Tech Brew Ride Home - Monday, Apr. 30, 2018 - The T-Mobile/Sprint Merger

Episode Date: April 30, 2018

The T-Mobile/Sprint merger, Fitbit wants to share health data with doctors, Oculus wants virtual reality theater, Galaxy S9s get a storage boost, and did Jeff Bezos become a billionaire simply because he wanted to live in space?  Links:As controversy swirls, Facebook dials down the swagger on its developer conference (The Verge)Oculus wants to make immersive virtual theater a reality (CNET)Jeff Bezos reveals what it’s like to build an empire and become the richest man in the world — and why he's willing to spend $1 billion a year to fund the most important mission of his life (Business Insider) Credits: Produced by @brianmcc and the @techmeme editors Music by @jpschwinghamer Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme ride home for Monday, April 30th, 2018. Today, the T-Mobile Sprint merger. Fitbit wants to share health data with doctors.

Oculus wants virtual reality theater. Galaxy S-9s get a storage boost. And did Jeff Bezos become a billionaire simply because he wanted to live in space? Here's what you miss today in the world of tech. So I guess rumors are only rumors until they become fact. If you'll recall on Friday, I talked about the seemingly endless rumors of a T-Mobile Sprint merger, and on Sunday afternoon, those rumors became fact.

T-Mobile announced it would be acquiring Sprint for around $26 billion in stock. Deutsche Telecom, parent company of T-Mobile, would be taking a 42% stake, and SoftBank, which has long had a majority position in Sprint, will control 27% of the combined company. Going forward, the company will be known as T-Mobile, and T-Mobile, and T-Mobile, CEO John Ledger will be the combined company's CEO. On a Sunday conference call, Ledger said, quote, we are going to have an impact on America. We are going to drag the rest of the players kicking and screaming to the prize, which is American leadership in 5G networking. Before the announcement, T-Mobile had a market capitalization of 55 billion, and Sprint is valued at 26 billion. Combined,

the new company would have about $74 billion in annual revenues and $7,000. million wireless subscribers. Verizon is currently the largest U.S. wireless carrier with $88 billion in revenue and 111 million subscribers. The number two player in the market is AT&T with 71 billion in revenue and 78 million subscribers. Sprint and T-Mobile claim that they will realize around $43 billion in operational synergies by combining their two networks. But a key thing to consider here is that Sprint is carrying $32 billion in debt more than its entire market cap. And the current scenario where T-Mobile is buying Sprint is a reversal from four years ago when Sprint attempted to buy T-Mobile. That deal fell apart after the Obama administration expressed antitrust concerns,

and in subsequent years, T-Mobile has gained subscribers largely at Sprint's expense. Four years ago, the two companies were largely equal in wireless market share. But as for now, T-Mobile has 17% of the U.S. market, and Sprint only has 13%. So the combination of the two would hold 30% of the U.S. market compared to the combined 69% of the market controlled by Verizon and AT&T. And that's what this is all about, of course, trying to achieve the sort of scale that will allow stronger competition with the bigger carriers, especially over the next few years as the North American market transitions to the next generation 5G wireless technology. As Ben Thompson points out in Stratecery, Sprint, quote, just doesn't have the money to invest in keeping

its current network up to date, much less building out a next generation 5G network. Team Mobile, meanwhile, has a lot of spectrum in the 600 megahertz range, which is very low frequency and much less useful for 5G. Verizon and AT&T and AT&T. are betting on super high frequencies called millimeter wave spectrum, but the company that might end up having the best of both worlds is Sprint. The company owns a huge amount of 2.4 gigahertz spectrum from its acquisition of clear wire. It just can't afford to develop it, end quote.

And so strength through competition is very much what the two companies are stressing. Obviously cognizant that four years ago regulators were worried about the U.S. wireless market essentially being controlled by only three companies, Sprint and T-Mobile are stressing that they believe this deal is necessary to create a larger competitor that can compete at scale. Quote, this isn't a case of going from four to three wireless companies. There are now at least seven or eight big competitors in this converging market. So said T-Mobile's John Ledger. In a conference call on Sunday, the companies vowed to boost hiring and spending on network deployment after, the merger, but one wonders how that squares with the promises of finding billions in operational

synergies. And there is obviously a new regulatory regime in Washington, one that seemingly holds complicated views when it comes to antitrust concerns. On the one hand, the Justice Department is trying to block the merger of AT&T with Time Warner. Quote, I think it's very hard to imagine DOJ just giving this deal a pass, given how much it would increase concentration in key segments of the wireless market. So said former DOJ official Gene Kimmelman in Axios. And this potential Sprint T-Mobile merger would create a U.S. wireless company largely controlled by foreign owners, one German and one Japanese. The Trump administration has lately been stepping in to prevent U.S. technology companies and especially telecoms companies from being acquired by foreign owners.

