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Will the T-Mobile, Sprint Merger Be Bad For Consumers? (vice.com) 130

Posted by BeauHD from the he-said-she-said dept.
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."
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Will the T-Mobile, Sprint Merger Be Bad For Consumers? More

Will the T-Mobile, Sprint Merger Be Bad For Consumers?

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  • Yes (Score:2, Insightful)

    by ugen ( 93902 )

    (ok, have to comment some more, so "yes, indeed")

    • Very bad idea. (Score:3, Funny)

      by Anonymous Coward

      Just remember what happened the last time Germans and Japanese got in involved in an "axis" regarding America...

    • Re: (Score:1)

      by Anonymous Coward

      Sprint is owned by softBank, a Japanese company headed by a Korean

      The merger of Sprint and T-mobile may be beneficial to the consumer of DoCoMo, the Japanese mobile company owned by SoftBank, but will be bad for American customers of both Sprint and T-Mobile

    • Comment removed based on user account deletion

  • No (Score:2)

    by wtbman ( 1996948 )
    No it won't. It will only make my crappy Sprint service better.

    • Of course your service sucks, why else would they be able to charge less than the high end carriers?

      My take is that it could be good for high end consumers and bad for low budget consumers. Right now TMobile and Sprint are the budget options, with Verizon and AT&T providing more high end service for those who can pay more. This merger will likely allow the new company to compete on the high end with Verizon and AT&T. Even their own website talks of rolling out first class 5g service capabilities.

      Thi

      • TMO has been working on 5G for some time now. That's not a merger-enabled opportunity for them. Sprint also was claiming they would deploy 5G in a year.

        Everyone in the business is all over 5G. Mergers are not necessary.

  • Sprint and TMo are saying that Sprint does not have the money to roll out 5G network upgrades without the merger.

  • Economics (Score:2, Insightful)

    by ChrisMaple ( 607946 )
    If your phone bill isn't paying part of 30,000 salaries, that would be a considerable consumer advantage.

    • Re:Economics (Score:5, Insightful)

      by quantaman ( 517394 ) on Monday April 30, 2018 @06:12PM (#56533443)

      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.

      • Re:Economics (Score:5, Insightful)

        by plague911 ( 1292006 ) on Monday April 30, 2018 @06:53PM (#56533619)
        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.

        • Re:Economics (Score:5, Insightful)

          by markdavis ( 642305 ) on Monday April 30, 2018 @07:27PM (#56533783)

          +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.

        • Re:Economics (Score:5, Insightful)

          by EvilSS ( 557649 ) on Monday April 30, 2018 @07:37PM (#56533837)

          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.

        • 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

        • 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 compet

      • Re: (Score:2)

        by EvilSS ( 557649 )
        The won't be all that much savings from those jobs going away anyway. Most of these jobs are going to be redundancies due to overlap in function when the two companies merge. Those functions are necessary to each company and that won't change when they merge. They just won't need two HR departments, two retail outlets right next to each other, etc.

      • 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 somewh

  • Never (Score:2, Funny)

    by 110010001000 ( 697113 )
    What is good for the corporations is good for America.

  • Just don't see it being an issue (Score:5, Interesting)

    by SuperKendall ( 25149 ) on Monday April 30, 2018 @06:08PM (#56533431)

    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.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      when there is only three players in a game, it is much, much easier for the three to collude.. even if "accidentally" (so they'll claim), than it is with four. once verizon and at&t do something anti-consumer, the combined tmobile/sprint will feel no pressure to not follow suit. with four players, as we have now, tmobile currently has to be conscious of what sprint does or doesn't do, as well.

      when post, the smallest (by significant share) of the three major breakfast cereal companies (the larger ones, o

    • Re:Just don't see it being an issue (Score:5, Insightful)

      by alvinrod ( 889928 ) on Monday April 30, 2018 @06:21PM (#56533487)
      That doesn't explain why a merger is necessary. Sprint can die the horrible death it deserves and the remaining companies can pick up their customers or other assets. That necessarily implies that they will compete for those resources and that each company is less likely to acquire resources it doesn't need or want.

      The likely alternative is that T-Mobile acquires Sprint at an inflated price along with a lot of assets that it has no real interest in, which could well capsize T-Mobile as well if they really screw the pooch on the valuation. History is rife with examples of mergers that left the acquiring company a bloated mess and much less capable. Let dysfunctional things die instead of co-opting them and hoping the cancer doesn't spread.

      • Re: (Score:2)

        by swb ( 14022 )

        The remaining three would just get larger in proportion to their size, mostly because they could afford to buy Sprint's assets in proportion to their own income and assets.

        Verizon and ATT would mostly wind up shutting down Sprint cell sites and repurposing their band assignments to existing towers.

        T-Mobile would probably add some new net coverage, but there would still be some duplication that would get shut down.

