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Would a T-Mobile-Sprint Merger Hurt Consumers? (dslreports.com)
Following a report from Reuters claiming T-Mobile is close to agreeing on a deal to merge with Sprint, an anonymous Slashdot reader shares a report from DSLReports arguing how such a merger would remain "a very bad deal for consumers": The Sprint-T-Mobile merger could prove problematic for not only wireless prices, but the recent resurgence in unlimited data plans. While wireless carriers still often engage in theatrical non-price competition more often than not, the government's decision to block AT&T's acquisition of T-Mobile several years ago helped spur an unprecedented period of competition in wireless (something large ISPs and their policy armies like to ignore). The end result was a brasher and more competitive T-Mobile, who lead the way on a wave of improvements in the sector culminating most recently in the return of simpler, easier unlimited data plans. The government's decision to block Sprint from acquiring T-Mobile helped keep that competition intact, something large ISPs and their policy folk would similarly like you to forget. As a result, T-Mobile has added more customers per quarter than any other wireless carrier for several years running, as the resulting competition put an end to numerous, nasty industry tactics including overcharging for international roaming, to obnoxious fees and long-term contracts. And while the new, combined company will likely still be run by current popular T-Mobile CEO John Legere, the very act of eliminating one of only four major players in the wireless market will indisputably reduce the incentive to more seriously compete on price, and could help reverse the progress the sector has seen in recent years. It's well within reason that this reduced competition could also bring back metered plans and put an end to unlimited data.Wirefly is a good place to compare cell phone plans to see the difference between Sprint and T-Mobile.
Since this essentially will lead to a monopoly or at least an oligopoly situation it will hurt the customers.
If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
There are two possible counter arguments to the "Fewer competitors = less competition" argument.
The first is that both Sprint and T-Mobile are silo'd, in the public consciousness, with "Cheap and poor quality", in comparison to their other two competitors. The reputation is unfair: T-Mobile is superb right now, and Verizon has always been overrated, concentrating on technical metrics studied in surveys while running a network that ignores critical usability features like call quality and user friendliness.
A merger would make it much easier for T-Mobile to knock down that final block in the public perception about its network. It can point out that it now has the combined coverage of both networks, matching or exceeding their competitors, and has plenty of low frequency spectrum to deal with indoor coverage issues. It would be able to argue that it is higher quality than both AT&T and Verizon on every metric.
The second counter argument is that Sprint is failing. Badly. It's not been profitable in decades. It is being propped up by investor after investor in the hope that one of the big 3 will buy it out. Sprint is going to die, one way or another, and if it doesn't merge with T-Mobile the likely result is that it'll just go bankrupt and the assets will end up split across the big three anyway.
There's a bigger picture here, and while yes, more competitors should equal more competition, two weak competitors in a four player market might not work as well as one strong competitor taking their place against the other two.
You are not alone. This is not normal. None of this is normal.
As long as the current management at T-mobile stays in place, and they don't all of the sudden decide to get greedy then it should be a win for everyone. Two companies with not horrible networks will become one with a great network, and they can then really mess with AT&T and Verizon. The two leaders in the industry, just kind of tolerated T-mobile and Sprint, now the company that comes out of this merger will really make them sweat, and this should only shake up the industry.
A merger is supposed to help the companies' and their investors. A merger is not meant to "help" consumers. So asking if a merger will "hurt" consumers is kinda sorta irrelevant.
If what "helps" the companies' and their investors also "helps" consumers . . . well, that's great.
If what "helps" the companies' and their investors "hurts" consumers . . . well, that's just tough luck.
When planning a merger, the interests of consumers are the last thing that the merger cabal will consider, if even at all . . .
Of course, governments are supposed to regulate mergers, to represent the interests of consumers . . . which means that politicians will need to be "lobbied" . . . or better stated, "bribed". Bribes are planned by business' as part of a merger's necessary expenses, like legal fees.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
Competition, instead of direct government regulation, is often the best way to ensure that consumers receive the best service at affordable prices. The degree to which antitrust regulation is needed depends on the barriers to entry. If those barriers are low, it's easy for competition to enter a market if an oligopoly or a monopolist isn't meeting the needs of consumers. In this case, the barriers to entry are really high because of the massive infrastructure to build a nationwide cellular network. That makes it very difficult for new competition to enter the market. That means there needs to be more regulation of mergers and acquisitions to protect consumers. Consolidation will reduce the competition and make implicit collusion easier where the prices and services change nearly in lockstep for the remaining cellular providers. If anything, T-mobile and, to a lesser degree, Sprint have been somewhat disruptive in providing services not offered by Verizon and AT&T. Removing one of those competitors would be harmful to consumers.