And so T-Mobile and Sprint are pitching this as a way for the U.S. to be more competitive, with other countries, such as China, which many people feel are further down the road to the promised 5G future than the U.S. is. On Sunday's conference call, T-Mobile's ledger said, quote, the combination of the 600 megahertz and wireless spectrum and other assets that we have are critical building blocks of what America needs to deploy to take its rightful place. Opinions on this potential merger are all over the map. Tech analyst Avi Greengart tweeted, T-Mobile Sprint merger rationale is aimed directly at regulators. Number one, we have to be allowed to merge or the Chinese will win.

Number two, it isn't reducing competition because anyone might be a carrier. Number three, rural broadband. Number four, we'll compete for business users. Number five, jobs. Rich Brome, the editor of Phonescoop.com, tweeted, T-Mobile and Sprint have some nerve saying this merger will create thousands of new American jobs. The expected run rate cost synergies of six plus billion dollars don't come from hiring more people. Quite the opposite, I'm sure. If you read the release very carefully, they don't

claim they'll hire more people, just that 5G will generally be a job creator. Hard to see how it's that many more jobs than with separate companies. Geek Squad founder Robert Stevens tweeted, I'm hopeful this will give us a viable third challenger to AT&T and Verizon, end quote. And that actually echoes Ben Thompson's position, as Ben has been saying for a while, that in essence, there already is a duopoly in the United States between Verizon and AT&T. Quote, there really aren't four national carriers. Rather, there are two healthy carriers, Verizon and AT&T, and two cripples, Sprint and T-Mobile, who in isolation pose minimal threat to the established pecking order. In this view, a merger of Sprint and T-Mobile would not have reduced competition from four to three, it would have increased competition from two to three.

Thompson concludes his Monday note on the merger by drawing an analogy to consolidation in a different industry. Quote, it reminds me of the questions surrounding Disney and Fox. Are the numbers of studios being reduced, or the number of viable Netflix competitors being increased? In both cases, I think your choice depends on the direction in which you look. backwards and neither deal should be allowed. Forward and can they not be? This echoes Ledger's internal memo to T-Mobile employees. Quote, we'll drive broader, better competition in the rapidly converging content and communications marketplace.

Oh, and quote, we'll still be called T-Mobile, we'll still be Magenta, I'll still be your leader, and we'll continue to be customer-obsessed. Facebook's F8 developer conference begins tomorrow. And according to The Verge, it will be a bit of an odd affair this year, given the various controversies that I've been swirling around the company recently. We've already heard many reported rumors that a home smart speaker that Facebook intended to unveil at the event this year has been postponed, so as not to stoke the flames of privacy controversies. But it's also a developer conference that will happen in the midst of several API rollbacks and shutdowns that Facebook has announced in the wake of the privacy scandals, moves that have angered developers who feel that their work has been disrupted by abrupt and confusing changes. Quoting from the Verge piece, Angene Midha, co-founder of an augmented reality company named Ubiquity Six, told me he was skipping F8 for the first time in years.

The original vision for developers on F8 that they could plug into the company's social graph to rapidly grow their businesses is greatly diminished, he said. That whole premise is gone, Miedha said. It feels like you've got to pack your bags and move on to somewhere else, end quote. According to the Verge, the usual developer sessions around developing for virtual reality, business apps, and gaming will still take place, but they will run side by side with sessions with titles like authenticity and quality in the news feed, and helping high-quality news thrive on Facebook. And in a story that is Facebook adjacent,

CET is reporting that Facebook-owned VR company Oculus is experimenting with virtual theater, performances put on by actors that allow audiences to experience narratives in a fully interactive and immersive way. I'll let CET describe the experience, quote, Scattered around Earth, you and other audience members slip on VR headsets and convene in a common virtual world. As you explore, you're approached by a character different from avatars you've met in VR before. It reacts to you like somebody in the same room would. But this isn't a creature of our world. It's sewn together by the same threads as the rest of this invented universe unspooling around you.

And by following it, you unlock the possibility of a unique journey. Rather than programmed by avatars, these characters are all powered by live, trained actors. Far away on a motion capture stage, a cast leads you and others through a performance that's never exactly the same story twice, end quote. VR theater has been a growing trend for several years now and has seen its most prominent success in Sleep No More, a riff on Macbeth that is put on by the Punch Dr. Dr. Theater Company here in New York City for seven years now.

