T-Mobile Merging With MetroPCS

Daetrin writes "Last year T-Mobile tried to merge with AT&T but the deal was blocked by the FCC. Now T-Mobile and MetroPCS have agreed to merge in a $1.5 billion deal. There doesn't seem to be much concern that the FCC will disagree with this deal, perhaps because the two companies combined will have a user base of 42.5 million, which will still be smaller than the #3 player Sprint's 56.4 million. Because the two companies have similar spectrum holdings T-Mobile claims the merger will allow them to offer better coverage. They also say they will continue to offer a range of both on and off-contract plans."

Comments

Re:As a T-Mobile customer, I'm opposed to this mer

[bluefoxlucid]

Mergers are always good for CEOs and shareholders and always bad for everyone else. It's a rule. This is not sarcasm.

Consider the whole reason Verizon and AT&T dominate the market: Verizon happened when Bell Atlantic absorbed MCI and GTE; AT&T absorbed Cingular and a few others. Smaller players still exist, but competition is hard; without mergers very small players would drop off until a healthy culture formed, but with mergers one or two parasites become huge and dominating and make it harder for smaller players to gain traction.

The smaller players can merge, gaining a stronger hand to compete but increasing the distance between them and the other small players, which then makes it hard for those small players to compete--and then they either die off or get absorbed in mergers. Eventually small players can't exist, and as they die off the larger players come to scavenge the carcasses.

Each round of mergers brings a lot of similar services under one hand, where they become redundant or excessive. Having 14 non-redundant niche services is a money sink, and so 10 of them go away and the consumer has 4 to pick from which aren't always as well-matched to the individual consumer's needs as the services discontinued. Lay-offs occur, although we can typically bring that into a cost-savings and increase in efficiency, which is less economic waste and should be good--because it SHOULD cause a decrease in operational costs, leading to a decrease in pricing of services to consumers, leaving more free money in the economy to fund new ventures that can tap the newly freed labor pool. Unfortunately, what often happens is the price stays high and margins increase, so the economy gets additional labor that it doesn't have anything to do with and we have a bunch more people unemployed.