they try to merge before?

I was told that just prior to the AT&T attempted takeover of T-Mobile US in 2011 that Sprint had planned to merge with T-Mobile. Mentioned by CNN here and TMONEWS here. I believe that it was more Apple Watch Sport, Space Grey Aluminum Case/Black Band, 42mmthan a rumor. From what the insiders said the rumors had some basis to them. It would have made sense and one more thing that was obvious is when AT&T attempted to take over T-Mobile US Sprint came out publicly and did all that they could to stop it. More on that below.

Then in 2014 they talked about merging again. It was Softbank pushing for this after their recent takeover of Sprint. They were really excited to become a major competitor in the USA. It looked like Softbank was willing to pay $32B for T-Mobile US, roughly $40/share. In this case, T-Mobile US CFO mentioned the merger first in 2013 stating that the merger would make sense to compete against the larger AT&T and Verizon. Remember that T-Mobile was growing quickly now. To add more confusion, Dish Network was making a play for Sprint and Clearwire. Sprint-owned most Clearwire at that time. Clearwire had the 2.5GHz spectrum at that time and was operating it on Wi-MAX. Dish failed and Softbank won, if you want to call it that. Sprint had massive debt.

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In 2014 Sprint/Softbank gave up their quest for T-Mobile US because the FCC and the DoJ pushed back hard. While o the business side, the agreement seems to be moving ahead, the FCC had other plans. They did all that they could, like creating rules to block the merger of this kind. And this is the legacy of the Obama administration’s FCC.

Resources:

http://www.fiercewireless.com/special-report/a-year-courtship-t-mobile-who-wants-to-merge-uncarrier-and-why

http://www.wsj.com/articles/sprint-t-mobile-generally-agree-on-merger-terms-1401919219

http://dealbook.nytimes.com/2014/08/06/no-takeover-but-plenty-of-taunts/

http://dealbook.nytimes.com/2014/08/05/sprint-and-softbank-said-to-abandon-bid-for-t-mobile-us/

Would merger create jobs inside the new company?

Honestly, I doubt the merger will bring more jobs to the US. If Son plans to invest in other businesses or startups, then I can see 50K jobs coming from $50B. In fact, is he just gave $1M to each of those 50K people, they would be on the way to massive job creation in the US, but I don’t see that happening.

Before I start, let it be known that both Sprint and T-Mobile workers that I know work very hard and very long hours. They go the extra mile for their respective companies. I hate to see anyone lose a job they love. I can’t believe how hard and dedicated many of these workers are, even when they disagree with the mother company, they still do all that they can to ensure success. Trust me, they don’t always like the policies or even what they do, but they all want to see success.

Here is what I see from the merger as far as workers go. First the initial talks and the teams it would take to make the merger happen would be large, so the first year would be massive. Why? Because of the due diligence on the financial side and the technical side. It takes a lot of time and money to make these mergers happen.

There would probably be independent firms that would investigate the complete holdings and inventories and salaries of both sides. Something that Masayoshi Son probably did when he acquired Sprint. Also, T-Mobile would ask for over $2B up front, much like they did with AT&T. That money proved to be a great asset for T-Mobile. That Legere is always thinking! I believe that the due diligence that Son did for Sprint still missed quite a bit. There were things that we suspect he missed. I doubt he will make that mistake with T-Mobile US unless he wants them so badly he is willing to overlook some problems. Again, he should have learned something from Sprint, he’s an exceptionally smart guy or he wouldn’t be where he is.

ThenDAS 101 Distributed Antenna System: A Basic Guide to In-Building Wireless Infrastructure by [Baasan, Soyola] after the merger would take place they would try to see what efficiencies could happen. This would mean to remove duplication. To translate, that means layoffs. Consolidation means that one side or the other or both will be downsizing and the teams will start to combine and work together.

I see the sales teams and the customer service teams scaling back first, then the project management teams, the finally the engineering teams. Unfortunately, the legacy systems are very different. You are going to be maintaining GSM and CDMA systems. Luckily moving forward, you have LTE which should merge quickly. I would think the technical teams will be one of the last to downsize.