I guess it's time to retire Betteridge's law.
I think the question is whether the structure of the governance of the resulting organization is such that investors can require them to fuck over customers if such action shown to generate more profit. I've been a customer of both T-Mobile and Virgin Mobile (now wholly owned by Sprint), and it's scary for me when I read that Softbank wants a say in how the resulting company is run.
OTOH, if T-Mobile signal starts originating from the towers used by Sprint, then they'll finally be getting strong enough signal to provide for more than intermittent text messages to my house. I eagerly await the 600 MHz LTE.
I wanted compulsory GSM, not a Merger.
Everywhere CDMA goes, you wind up with people who can't switch, who wind up unable to keep their devices when they switch carriers in the US, Canadian users who pay exorbitant Roaming fees, so on and so forth. But the truth is there are only four real carriers in the US, two are GSM, and two are CDMA. Those CDMA carriers should not be there, there should be 5 or 6 GSM carriers that own Towers, and this confusing MVNO scam needs to stop.
"It's well within reason that this reduced competition could also bring back metered plans and put an end to unlimited data"
It's also well within reason that a T-Mobile/Sprint merger will put even more pressure on AT&T and Verizon resulting in even better conditions for consumers.
I hate articles that spread FUD without looking at the other side.
1st Does T-M get a good deal or waste $ on over valued assets + absorbing debt burden like Sprint & Nextel.
A bad deal will take funds away from network investment and ability to lower sub fees. T-M may be able to build its network cheaper or wait for a Sprint fire sale. T-M will unlikely need to compete with the big 2 in a fire sale but Dish, Comcast and other new entrants could present challenges.
Assuming T-M gets a decent deal they could retire redundant infrastructure as well as other Opex ( layoffs). Theoretically allowing investment in network expansion and capacity where better needs. Also, lower fees needed to make profit / + cash flow.
Japan has 3 main operators with half the population, even less coverage requirements since small / densely populated country and less competitive fees / services though very good coverage - so a high level bad comparable but does not mean U.S. Would regress to similar situation. The Japan big 3 defend their Fees necessary for coverage and capacity quality which is fairly good. Spectrum is allocated not purchased.
There are many other considerations but above offered to help advance this discussion since a fairly important question for U.S. Cellular market.
Most people don't use that much data, and they subsidize those use so much.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Firstly, the physics of mobile communications limits the amount of communication that can happen per second. In the USA, the current structure allows companies to buy spectrum and use it exclusively; nobody forces you to share. A merger of the two smallest of the four biggest companies would combine their physics resources, allowing them to compete on a larger scale. Secondly, nature abhors a vacuum. If fourth place opens up, somebody could fill it. While this could mean combining the next five largest to make a company or coalition that can compete with the next three largest, as long as there's nothing to stifle that company or coalition, it should thrive and create more options for customers.
If history is an indicator, less competition means higher prices and lower quality of service. There is a reason that there are regulations that are supposed to be put into place to prevent monopolies for exactly that reason. But what do I know? I am just a lowly human being....
No.
You start by saying yes in your subject line but then spend 4 paragraphs explaining why the merger will help consumers.
And the answer is yes, this will hurt consumers. T-Mobile stopped charging overage fees for data use because they were about to get swallowed up and needed something to compete. It worked, but they only did it to compete. The cell phone market is completely saturated and they're not competing for the same pool of users. The point of the merger is to eliminate that competition by eliminating one of the options you have for lower rates. I saw this with the Safeway/Albertson's merger and now my grocery bills are slightly higher because the two no longer compete.
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own the House, Senate, POTUS and most of the judiciary (we like to forget everything below the Supreme court, but they don't). They also have repeatably stated they're in favor of minimal regulation and a hands off approach. There will be no governance. It's going to be a free for all. The question is will that be a good thing. A lot of Americans think so as they voted for the party that supports it. We're about to see how well it works in practice.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Fewer offers leads to either lower quality or to higher prices or both.
Sent as ripples into the electromagnetic field. No single photon has been harmed in the process.
Less competition is always bad. If anything, government should foster more competition and make the level of entry into markets easier. Although, I see the need for that more with residential broadband than mobile. In many places there is only one provider for broadband and in many other places none at all. Those places who have two or more, consumers still pay significantly more than in most other countries (who tend to have providers offering better service).
