What the Sprint/T-Mobile Merger Means To You
The Merriam-Webster dictionary defines monopoly as “a company or group having exclusive control over a commodity or service.”
Thus, it would be incorrect for Billshark to define the pending merger of Sprint and T-Mobile as creating a monopoly, because the giant firm still has competition from AT&T and Verizon. At least theoretically.
In practice, many critics have raised concerns regarding the proposed merger and its impact on consumers’ wallets.
This week, T-Mobile and Sprint, the country’s third- and fourth-largest wireless carriers, announced a $27 billion merger, effectively cutting the number of national providers of wireless service from four to three.
The companies claim the merger would enable them—as a single entity that will eventually drop the Sprint part of the name—to help build out the infrastructure needed to support 5G, the next generation wireless technology poised to offer mobile devices speeds approaching those of in-home Internet connections.
The Washington Post reported that the new firm would have approximately 100 million prepaid and postpaid subscribers in the U.S., ahead of AT&T’s 93 million, and closing in on Verizon’s 116 million.
“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience—and do it all much faster than either company could on its own,” John Legere, the chief executive of T-Mobile said in a statement announcing the proposed merger.
Of course, he would be expected to say something like that.
Other opinions are less positive on whether the merger will benefit consumers, but opponents and proponents exist in both political parties.
President Trump in the past has voiced opposition to such mergers, especially those involving foreign ownership. During the 2016 campaign, he spoke against AT&T’s proposed purchase of Time Warner, saying it was an example of too much power “in the hands of too few.”
Whether his Federal Communications Commission (FCC), now headed by the notoriously business-friendly Ajit Pai, will approve the Sprint/T-Mobile deal remains to be seen.
Sen. Amy Klobuchar (D-MN), the top Democrat on the Senate’s antitrust subcommittee, told The Post, “Competition among the four largest cell phone carriers has led to lower prices, better service, and more innovation. I remain concerned that increased consolidation could undermine benefits to consumers.”
Consumer advocates are generally pessimistic that the merger will result in lower prices.
“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.
“I don’t see the benefits for consumers in a marketplace where Verizon and AT&T and the new T-Mobile would be calling all the shots,” Michael Copps, a former FCC commissioner and special advisor to the watchdog group Common Cause, told CNNMoney.
The consumer watchdog magazine Consumer Reports was likewise skeptical.
“This merger raises several red flags for consumers,” said Jonathan Schwantes, senior policy counsel for Consumers Union, the advocacy division of Consumer Reports. “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. If you combine these two companies, those incentives and options could dry up.”
New Street Research policy advisor Blair Levin told The Post, “The general view on Wall Street is that as a result of this deal, there are likely to be job cuts and prices are likely to rise.”
The FCC and Justice Department must still approve the deal. Until that happens, part of the merger announcement contained a new roaming agreement that will allow Sprint’s current customers to utilize T-Mobile’s network in places where Sprint is not now available to them.
Trust Billshark to keep an eye on this developing situation for you. And trust us to help you fight the big guys in the battle over your bills. Let our sharks hunt down savings for you to the tune of hundreds or even thousands of dollars every year!