Sprint-T-Mobile US merger: Bad for competition? Good for standing up to Verizon, AT&T? NYC court goes with the latter A federal district judge in New York City has approved the $26bn merger of telecom rivals Sprint and T-Mobile US, eliciting enthusiasm from company executives and investors. Nonetheless, there's one more regulatory hurdle to overcome and resistance from the coalition of state attorneys general opposing the deal remains …
In this particular case, it was a case of "might as well". The US mobile market is saturated: the game zero-sum. The only way a player can get more customers is at the expense of someone else. Meanwhile, the two big boys (Verizon and AT&T) have been using their big size to command even more influence in the market (AT&T now owning DirectTV, for example, and both of them have tremendous sponsorship influence). It's basically endgame in the poker tournament. If the merger had not taken place, odds are Sprint, then T-Mobile would get cornered, starved, and finally scavenged.
"There is no doubt that reducing the mobile market from four to three will be bad for consumers, bad for workers, and bad for innovation,"
Considering that these cellular carriers have almost nothing to do with engineering the technology they implement, I'm not buying into the above statement. Does AT&T design and manufacture cell phones? No. Do they design and manufacture radio units for towers? No. They are technology implementers.
You are correct that the carriers don't create much of the technology. However, you are incorrect about them not harming. Let's consider each thing the quote says they would harm:
"consumers": This is the most obvious one. Without the need to compete on price, there will be fewer plans, and each will be more expensive. No doubt they will hide this by making the specs of each plan slightly higher, but dropping all the lower-end ones. This harms consumers who cannot afford expensive service, as well as consumers who don't need much and would still have to pay for capacity they don't use. Eventually, the prices would start to rise even for people who are frequent users.
"workers": This one is a bit harder to argue. Of course, by merging, some of the employees of these companies are bound to lose their jobs. That happens a lot, though, and it's rarely enough to rule against a merger. This could also be a rephrasing of the "bad for consumers" line again; if the company is spending a lot more on the more expensive phones, the workers won't get as large a pay increase.
"innovation": I assume this is the one your comment was targeting. While you are right that these companies aren't building the new tech, they are the people whose investments make the development of that tech possible. If these companies have less pressure to compete with one another, they are unlikely to bother investing in new tech that increases range, lowers power draw, or the like. Why should they bother? You could argue, probably correctly, that the rest of the world provides enough competition for the innovation to continue, but that's in the realm of supposition as we don't have comprehensive figures describing who paid how much for each innovation in mobile telephony technology.
Hopefully, no one currently employed with Sprint survives the merger. There is not one single useful person in that entire company. I cant express how bad Sprint is. Consider: I got a free year of Sprint, and moved to another company before my free year was up. Free is no good if it's on a crappy network.
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