Millions of cell phone users across the United States are about to be affected by one of the biggest mergers in the telecommunications world. Over the weekend, T-Mobile and Sprint have announced to become one company after regulators approve the pending business decision. The company would operate under the name of T-Mobile.
T-Mobile CEO John Legere, who avidly tweets about industry news and his personal life, posted this message on his official account:
“I’m excited to announce that T-Mobile & Sprint have reached an agreement to come together to form a new company—a larger, stronger competitor that will be a force for positive change for all US consumers and businesses!”
Although the move may strengthen these national wireless carriers in their competition with cellular network giants like Verizon and AT&T, who continue to lead the pack in users, the merger may negatively impact business and your cell phone bill. Issues, both seen and unseen, may rise with a playing field of only three massive competitors.
The importance of this decision lies in the backdrop of the telecommunications industry in America today. There are four major networks: Verizon, AT&T, Sprint, and T-Mobile. For years the first two have led the pack in the number of users, with Verizon especially boasting more than 100 million users on the network with AT&T sizing up at about 80 million. With the merger, the new T-Mobile company would rise to second place, combining Sprint’s 55 million with T-Mobile’s 73 million customers.
While business analysts and spokespeople from both companies might suggest that the merger better positions T-Mobile to compete with Verizon and AT&T, the elimination of competition may have negative ramifications.
While unlikely to happen in the immediate, the elimination of choices makes it easier for companies to raise rates or diminish service quality.
“The general view on Wall Street is that as a result of this deal, there are likely to be job cuts and prices are likely to rise,” said Blair Levin, a policy adviser for New Street Research.
For existing Sprint customers, the companies report that you will be migrated over to the T-Mobile network should the merger be passed. The process could take up to three years.
The business union, however, may have positive outcomes for consumers as well. Beyond the possibility for lowered prices, T-Mobile has long styled itself as the underdog competitor in the cell service space. The company has made strides to innovate by introducing new unlimited data plans, flexible offerings, and interesting perks such as international calling, an optimized streaming experience, and family deals. These moves have even pushed AT&T and Verizon to launch their own efforts, with AT&T buying satellite TV network DIRECTV and Verizon pushing their Go90 television service.
One element of the merger that remains unclear is how T-Mobile and Sprint will handle their relationships with MVNOs—mobile virtual network operators. These smaller, lesser-known cellular companies typically serve markets where the major carriers may struggle to develop a presence or infrastructure in, such as rural populations. MVNOs act as digital middlemen, leasing data and cell tower usage from the major carriers to deliver service to these niche markets, often at a lower price. MetroPCS one of the more popular MVNOs which is owned by T-Mobile may undergo some changes caused by the merger. Neither company has yet to release a statement about how the union may impact service.
For more information on the merger, and how it may affect you specifically as a customer of either company, check out the video below. T-Mobile CEO John Legere and Sprint CEO Marcelo Claure aim to spell it out in cleaner detail with their push to 5G.
Are you a Sprint or T-Mobile user? Let us know your feelings on this merger in the comments. How do you feel this move may affect your cell phone usage. If you're not one of these customers, let us know how other companies might respond!