Oculus's own take on VR Theater is expected for release next year and wants to expand the genre. We're really interested in how do you create that experience of live actors without needing to be in a site-specific location? So said Yelina Rechiske, executive producer of experiences at Oculus. A grab bag of tidbits of stories here. First, one with a VR flavor. Google and NBC announced today that they have teamed up to produce at least 10 multi-episode VR productions

that will run as extra content to complement NBC's original programming, as well as programming on its sister channels. Viewers will be able to watch the shows on Google Cardboard or Daydream View, as well as stream them on YouTube in regular 2D. Initial VR shows will come from Saturday Night Live, Vanderpup Rules, and various shows from the Sci-Fi channel. Samsung this afternoon announced new 128-gibite and 256-gibytes versions of its Galaxy S9 and S-9 Plus flagship smartphones.

The original phones launched with only 64 gigabytes of storage, if you weren't aware. The new devices will be available only from Samsung.com in the U.S. at the moment, but pre-orders begin May 1st. Fitbit announced this morning that it will soon make health data from its wearable devices available to doctors. It will do this by utilizing Google's cloud for healthcare API, which is designed to create an information sharing platform for healthcare professionals, medical facilities, and researchers. Through its partnership with Google, Fitbit hopes to create a system where your doctor might be able to monitor your health information. real time thanks to the data collected by your digital wearable. The timeline for when such a platform might roll out was not announced. And lastly, the downvote button that Facebook recently announced

has begun to roll out, at least to some users. The Reddit style up or down buttons seem to appear in comments to posts, and Facebook has said it intends that users flag bad comments, which it defines as those having, quote, bad intentions or are disrespectful. But Facebook has also tried to stress that this isn't a dislike button. They probably don't even like me using the term downvote. The rollout has apparently begun with users in Australia and New Zealand and seemingly is moving westward with the sun. Finally, today, I know I featured a profile of Jeff Bezos in Friday's Longreads suggestions,

but whenever Jeff Bezos speaks, it tends to be news. He is the richest man in the world, after all. Over the weekend, Bezos gave a rare in-depth interview to Matthias Doppner, CEO of Alex Springer. A couple of the key takeaways from the interview. On recent criticism from President Trump, Bezos said, We should be scrutinized.

I think all large institutions should be scrutinized and examined. It's reasonable, end quote. On the controversies around data protection and privacy that have royal Silicon Valley recently, quote, I think this is one of the great questions of our age. Asked if regulation was necessary. Bezos responded, quote, it's not ultimately our decision, so we will work with any set of regulations that were given.

Ultimately, society decides that. We will follow those rules regardless of the impact they have on our business. And we will find a new way, if need be, to delight customers. On his decision to buy the Washington Post, quote, it's the most important newspaper in the most important capital city in the Western world. I'd be crazy not to save that newspaper. I'm going to be very happy when I'm 80 that I made that decision. And when asked how it feels to be the first person in history to have a net worth with a three-digit amount of billions,

Bezos said, quote, The only way that I can see to deploy this much financial resource is by converting my Amazon winnings into space space. travel. That's basically it. Blue Origin is expensive enough to be able to use that fortune. I am currently liquidating about $1 billion a year of Amazon stock to fund Blue Origin, and I plan to continue to do that for a long time, end quote. Blue Origin is, of course, Bezos's private space and rocketry company that has a friendly competition with Elon Musk's SpaceX. This is seemingly confirmation of an anecdote that popped up a couple years ago in a biography of Bezos, Bezos's high school girlfriend was quoted as speculating that the only reason Bezos,

who is such an obsessive Star Trek fan that he almost named Amazon Make It So.com, wanted to become a billionaire in the first place, is because he wanted to fund space exploration himself. He wanted to live on Mars someday. Of his work with Blue Origin, Bezos said, quote, I'm pursuing this work because I believe, if we don't, We will eventually end up with a civilization of stasis, which I find very demoralizing. I don't want my great-grandchildren's great-grandchildren to live in a civilization of stasis.

Coincidentally, Blue Origin recently conducted the eighth successful test launch of its New Shepard suborbital rocket. This is the rocket that Blue Origin hopes to refine, to make space tourism a regular thing. That's all for today, April 30th. This just so happens to be my firstborn's birthday. Happy fourth birthday, Penelope. Her big present was a PJ Masks HQ playset. If you have kids under the age of six, you might know the PJ Masks, and you might know what a huge score the HQ playset is.

My own equivalent would be the Castle Grey Skull play set that I played with back in the day. But of course, the toy we always remember is the toy we never got. I always wanted a space Voltron. I got the Lion Voltron, which was nice, but I always wanted the Space Voltron. because, let's be honest, the space Voltron was cooler. Anyway, this has been the 80s toy nostalgia podcast for today. I've been your host, Brian McCullough. Talk to you tomorrow.