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Will the T-Mobile, Sprint Merger Be Bad For Consumers? (vice.com)
On Sunday, T-Mobile and Sprint said that they have agreed to a $26.5 billion merger, creating a wireless giant to compete against industry leaders AT&T and Verizon. While a new website has been set up by the companies to help quell consumers' and regulators' fears by promising new jobs, improved broadband service, and increased competition, Motherboard's Karl Bode cites previous telecommunications mergers and Wall Street analysts to argue against the merger. From the report: The two companies attempted to merge in 2014 but had their efforts blocked by regulators who were justly worried about the deal's impact on overall competition. As Canadian wireless users can attest, the reduction of major wireless competitors from four to three only reduces the overall incentive for wireless carriers to engage in real price competition. That was the central point repeatedly made by regulators when they prohibited AT&T from gobbling up T-Mobile back in 2011. Even with four competitors, the industry frequently does its best to avoid genuine price competition, and industry watchers have noted that the overall volume of quality promotions for wireless consumers had been dropping so far in 2018. After regulators blocked the AT&T merger, T-Mobile wound up being a largely positive impact on the sector, forcing its competitors to adopt more consumer-friendly policies like eliminating long-term contracts and early termination fees. However, even with T-Mobile intact, price competition in the sector tends to be theatrical in nature.
Wall Street analysts are on record predicting that a Sprint, T-Mobile merger could result in the loss of up to 30,000 jobs -- potentially more than Sprint even currently employs. From retail operations to middle managers, there's an endless roster of human beings who, sooner or later, will be viewed as redundant. "If approved, this deal would especially hurt consumers seeking lower-cost wireless plans, as the combined company's plans would likely increase while competitors AT&T and Verizon would have even less incentive to lower prices," said Phillip Berenbroick, lawyer for the consumer advocacy group Public Knowledge. "Unless the merging parties can demonstrate clear competitive benefits we have yet to see, we will urge the Department of Justice and the FCC to reject this deal."
Wall Street analysts are on record predicting that a Sprint, T-Mobile merger could result in the loss of up to 30,000 jobs -- potentially more than Sprint even currently employs. From retail operations to middle managers, there's an endless roster of human beings who, sooner or later, will be viewed as redundant. "If approved, this deal would especially hurt consumers seeking lower-cost wireless plans, as the combined company's plans would likely increase while competitors AT&T and Verizon would have even less incentive to lower prices," said Phillip Berenbroick, lawyer for the consumer advocacy group Public Knowledge. "Unless the merging parties can demonstrate clear competitive benefits we have yet to see, we will urge the Department of Justice and the FCC to reject this deal."
(ok, have to comment some more, so "yes, indeed")
If your phone bill isn't paying part of 30,000 salaries, that would be a considerable consumer advantage.
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Same tune, different pipers.
Every time they want to do these mega-mergers, we hear the same thing. It'll be great for consumers! It'll let us provide much more efficient service and lower prices! And we can't do X unless you let us merge!
After they squeak it through approval, it ends up with shittier service, higher prices, mass layoffs, and in many cases, X not getting done anyway (because why do that when they're no longer competing?). This will be the exact same thing.
We already know how this story ends. Why do we need to replay it yet again?
To fight the war on terror, stop being afraid.
Every time they want to do these mega-mergers
I agree generally but in most other cases it's between companies at the top that combine and stay at the top, sucking in a slightly new way together.
But in this case, even combined they are still smaller than either Verizon and AT&T. And at least one half the marriage, T-Mobile, does not suck - so there's a good chance the combined entity could be simply larger and better like mergers are supposed to be.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
when there is only three players in a game, it is much, much easier for the three to collude.. even if "accidentally" (so they'll claim), than it is with four. once verizon and at&t do something anti-consumer, the combined tmobile/sprint will feel no pressure to not follow suit. with four players, as we have now, tmobile currently has to be conscious of what sprint does or doesn't do, as well.
when post, the smallest (by significant share) of the three major breakfast cereal companies (the larger ones, of course, being general mills and kelloggs) bought their budget competitor and store brand manufacturer (at a time when there was a significant price war ongoing), malt-o-meal; breakfast cereal prices across the board went up considerably.. and selection (of those cheaper store brand copycats) decreased. again, three players is much worse for consumers than four.
That doesn't explain why a merger is necessary. Sprint can die the horrible death it deserves and the remaining companies can pick up their customers or other assets. That necessarily implies that they will compete for those resources and that each company is less likely to acquire resources it doesn't need or want.
The likely alternative is that T-Mobile acquires Sprint at an inflated price along with a lot of assets that it has no real interest in, which could well capsize T-Mobile as well if they really screw the pooch on the valuation. History is rife with examples of mergers that left the acquiring company a bloated mess and much less capable. Let dysfunctional things die instead of co-opting them and hoping the cancer doesn't spread.
troll harder
Nice idea... ...until someone decides that the resultant company is "too big to fail" and is therefore entitled to tens of billions of dollars of taxpayer money to keep them afloat after their executives demonstrate extreme incompetence while simultaneously collecting multi-million dollar compensation packages complete with golden parachutes.
No such thing as a free market.
The United States is a capitalist economy with a free market.
It has free markets that are a regulated. Saying otherwise doesn't make it so. Try dealing with the world the way it is, not the super simple world you wish it was (for no other reason than you're emtionally incapable of handling it.)
"Old man yells at systemd"
So how come the government controls the airwaves and auctions off frequencies to the highest bidder? There is no free market in the US! Having less competitors for whatever reason is always bad for consumers and especially for the 30,000 employees.There will also be impacts on those companies that sell the CDMA radios. After a merger I am sure CDMA will be phased out in favor of GSM. There is no point for T-Mobile to support two tech stacks.