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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."
No it won't. It will only make my crappy Sprint service better.
Just remember what happened the last time Germans and Japanese got in involved in an "axis" regarding America...
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
If your phone bill isn't paying part of 30,000 salaries, that would be a considerable consumer advantage.
Considerable stock owner advantage sure, but less competition generally means higher prices, the savings won't end up in the consumer's pocket.
I stole this Sig
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
Doesn't matter who is running what, the whole wireless 'industry' is a gigantic gang-rape session, and we're all the 'guests of honor'. Makes me want to go back to a landline.
Is the Pope Argentinian?
Does a bear shit in the woods?
Does a tadpole have a watertight asshole?
Corporate gigantism is always bad for consumers.
The question is "will the merger bring more competition." This is one of the areas where there valid debate. Generally fewer players = less competition, but in the case that you have two market dominators and two minor market participants, the merger of the two minor market participants to create a third market dominator class organization, the answer is more ambiguous and would require a real in depth analysis to come up with a reasonable conclusion.
it'll be bad for consumers and employees. The shareholders & CEOs, OTOH, will make out like bandits.
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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
In the short term I think it will benefit existing customers of both companies in terms of expanded service coverage. As far as on-going monthly customer costs go, I won't be surprised when rates go up.
I can't think of any merger in recent memory where prices actually dropped for the customers in the long term.
I should be able to get into a contractual relationship with anyone I want as long as the business itself is legal (so prostitution would not count).
A long term contract exchanging sexual intimacy for financial support is known as a "marriage" and they are legal, even though the legal enforcement is only on the "financial support" side of the deal.
Short term deals, such as SeekingArrangement.com, are legal as long as there is a "relationship", and it is not purely a one-time sex-for-money transaction.
15 year Sprint customer here.
I'm pleased with the prospect of a merger, without which I had been considering relocating my multi-line cellular service to Verizon or ATT for their superior rural coverage. Work has recently picked up in the boontoolies surrounding our small metropolis, and I've noticed considerably better outskirt's reception by folks with phone service from the other providers.
Even the devastation left behind by severe storms is often a welcome sight to roofers, auto body repairmen, and glaziers... no fallacy.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
As a general rule of thumb, when it's something a large telecom corporation wants then it's almost certainly bad for consumers. If it's something a large telecom corporation is against, then it's probably good for consumers.
I'm sure you could find an exception to that rule if you looked, but I don't find that it's wrong often enough to lose sleep over.
Log in or piss off.
A long term contract exchanging sexual intimacy...
Obviously written by a single person.
>"Sprint and TMo are saying that Sprint does not have the money to roll out 5G network upgrades without the merger."
Then let Sprint die and then sell itself to T-Mobile. That will guarantee T-Mobile, who is doing everything RIGHT will remain 100% in control.
+1 Bingo. In this case, it is very unclear if the merger would create more or less competition. I don't think any of us on Slashdot could possibly know everything needed to make a really informed decision in that regard.
I am just worried that Sprint merging into T-Mobile will somehow contaminate T-Mobile or drag them down. T-Mobile has been doing things very, very well for many years now.
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 question is "will the merger bring more competition." This is one of the areas where there valid debate. Generally fewer players = less competition, but in the case that you have two market dominators and two minor market participants, the merger of the two minor market participants to create a third market dominator class organization, the answer is more ambiguous and would require a real in depth analysis to come up with a reasonable conclusion.
You also have to consider if both the smaller companies are going to last. Sprint has been shaky for a while now and while T-Mobile is in a better position it's might be constrained on how much it can grow with net-new buildout and it's current spectrum licenses.
Also, if one of them (let's be honest, Sprint) goes under, it's spectrum and towers are going to be bought by someone and you can bet it will probably be AT&T or Verizon who get the lion's share. As much as I dislike consolidation, I think a combined T-Mobile/Sprint with T-Mobile's leadership at the helm can cause some serious headaches for AT&T and Verizon, particularly with 5G rollouts just around the corner.
I browse on +1 so AC's need not respond, I won't see it.
The only people who might benefit are Sprint users. T-Mobile should really let Sprint die and pickup their pieces, $26.5 billion is ridiculous for such a bad company. T-Mobile has flaws, but it is heaven compared to the rest of the lot, shame that not all users can see it and they can't even reach #2 by being more customer-friendly than AT&T and, especially, Verizon.
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The question is "will the merger bring more competition." This is one of the areas where there valid debate. Generally fewer players = less competition, but in the case that you have two market dominators and two minor market participants, the merger of the two minor market participants to create a third market dominator class organization, the answer is more ambiguous and would require a real in depth analysis to come up with a reasonable conclusion.
