How Cord Cutting Led to the Merger of T-Mobile & Sprint

Yesterday, T-Mobile and Sprint announced a $26 billion merger to form the new T-Mobile.

One of the major reasonings behind the merger was the focus on 5G — the next generation of wireless internet that can bring speeds over 1 Gbit/s.

By being able to bring together Sprint (2.5 Ghz) and T-Mobile’s (600 Mhz) respective network holdings, they feel that they can be a leader in the 5G race.

To date, cord-cutting has been the result of people getting rid of their cable and satellite service for internet streaming content. T-Mobile CEO, John Legere, feels that broadband Internet is the next industry to have their cord cut.

Right now, you likely have a wireless plan for your smartphone and a broadband plan for your home. In the future, those will likely merge. The new bundle may come from your telecom provider, instead of your cable provider.

With AT&T owning DIRECTV NOW, T-Mobile owning Layer3, and Verizon owning AOL/Yahoo, this is going to be the new battlefront. In order to compete, T-Mobile & Sprint felt that working together against AT&T and Verizon gave them a better chance than going at it alone.