We’ve fielded some questions around the proposed T-Mobile and Sprint merger. We haven’t said too much because it’s a process. That process is now at a place where we can share our thoughts on the subject in more detail.
Consider this post the tl;dr of our 12-page letter to the FCC on the subject. We’re generally supportive of the proposed merger provided three main points are recognized and addressed. We also have some caveats and cautionary tales to share.
This post got pretty long itself, so here are those three central points in a more digestible format:
MVNOs like Ting, Google Fi, Republic Wireless, Consumer Cellular and others are the ones driving innovation, keeping prices down and service levels up. They need to be protected, especially if the “Big Four” carriers are to become three.
eSIM and other technology and standards allow Americans to take the cell phones that they own to any carrier they choose. The public demand for just this kind of innovation in device portability needs to be heard and honored if a merger is to be approved.
Canadian cell phone service sucks. Mostly because of an anti-competitive three carrier, no challengers system. Service is inflexible and expensive because no one has any reason to make it anything different. Americans would be fools not to heed this warning.
MVNOs are the innovators and must be protected
Mobile service has long since been commoditized. The big carriers are interested in maintaining the status quo. They will certainly implement innovations in mobile at the network level to keep up. They’ll talk at great length about 3G, 4G and now 5G as cure for all our ills. It’s important work and needs to continue. That said, all of the non-network innovation and improved customer satisfaction that the US mobile industry has enjoyed in the past 10 years has come thanks to the mobile virtual network operators (MVNOs). Not just Ting but certainly including Ting.
MVNOs share of the larger mobile market is tiny. Even collectively speaking. Individually speaking, MVNOs are little evolutionary organisms, trying different things to find a foothold in the larger mobile market and growing viable businesses from that foundation.
For Ting, the proposition is smarter mobile service: tools that put people, not corporations, in charge of how they use their cell phones and what they ultimately pay. Ting is about building tools that put people in control of their phone bills and real human help any time. Google Fi boasts technical innovations like multi-homed SIM technology (more on that in a minute). Consumer Cellular has a message of simplicity, specifically for older users. There are dozens of MVNOs each with a different value proposition and each with its own base on which to grow.
As our FCC letter points out in more detail, the rising tide brought about by MVNOs lifts all boats. Simply put, MVNOs like Ting try harder to earn and keep happy customers. Big telcos necessarily respond.
In impartial cell phone satisfaction surveys like the one Consumer Reports does every year, the incremental improvements major telcos have made are visible in their slowly but steadily improving customer satisfaction scores.
The extra efforts these major telcos have put in can be seen in the stats. We posit that these telcos are responding directly to the competitive pressure and raising of expectations that MVNOs like Ting bring. The whole uncarrier playbook came from MVNOs.
With all that said, MVNOs currently operate at the whim of the big carriers. Unlike virtually every other country in the world with an MVNO sector, the US does not regulate theirs. This is a good thing. But, this relationship needs to have some basic and fundamental protections in place. Some of our recommendations are included in the letter we’ve filed with the FCC on this subject.
eSIM is the future. Let’s get there.
A SIM card lets a phone access a given carrier’s network and only that network. SIM cards have an expiration date and can only be activated once. The more flexible eSIM standard is an evolution that needs to be encouraged. Big carriers won’t do it on their own.
Today and owing to the fact that we have service agreements with two of the big four carriers (the two that are the subject of this very merger discussion) just about any new phone in the market today will work on Ting. iPhone or Android, smart or simple. MVNOs in general and Ting specifically have done a great deal of work to make “device portability” a topic for discussion. These efforts are a factor in changing buyers’ behavior, which has also led to the draconian cell phone contract falling out of popular favor.
It’s not enough.
It used to be that your phone company was who you’d expect to buy both the phone and the service you’d use it with. Today, whether they’re in the Apple Store, on Amazon or at any number of online and offline independent retailers, people are increasingly looking outside of the companies that provide them cell phone service when they’re looking for a new phone. New phones are more capable and in many cases more affordable today than ever before. That’s the free market at work.
eSIM is the next step along that path. Without some requirement to support this or other end user-friendly innovations, major carriers won’t be eager to do so. Big companies are market share protectionists by nature. eSIM and similar technologies need to happen, not in spite of this fact, but because of it.
This merger request might be the only opportunity to get commitments on eSIM and other innovative, end-user favoring technologies.
And multi-homed sims, like the one Google Fi uses, are clearly technically feasible. The carriers just won’t let other MVNOs use them. This is wrong. People should not have to switch sims or change phones just to change carriers. SIM cards are the floppy disk of the phone world. It’s time to let them go.
Don’t be like Canada
There are a lot of things that make Canada great. Cell phone service is not one of those things.
Canadians pay the most for cell phone service in the developed world according to a worldwide audit of cell phone bills undertaken by Nordicity Group Ltd in May of 2017 (and verified by all of Tucows’ Canadian employees in independent testing).
In Canada, an oligopoly of three carriers, colloquially and not so affectionately known as Robelus (Rogers, Bell, Telus) can effectively decide what Canadians pay for mobile service. Other mobile brands look a little bit like MVNOs on the surface but are actually owned by the “Big Three” and only seem to exist to keep their yucky pre-paid customers from muddying the rich post-paid waters. When one carrier raises prices, the others magically do. When one of the big three lowers prices, the others magically do.
There have been efforts with the CRTC (Canada’s answer to the FCC) to open the Canadian market to some (any!) competition by requiring that network operators allow MVNOs to operate and innovate atop the network. These suggestions were met instead by suggesting that a lame duck fourth network was the answer, without either the footprint or the service to be anything approaching a viable choice. The CRTC has failed Canadians in this regard.
Back to the topic at hand.
While Ting generally supports the proposed merger for all the reasons outlined in our FCC letter, the fact is that three (carriers) is less than four and the competitive balance in the US moves from two huge players and two large players to three, near-equal players. Looks a lot like Canada. As we’ve outlined, three is not a lucky number for Canadian cell phone users.
For this reason and myriad others outlined here, there need to be protections in place to ensure that the average American has more choice and more buying power when it comes to cell phone service.
Again, we generally approve of the proposed merger and see it as an opportunity to ensure that all appropriate customer protections are put in place.