T-Mobile’s proposed merger with Sprint would keep the headquarters of the combined company on the Eastside where the wireless carrier has deep roots, and ensure that the coming evolution of the wireless industry will play out in the Northwest.
T-Mobile’s intensely competitive nature — which drove a precarious telecom straggler to become the third-largest U.S. wireless carrier – has roots in its Eastside history and predecessors.
The Bellevue company is ingrained with the DNA of VoiceStream Wireless and McCaw Cellular Communications, two pioneering companies that put the region on the map for wireless invention.
T-Mobile’s proposed merger with Sprint would keep the headquarters of the combined company in Bellevue. If approved by regulators, the deal will ensure that the coming evolution of the wireless industry, started here more than three decades ago, will play out in the Northwest.
“T-Mobile carries a lot of that innovation tradition from the McCaw days,” said Tom Alberg, a former McCaw Cellular executive and founder of Madrona Venture Group, a venture capital firm.
T-Mobile isn’t a direct descendant of McCaw Cellular, the region’s first wireless company started in Kirkland by industry pioneer Craig McCaw in the early 1980s. That company was sold to AT&T in 1994 for $12.6 billion, where much of its fast-moving, creative culture was masked by AT&T’s more corporate feel.
Instead, T-Mobile has its roots in VoiceStream, a company started in Bellevue in 1994 by influential longtime McCaw executive John Stanton, whose name is nearly as entwined with the wireless business as Craig McCaw’s own. VoiceStream was sold to Deutsche Telekom in 2001 and renamed T-Mobile.
In its heyday during the 1980s, McCaw Cellular was known as the underdog to the larger regional Bell Telephone companies and set itself apart by stitching together a nationwide cellular network, complete with long-distance calling.
At McCaw, that competition “created a culture that was always aggressive and assertive and looking to do things better,” Stanton said Monday.
T-Mobile has approached the wireless market the same way – as a creative underdog – making a name for itself by offering unlimited data streaming to customers and buying people out of their contracts with other carriers, moves that bucked industry tradition.
Stanton sees similarities in the way T-Mobile is run to the days of McCaw and VoiceStream, particularly in the pace and willingness to try new things.
“They’ve maintained the soul of creativity and relentless, hardworking, thoughtful customer-oriented service,” he said.
Outspoken T-Mobile CEO John Legere likes to point out his company’s newest technologies and promotions, regularly insulting the other three U.S. carriers’ plans and networks, while hyping his own.
That extended even to Sprint as recently as January, before the two CEOs appeared as a united front Sunday to announce their plans to merge. T-Mobile plans to buy Sprint for about $26.5 billion, and it’s the Bellevue company’s magenta-clad brand that will remain when the deal is completed.
“We’ve been such a fast-moving company,” said T-Mobile chief operating officer Mike Sievert, who will stay on as president and chief operating officer of the combined company. “Understanding and not fearing change is a core value.”
Sievert and Legere both joined T-Mobile in 2012, and Sievert expected they’d have to dramatically change the culture and people of the financially struggling company. But Sievert – a former executive of Clearwire, another Craig McCaw telecom company – was surprised.
He found the people driven and passionate – an element carried down through the McCaw/VoiceStream days.
“I think so many of the great wireless companies can trace back to Seattle founders,” he said.
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The next evolution for the U.S. wireless industry will be the implementation of 5G technology – the next generation of connectivity that promises ultrafast speeds and seamless video downloading and streaming. The big players are all getting on board, and Sievert said interest extends beyond just the traditional four telecoms.
As Legere pointed out Sunday when the T-Mobile-Sprint deal was announced, there are now “at least seven or eight big competitors in this converging market.” That number may be a bit inflated, but Legere was pointing not only to traditional competitors such as Verizon and AT&T, but also cable companies such as Comcast and Charter Communications.
“There really isn’t a wireless industry anymore, in our opinion,” Sievert said. Instead, the telecom industry also includes cable and video, he said.
T-Mobile has said the combined company would invest $40 billion in the next three years to build out its 5G network, an investment that is also meant to appeal to federal regulators who will have to weigh whether the merger’s elimination of competitors in the industry from four to three will be outweighed by the investment of more money in a new, key technology.
“The 5G infrastructure will continue to blur the line between wireless companies and cable companies,” said Brian Paulen, managing director and Seattle leader at consulting firm West Monroe Partners. “The cost is supposed to be very, very significant. We need organizations of a certain size to stomach that.”
And, in a nod to another Seattle wireless pioneer, the combined company’s 5G development will make use of some radio spectrum technology that once belonged to Clearwire, the wireless company McCaw founded in 2004 and then sold to Sprint in 2013, Sievert said.
A merger of T-Mobile and Sprint would ensure a future for the wireless industry in the region, but the deal still has many hurdles to overcome. Even if federal regulators give it a green light, combining the networks and operations of the two companies will take years.
Three to four years, Sievert estimates.
But in the typical T-Mobile way, they’ll try to do it faster.