The Department of Justice has approve a $26.5 Billion Dollar merger between mobile providers T-Mobile and Sprint.
In allowing the merger, the Justice Department is prioritizing corporate profits over the public interest.
While John Legere, T-Mobile’s chief executive, is expected to become even more wealthy the folks that feed his pockets, that’s you the monthly cell phone bill payers are, not. Surprise, oh no?
Federal regulators have come to evaluate mergers solely on the basis of whether consumers will benefit. This deal does not meet the test. Obviously.
The Justice Department is requiring the two companies to make room for the television provider Dish to build a mobile phone business. Sprint is selling Dish its prepaid service, which operates as Boost Mobile, and some of its space on the wireless spectrum. Dish also will pay the new company for its customers to use T-Mobile’s network for a few years. In short that means an opportunity for fair competition. Sounds vaguely familiar. Dish is like the monthly paying customers minus the backing of strong sister Spring.
The merger deal’s terms call for T-Mobile, the larger of the two companies, to effectively buy Sprint in an all-stock transaction valued at $26.5 billion. The combined company, to be called T-Mobile and led by T-Mobile’s chief executive, John Legere, would be a formidable rival to AT&T, the largest wireless carrier in the country, and Verizon, the second-largest.
Before getting the Justice Department’s approval, T-Mobile and Sprint took steps to win over the Federal Communications Commission, which oversees the telecommunications industry. In May, Ajit Pai, the commission’s chairman, signaled his support after the companies committed to investing heavily in rural broadband service and the fifth-generation cellular networks known as 5G, which brings faster-than-broadband speeds through the air.
On a conference call on Friday, Letitia James, the New York attorney general, said the plan to transform Dish into a fourth major wireless carrier was not realistic.
“Dish has never owned any kind of mobile wireless business,” she said. “Dish has no experience building or operating a nationwide mobile wireless network.” Ms. James added that the agreement brokered by the Justice Department would hurt consumers and “violates antitrust laws.”
What will happen?
Sprint subscribers will become T-Mobile customers, and the executives overseeing T-Mobile will lead the combined company.
Will prices for wireless service go up?
The average amount spent by wireless customers in the first quarter was $47.50 a month, up slightly from $46 in 2018, Mr. Sharma said. (The numbers look low because they include people who are on cheaper prepaid phone plans.) He added that people still spend less than they did in early 2014, when the average amount spent was $60 a month.
Will my wireless service quality improve?
It remains unclear whether customer support quality will get better or worse after the merger. T-Mobile will now have to take on millions more customers coming from Sprint. In anticipation of the influx of new subscribers, T-Mobile said it plans to hire staff for five new customer service centers. But it will take time to train new workers, so in the near term, support quality might be inconsistent.
Supporters of the merger say that the combined company will accelerate the deployment of 5G networks, which are so fast that people can download an entire movie in seconds rather than a few minutes.
So should I switch to AT&T or Verizon?
It’s best to wait and see what happens to the pricing and quality of service.
T-Mobile still offers some attractive perks, like free international roaming and free in-flight texting with Gogo Wi-Fi, which AT&T and Verizon don’t. So depending on your lifestyle, the No. 3 carrier might still be your best bet.
The good news is that if you decide to switch, it’s not as difficult as it used to be. With the industrywide shift away from two-year contracts and the end of early termination fees, you just have to make sure you have finished paying for your cellphone before making the change.
T-Mobile and Sprint have said that, together, they would be able to invest more deeply and quickly in fifth-generation cellular networks, or 5G, bringing high-speed internet access to rural areas neglected by cable services.
The attorneys general argued in their complaint that the merger would cost Sprint and T-Mobile subscribers at least $4.5 billion annually. Lower-income and minority communities would be hit especially hard, Ms. James said in a statement, calling the deal “exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”
The companies have powerful allies in the Trump administration. In signaling his approval of the deal last month, Ajit Pai, the chairman of the Federal Communications Commission, said it would advance “critical objectives” such as “closing the digital divide in rural America and advancing United States leadership in 5G.”
That view was shared by Blair Levin, a policy adviser at New Street Research, a research firm focused on the telecommunications and technology industries. “At this moment,” Mr. Levin said, “no one should have a high level of confidence in the deal moving forward.”
Democratic lawmakers have noted that executives pushing for the deal have stayed at Trump hotels repeatedly since the proposed merger was announced. In January, Mr. Legere stayed two nights at a $2,246 suite at the Trump International Hotel in the capital.
A combined T-Mobile and Sprint would put 30,000 jobs at risk, said Dennis Trainor, the vice president of the local chapter of the Communications Workers of America union.
Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin joined California and New York in filing the lawsuit.
Electronic SIM (eSIM) is the technology that allows wireless devices to get activated on a network through software. In theory, it makes it much easier for consumers to switch networks because they don’t have to acquire a physical thing (the SIM card) from the network they want to switch to. They can just tap a few buttons in an app. In practice, it hasn’t quite been that easy since US carriers have dragged their feet in rolling out full support for eSIM.
If eSIM becomes the standard on T-Mobile and Dish, the DOJ is hoping consumer pressure will bring it to all carriers and also make it easier to use to easily switch between them.
We don’t yet know the full extent of the DOJ’s eSIM requirement.