Plenty on the line for Leap Wireless in 2010

It just wouldn’t be a day that ends in Y without a reference to a MetroPCS and Leap Wireless merger. This one came a couple of days ago, and while it remains highly speculative the source couldn’t be any stronger. Leap CFO Walter Berger spoke vaguely about a potential merger, noting that (in the words of Toronto Star reporter Imari Love) “it makes some sense given the potential scale benefits.” Both Leap and Metro have seen churn rates climb this year, meaning that the carriers have not only the challenge of pulling subscribers from other networks, but of keeping their own customers. In a wireless world dominated by four carriers, and those dominated by two, it’s not an easy endeavor.

As Love notes, the companies face two obstacles in attracting and maintaining subscribers. First is competition. Cricket and MetroPCS used to be the only flat-rate, unlimited carriers. Now many carriers offer these plans, for around what Leap and Metro charge for service. Most of them are MVNOs or subsidiaries of larger carriers, so they offer nationwide service, while Leap and Metro still operate regionally.

Second is a smartphone craze. We’re seeing new smartphones launch more frequently than ever before, and that has customers jumping to contract carriers. T-Mobile even has a program where you don’t need to sign a contract, and you can pay for your phone in monthly installments. Since T-Mobile offers a line of high-end smartphones, including Android and BlackBerry handsets, many customers will find their deals more attractive than Cricket and Metro.

Will 2010 finally be the year they get together? There’s as good a chance as any. Yet we’ve heard this talk since 2007, so we know not to get our hopes up.

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