Sprint is no stranger to layoffs, http://www.bizjournals.com/kansascity/news/2016/05/03/claure-worst-sprint-layoffs-finished.html, http://www.kansascity.com/news/business/technology/article74725997.html, http://www.kansascity.com/news/business/article56191755.html.

Interested in the full report? For a fee, it can be downloaded in PDF format from Gumroad or Sellfy by following one of these links. The full Table of Contents listed below for you to see what is covered in your report.

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https://sellfy.com/p/6PIm/

 

Table of Contents:

  • Summary             1
  • Meeting between Softbank Owner and the USA president-elect   2
  • Did they try to merge before?     3
  • What’s different now?   4
  • Would merger create jobs inside the new company?        4
  • Does Technology Matter?             5
  • How would it affect the vendors? The trickle-down effect?             6
  • The major OEMs:             6
  • Service companies?         7
  • Contractor workload Timeline:    7
  • Tower companies?           8
  • Resources:          8
  • Leadership, who will lead the new company?       9
  • Why wouldn’t T-Mobile Take over Sprint?             9
  • History of the AT&T T-Mobile merger.     9
  • Consolidation:    10
  • The Core:            10
  • The RAN:             10
  • Would we see growth in the USA?            11
  • Would it be better to compete with AT&T and Verizon Wireless?                11
  • Would they innovate? If so, when?           11
  • How would this effect smaller contractors?          12
  • How would it affect the smaller contractors? Good or bad, growth or consolidation?         13
  • Who would lead the company? Legere or Claure? Has Claure really proven himself?          13
  • Is Sprint financially strong enough to take anyone over? It seems they are leveraged heavily.               13
  • What about the CCA losing 2 of their largest members?   13
  • What about all the smaller carriers? We would continue to see them get swallowed up and disappear?          13
  • What about Sprint’s and T-Mobile’s partners?      13
  • Would this be the hurt the smaller contractors across telecom?   14
  • About the author:            14

Be smart, be safe, and pay attention!

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What is LTE UE Backhaul?

What is LTE UE backhaul? It is backhaul that uses the carrier’s spectrum, just like the UE, User Equipment, you smartphone. If you have ever used a carrier’s Wi-Fi hotspot then chances are you have used a device similar to this. One that will use the carrier’s spectrum, like LTE, for backhaul. This is something that is commonly used for internet access when there is no Wi-Fi available. The carriers all sell these units and many of today’s smartphones do something similar. However, they just use the standard signal. Using it for a tiny hotspot and for an eNodeB are 2 different things.

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Let’s talk hotspot. Many vendors provide equipment that a user can add coverage quickly and easily. A quick Wi-Fi connection to the internet using the carrier’s LTE. Everyone has Wi-Fi and there are devices that create an instant hotspot. Verizon has the Mi-Fi or you can use your smart phone as a hotspot. Every carrier has a wireless modem that you will provide a Wi-Fi hotspot. I think anyone reading this probably knows about the hotspots. I thought it would be a good example to get started.

I am bringing this up because now there is talk about using the UE backhaul for small cells making it a more powerful cell extender. It sounds like a great idea on the surface. This is a cheap, quick and easy backhaul. However, what are the drawbacks?

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What is a cell extender? There is a practice where many carriers will use a cell extender that will have a UE relay backhaul to extend the signal. This is also like a smartphone hotspot or a Mi-Fi unit because it was just to help a few customers but extends the carriers signal instead of Wi-Fi. This is a type of repeater to extend the macro’s signal, a cell extender. This is a way for the carrier to extend the coverage just a little bit farther. It’s a way to provide coverage someplace quickly and easily. These were common in 2G, 3G, and now LTE. It is a simple and quick way to install a repeater to extend carrier coverage down an ally. In the old days of DAS, this is really what they did. They would take the signal where it was strong or use an antenna and amplifier to increase the strength to get it into a dead spot. People paid a lot of money for these systems.

SOW_20Training_20Cover

What about using UE backhaul for an eNodeB? You know, like a small cell or a mini macro? I am bringing this up because now there is talk about using the UE backhaul for small cells making it a more powerful cell extender. It sounds like a great idea on the surface. This is a cheap, quick and easy backhaul. However, what are the drawbacks?