    • Re: (Score:3)

      by Luthair ( 847766 )

      Consider the math - if a company offering rate X can gain 1000 clients, when the company is small the customers added are a larger percentage of their base. So when they offer a rate to both new and existing customers they can literally make up the lower revenue on their exisitng customers by the added customers. For a large company the number of customers added is a small part of their customer base so overall the money from new customers won't offset the lost revenue on existing customers.

      Expanded coverag

    • But why? Even the combined company would still be smaller than either AT&T or Verizon.

      Nothing good has come from the consolidation of an industry already considered an oligopoly.

  • Uh, yes? (Score:5, Insightful)

    by laughingcoyote ( 762272 ) <barghesthowl&excite,com> on Monday April 30, 2018 @06:12PM (#56533445) Journal

    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?

    • Different here though (Score:5, Insightful)

      by SuperKendall ( 25149 ) on Monday April 30, 2018 @06:17PM (#56533467)

      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.

      • Hope springs eternal, I suppose. But I'm not holding my breath.

      • Re:Different here though (Score:5, Insightful)

        by Ichijo ( 607641 ) on Monday April 30, 2018 @07:08PM (#56533685) Journal

        there's a good chance the combined entity could be simply larger and better like mergers are supposed to be.

        There's also a good chance it will larger but worse, and then there will be no more T-Mobile as it exists today. Are you sure it's worth the risk of losing the option that does not suck?

      • But in this case, even combined they are still smaller than either Verizon and AT&T.

        So the argument being: Providing we don't join the oligopoly it must be good? Size and market power are really only a small portions of the pie chart of reasons consolidation often screws consumers.

    • Re: (Score:3, Insightful)

      by rsilvergun ( 571051 )
      Because America is not a Democracy [bbc.com]. I don't think it ever was. But for some reason we insist on the charade.

    • mass layoffs

      This one is at odds with most of the others. The whole point of mergers is to do the same thing using less resources by combining the services and utilities of both sides, and assuming we live in fairy land and savings were passed onto consumers instead of share holders, the mass layoffs would be positive for all except those being laid off.

  • Gang-rape (Score:3)

    by Rick Schumann ( 4662797 ) on Monday April 30, 2018 @06:19PM (#56533479) Journal
    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.
    • That wouldn't help. The prices for landline service (& long-distance) were almost as bad. And remember that several of these current players also provide landline service.
      • Yeah, I know, I know. In reality, if I got pissed off enough to dump wireless entirely, I'd probably end up using Skype. Not that that's a big improvement, then I'm part of Microsofts' bot-net again, and having to worry about them listening in on my conversations. Almost wish I had no need for it at all other than a few friends, in which case I'd just get them all encrypted radio transceivers.

  • Will it be bad for consumers? (Score:3)

    by sgage ( 109086 ) on Monday April 30, 2018 @06:39PM (#56533551)

    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.

  • ... a Sprint, T-Mobile merger could result in the loss of up to 30,000 jobs -- potentially more than Sprint even currently employs.

    ... how many "Sprinterns" and other portmanteaus will be lost.

    (Note: I actually like that one.)

    • When Sprint took over Nextel several years ago, the first thing they did was blow millions of dollars to upgrade those stores to their current "standards". Then not long after that, they started closing dozens (if not hundreds) of stores that were 'under-performing'.

      Just imagine how much the insanity will be ratcheted up a few notches with this merger.

  • The answer to this is Yes, and the answer to question headlines should always be No.

  • I think we're being unfair to T-Mobile/Sprint (Score:3)

    by rsilvergun ( 571051 ) on Monday April 30, 2018 @07:01PM (#56533651)
    it'll be bad for consumers and employees. The shareholders & CEOs, OTOH, will make out like bandits.

    • On the news over the weekend, a news program reported that the proponents of the merger claimed that it would create jobs. I laughed so hard at that.

      Create jobs: right! So they are going to merge two companies and their combined costs would increase. That is the reason to merge: so that they can lower their profits. Yeah, right. In other news, I hear that the merger proponents are selling some fine land in Florida.

  • Maybe in some ways (Score:3)

    by caseih ( 160668 ) on Monday April 30, 2018 @07:07PM (#56533683)

    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.

  • Obviously (Score:3)

    by c ( 8461 ) <beauregardcp@gmail.com> on Monday April 30, 2018 @07:12PM (#56533715)

    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.

    • Re: (Score:2)

      by EvilSS ( 557649 )

      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.

      Well in this case two large telcos will be for it, two against it. So..... flip a coin?

      • Re: (Score:2)

        by c ( 8461 )

        two large telcos will be for it, two against it

        I'm not so sure of that. It wouldn't shock me if the two "against it" will be perfectly fine with the merger, as long as the new merged telco gets saddled with a shitload of conditions that affected it's ability to compete... in order to protect consumers, of course.

