Big news shook the wireless industry in late April, as two of the biggest brands in the business announced a decision to merge. T-Mobile and Sprint, currently the third-largest and fourth-largest wireless carriers in America, intend to come together and form a conglomerate worth over $26 billion.
This may just sound like another bland business headline, but according to The Washington Post, it could have far-reaching implications for ordinary people everywhere. With the elimination of a competitor from the marketplace, there could be both an increase in prices for consumers and a decline in industry job opportunities.
It’s not entirely a surprise, though; in late 2017, there were murmurings of a possible T-Mobile/Sprint merger.
T-Mobile and Sprint together would constitute the second-largest wireless carrier in the nation after Verizon, with around 100 million customers in total. With more market share and less competition, the fear is that T-Mobile/Sprint could form something of a monopoly and use it to harm consumers.
“The general view on Wall Street is that as a result of this deal, there are likely to be job cuts and prices are likely to rise,” said Blair Levin, policy adviser at New Street Research.
The alternative viewpoint is that regardless of what T-Mobile and Sprint do, the market is plenty competitive either way, and consumers will therefore be fine. Marcelo Claure, Sprint’s chief executive, made this point, stressing that in today’s crowded marketplace, nothing even resembling a monopoly is possible.
“The market has changed dramatically,” Claure told the Post. “There used to be four big carriers. Today, there’s six or seven players. When you get to 5G, you get to seven, eight players.”
The arrival of 5G technology is a major complicating factor here. “Fifth generation” wireless service will allow people to use their smartphones and other mobile devices with the same connection speeds as their in-house internet service—a change that will dramatically change the wireless industry. Building a 5G network is costly, and some fear that a merged T-Mobile/Sprint could have too much power to ramp up theirs and control the industry.
In short, there are a lot of moving pieces in the business right now, and many both short- and long-term considerations to take into an account. Will a merger of two of the biggest wireless brands ultimately help consumers or hurt them? It remains to be seen.
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