Sprint CEO: Wireless merger could increase competition in suburbs

Consolidation in the wireless market could finally result in a third major wireless operator with the network footprint to finally rival AT&T and Verizon, Sprint CEO Dan Hesse said.

Networks that offer loads of capacity and fast speeds are important when it comes to competing in the wireless market. So is something as basic as network coverage. But covering rural and suburban markets is expensive.

Today, AT&T and Verizon dominate the US wireless industry with more than 73 percent of all mobile subscribers. One key reason for this dominance is the fact that these providers offer service in more markets than either of the two smaller national carriers, Sprint and T-Mobile. And because Sprint and T-Mobile have far fewer customers than either AT&T or Verizon, neither has the revenue or capital to invest in expansion.

"If you have more customers, you can afford to build a larger network," Hesse said. "Only then do you have the revenue to justify building in smaller suburbs and rural areas."

In order to truly compete against AT&T and Verizon, Sprint and T-Mobile need wider network footprints of their own. "If you live in an urban core, you will have access to AT&T and Verizon and you'll also likely have access to T-Mobile and Sprint," Hesse said. "But when you go to less populated areas, Sprint and T-Mobile might not be there."