Stop the Cap! » MetroPCS

Breaking News: T-Mobile in Talks to Acquire MetroPCS

Phillip Dampier — Wed, 09 May 2012 20:21:33 +0000

Deutsche Telekom AG is in talks to acquire MetroPCS in a stock-swap transaction that would give T-Mobile USA control over the upstart regional carrier.

MetroPCS shares jumped nearly 30 percent on the news, reported by Bloomberg.

MetroPCS operates a CDMA and LTE 4G network incompatible with T-Mobile USA’s GSM service, but would be an asset to T-Mobile’s prepaid phone unit, which could co-exist with T-Mobile’s existing network. MetroPCS primarily operates in the Boston-New York-Washington corridor, Southern California, Florida, southern Michigan, northern Georgia, and northeastern Texas. It is best known for delivering aggressive pricing on no-contract service plans, much like Leap Wireless’ Cricket.

Analysts predict T-Mobile would have little trouble winning approval for a merger between the two carriers. MetroPCS maintains an inconsequential 2.7% market share in the wireless industry. Speculation immediately increased that Leap Wireless’ Cricket unit could be the next target for a merger, potentially with Sprint or T-Mobile.

If T-Mobile sought to assume control of MetroPCS’ spectrum for its own operations, it would have to supply existing MetroPCS customers with new phones that operate on T-Mobile’s network standard.

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Sprint Attempts, Pulls Back from Buyout of MetroPCS; Wall Street Questions Management

Phillip Dampier — Mon, 27 Feb 2012 19:19:27 +0000

An aborted takeover attempt of MetroPCS by America’s third largest cell phone company — Sprint Nextel has some on Wall Street calling for the hide of Sprint CEO Dan Hesse.

The proposed multibillion dollar takeover of prepaid provider MetroPCS, which offers mostly urban service in select cities, was vetoed late last week by Sprint’s own board of directors.

The deal would have delivered a 30 percent premium to MetroPCS shareholders, and further consolidate America’s wireless marketplace. It would have also further complicated Sprint’s financial position — already heavily indebted as it commits to a major 4G wireless service upgrade and deals with an even more expensive commitment to Apple to pitch the iPhone on Sprint’s network.

Reuters reports some investors considered the deal a mistake and are glad it was aborted.

A 30 percent premium seemed “irrational” and would have hurt Sprint shareholders, Roe Equity Research Kevin Roe told the news service.

“He’s on a short leash,” Roe said. “The board did the right thing, thank God. It’s remarkable this deal got this far.”

MetroPCS competes with Sprint’s prepaid services in several regions including metropolitan New York City, northeastern Texas, southern California, southern Michigan and central/southern Florida. MetroPCS operates its own 4G LTE network.

Now that MetroPCS is considered “in play,” it is likely other suitors may consider buying the company out. Among the most likely — Leap Wireless, which owns Cricket and operates a comparable service.

Craig Moffett of Bernstein Research has told investors the wireless industry continues to be “crying out for consolidation.” The most important players in that consolidation story are T-Mobile and Sprint, which remain potential partners if the two companies can overcome their technology differences. T-Mobile operates a GSM network incompatible with Sprint-Nextel.

Click here to view the embedded video.

CNBC reports Sprint walked away from a takeover attempt of MetroPCS on Friday. (3 minutes)

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Wireless Telecom Roundup: The Big Get Bigger; Smaller Providers Feeling the Heat

Phillip Dampier — Tue, 21 Feb 2012 15:43:41 +0000

A summary of recent quarterly earnings reports from America’s wireless companies:

Verizon Wireless: Verizon has been uncompetitive in the prepaid market for the last several years, as it focused on its postpaid/contract customers. No more. Recent price cutting and the introduction of new contract-free plans that offer unlimited calling or packages of features comparable to contract plans are starting to win Verizon a bigger share of the prepaid market. But Verizon also successfully picked up 1.2 million new contract customers as well, many switching from AT&T or smaller providers. That’s the second best result the company has had in the last two years. Verizon has a whopping 87.4 million people on two-year contracts and 21.3 million prepaid customers — 108.7 million total. Verizon’s iPhone remains popular with 4.3 million activations last quarter.

