Three Ways the Looming Sprint/T-Mobile Merger Hurts You
As BILLSHARK recently told you, a federal judge in January approved the $26 billion merger of telecom giants T-Mobile and Sprint, thus bringing the number of major wireless carriers down from four to three.
In 2018, T-Mobile’s and Sprint’s boards approved the all-stock merger between the two companies, the third- and fourth-largest wireless carriers. The resulting merger hands the new entity—which will be known as New T-Mobile—more than 127 million customers, automatically making it the third-largest player in the game, after AT&T and Verizon.
Good for these companies’ profits, bad for you. Here’s why:
1. Reduced competition
Last year, the companies pledged to build out 5G wireless to most of the country, while providing “same or better prices for the next three years.” This was part of a series of proposals the two firms offered to allay regulators’ concerns about the merger.
But despite these promises, the fewer companies that exist in any market reduces consumer choice and invariably results in higher prices.
“Right now, Sprint and T-Mobile provide much-needed alternatives to Verizon and AT&T, with some innovative plans and pricing options that keep some semblance of competition alive,” said Jonathan Schwantes, senior policy counsel for Consumers Union, the advocacy division of Consumer Reports. “If you combine these two companies, those incentives and options could dry up.”
History shows that lack of competition is bad for consumers, because—let’s face it—if you don’t like what the giants are doing, what alternative do you have? They can raise prices at their whim.
“I can’t think of another market where consolidation has been beneficial to consumers in that respect,” Bell Menenzes, the principal research analyst covering mobile services for Gartner Research, said in an interview with CNNMoney.
2. Worse service
Again, with lack of competition, what is the incentive for large companies to improve service? Answer: not much.
According to USA Today, the merger—which leaves the marketplace to AT&T, Verizon, and the New T-Mobile—the availability of the budget “pre-paid” options is now in question. The old T-Mobile and Sprint offered these pay-as-you-go services in the Metro and Boost Mobile lines, respectively.
“Metro and Boost competed against each other, were fierce rivals, and that is even fading today,” Peter Adderton, Boost founder, told USA Today recently.
Because the New T-Mobile will control over 50 percent of the pre-paid market, it will have much more incentive to raise prices, adversely affecting budget-conscious and low-income consumers.
In addition, the merger “will degrade the choices available to consumers, the options for network access, and the incentives to create better and more innovative service,” George Slover, senior policy counsel at Consumer Reports, told the paper.
Finally, you can likely say goodbye to “unlimited” plans, as MarketWatch reported last year.
3. Broken promises
As noted above, the New T-Mobile has pledged not to raise prices for three years. But if they do, who will stop them? Certainly not the current Federal Communications Commission (FCC) under Chairman Ajit Pai, which has done nothing in his three years as chairman to rein in the big broadband carriers.
Wired magazine noted last year that the companies’ promises touted by Pai are “speculative, unsubstantiated, and entirely unenforceable.”
“For example,” the magazine wrote, “T-Mobile and Sprint commit to deploying a new 5G network that would cover 97 percent of Americans within three years of closing the deal, and 99 percent of Americans within six years. They further promise that 85 percent of rural Americans will have access to those networks within three years, and 90 percent will be covered within six years.
“But nothing in T-Mobile’s filings prove that they can meet these goals, and much like the broken promises of other big broadband, telephone, and cable providers, they are wildly optimistic.”
The bottom line: When you have an administration that is geared toward protecting big business over consumers, the deals will keep going through, the regulations will be rolled back, and the American people will end up paying the price.
This is one more reason why you need BILLSHARK on your side. We know all the tricks and schemes the providers use to squeeze even more money out of you, so let us review your bills for free and see how much we can save you every month.