T-Mobile, which has cultivated an image as the feisty underdog of mobile telephony, will no longer be an also-ran after it buys Sprint.
After getting a green light from a federal judge last week, T-Mobile says it expects to complete the deal by April 1. The combined company will have roughly as many mobile subscribers as Verizon and won’t be far behind industry leader AT&T. The three big carriers will control 98% of the wireless market.
The question for phone users is this: After T-Mobile enters the land of the giants, will it still compete like the “Un-carrier” that delighted in mocking and undercutting its larger rivals?
The wireless phone component of the Consumer Price Index has fallen 17% since T-Mobile introduced its unlimited data plan in 2016. Michael Kades, director of markets and competition policy at the Washington Center for Equitable Growth, expects prices to drop more slowly after the merger.
“Their underlying fundamentals are going to look more like Verizon and AT&T, so why wouldn’t you expect them to act like Verizon and AT&T?” he asks.
Mark Jamison, a visiting scholar at the American Enterprise Institute, disagrees. He says there’s more to a company than assets and revenue, and he thinks T-Mobile could retain some of its maverick culture.
“The chances of it becoming like AT&T or Verizon are very small,” Jamison says. “None of its T-Mobile DNA or its Sprint DNA looks like either of the two larger companies.”
He also notes that the wireless market will change as carriers introduce 5G technology, which boosts speeds by relying on networks of small, closely spaced antennas.
“As long as the road is straight, you can drive with a rearview mirror, and that’s all antitrust law has,” Jamison says. “With all these changes happening, a rearview mirror is a terrible way to navigate. You just can’t predict what the landscape ahead will be like.”
T-Mobile argued that it needed Sprint’s spectrum to build a viable 5G network. That argument seemed to persuade both the Justice Department, which granted antitrust clearance last summer, and Judge Victor Marrero, who last week dismissed a challenge brought by 13 states.
If neither Sprint nor T-Mobile had the resources and spectrum to build a 5G network on its own, AT&T and Verizon might eventually have become a duopoly in high-speed wireless. That would be a worse outcome than the three-way race that’s now shaping up.
Still, going from four national wireless companies to three is a significant reduction in competition. The Justice Department is trying to set up a fourth competitor by forcing Sprint to sell some wireless assets to Dish Network, but Kades isn’t optimistic about Dish’s chances for success.
He says antitrust regulators have failed before in attempts to create new competitors, as when they allowed Hertz to buy Dollar Thrifty in 2012. Hertz’s Advantage Rent a Car brand, spun out as a separate company, filed bankruptcy within a few months.
Similarly, the government let Dollar Tree buy a big rival in 2015 but forced it to sell 330 Family Dollar stores. Two years later, the stores’ private-equity owner said Family Dollar was no longer viable and sold the stores to Dollar General.
“Those are different markets but the divestitures failed,” Kades said. “This one seems particularly forced.”
Maybe a three-company wireless market can still be competitive, but the presence of Dish as a weak No. 4 is unlikely to make much difference. Chances are, consumers will wind up wishing they had the “Un-carrier” back.
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