AT&T: Growth at AT&T achieved its best results in the last quarter of the year, but the company continues to trail Verizon Wireless. AT&T added 717,000 contract customers last quarter, and has been behind Verizon adding new customers for more than a year. The company’s reputation for lousy service and policies that antagonize their customers have driven people to look elsewhere — mostly to Verizon. But iPhone devotees are remaining loyal to AT&T, with one of every five new iPhone activations happening on AT&T’s network. The company picked up 7.6 million new iPhone activations last quarter.

Sprint: The iPhone is killing Sprint’s balance sheet, but is bringing the company new contract customers. Historically, Sprint’s most predictable growth has come from its resale agreements with third party providers and its various prepaid service divisions (Boost/Virgin Mobile). But with the introduction of the Sprint iPhone (1.8 million new activations last quarter), customers looking for unlimited data or a cheaper plan are finding both at Sprint. Unfortunately for the company, the wholesale cost of the iPhone is eating heavily into the company’s cash on hand.

Leap Wireless/Cricket and MetroPCS: Both companies are facing increasing challenges sustaining their prepaid service business models because of growing competition from larger providers. Just about everyone who wants a two year contract-cell phone plan already has one, limiting new growth opportunities. That is forcing AT&T, Verizon, Sprint and T-Mobile to turn their attention to the still-growing prepaid market, which is attractive for the credit-challenged, occasional users, travelers, and those with lower incomes. Both Cricket and MetroPCS have traditionally targeted urban markets, where their networks are focused, to sell customers inexpensive service plans with convenient payment options. But their networks don’t extend outside of suburban and urban areas, so roaming expenses can be higher for customers on the go. Customers of both companies are increasingly looking to larger providers with more robust network coverage and increasingly aggressive pricing.

That has left Cricket with anemic, but acceptable growth, picking up 179,000 new customers in the fourth quarter. MetroPCS, however, failed to meet expectations with just 197,410 new customers in the fourth quarter. Existing MetroPCS subscribers are also leaving at a higher rate.

Verizon Buying Portion of Plateau Wireless’ New Mexico Operations

Plateau Wireless serves eastern New Mexico and portions of western Texas.

The consolidation of America’s wireless market continues with this week’s announcement Verizon Wireless intends to acquire a portion of Plateau Wireless’ network operations in southwest New Mexico.

Verizon will take over Plateau’s 259,000 mostly rural customers in portions of Roswell, Carlsbad, Artesia, Hobbs, and Ruidoso, N.M.

The acquisition covers a service territory of 26,100 square miles.

Plateau says the decision came down to money. The wireless company needs the infusion of cash a Verizon purchase would bring to help finance high speed wireless upgrades.

The FCC will have to review the transaction before it can be approved.

Plateau will continue to service customers in Clovis, Portales, Tucumcari and parts of western Texas.

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Moody’s Declares AT&T and Verizon the Winners — Sprint and T-Mobile Can “Never Catch Up”

Phillip Dampier — Wed, 15 Feb 2012 18:39:33 +0000

Game over. In the championship of cell phone competition, Verizon Wireless and AT&T have won, and it is now too late for Sprint-Nextel or T-Mobile USA to catch up.

That is the conclusion of Moody’s Investors Service, who has determined competition in waning in the U.S. wireless marketplace.

“AT&T Mobility and Verizon Wireless have better network coverage, wider capabilities and wider profit margins which gives them a competitive advantage that smaller rivals just can’t match,” said Mark Stodden, a Moody’s analyst and author of the report. “It is too late for competitors to invest and catch up; Sprint has the willingness but not the ability, while T-Mobile’s parent Deutsche Telekom, is the opposite.”

Sprint’s ambitious plans for a new 4G LTE network have been suppressed by a lack of enthusiasm by Wall Street investors and bankers, who seem to prefer the much-larger AT&T and Verizon who can sustain increased pricing and are better credit risks. T-Mobile USA has practically been abandoned by its parent owner Deutsche Telekom, which wants to focus its investments in larger markets in Europe.

Moody’s estimates AT&T and Verizon will account for 81 percent of industry earnings in 2011. Wall Street has pressured Sprint and T-Mobile to seek consolidation to better withstand their larger competitors. Before AT&T bid for T-Mobile, rumors of an acquisition of the German-owned company by Sprint-Nextel were common, although the two companies operate with different network technology. Moody’s predicts troubled waters for Sprint if it should actually seek to acquire T-Mobile, because the FCC seems comfortable with a minimum of four national carriers.

