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The four major mobile carriers, AT&T, Verizon, Sprint, and T-Mobile, will have the opportunity to enlarge their wireless frequency ranges due to an auction organized by the FCC. According to FCC, in 2014 the frequency spectrum lacks 275 MHz, thus proper wireless services are not fully implemented. In 2015 the FCC will auction LTE frequencies and the carriers are eager to capture larger shares of it. A Sprint T-Mobile merger will complicate the affairs, but the result might be very beneficial to consumers. Half of Americans are addicted to smartphones, so without proper coverage, they will end up frustrated.
Sprint and T-Mobile already talk about a merger. Until the FCC and Department of justice approve the operation and the financial details are fully established, the two carriers think about joining forces in a common bid during the next year auction. The auction is highly important because it offers the mobile carriers access to low-band 600 MHz frequencies. This frequency has important characteristics for coverage improvement. Besides the fact that they can reach wider areas, they can penetrate walls easier, according to BusinessWeek.com.
Sprint T-Mobile merger preceded by common bid for low-spectrum frequencies
Masayoshi Son, the CEO of SoftBank, the company owning Sprint, tries to convince regulators that the merger is as serious as possible and it will benefit consumers. Sources say, according to Businessweek.com, that in August the two companies will announce the merger. Sprint will allegedly pay $32 billion for T-Mobile. However, the regulators will need around one year to analyze the case.
Now Sprint has to obtain the necessary funding to cover both deals, to acquire T-Mobile and to buy new frequencies at the next year FCC auction. As a total of $40 billion is needed, both Sprint and SoftBank are negotiating the issues with banks.
The Sprint and T-Mobile, the third and fourth biggest players in the mobile market have only 10 and 4.5 percent of the low-band spectrum, while At&T and Verizon have more than 30 percent each. Low-band spectrum will be needed to expand coverage in rural areas and small towns.
FCC has not established the auction details yet. The regulator is open to adapt the conditions to any changes in the market. If the Sprint T-Mobile merger happens, Sprint will own licenses for more frequencies than allowed by FCC, transforming the whole acquisition into a bureaucratic nightmare.