Who Will Benefit if Sprint and T-Mobile Merger?

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By Kira Vance of Lease Advisors 

The FCC has already agreed to the idea of an acquisition between these two wireless underdogs and has allowed both Sprint and T-Mobile to bulk up their infrastructure through purchasing even smaller carriers such as Metro PCS and Clearwire.

Although some see the merger as a positive for the telecommunications market, many fear there is already too little competition. Public Knowledge senior staff attorney John Bergamayer thinks that prices should be decreasing at a quicker rate.  He blames the slow decline on the lack of competition and fears the possibility of additional mergers within the industry.

Four may be the magic number.  Having four national companies to choose from allows a market enough competition that the consumer does not get the short end of a deal.  In support of this theory, Canada is currently struggling to bring a fourth wireless player into their market.  With only three carriers, Canada’s market lacks diversity, resulting in consistently high prices for consumers.

Columbia Law Professor Tim Wu brings to light the inconvenience of overage charges, termination fees, and locked phones.  T-Mobile eliminated features such as these from their cellular plans.  However, Wu questions Sprint’s ethos and wonders if they will continue with T-Mobiles termination of these features or if they will play the same game as Verizon and AT&T.

The FCC blocked AT&T from merging with T-Mobile under the claim that the buyout would essentially create a duopoly, which Sprint strongly agreed with.  Sprint’s hope to purchase T-Mobile is likely to go through, it would not advance Sprint’s position as the nation’s third largest wireless carrier.

If Sprint purchases T-Mobile it will increase its subscribership to 53 million, behind AT&T’s 72 million and Verizon’s 95 million. Additionally, Sprint’s acquisition of T-Mobile would result in a much-needed increase in network coverage.

Whether Sprint purchases T-Mobile or not, it is easy to understand Sprint’s motives.  The network is under a new ownership and inevitably, change is in the air.  Sprint wants to consolidate the bottom of the market in order to create a bigger player. It is not clear whether it is the consumer or the corporation that will benefit.

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