It’s not a simple cell extender, and let me tell you why. Now you are talking about putting the small cell in an area where there is a loading issue. This goes beyond coverage. The data and spectrum usage could go through the roof! So if you set it up like a cell extender with backhaul to the macro site, then guess what! You will see an overloaded macro sector! The macro not only has to deal with all of its users but all the small cell or Mini macro users too. This sucks up all the spectrum and bandwidth for that sector.  What can be done? Read on!

To break the bottleneck you need to dedicate spectrum in the macro eNodeB that will be feeding the UE backhaul. This will alleviate the spectrum usage for the regular users on the macro sector. We don’t want them to get knocked off if the small cell US backhaul overloads the macro. This will make it so that the users on the macro don’t get shut knocked off if the small cell pulls the entire spectrum for its users. This will allow the small cell UE backhaul to have a dedicated pipe. It needs to have dedicated spectrum for this purpose. Then the small cell will know how much backhaul spectrum it has to available. By the way, not an easy change, changes in the eNodeB and possibly the core need to be considered as well as neighboring sites. This “dedicated backhaul spectrum” needs to be set aside in this sector and others too. It takes some planning and changes.

You could still have the data bottleneck at the macro’s backhaul. That’s another issue that needs planning.

So now you dedicated part of the band to the UE backhaul, which seems OK. Remember that the carrier paid a lot of money for that spectrum and now they are choosing to use it for backhaul. So the pipe is limited based on coverage and availability. It is a quick and easy to add UE backhaul, but is this the best use of the spectrum? Will you lose something in this backhaul? Yes, you have delay issues, timing issues, and neighbor issues. All of this is a problem when building a site for any type of real loading. Go to the links below to learn more.

However, what’s the real issue? Is it all the problems I mentioned above? They are all technical issues that good engineers will resolve. This appears to be a cheap and quick solution. But that’s not the real issue, is it? The carriers paid a crap ton of money for spectrum. Is backhaul a smart way to use this resource? Is that billion dollar investment there to save some CapEx for the company? I thought it was for the customers! Backhaul could have been something in the unlicensed band for a lot less money. It could be a fiber link for more money. Is this an easy out or will it cause problems down the road because the spectrum is only going to get more and more valuable? Do investors want to see that spectrum used this way?  I don’t see the auctions being a cheap alternative to providing backhaul.

So just because it looks cheap and easy doesn’t mean it’s a good move strategically. Don’t get me wrong, the UE relays, the repeaters serve an important purpose for coverage and filling holes, I am just saying be strategic and think it through. For more information hit the links below to learn about these solutions.

https://www.nttdocomo.co.jp/english/binary/pdf/corporate/technology/rd/technical_journal/bn/vol12_2/vol12_2_029en.pdf

http://lteworld.org/blog/introduction-relay-nodes-lte-advanced

http://wireless.skku.edu/english/UserFiles/File/1569472705.pdf

http://www.ericsson.com/res/docs/2013/lte-in-band-relay-prototype-and-field-measurement.pdf

http://www.interdigital.com/research_papers/2012_01_13_system_architecture_for_a_cellular_network_with_ue_relays_for_capacity_and_coverage_enhancement

http://www.airspan.com/products/airvelocity-2/

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End to End Safety: The Site Safety Audit

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Why is safety so important? If you need to ask it’s because we need to all that we can to make sure that the workers come home alive. Elevated work is very dangerous, look at this article in Paintsquare and listen to what FCC Commissioner Mignon Clyburn said. Worker safety is job #1. Complacency is a killer, as is the killer schedules. The FCC knows it, OSHA knows it, and you should know it. But what’s easy to do is easy not to do, and safety can be easy to do, but just as easy not to do. I am going to give you an idea of what can help in mass deployments.

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First, let me talk about how the end customer can make a difference in safety. I have it figured out. A way we can track the poor contractors, the dangerous workers, and poorly equipped climbers. This is something that the end customer, let’s use the carriers as an example. I am talking specifically about AT&T Wireless, Verizon Wireless, Sprint, T-Mobile, and even FirstNet. Any end customer that will listen. Here is a way you can play an active role is saving live, eliminating bad contractors, and securing a good work force. It is to do safety audits on all regions you are deploying. I don’t mean all sites, pick a percentage randomly, but make sure you send someone out to do the audit while the contractor is still on site. This is not a close out package! This is an audit of the workers and what they are doing. You learn a lot when you show up unannounced.

