While no one ever expected customers to jump for joy at the prospect of the Sprint/T-Mobile merger, a new report by the New York Post suggests that any T-Mobile/Sprint merger benefits will be more concentrated than feared. Indeed, according to the Post, the New York Attorney General’s office has been investigating the merger since it was announced in April out of concern the newer and larger T-Mobile will be bad for most customers.
Of particular interest is just how the T-Mobile/Sprint merger would impact families and individuals who are less financially secure. Both Sprint and T-Mobile currently offer pay-as-you-go services (Boost & Virgin Mobile at Sprint and MetroPCS at T-Mobile). Those who are less affluent are particularly reliant on these pay-as-you-go services, and there is significant worry that the merger could see these services cut or limited.
A Shrinking Market
Any cut to pay-as-you-go services is exacerbated by the extremely limited competition among cellular service carriers. AT&T and Verizon are the two largest such carriers in the United States. If the merger is successful, the new T-Mobile/Sprint entity will represent the third such large carrier. Second-tier carriers will be all but extinct.
The worry is that such a shift could cause significant price inflation for those currently subscribing to either T-Mobile or Sprint. As a recent Forbes analysis pointed out, monthly prices at AT&T and Verizon may moderate in the face of this new top-tier competition. But once the merger is complete, T-Mobile will likely be more interested in competing for those top-tier customers than in satisfying its current patrons.
All of this has the FCC, the New York Attorney General’s Office, and the Department of Justice looking quite closely at the proposed merger.
To alleviate some of the concerns regarding who might see T-Mobile/Sprint benefits, executives at T-Mobile have tried to assure stakeholders that they plan to retain all of their pay-as-you-go services, citing “aggressive pricing from day one.” However, there is little in place to assure wireless customer advocates that any such aggressive pricing will be strictly adhered to or will in any way benefit pay-as-you-go subscribers.
Unfortunately, those subscribers might find themselves with limited options whether the merger is approved or not. Industry experts have warned about the viability of Sprint for some time, and many fear that the company could fall behind—and eventually collapse—should negotiations with T-Mobile fall through.
The Recipients of T-Mobile/Sprint Merger Benefits
Whether such an outcome is better or worse for wireless subscribers is difficult to forecast. The primary concern of consumer advocates is price creep, which could eventually price some customers out of the mobile phone market. That could be disastrous for consumers. For many, the mobile phone is more than a necessity: it’s a lifeline. Without a mobile device, finding work and exerting economic agency could become effectively impossible.
The T-Mobile/Sprint merger benefits, therefore, seem contained to two small but powerful groups: stakeholders in the two wireless carrier companies and the shareholders to whom they have a fiduciary responsibility.
What do you think about the T-Mobile/Sprint Merger benefits? Worth it to switch over? Comment below and let us know what you think. Want to keep your throughts private? Shoot us an email to Outreach@