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Sprint iPhone 5 protects carrier from last resort Verizon merger

Enter the Sprint iPhone 5. Exit talk of Sprint being forced to merge with Verizon. Sprint’s longtime security blanket, the fact that it wasn’t the smallest U.S. carrier and wasn’t the only one without the iPhone juggernaut in its lineup, took a double blow this year. First Verizon added the iPhone 4. Then T-Mobile went up for sale, with AT&T being the intended acquirer.

Suddenly Sprint faced the prospect of being the smallest remaining carrier and the only one without the iPhone, leaving it in a weak position to compete going forward. Option one: get sucked up by Verizon in response to the AT&T – T-Mobile merger. Option two: add a Sprint iPhone 5 to the mix, giving existing customers an extra reason to stick around while also giving Verizon and AT&T customers a reason to consider switching sides. Sprint is going with the latter.

The evidence is everywhere: Sprint subcontractors installing signal boosters around Apple Stores. Language in Sprint’s lawsuit against the T-Mobile merger pointing to a future landscape in which it feels it won’t get a fair shot at competing even with the iPhone 5 under its belt. But that may be mere posturing on Sprint’s part, as the carrier has multiple approaches for pinching competitors’ iPhone customers when it launches its own iPhone 5.

The first is Sprint’s unlimited monthly data offerings, which stand in contrast to the moves by Verizon and AT&T to assign monthly data caps for the purpose of hitting customers with massive overage charges in the same manner as they once did with text message overages. The second is that even as Verizon is diddling with 4G and AT&T is pretending to diddle with it, Sprint has a (slower) 4G network nationwide already, although it remains to be seen which 4G technologies if any the iPhone 5 serves up. Then there’s the crop of T-Mobile customers who don’t like the prospect of ending up being part of AT&T (or whoever ends up acquiring T-Mobile) and view Sprint as the top alternative thanks to the fact that A) it’s smaller than Verizon and B) it now also has the iPhone 5.

Sprint will still face challenges even with the iPhone 5 on its roster. Existing iPhone customers are locked into upgrade cycles which make it difficult to escape the two-year contract without financial penalty (essentially, you have to buy an iPhone and use it for two years without upgrading or your stuck in a contract loop forever). And someone will end up snapping up T-Mobile, leaving Sprint all alone at the bottom of the food chain in terms of U.S. carrier size. But with the iPhone 5 in hand, at least Sprint won’t be fighting with both hands behind its back.

[Thanks: http://www.beatweek.com]