It will cost money, I won’t kid you. You will need to make sure you build a budget for this, outside of deployment, and you must not have your GC or OEM or master integrator do it because they might cheat. You must do it as a separate project that runs simultaneously with the deployment. This is how the end customer/carrier can play an active part in deployment safety. Not just for the tower crew but for all of the workers in general.

While I think this is a great idea because 1) it will keep all of the contractors honest, 2) remove the incompetent crews, 3) keep all the crews on their toes for safety. Plain and simple, it’s a plan that will help you maintain the integrity of your deployment for safety and competence. An added bonus is it will show that you are serious about tower worker safety, right? If anything, this should alleviate you of accident liability because you are doing all that you can. This is a form of quality control!

Why wouldn’t you do it? To remain hands off so you can point the finger and stay at arm’s length to controlling safety. You probably won’t want to spend the money, which you will point to the shareholders and say they won’t let you do it. Meanwhile, what did you pay for safety people for support and what did you pay CTIA, PCIA, and NATE to resolve this issue? While they appreciate the support you can have more control here. This will look great in the eyes of OSHA and the FCC!

So what would the plan be? Here it is in a nutshell. Your next deployment will be planned out and you will hire the crews, the contractors to manage and run it and the OEM to supply the equipment. That will give you the schedule and the contractor’s names. So simultaneously have your safety people working on their project, independently, to create another separate RFP to do 10 to 25% random safety audits at the sites while the crews are on-site. This will have to be done independently of the tower work and GC because if you use them then they will warn the tower crews that an inspection will take place. Do not hire any of the deployment companies! That defeats the purpose.

Plan to put out a separate RFP to other vendors, ones that are not involved in your deployment or maybe safety teams. They can be safety vendors. Make the scope all about inspections of the tower workers while they are on the tower site working. Make the inspections random. Make it one guy that visits the sites to keep costs down. Plan on a percentage of sites, say 10% to 25% of the sites in that region. I will write the SOW if you need me too.

So when the guy goes to the site here is the high level scope.

  • Give the safety contractor a region.
  • Give the safety contractor a schedule of deployment, your PM should know what is going on. Make sure the safety contractor knows which sites the climbers will be working at.
  • Have the contractor go near the site to watch and record what it happening.
  • From afar, take video and picture for 30 minutes of the site, if possible. Log the workers actions from a safety standpoint.
  • Then have the contractor go on site, identify his purpose and show ID. Make sure to talk to the foreman or lead crew member. Ask for his and all crew members credentials and ID, record all names. Ask for all certifications but chances are good they will not have them along, so ask if they can email them to the safety contractor. Get all names, ask for each person’s ID if possible. Take notes while on site to log all activity, record all notes about work and safety. Wear all necessary PPE, like a hard hat.
  • This person visiting the site should not climb! Not his job, one person can do this. They need to take pictures and videos. If possible, use a drone to get the tower pictures and videos of the climbers in action with the foreman’s permission. Do not climb! Take plenty of notes, complete a form to log all safety information.
  • The person on site should compile the report and send to the office for completion, close out, and billing.
  • The office can compile the pictures and put in a deliverable format for the customer, end customer, and make a rating of the crew based on safety with the evidence of video and pictures and ID information. Include all names, ID information, and copies of certifications.

So there it is, if you are interested in learning more, I am writing a white paper on this subject. Let me know if you want a copy, I can send it to you if you leave me a message below. I think that we need to do something. This will serve many purposes. If you sincerely want to see the qualified contractors do the work, this is a good plan. I am sure you will tell me all the problems with this plan so feel free to comment!

Related blog posts: Large Scale Wireless Deployments, Are you in over your head?

Be smart, be safe, and pay attention to what you are doing. You need to arrive alive at the end of the day or week. You have family and friends and crewmates that want you around!

Here is my full response in a PDF. Go ahead and download it to look it over. This is what I sent to the FCC.

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