Opinion

The T-Mobile-Sprint Merger Isn’t Really About 5G

By Nicholas Economides

Headshot of Nicholas Economides

No matter how you cut it, 5G is not a legitimate justification for this merger.

Sprint and T-Mobile are trying to justify their recently announced merger by claiming that the combined company would be able to invest in 5G service. Yet no matter how much T-Mobile CEO John Legere and Sprint CEO Marcelo Claure push this justification for their merger, it doesn’t make any sense.

To start, a fully developed 5G network is at least four years away. At present, 99% of the 5G electromagnetic spectrum is in the hands of the U.S. government, which has not determined any procedure for allocating it to telecom companies. AT&T and Verizonhold the miniscule remaining amount. So wide-scale investment in 5G is far from imminent.

In addition, 5G uses a spectrum that is inferior to the one used by 4G/LTE. 5G cannot penetrate walls, so its transmission cells need to be placed inside buildings, requiring substantial capital investment and a lot of time.

Read the full article as published by Fortune

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Nicholas Economides is a Professor of Economics at NYU Stern School of Business.