Yesterday, T-Mobile announced it will yet again try to merge with Sprint. Which could spell trouble for consumers in a number of ways if it does, indeed, go through:
Less Competition, Higher Pricing
Fewer competitors means that existing players could charge more for service. Sprint and T-Mobile, in particular, have always competed by maintaining the lowest price service among the big four carriers. Both carriers also led the way in introducing unlimited data service. If that goes away, you can bet the other carriers will stop unlimited data as well.
Not to mention the fact that many MVNO’s (Mobile Virtual Network Operators), who buy service from these two companies and resell it under their own name, rely on Sprint and T-Mobile’s low price point. You could see names like MetroPCS and Virgin Mobile go away, leaving even fewer low-priced options in the marketplace.
Additionally, it’s easy to fall into the trap of arguing that another competitor could rise up the ranks. But given the sheer amount of money it takes to buy spectrum (frequency) to operate a cellular service, it’s exceedingly unlikely that any small, regional carrier could step up and become a viable competitor.
Incompatible Systems, Massive Integration Headache
Remember when Sprint merged with Nextel in 2004? The chirp-chirp of Nextel’s Push-to-Talk service stuck around for a very long time. That’s because Sprint’s phones operated on the CDMA network, whereas Nextel phones operated on iDEN technology. Both network technologies were incompatible and it took many years for Sprint to integrate the two networks. It wasn’t until 2013 when Sprint was able to get enough customers off the old iDEN network to be able to shut it down.
Sprint faces the same problem with T-Mobile. Sprint still operates on a CDMA network, whereas T-Mobile operates on a GSM network. Meaning that customers of the combined company will be forced to upgrade their phones eventually so that they’re compatible with the newly integrated network.
But T-Mobile has long argued that it needs more money to help it build out its network. Especially as the competitors look to roll out a new 5G network at the end of this year. The company will likely argue that the downside of incompatible network technology pales in comparison to the benefits of being able to access additional money and resources to build out their network.
One Saving Grace, the Merger Will (Likely) Fail
The fourth and third largest cellular carrier in the U.S., respectively, have tried to merge before. But the merger was previously blocked by the Justice Department.
Schwartzman noted the deal was blocked because regulators determined that the wireless market could support four major players, and having them compete benefited consumers.
“It will be difficult to convince the Justice Department that circumstances have changed so much that it’s necessary to go down to three providers,” he said. “That’s the major hurdle that has to be confronted.”
-“T-Mobile and Sprint agree to merge, finally“, CNN, April 29, 2018
Even without federal government approval standing in the way, this merger could still take one to two years to close. But the general consensus in the media and among telecom analysists is that the merger will likely fail.
A merger between Sprint and T-Mobile has a massive downside and very little benefits for consumers. When the merger goes up for consideration at the various Federal agencies, be sure to submit public comment to regulators and public officials know how you feel about the merger. After all, if you don’t participate in the process, you can’t complain about the consequences of this merger if it is approved.