Enterprise Viability - Sprint/T-Mobile
The U.S. Wireless market is a hyper-competitive space with four Tier 1 carriers accounting for 99% of total market share. While T-Mobile and Sprint combine to claim 30% of total U.S. market share, their share of the prized enterprise sector is minuscule compared to Verizon Wireless and AT&T Mobility who own 90%+ of the space. Should you include Sprint & T-Mobile in your plans?
As a trusted industry expert, G2 is often asked if T-Mobile and Sprint are viable carriers for the enterprise. It’s an interesting question to ponder for a multitude of reasons. Let’s first consider the recent history of each carrier to better understand their current position in the market. Back in 2005, both carriers served a niche in the enterprise space, Sprint with its Push-to-Talk service that catered to blue collar use-cases and T-Mobile with its strong global GSM footprint to meet the roaming needs of international business travelers. Beyond that, each carrier has faced challenges in gaining enterprise market share.
Sprint & T-Mobile History
Sprint’s history over the past 15 years has been rife with missteps that have decimated its customer experience resulting in mass subscriber and revenue losses. From the synergy-lacking acquisition of NEXTEL in 2004, to the ill-advised selection of Wi-Max as its 4G network technology in 2006 and on to the clunky shutdown of its iDEN network in 2013, it has been a 15-year span that Sprint would rather forget.
T-Mobile’s recent history has been brighter than Sprint’s, but it has not been without challenges of its own. T-Mobile has always been at its core a value based, consumer-centric brand. Gaps in spectrum holdings and other resources have historically limited T-Mobile’s U.S. coverage footprint. It wasn’t until AT&T’s failed T-Mobile acquisition in 2011 that T-Mobile obtained some of the resources needed to materially improve its network. T-Mobile leveraged these assets ($3B cash and AT&T spectrum holdings in 128 markets) to build out its nationwide LTE network and narrow the coverage gap with its top competitors. T-Mobile’s Simple Choice offering and “Uncarrier” branding have disrupted the U.S. consumer market and sparked a six-year run of impressive subscriber growth.
Despite different paths to the present, T-Mobile and Sprint face similar challenges winning enterprise customers. Foremost amongst these is perception. Despite dramatic improvements in network coverage, most peoples’ perception of the Sprint and T-Mobile networks is based on experiences from 5-10 years ago. It should be no surprise that this perception is generally unflattering. Perception tends to lag reality and shifts in perception are slow to materialize.
Sprint and T-Mobile’s enterprise offerings also suffer from antiquated processes and systems combined with smaller enterprise account teams. With smaller subscriber bases, Sprint and T-Mobile have had less capital to invest in the people, processes and systems needed to effectively win and support enterprise customers. The end result to enterprise customers (real or perceived) is that T-Mobile and Sprint are harder to do business with compared to their larger rivals.
Additionally, each carrier’s lack of a substantial fixed telecom services offering puts them at a competitive disadvantage compared to AT&T and Verizon. Large enterprise customers often seek to maximize leverage and take advantage of the natural synergies that arise from buying fixed and mobile services from a single carrier.
The Pending Merger
Lastly, let’s address the elephant in the room – the pending merger of T-Mobile and Sprint. The combined assets of these carriers would likely provide the network coverage, personnel and scale to effectively compete against AT&T and Verizon. T-Mobile is also promising to disrupt the home internet market but only if the merger is approved by regulators. This approval is proving more difficult than originally anticipated with several powerful organizations lobbying against the plan. Consequently, the uncertainty surrounding the pending merger is also another reason for enterprise customers to shy away from Sprint and T-Mobile in the short-term. However, there is also a strong case for approval, and although the full integration and synergies of the merged entity may take a couple of years to materialize, the impact on the enterprise market is not hard to envision.
G2’s Recommendation
In spite of everything above, does G2 recommend T-Mobile and Sprint as viable enterprise carriers? While some deficiencies remain, G2 recommends that enterprise customers consider including Sprint and T-Mobile in their next competitive bid event. In addition to the coverage improvements mentioned above, both carriers are making investments to address the enterprise market. These include personnel, updated billing portals and new customizable (and competitive) pricing tailored to the enterprise. We further recommend requesting quantifiable coverage data from each carrier at key site locations and test devices to vet coverage. Additionally, ask for references of similar-sized customers that have migrated to and remain happy on their networks. Worst case is that their presence will apply competitive pressure on AT&T and Verizon. Best case you might find yourself pleasantly surprised by their capability and staring at a savings opportunity that is too large to ignore.