T-Mobile and Sprint, the third and fourth-largest wireless carriers in the United States, have been in the process of merging for the past few months. Both the Federal Communication Commission (FCC) and the Justice Department (DOJ) have approved the merger. How will this merger impact consumers, wireless carriers, and what does it mean for the future of wireless technology?
While there are still a few who oppose the deal —like the coalition of state attorney generals who initially voiced the merger violates antitrust laws — the Federal District Court approved the deal Opens a new window as of early February, directly impacting more than 90 million U.S. customers.
How will this merger impact consumers, wireless carriers, and what does it mean for the future of wireless technology?
One reason T-Mobile and Sprint play hand-in-hand is that they each lack resources where the other company can pick up the slack. For example, T-Mobile lacks mobile and high-band spectrum, while Sprint excels in these areas. Contrarily, Sprint does not have a sufficient network in rural areas, a T-Mobile strength Opens a new window . Together, the two have set a goal to have 96% coverage Opens a new window in U.S. rural areas by 2024 as they merge their offerings to reach even more customers nationwide.
Additionally, once official details of the merger are complete, the newly formed company will have the opportunity to compete against the two major cellular carriers in the U.S., Verizon and AT&T, especially in rural areas and in the race to 5G. 5G has been an intense competition among all carriers for the past few years, and we can only expect it to heat up following the T-Mobile and Sprint merger.
Many individuals who oppose the T-Mobile and Sprint merger still believe it will be an unfair deal. Rural carriers, for example, claim T-Mobile will not cover their customers when they travel out of their local areas, leaving customers with roaming coverage. Sprint, on the other hand, has maintained stable relations with carriers in rural regions, and has an opportunity to ease this tension.
Mobile virtual network operators (MVNOs) worry about the effect the merger will have on their combined network resources. If T-Mobile decides to restrict access to coverage and increase rates, the MVNOs risk alienating customers in rural areas, causing them to look at other competing rural carriers.
When change occurs, there are always opinions on both sides. In the end, this merger will have direct effects on the average consumer, which is the most critical factor carriers should consider.
As mentioned, there are many critics of this merger, including multiple state attorney generals, who believe fewer choices in cellular coverage will result in reduced competition and anti-trust lawsuits — both of which can cause higher rates for consumers. Higher prices will have a negative effect in all areas, but rural and minority communities that may have lower-income households will feel the greatest impact. According to the Rural Wireless Association, the deal will suppress the competition in these areas, thus increasing roaming rates and harming coverage in rural markets.
On the other hand, advocates for the merger disagree with these allegations, and claim the merger will cause lower prices for rural users as well as existing T-Mobile and Sprint customers. T-Mobile has promised not to raise the rates for its existing customers for the first three years post-merger and is in the process of expanding its 600 MHz spectrum to 300,000 square miles of new rural coverage area. Advocates point toward this expansion of the 600 MHz spectrum infrastructure as not just a way to improve coverage in rural areas, but as a way to create new jobs.
Those most recently impacted by the merger are T-Mobile employees. T-Mobile reportedly laid off a number of employees in its Metro by T-Mobile prepaid business. Following the report, the Communications Workers of America (CWA) said one of the top reasons it opposed the merger in the first place is due to the loss of jobs. An analysis from the organization found that up to 30,000 jobs could be lost due to the merger, specifically in stores that are staffed independently like Boost Mobile and Metro by T-Mobile.
In response to the recent news, T-Mobile released a statement saying that in the first year of the merger, it will have more than 3,500 full-time employees than the standalone companies, and an additional 11,000 by 2024. On top of that, T-Mobile claims it will create 12,000 more jobs through 600 new retail locations, including five “customer experience centers.”
Another potential workforce impact to consider are the implications for T-Mobile and Sprint’s independent dealer networks, many of whom maintain storefronts virtually on top of each other.
There is one more factor to consider — typically, less competition means a more monopolized industry. This may not be the case in the wireless industry, as T-Mobile and Sprint own a significantly smaller portion of the market compared to Verizon and AT&T. The merger of T-Mobile and Sprint could result in better competition for Verizon and AT&T, meaning better services and prices for the consumers.
We’re already seeing a huge impact from the T-Mobile and Sprint merger and will continue to see its effect on the industry, consumers, and other carriers. While multiple factors should be considered before forming an opinion on the merger, one thing is for certain — the potential for market disruption at this scale is worth keeping track of.
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