Canada has Rogers, Bell, Telus and Freedom Mobile(Formerly Wind, owned by Shaw)
These four are owned by the big telcos, Rogers (who owns half the media), Bell (who owns the other half), Telus (who operates network services and outsource data centers), and Shaw (who divested it's media to Corus, which is owned by the Shaw family)
The media consolidation and wireless/wireline consolidation has done nothing but drive up prices by eliminating competition and pricing out third parties since the last mile and the cell towers are owned only by these 4 companies. Nobody else can enter the market and disrupt it, thus it is 80$/mo minimum for a cell phone and $80/mo minimum for internet service. We may have better speeds in Canada, but we have the most rip-off prices on the continent.
A merger of Verizon, AT&T, T-Mobile or Sprint with each other ensures that your prices go up and your service goes down.
T-mobile in particular should not merge with anyone, ever. T-mobile is the only carrier that is not tied down by a wireline operation or media operation. AT&T is, so losses in the media or wireline operations are passed onto the highly profitable wireless customers. Verizon is just a hateful company in general and should be broken up into wireless and wireline.
If I could improve the Canadian and American markets at all, I'd force all of them to divest their media, wireline, and wireless services , and divest their bandwidth costs from their connection costs. If you want to use an iPhone with T-mobile's towers and Comcasts bandwidth, there you go. If you are going outside the country, it would be simple to buy bandwidth directly from Telus instead of being ripped off by Verizon.
Finally, the exception to Betteridge's Law has been found...
Betteridge's Law: "Any headline that ends in a question mark can be answered by the word no."
In this case, however, YES, a T-Mobile-Sprint merger WOULD hurt consumers. Have no doubt about this, customers rank dead last in things that T-Mobile or Sprint give a shit about.
Just cruising through this digital world at 33 1/3 rpm...
It should be "Can a T-Mobile-Sprint Merger Benefit Consumers". Pls fix.
thx
- Betteridge
If we bought gas for our car like we buy cell services, we would have to sign up for say blocks of 20, 50, 200, or unlimited gallons a month, paying for it whether we used it or not. The unlimited block would be heavily subsidized by the 20 and 50 blocs. If we went over our allotment, we bought more in that month in large blocks (again paying whether or not we used all of it) at prices well above what the monthly contract block cost. Frankly I'm damn tired of subsidizing people spending their days watching Youtube cat videos on their cell phones.
(This is not to say that the telecos wouldn't find great ways to screw you on metered service plans - especially now given our lemming-like plunge into deregulation.)
GSM initially used TDMA - time division multiple access. Basically each phone took turns talking to the tower. This was terrible for data because each phone took a timeslice of the bandwidth regardless of how much data they had to transmit, or even if they had no data to transmit. If a tower had 50 Mbps of data bandwidth and had 50 phones connected to it, each phone only got about 0.5 Mbps (there is padding at the ends of the timeslices to account for latency due to the phone's distance from the tower and the speed of light).
CDMA (code division multiple access) phones don't use timeslices. They all transmit simultaneously and the tower tells them apart because they're using orthogonal codes. Kinda like writing horizontally and vertically on the same sheet of paper. Your letters overlap, but they're distinct (orthogonal) enough that you can still figure out what the letters are in the direction you're reading. CDMA has no problem with data because each phone sees the other phones as an increase in the noise floor. Since the data bandwidth is the signal to noise ratio, the more phones are transmitting, the higher the noise and the lower the data bandwidth for a single phone. If fewer phones are transmitting, the noise floor drops, and each phone gets more data bandwidth. So in CDMA the data bandwidth available to each phone scales automatically. If there's just one phone using data, it can use all of the tower's 50 Mbps. If there are 50 phones transmitting, each gets 1 Mbps.
CDMA completely destroyed GSM in cellular data performance. Within a year GSM threw in the towel and amended the GSM spec to add UMTS which used wideband CDMA for data. That's why GSM carriers took about a year longer than CDMA carriers to move to 3G data. That's why GSM phones could talk and use data at the same time - they had two different radios, a TDMA radio for voice, a CDMA radio for data. CDMA phones only had a single CDMA radio so couldn't do both at once.
If you'd gotten your wish and the U.S. had gone along with the rest of the world and mandated GSM, CDMA wouldn't have happened and cellular data speeds today would probably be 1-2 Mbps. We would not have LTE because most LTE implementations use OFDMA (orthogonal frequencies instead of orthogonal codes). CDMA was the proof of concept that this crazy "everyone transmits at the same time and we tell them apart by orthogonality" idea actually worked when scaled up to a nationwide cellular network. Without that proof, there would've been little incentive to develop the higher-power consumption OFDMA.
