Feature Article

September 02, 2014

Any T-Mobile US Buyer Likely to Rely Substantially on 'Wi-Fi First'

Iliad, the French owner of Free Mobile, continues to seek additional investors that will enable it to make a successful bid to buy T-Mobile US. T-Mobile US, on the other hand, continues to signal it is in play.

T-Mobile US recently said it would sell for any offer of at least $35 a share. That price almost certainly would include high likelihood of an immediate regulatory approval. And it would be reasonable enough to suggest any such deal by Iliad would not be the last.

The reason is that Iliad’s attack on mobile market pricing in France has been based on extensive use of a ‘Wi-Fi first’ access model. Iliad is likely to want to replicate in the U.S. market.

Assuming Iliad somehow can line up funding to buy T-Mobile US, it eventually will want to source Wi-Fi capacity widely across the United States.

That almost inevitably will mean some potential alliances or direct conflict with Comcast, which is assembling what it hopes will be an extensive national footprint of Wi-Fi hotspots.

That, in turn, would allow Comcast to create its own ‘Wi-Fi-first’ mobile network.

The other obvious bidder for T-Mobile US is Dish Network, which badly needs a way to create a nationwide U.S. mobile network, or risk losing all the substantial equity value in its spectrum licenses.

Dish Network and Iliad would likely approach the, “we need more spectrum,” problem in different ways. Iliad will substitute Wi-Fi for mobile spectrum, while Dish Network would bring spectrum of its own.

In either case however, either a Dish Network purchase of T-Mobile US, or an Iliad ownership, it is likely that offloading demand from the mobile network would play some substantial role.

For Iliad, that is the preferred access architecture. For Dish Network, widespread support of Wi-Fi access would allow Dish to compensate for some of the network reach issues it would face as the owner of the T-Mobile US network.

But, Dish would also be expected to leverage its video entertainment assets to create a differentiated mobile offer.

However, streaming video entertainment would pose a huge strain for the T-Mobile US network, even if reinforced by new spectrum that Dish Network would contribute. Offloading that consumption to Wi-Fi is therefore a logical way to support quality of experience for users, while alleviating the mobile network load.

Edited by Stefania Viscusi

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