Getting confronted with terms such as “Digital Era” or “Industry 4.0” let us assume, that we live in an ecosystem that is already set up sufficiently with sensor technology that operates in a network of high-speed connectivity and real-time information exchange. If we would ask our parents, they would possibly support that assumption – while still being fascinated by the new TV’s ability of entering the internet. Unfortunately, the reality depicts a heterogeneous composition of emerging promises accompanying 5G broadband implementation and a lack in infrastructure connectivity within countries (Oughton, E. J., & Frias, Z., 2018). While auctions for the 5G usability rights have reached new price dimensions at the beginning of this year, countries still debate about digitisation strategies for their infrastructures to efficiently unlock this disruptive technology’s potential in the far future (Medin, M., & Louie, G., 2019).
So, is there any reason for shifting the focus towards a technology which appears to be just a nice premium in an infrastructure, that still needs to tackle the basic problems of connectivity?
One central concept for answering these questions could be the general importance of digital ubiquity in today’s world. It is understood to drive companies to think ahead and to strive for revolutionising their business models on the background of value creating and capture. According to them, a company has to re-evaluate the core values for its customers while, at the same time, needs to understand new industry forces and dynamics to capture the identified value (Iansiti, M., & Lakhani, K. R., 2014).
A company that faces the problems surrounding 5G technology and which addresses the potential of 5G technology by dealing with future dynamics within its industry is T-Mobile.
One promising step is the planned merge with the fourth-largest U.S. carrier ‘Sprint’ (Forbes, 2019). Together, they address a wide-spread problem in the U.S., namely the lack of proper internet access in rural areas and in the overall outdated wireless environment of the country. In the short run, this move mainly underlines the two companies’ goal of staying competitive in a market to compete with the two biggest carriers in the U.S. market – Verizon and AT&T. By taking a look far beyond the current market situation T-Mobile addresses these communities in hope to gain new customer segments throughout the country. The company is convinced that a wider network creates new value, including further price reductions, wide-spread wireless connectivity in the U.S. and, consequently, higher interaction between customers in the network (T-Mobile-Commitment, 2019). Based on that, product and service offerings shall benefit from the network and allowing T-Mobile to offer at a low-price, while introducing new service innovations to the market (NewYorkTimes, 2019).
However, what matters in today’s fast evolving industries is a company’s capability of capturing the new value. In our case, T-Mobile shifts its focus already to a new digital era, in which the 5G technology will play a crucial part. To capture the promised new value, the company intends to become a key player in that industry. Merging with Sprint creates a pool of resources with which T-Mobile could direct its business model towards the potential of the future markets (FinancialTimes, 2019). Providing high-speed at a low price at a high scale will also increase the pressure on other sectors within the industry and markets such as in-house bandwidth providers, who would need to orientate on the T-Mobiles price-settings. Not only do other companies within the emerging market welcome T-Mobile’s pro-active attitude, but also did public institutions and political parties mention their hope, that this move will create a domino-effect, driving other industries towards the implementation of 5G technology (TheWallStreetJournal, 2019).
In general, a public mindset should be the encouragement of such companies to think beyond well-known dimensions to give a kick-start for much bigger movement. Especially when dealing with the digitisation of whole industry infrastructures, these approaches will be essential for creating opportunities and to reach new potential within industries.
References
Iansiti, M., & Lakhani, K. R. (2014). Digital ubiquity: How connections, sensors, and data are revolutionizing business.
Medin, M., & Louie, G. (2019). The 5G Ecosystem: Risks and Opportunities for DoD. Defense Innovation Board Washington DC United States.
Oughton, E. J., & Frias, Z. (2018). The cost, coverage and rollout implications of 5G infrastructure in Britain. Telecommunications Policy, 42(8), 636-652.
Sprint T-mobile Merger: Overview Of Some Of The Recent Developments
Trefis Team – https://www.forbes.com/sites/greatspeculations/2019/05/16/sprint-t-mobile-merger-overview-of-some-of-the-recent-developments/#922069058df5 [accessed 15.09.2019]
T-mobile-sprint Merger Wins Approval Of F.c.c. Chairman
Edmund Lee – https://www.nytimes.com/2019/05/20/business/dealbook/sprint-tmobile-merger.html [accessed 15.09.2019]
T-mobile and Sprint Clinch Us Approval For Merger
Kadhim Shubber – https://www.ft.com/content/048a149a-af00-11e9-8030-530adfa879c2 [accessed 15.09.2019]
U.s. Approves T-mobile-sprint Merger
Sarah Krouse-Drew FitzGerald – https://www.wsj.com/articles/justice-department-approves-merger-of-t-mobile-us-and-sprint-11564155026 [accessed 15.09.2019]
When We Say We’ll Do Something, We Mean It!
John Legere – https://www.t-mobile.com/news/new-t-mobile-commitments [accessed 15.09.2019]
Hi Tobias,
with 5G I believe you mention a relevant topic in today’s discussion on how digitization is being speeded up. The concept of hyperconnectivitiy with highspeed bandwidth has the potential to drive value for organizations like T-Mobile and network providers alike.
However, the way T-Mobile for instance is looking at the value they can derive from introducing new concepts like 5G has a debatable underlying rationale. Instead of pushing the high speed connection of only particular areas within our developed world, but also in regards to the whole world, there should be a motivation to first create decent 3G or LTE connection comprehensively across continents. I find it hard to support an initiative which tries to speed up connectivity while an essential part in Germany is not yet having a decent and stable access to a network.
You mentioned that 5G is a technology which will be implemented in the future and I hope that with the discussions about future technologies, there is an equal focus on the problems and needs these companies like T-Mobile are trying to solve.
Thanks for your article, I enjoyed reading it!
Hi Tobias,
A very interesting article! I was thinking of T-Mobile and what they recently did in the Dutch market, they acquired a big player named Tele2 (https://www.tele2.com/media/press-releases/2019/merger-completed-between-tele2-and-t-mobile-in-the-netherlands). And by seeing that they are also willing to merge with Sprint, also a big player in the US market, it seems like an overall strategy where they want to gain marketshare. But one big question pops-up in my mind, why did AT&T and Verizon not buy Sprint earlier onwards? Would it be too expensive for them to roll our the network in remote areas in the US? And why is T-Mobile willing to do this? Of course 5G can help a lot in this, people don’t even need an internet connection in their homes any longer, they can just make use of the ‘mobile’ network also within their work place, homes and any other place people might be. Speed and the amount of data that can be down- and uploaded is a huge advantage in comparison to 4G networks. But coming back to the T-Mobile case, by acquiring Sprint they can expand their services rapidly, and also for a relative ‘cheap’ price, but don’t you think that in the end this will end up in a price war? If T-Mobile sets a relative cheap price in for accessing 5G networks in the US, Verizon and AT&T most probably need to follow. Again and again. If T-Mobile does this I think they should be really careful with their first mover advantage, since lock-in effects will be crucial for them, otherwise the competition will also roll out their 5G networks for even cheaper prices resulting in a negative spiral… I’m really curious on what is going to happen in these markets in the near future.