GSM vs CDMA is actually a perfect example of why market competition produces better results than government-mandated standards. (The SIM card is very cool though and I'm glad it got incorporated into LTE.) Government should not be mandating technological standards. It should stick to mandating standardized requirements, and leave it up to the market to come up with the best technologies to meet or exceed those requirements.
Spoken like someone who owns stock.
If you break up that vertical integration, then most of the monopoly/oligopoly problems disappear.
Crucially, any improvement in one of these three areas would immediately be available to all competitors in the other two areas. A better phone would be usable on any service provider and any tower network. A better discount service provider could contract with any tower network and use any phone. A better tower network would be available to all service providers and could connect to any phone.
why does t-mobile have this dead set goal of whoring itself to the highest bidder. there doing great on there own and just need some expansion outside the big city to truly put a hurting on the big 2.
There is Verizon, AT&T, T-Mobile, and Sprint right now. Only 4 options for 320 million people in the United States. 4 may not seem quite like a traditional oligarchy but the competition among them is already so little and even among them T-mobile is the only one pushing competitors around with cheaper pricing for better offers. When is the last time you watched a sports with only had 4 people playing? We are lucky even 1 out of the 4 of them gets half decent ideas. In my opinion for the current size of the United States we should not let any merger happen between even the top 20 companies in an industry.
In this case, adding together two incompatible networks with absolutely shitty coverage just makes one big heterogeneous network with absolutely shitty coverage.
TMob will turn into complete shit. Sprint is a disease, just ask anyone who was on Nextel.
My BIG...BLACK...DICK. Just ask your daughter.
Yes, there is competition in the high-data-amounts and unlimited data markets but there isn't much out there in the cheap seats. But it doesn't feel like a great deal overall. Until Xfinity Mobile - we'll see whether or not they keep their low prices into the future. Losing a carrier would be a negative for consumers.
I remember when the government broke up the "phone company" in the 80's. It's taken over 30 years, to almost put it back together. If the t-mobile/Sprint merger goes through, that will leave 3 "giants" for mobile communications in the United States, Verizon, At&t, T-mobile. Aside from the straight-talk, cricket and other MVNO's, that's your choice. Competition has caused innovation to explode. For those of you too young to remember, to have a phone, you went to "MaBell"...you WENT to the phone company. The GAVE you a phone (charging you rent). If you had MORE than one phone, you were considered well off. If your phone was any other color than BLACK, you were well off. Then you WAITED for the phone company to "turn your line on". Plugged your phone in (or even farther back, you waited for the phone company to HOOK it up). Now, you have "a phone". In some cities, calling some parts of the city was a local call, everything else was "long distance", which was a separate charge. Even farther back, you had to call the operator to have THEM place a call. On the road for work? need to call the office etc? Look for a phonebooth. A box that had this thing called a PAY PHONE. If it was anything other than a local call, which would cost anywhere from a dime to a quarter, you called the other party collect (they paid), or the operator had you insert enough money to pay for the call. Car breaks down in the middle of nowhere? Well, you had to WALK to call someone. With the break up of the phone company, you got to choose your own phone, local calls usually meant within your own area code, answering machines, cordless phones, pagers exploded. Then in the early 90's cellular took off. I hope it doesn't get worse, but with less competition, the price usually goes up.
No, I actually don't think it will.
T-Mobile seems to have it's goal set on becoming the Netcom of the Internet. (Remember Netcom? Back in the days when you paid by the hour to access the internet thru AOL, Prodigy, CompuServe, etc. Netcom came out with the flat $20/month rate and forever altered the industry.
T-Mobile seems to be attempting to do the same. Sprint while by far the cheapest cell network provider, is often routinely the lowest in coverage, etc. T-Mobile, while not always as competitive as Sprint has really pushed to provide an offering that can compete with Verizon and AT&T, while providing far greater cost to benefit ratio. Many user friendly industry firsts or standards:
> Taxes included in the pricing, up front you get to know how much you pay a month.
> Unlimited Data
> Unlimited Tethering options
> No contracts
etc
So in a rare case in point, I would actually support this merger as I think it would allow T-Mobile to press Verizon and AT&T to be more competitive.
They will largely dismantle the Sprint Network over the next decade. That it will primary be done to acquire more customers, for leveraging some of their deals like free Netflix. And for them to essentially acquire a bunch of spectrum for their upcoming 5G rollout.