        • Re: (Score:2)

          by EvilSS ( 557649 )
          I would surprise me. A combined TMO/Sprint would be big enough to challenge them. The biggest weakness for TMobile has been their crappy coverage, and Sprint has been bad management. TMO with the Sprint towers and spectrum will be a full-fledged competitor.

  • MetroPCS (Score:2, Informative)

    by darkain ( 749283 )

    None of these FUD predictions came true when T-Mobile acquired MetroPCS. Why will it magically come true now that they're STILL the underdog after acquiring Sprint? From TFA, they mention a 3x increase in employees for MetroPCS. Also, we're all nerds here, and looking for stuff that matters: spectrum. They have a huge point in TFA about how T-Mobile and Sprint combined have amazing spectrum to roll out 5G. Coverage issues? They're planning in literally investing billions into infrastructure, this is their p

  • Good for some, bad overall (Score:3)

    by Ecuador ( 740021 ) on Monday April 30, 2018 @07:43PM (#56533869) Homepage

    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.

  • Will the ________, ________ merger be bad for consumers? Yes.

  • As a Sprint customer, I can't imagine it could get any worse than it already is. My service is already shite. Now, merged with T-Mobile it could be double shite. How could I lose?

  • Sprint has fallen so far in recent years, they're really just a bottom of the barrel carrier that has a disproportionately large number of customers with poor credit, plus people they suckered in with a deep discount on a new handset, only to be locked in to the poor coverage for the next 48 months.

    T-Mobile will likely just dismantle the whole thing, keeping the customer database and the frequency spectrum rights. (Existing Sprint customers may get some kind of special deal to move to a T-Mobile compatible

    • I'd still like to know what ever happened to U.S. Cellular though? I had them years ago and thought they were a pretty respectable regional carrier. As far as I know, they owned their own towers and all that ... just not nationwide. But it seems like they suddenly changed direction and shrunk their footprint, having about the same status today as any of these second tier carriers who use the major carriers' infrastructure? It seems to me they had a real shot at replacing a carrier like Sprint, for a long time.

      USCC is just resting on their laurels. They just rolled out VoLTE quietly. It doesn't even work on all their handsets. They rolled out "Unlimited" data... if your version of "Unlimited' is a T1. (1.5Mbit/sec). Even with the speed cap, they had the 22GB usage cap that knocked you down to 1X speeds. I'd be with T-mobile right now if it wasn't for the massive discount I have with USCC and the coverage that USCC has.

  • While I understand a merger of AT&T and T-Mobile, cannot see why T-Mobile and Sprint want to join. T-Mobile use GSM networks, while Sprint uses CDMA. Is not like the two networks can magically get together into a bigger one, or fill missing spots. And the customer list, well they got in Sprint for one reason and probably was they were not happy with the other carriers. https://www.pcmag.com/article2... [pcmag.com]
  • T-mint would be similar scale to the big 2. If regulators block then should evaluate splitting the big 2 which are currently about 2X the #3 & #4 carriers. Sprints debt and cash flow challenges pushes it Towards the auction block with few other willing and capable suitors. It will be interesting to see how the regulators respond since if they block it, expect T-Mobile and Sprint to turn tables and point at the big 2. So expect the big 2 to not oppose the merger of 3+4.
  • The can simply use the scare tactic of "if we don't merge, we're lose to the big players". Sprint and T-Mobile take the stance that if they don't merge AT&T and Verizon will be the only major options left as they fold. The fear of those two corporate giants will be enough to convince many that this is a good idea.
  • The less players in the oligarchy, the easier it is to have "informal understandings" among the Oligarchs and aside from that, the less choice consumers have. So it's a double-whammy. The ONLY circumstance this would be beneficial if a number of very large new players entered the market and played the long game of pricing the incumbents out (at severe losses), THEN tightening the noose and start raising prices, etc.

  • Time for them, and Verizon, T-mobile, and even Sprint, to be broken up into smaller companies. Cable companies too. Plus loss of their protectionism.

  • As a long time happy Tmobile customer, I'm looking forward to their increased spectrum availability with this merger. It puts them on more even ground with Verizon and AT&T.

  • Of *course* it will. They'll raise rates to pay for the costs of the merger, just to start.

    Time to roll back the Telecom Deregulation Act of 1996, and reregulate the industry, to improve costs for those of us not running the companies.

    And for the ignorant, governments don't put in regulation because some legislators were sitting in their offices, feet on desk, and decide to regulate. They create regulations and laws because us, their constituents, yell at them to do something about things like price gouging

  • At first, the answer is "obviously", but in this particular case things might be more complex than it looks.
    Why? Because both companies are smaller than the competition.
    It is a bad thing that companies like those need to merge to compete in the first place, no question about that.
    Then again, this means a closer to 3rd player will result from this merger. Which could potentially bring closer competition against Verizon and AT&T. Which could bring benefits to costumers.

    On the other hand it'll probably be

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