My guess is that there will be more competition initially, both to gain the new entity a greater market share, and to lull the critics and the regulators into a false sense of security. After the growth of new accounts starts to level off, and the critics are focused on the next big example of capitalistic abuse, SprintMobile's prices will go up and/or their service quality will decline, and there will be a 'triopoly'. Ineffectual mutterings and remonstrations will follow, but will be ignored and forgotten in a couple of news cycles.
I don't think "in depth analysis" is any likelier to result in an accurate prediction here than my wild-assed guess is.
'The Economy' is a giant Ponzi scheme whose most pitiable suckers are the youngest among us and the yet-unborn.
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.
This wakes the amateur and inadequate economist in me.
Somehow, while it seems logical, indeed necessary, that lower costs would lead to lower prices. This is not assured.
Prices are set mostly by the demand. If you're willing (or compelled by need) to pay, you will pay. Costs are not the determinant in many markets. In the US some markets (utilities for instance) are regulated in a manner that escapes this, but that's not anything like a 'free market', and not in scope for this thread.
Some markets are somewhat responsive to demand, for instance the US gasoline market - but also responsive to seasonal influences, such as refinery changeovers, and to other influences, such as outages, pipeline failures, weather. US Heating oil is a fabulous market, and many a northern state dealer deals in futures, contracts with customers for fixed amounts at fixed prices, and is active in the heat pump business, since oil is becoming unattractive. Food can be a volatile market for many reasons.
You can be sure that the cell phone industry is constantly determining what the price is that we will pay. The combinations of caps, features, and billing methods are fascinating.
For me the market lesson most fascinating is GM and its response to the Japanese invasion of the 70s-90s. GM changed little until it was past obvious they needed to or fail. So they cut their payroll. Even the white-collar jobs.
Look at a market that is coming to grips with a new paradigm - cable TV. This market is learning that they have both actual competition and customers who are no longer willing to pay whatever they are told to. Early stages, but it's coming.
My point is that these platitudes about mergers not lowering prices aren't very helpful, and often misleading. Real market change can affect prices, for instance TMO changing the phone lease/purchase paradigm, and as the networks 'merge', focusing on LTE and leaving CDMA behind, locked phones will become undesirable, and we will see a more EU-style market, though pricing may not be so simple. Remember, the US is a huge place relative to Europe, and complaints about coverage are often rooted in technology problems.
Long-range solutions will impact a lot. As Band 71 builds out, expect that to be the hammer on the cable TV business head. There is no good solution for cable systems to extend their reach into underpopulated areas, DSL of course can't, and will be limited and fail.
We live in interesting times.
deleting the extra space after periods so i can stay relevant, yeah.
Not a football fan, are you?
Watch the line of scrimmage. Some battles are one-on-one, some are coordinated struggles. The competition is at similar levels, but the impacts are different.
Or hockey. Fewer players, the 4-on-4 or 3-on-3 situations, make the players both more cautious and more emboldened, seeking opportunity and momentary advantage to score in ways not common in full-strength situations.
Going from 4 to 3 nationwide cell providers in the US makes all of this riskier for the few left, fewer competitors to take customers from, customers left with fewer and possible (possibly) simpler choices, apparently easier to change carriers. It also gives the incumbents a cushion, splitting the market fewer ways giving a TMO/Sprint more customers to work with, more capital, and TMO has good bandwidth available, so they can use that to leverage their network and build out to match or exceed the capabilities of their competitors.
I'm not at all convinced that this is bad for customers. When AT&T and Verizon start gobbling up smaller regional carriers them I'll be worried, but some of these are going to be leapfrogged by tech in the next few years and struggle anyways. Good riddance to US Cellular.
deleting the extra space after periods so i can stay relevant, yeah.
Scenario 1: Two minor league operators merge to form on major league operator, increasing the number of major league operators by one.
Scenario 2, the likely alternative: One minor league operator goes bankrupt. The three remaining operators, one minor, two major, pick over the remains. The FCC might help out the minor operator on the grounds the other two are already large, but, you know, Idjit Pai is in charge, so that won't happen, and most of the bankrupt assets end up in the hands of the two richest operators.
So my answer is no, because what's being proposed is scenario one. Scenario 2 is very scary. Realistically it'll leave us with only two operators, because I doubt T-Mobile can hold its own if up against Verizon and AT&T with no additional resources.
You are not alone. This is not normal. None of this is normal.
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.
You are not alone. This is not normal. None of this is normal.