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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."
The article seems to worry that the combined T-Mobile would be less willing to undercut market pricing...
But why? Even the combined company would still be smaller than either AT&T or Verizon. Together they can just provide better coverage but would still be scrapping to change the market to compete.
The article points out T-Mobile has been a positive influence, but what about Sprint? Basically it's been a big pile of nothing. The only thing I fear (as a current T-Mobile customer) is some aspect of Sprint will "infect" T-Mobile, I just want Sprint's coverage added... but hopefully that's where all those 300k jobs are going, to let go of the people that made Sprint dead in the water (though humor aside I seriously do not wish unemployment on anyone, even the inept).
Overall I'm more positive than negative about the deal just because of coverage expansion.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
That's nice to hear that Sprint has been offering more than I thought, for me the most awesome thing about T-Mobile was unlimited international roaming for free - coming from both AT&T and Verizon which had charged VAST sums, just to even make it possible then absurd sums per some amount of KB you consumed, it was amazing.
Anyway, your story gives me hope that the combination will actually be pretty decent, and as you say finally T-Mobile will cover your area for real. I have noticed a couple of times my phone would be roaming on Sprint so making it all one could make the coverage map pretty decent even compared to Verizon.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
If Sprint dies, it doesn't get to choose who buys its assets. You can expect Verizon and AT&T, as two companies with the largest pockets, to take over most of the assets, or drive up the price so high that even if T-Mobile ends up getting more resources it'll pay over the odds for them.
Sprint is dying right now. Might as well make sure the other minor national operator benefits from it.
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