As many of you may have probably heard T-Mobile and Sprint have finally announced their long-awaited merger. This deal has been off and on again since 2014. By doing so they will successfully have created the nation’s second largest cell phone carrier surpassing AT&T and falling short of Verizon leaving them somewhere in the middle. With that being said I’m here to talk about where that leaves you and I as consumers. See this merger is kind of a big deal even if neither of these guys are your carrier of choice. There are several possible outcomes to this deal and none of them really seem to play out exactly the same leaving this as kind of a shot in the dark.
The first possibility is that once again the merger will fail. This isn’t the first time the carriers have tried to combine. The two companies have tried twice before to join together and both times things fell apart. Back in 2012 T-Mobile successfully bought Metro PCS thereby increasing their prepaid base in the process. Prior to that AT&T tried to merge with the uncarrier in 2011. Deutsch Telecom the parent company of T-Mobile seems to have gotten a lot more aggressive with their holdings in the US and one can’t help but feel they aren’t really sure how much they really want to be in the marketplace in the U.S anymore. However there is always the possibility that they may pull out of this deal once again. While there have been many attempts before it seems as though this time it will actually happen. For starters both companies do seem very invested in making it happen this time around. They even have the semantics of how the newly formed super carrier would operate leaving T-Mobile’s current figurehead John Legiere as the CEO of the combined companies. The other major difference this time around is the new administration in the US. The Obama administration was a lot more vigilant in trying to prevent monopolies to help keep pricing down. Under the Trump administration it seems more likely to come to pass. So what does this mean for you?
If T-Mobile or Sprint happen to be your carrier you may be in for a treat. See both companies have significantly smaller cellular footprints than either AT&T or Verizon. By combining the companies they both instantly almost double coverage. This will eventually lead to subscribers having access to a third viable option for true nationwide coverage. However there is a caveat to this. T-Mobile uses GSM technology for their voice service and Sprint uses CDMA for theirs. The technologies are not compatible leaving them to decide which one they’ll go with. It does come slightly less problematic when you take into account that we are on the verge of 5G as long as both companies started to purchase compatible spectrum. 4G LTE started to close the gap slightly but it’s not a total solution to the problem. First off Sprint and T-Mobile use different spectrum for their LTE. Couple this together with the difference in voice bandwidth and hand-offs between the towers becomes a nightmare to both the technicians and the consumers. This can be circumnavigated by cannibalising Sprints network to reallocate it into 5G rather than make them play nice. There are options but it needs to play out in the right manner otherwise it’ll cause great consequences to the company.
What if I have Verizon or AT&T? This effects you as well. By eliminating a fourth competitor in the ecosystem (smaller carriers not withstanding) consumers are left with three to choose from. With less competition in the market one of two things can happen. One is that the newly formed T-Mobile will cut pricing forcing Verizon and AT&T to cut theirs in order to stay competitive. This is best case scenario for the consumers. The second and more likely scenario is that with less competition all the carriers will slowly jack up their prices. This has already happened in Canada where there are only three major carriers. People are getting more and more fed up by forking out such large monthly bills every month. While I can certainly understand this, running such a large network requires a significant amount of capital. There’s the upkeep of towers which Verizon and AT&T sink a huge amount of money into every year. There’s the thousands of employees that work for them that are on the payroll. There’s also advertising and developing new products and technologies. Cellphones have become such a necessity with everything they do for our modern life that the price you pay monthly becomes justified in order to not sacrifice coverage. T-Mobile and Sprint have been able to drive prices down slightly because having a smaller network means they don’t have the same expenses as the big guys. With the two companies combining to form an almost equal carrier this no longer becomes the case for the T-Mobile.
Let’s say the merger goes through, let’s say that the technical specs work out as well and pricing stays low. What do we have to look forward to with the market? Well in a best case scenario we have three major players really interested in maintaining their customer base. We will continue to see amazing new products come to market that utilize the power of these networks. We’ll see 5G improve upon everything we love about our devices. On the flip side we could very well see the merger go through and then fail. In this situation T-Mobile could completely crash and burn leaving only two carriers left forcing you to succumb to the mercy of today’s titans. Whatever happens here’s hoping it goes in everyone’s favor. I’m hoping for the former. What are your thoughts? Let us know in comments below.