Instead, Moody’s predicts Sprint will seek to acquire smaller regional carriers and prepaid providers like Leap Wireless’ Cricket and MetroPCS. Neither acquisition would significantly improve Sprint’s service footprint, however, as both prepaid providers operate only in larger markets where they already co-exist with Sprint.

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AT&T Scores Last (Again) in Consumer Reports’ Ratings; Oddly AT&T Reseller Scores Highest

Phillip Dampier — Tue, 06 Dec 2011 20:04:26 +0000

AT&T has once again scored dead last in a nationwide survey (subscription required) of wireless providers commissioned by consumer magazine Consumer Reports.

Among national coverage carriers, Verizon Wireless again scored the highest, but not highest overall when including smaller independent and regional carriers. Top honors were won by Consumer Cellular, a relatively small company in Portland, Ore. that ironically depends on bottom-rated AT&T’s network to deliver service. What sets Consumer Cellular apart from other carriers is its near-exclusive focus on selling phone service to America’s senior population. Working with groups like the AARP to market simple cell phones to older, less technologically-comfortable customers, over 85% of Consumer Cellular customers are over the age of 50. The vast majority are occasional cell phone users, primarily using cell phones to make and receive calls.

Regional carrier U.S. Cellular, which used to top Consumer Reports‘ surveys, scored second. Most U.S. Cellular customers are in the Pacific Northwest, Midwest, and parts of the East including New England. CREDO, better known under its former name Working Assets Wireless, scored third. It provides service over the Sprint network.

Among major-sized providers, only Sprint managed to escape the poor ratings for value received by AT&T, Verizon, and T-Mobile. Also ironic, T-Mobile continued to score better than AT&T, which is still working feverishly to acquire the German-owned carrier.

AT&T also did poorly in delivering reliable voice and data services, according to respondents. Customer service was also deemed lacking.

Consumer Reports

“Our survey indicates that subscribers to prepaid and smaller standard-service providers are happiest overall with their cell-phone service,” said Paul Reynolds, electronics editor for Consumer Reports. “However, these carriers aren’t for everyone. Some are only regional, and prepaid carriers tend to offer few or no smart phones.”

Consumer Cellular being a prime example.

Consumer Reports surveyed 66,000 Americans for its 2011 Wireless Satisfaction Survey and found little had changed from last year. The consumer magazine recommends consumers who don’t make or receive a lot of calls or are not addicted to wireless data services consider a prepaid plan instead of a two-year contract. Competition in the prepaid arena continues to force prices down, and most providers offer month-to-month service plans that can be automatically renewed through a checking account or credit card, eliminating any hassle purchasing “top up” cards.

Most of the prepaid providers resell service provided by AT&T, Sprint, or Verizon Wireless. Two that don’t: MetroPCS and Leap Wireless’ Cricket, received little regard from those surveyed. MetroPCS scored second from the bottom and Cricket didn’t make the ratings at all. Two prepaid plans to consider first: TracFone, excellent for occasional calling, and Straight Talk, sold by Wal-Mart — better for those who like to talk a lot on their phones. If you don’t need the sexiest handset around, Stop the Cap! also recommends Page Plus, which relies on the Verizon Wireless network, especially if you don’t need a lot of data services.

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MetroPCS’ Nasty Terms of Use: ‘We May Not Provide You a Meaningful Data Experience’

Phillip Dampier — Wed, 25 May 2011 14:30:41 +0000

Unlimiting the ways a cell phone company can limit your service.

MetroPCS pitches its 4G/LTE plans to customers looking to save money over the bigger players in the marketplace. The upstart provider, based in Richardson, Texas, serves just over a dozen major metropolitan areas with no-contract plans that deliver lower prices in return for smaller coverage areas. As larger providers heavily sell their “next generation 4G” networks, MetroPCS has also been promoting their own “unlimited talk, text, and web” 4G/LTE plan that offers an “unlimited” experience for $60 a month. But there is a catch, only revealed when customers click the fine print link that opens the Terms of Use. The document is a poster child for Net Neutrality, because it allows the company to block, throttle, prioritize, alter, or inspect any web content.

Here is what MetroPCS advertises:

Here is a selection of the Terms and Conditions which tarnish a great sounding deal (underlining ours):

You acknowledge and agree that the Internet contains Data Content which, without alteration, will or may not be available, or may not be providable to you in a way to allow a meaningful experience, on a wireless handset.

