Sprint Plus T-Mobile Equals T-Mobile
Sprint and T-Mobile are two giant U.S. telecommunication companies who rivaled each other for years. Not only were they competing for the faster cellular network across the U.S., but they also were fighting over subscribers to their cellphone plans. However, all of a sudden, they tried to form into one single telecommunication company, which would be the second biggest telecommunication company after Verizon. Their sudden merge was approved by the U.S. Supreme Court. The reason for the merger was the development of 5G wireless networks across the United States. According to Times magazine, the U.S. has already lagged behind China in the 5G race. Part of the reason for the development of the 5G network was to catch up with China. Although the merger will help the United States in the development of the 5G wireless network, it will also be bad for the consumers by leaving them with higher prices, less options, and incompatibility.
Less Competition, Higher Price
As part of the $26.5 billion deal, the merger of Sprint and T-Mobile will combine two companies into one, T-Mobile. As a result, the merger will eliminate one of the big companies, Sprint, as the two companies will turn into one. The merger would also be bad for consumers as the merger leaves the telecommunication market with one less company. Clearly, the merger would benefit the three remaining companies, Verizon, T-Mobile, and At&t, with less competition. One less company could help the remaining companies by easing the pressure to set a competitive price in the consumer market. This outcome can be described by Karl Bode, a journalist from Vice, who states, “Eliminate one of four carriers and the incentive to compete on price is reduced proportionally.” In this case, the consumer will have to pay more as the companies do not have to set their prices lower than before.
Less Options For The Consumer
As of 2019, each of the four telecommunications giants offers their own plan to their subscriber. The price of each plan differs as it depends on the location of the consumer and the number lines that the consumer demands. But in most cases, Sprint turns out to be a cheap carrier for many cellphone users. According to The Motley Fool, Sprint “often has the lowest prices of any of the top-tier carriers”. In addition, Sprint offers a $650 credit if the cellphone user chooses to leave their current carrier. Unfortunately, the merger of Sprint and T-Mobile would ultimately change or replace most of the services offered by Sprint, as well as force their 32.77 million subscribers to choose plans offered by T-Mobile. The merger would leave out less options and more expensive choices for U.S. consumers.
Will T-Mobile and Sprint Succeed?
In 2008, Sprint had merged with another telecommunication giant, Nextel, for the price of $35 billion. The results were a catastrophe as the network of the combined companies was slow and incompatible. The cell phones offered were unattractive with outdated features. This set of failures caused Sprint to fall behind other telecommunication giants as the new flagship of iPhones and Android phones were released.
As of 2019, Sprint’s merge with T-Mobile will experience similar problems to that of Sprint and Nextel: incompatible networks. According to Tom’s Guide, Sprint customers should be worried because their network will not work on T-Mobile. Sprint uses the CDMA network standard while T-Mobile uses GSM, which would make it a challenge for the two companies to move Sprint’s customer’s network to T-Mobile. The executives from both companies mentioned that it could take up to three years to solve this problem. The incompatibility problem not only affects current Sprint customers but it also raises doubt in the two companies’ ability to work together and develop the 5G plan. It is likely for Sprint to fail like before with Nextel, as the two companies could not cooperate, demonstrating problems in their network. The failure would hurt the company as well as the U.S. consumers, with network problems and slower development of the 5G network.
Alternative Solution To The Merger: Collaboration
In conclusion, the two telecommunication giants do not have to merge. Instead, they could collaborate on a single project: the 5G wireless network. Every consumer’s situation is different and telecommunication companies should not limit their options. By merging, not only will the companies limit the consumers’ choices and lessen competition within a market, but they will also create future problems like network incompatibility. Instead, the two companies could just remain the same and offer a wide range of services as it used to. The current goal for the two companies is to work on 5G wireless so they could win the 5G race together instead of hurting their own customers. The chances of two carriers developing the 5G network is higher than only one carrier working alone.
[Image Attribute: Alberto Adan]