Bad Connection

T-Mobile/Sprint Merger Would Reduce Competition, Increase Cost to Cellular Customers

The proposed merger should be "dead on arrival" at the FCC, says former Commissioner Michael Copps.

They’ve tried to connect at least twice but the calls didn’t go through. Now, T-Mobile and Sprint say they’ve established a secure connection, a $27 billion merger agreement that if approved by federal regulators will make their combined companies the nation’s second largest cellular carrier.

But what the companies insist is a great deal for their shareholders shapes up as a bad connection for cellular consumers and ultimately for American democracy.

Should the merger survive a required review by the Federal Communications Commission, “consumers can expect to pay higher prices and see fewer competitive options in the marketplace,” said Michael Copps, special adviser to Common Cause’s Media and Democracy Reform Initiative. “Low-income consumers and other vulnerable communities seeking more affordable mobile communications services would be particularly hurt from the merger.”

Copps, a former FCC commissioner, said the merger plan should be “dead on arrival” at the commission. It “would cut the number of national wireless carriers from four to three, which would reduce competition in the wireless marketplace,” he observed.

In much of the country and particularly in rural communities, cellular connections provide the only available access to the internet. With competition reduced, the remaining cell companies may have less incentive to further extend their service or improve it in areas where connections are spotty. That would effectively keep millions of Americans out of the electronic public square.

The T-Mobile/Sprint combination, which would carry the T-Mobile brand, would have about 100 million customers, trailing only Verizon’s 116 million U.S. subscribers. AT&T, now the nation’s second largest cellular company, would drop to third place with 93 million customers.

T-Mobile and Sprint executives say their merged companies would be better positioned to offer consumers 5G service, an expensive, next-generation technology that both companies – plus AT&T and Verizon – already have promised to deliver.

Analysts say the shift to 5G is still years away. But if the technology lives up to the hype surrounding it, consumers will have access to cellular service allowing them to surf the internet at speeds comparable to those now provided by in-home broadband connections. The service also promises to be more reliable than today’s 4G connections.

The current, four-way competition among nationwide carriers has been marked by T-Mobile’s aggressive pricing strategies. The company was the first to offer customers unlimited data plans and freedom from long-term contracts, consumer incentives that are likely to disappear if the merger is approved.