You acknowledge and agree that such alteration that MetroPCS may or will perform on your behalf as your agent may include our use of Data Content traffic management or shaping techniques such as, but not limited to delaying or controlling the speeds at which Data Content is delivered, reformatting the Data Content, compressing the Data Content, prioritizing traffic on MetroPCS’ network, and placing restrictions on the amount of Data Content made available based on the Agreement. You further acknowledge that MetroPCS may not be able to alter such Data Content for you merely by reference to the Internet address and therefore acknowledge and agree that MetroPCS may examine, including, but not limited to Shallow (or Stateful) Packet Inspection and Deep Packet Inspection, the Data Content requested by you while using the MetroWEB Service to determine how best to alter such Data Content prior to providing it to you.

If we notice excessive data traffic coming from your phone, we reserve the right to suspend, reduce the speed of, or terminate your MetroWEB Service. In addition, to provide a good experience for the majority of our customers and minimize capacity issues and degradation in network performance, we may take measures including temporarily reducing data throughput for a subset of customers who use a disproportionate amount of bandwidth; if your web and data Service Plan usage is predominantly off-portal or otherwise not provided by MetroPCS during a billing cycle, we may reduce your data speed, without notice, for the remainder of that billing cycle. We may also suspend, terminate, or restrict your data session, or MetroWEB Service if you use MetroWEB Service in a manner that interferes with other customers’ service, our ability to allocate network capacity among customers, or that otherwise may degrade service quality for other customers.

MetroPCS also wants customers to know their service is not intended as a home broadband replacement, and states it is only to be used for basic web services, including e-mail and web browsing and downloading of legitimate audio content. Video streaming is naughty.

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MetroPCS Introduces Pay Walls for 4G Users: Web Favorites Locked Out Unless You Spend More

Phillip Dampier — Wed, 05 Jan 2011 03:44:46 +0000

Hammer Time: MetroPCS introduces 4G/LTE service plans that establish pay walls for familiar web content.

Want a sneak preview of America’s Internet experience without real Net Neutrality? Look no further than MetroPCS which has managed to turn the clock back to the early days of “mobile web,” where carriers pre-selected content and blocked much of the rest. Want access anyway? Then spend some time with a spreadsheet to figure out what service plan you’ll need and start counting out some ten dollar bills because MetroPCS promises a Long Term Expensive 4G experience.

The business press focused on MetroPCS’ new pricing — delivering what the company calls “a selection of data access levels to meet customers’ lifestyles.” But some public interest groups considered today’s announcement the first gauntlet thrown in the Net Neutrality war since the FCC voted to approve a watered down version of the open Internet policy last month.

MetroPCS called their new plans a boon to customers.

“Our customers told us they wanted more video, more sharing of their content and more Web browsing capabilities – they want to have it all with the value and no annual contract that only MetroPCS can deliver,” said Roger D. Linquist, president, CEO and chairman of MetroPCS. “Our 4G LTE network can deliver unlimited voice and mobile broadband data services and, with these new service plans, consumers are in the driver’s seat on how much additional data access and real-time entertainment content they want to pay for on a monthly basis.”

But many customers will discover the company’s road to good intentions pitted with potholes, toll booths, roadblocks, and diversions.

Just getting on this data highway to hell could be very confusing to customers who will need to think about what websites and services they need, want, or can live without, and then finding the corresponding service plan that makes it all work.

MetroPCS says it has three new pricing levels to consider:

The $40 service plan offers unlimited talk, text, 4G Web browsing with unlimited YouTube access.

The $50 service plan includes the same unlimited talk, text, 4G Web services and unlimited YouTube access as the $40 plan. Additional features include international and premium text messaging, turn-by-turn navigation with MetroNAVIGATOR™, ScreenIT, mobile instant messaging, corporate e-mail and 1 GB of additional data access, with premium features available through MetroSTUDIO™ when connected via Wi-Fi, including audio capabilities to listen and download music and access to preview and trial video content.

The $60 service plan provides the same premium features as the $50 plan, plus unlimited data access and MetroSTUDIO premium content such as 18 video-on-demand channels and audio downloads.

You'll need a smart phone to figure out what pricing plan actually delivers the services you need.

A customer could be forgiven if they assumed the $40 plan provided “unlimited web browsing,” which will be interpreted to mean they can access all of the content contained on those websites, but they would be wrong. Beyond YouTube, MetroPCS customers will need to spend at least $10 more to access embedded video and audio, play online gaming, and access other rich media services. Want to view videos from a website that isn’t among the carrier’s “preferred content partners?” Forget it.

What about Skype, Netflix and other popular services? Nuh uh.

Only the $60 monthly plan delivers unlimited data, along with pre-selected video and audio you can access… or not.

Free Press Policy Counsel M. Chris Riley called MetroPCS’ foray into the toll highway business a profit padding scheme.

“In December, the FCC chose to disregard wireless protections in its Net Neutrality order, and MetroPCS’s new scheme is a preview of the wireless future in a world without protections on the mobile Web. Such blocking of websites, services or applications would clearly be prohibited and deemed unreasonable on a cable or DSL network. Are these the kinds of restrictions the FCC really wants to promote on wireless networks?

“The open Internet order approved in December stated that the FCC was not implicitly approving practices on the mobile Web that violate its rule against unreasonable discrimination – and now we’ll see whether the agency is willing to do anything about such practices. Silence in the face of ongoing violations is no different from outright approval. If MetroPCS is allowed to engage in rampant discrimination and blocking of Internet applications and services, will Verizon be next? Will AT&T extend its history of blocking services like VoIP and Sling on its LTE network in the future?

“MetroPCS’s plan will restrict consumer choice and innovation in a developing mobile market, all for the sake of further padding its bottom line. The FCC must not stand idly by while carriers are engaging in anti-consumer and anti-competitive behavior, and we urge the agency to investigate.”

Click here to view the embedded video.

It’s too bad the company that regularly lampooned their wireless competitors in witty commercials has now adopted the same “gotcha” tricks and traps that will leave customers trying to figure out why they can’t access the web content they thought they paid to receive. Watch a series of amusing MetroPCS ads and a brief review of the company’s new 4G phone courtesy of TheStreet TV. “Hello. Hello. Hello.” (7 minutes)

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Unlimited Flat Rate International Calling Arrives for Just $5 A Month – Why Do We Need to Drop Flat Rate Internet Again?

Phillip Dampier — Thu, 25 Jun 2009 04:02:18 +0000

One of the arguments used by those who want to engage in Internet Overcharging is that people already “pay for what they use” for gas and electric service, so why shouldn’t they adopt the same attitude towards Internet service.

Historically, people did used to pay for their usage of online services, before there was a World Wide Web. CompuServe, QuantumLink, PeopleLink, Delphi, GEnie, AOL, among many others used to provide access to dial-up users for a fee which varied depending on the amount of time spent accessing the service. Rates during business hours were outrageous (CompuServe charged upwards of $12-16 per hour in the 1980s), but more reasonable during the evenings.

But as costs to provide the service declined, providers rapidly abandoned that type of pricing for flat rate, unlimited access for one monthly price. Internet Service Providers worked the same way, with customers first using dial-up modems to connect for one monthly price. Nobody worried about watching the clock or meters. It has worked that way ever since, with highly profitable results for broadband providers.

MetroPCS Coverage Map (click to enlarge)

Now, some of these companies hunger for more of your dollars, and they are attempting to convince you their pricing should be similar to utilities like gas, electricity, and water (while conveniently not allowing themselves to be regulated like those providers). They scrupulously avoid comparing their service with telephone companies, which are really the closest cousins to broadband service.

Now we know why. While some broadband providers want to move away from flat rate pricing, telephone companies are moving toward flat rate pricing.

In addition to unlimited local, statewide, and nationwide flat rate long distance plans, MetroPCS, a regional prepaid mobile telephone provider, has announced a new unlimited international flat rate calling plan for just $5 per month.

To be eligible for $5 Unlimited International Calling, customers must choose an unlimited calling plan starting at $40 per month. For an additional $5, customers get unlimited calling to 100 countries.

MetroPCS sees this new international flat rate plan as a “game changer” in the industry, drawing large numbers of new subscribers who love to call overseas. The company may even attract tourists who sign up with a “throwaway” basic mobile phone just for the duration of their visit. The costs for the service are dramatically lower than roaming rates, especially for international calls, even with the price of the phone.

The only downside? MetroPCS operates in only a limited number of cities, although they maintain roaming agreements with Leap Wireless (Cricket) to extend their coverage. Once one company offers flat rate international calling, others will certainly follow, potentially establishing a new paradigm for truly unlimited mobile phone calling, regardless of where you call.

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