Depending upon what week it is, and to whom one listens, the merger between Sprint and T-Mo is a bust or a sure thing. Other weeks it is anywhere in between. One thing is for sure, there has been no shortage of sparring between the DoJ and the principals (T-Mo and Sprint, so I do not have to keep retyping them).
One of the things I have a hard time with is understanding is the Department of Justice’s (Doj) position that allowing these two companies to merge is going to have a significant impact on competition. That the shrinking down of the market, from four to three nationwide carriers, will be bad for the consumer.
If one looks at the history of the carrier landscape, over the years they have all charged about the same for similar offerings. Only recently has T-Mo really come to the table with budget pricing and all the data one can consume for a paltry sum (up to a point, of course. I have to laugh at the carrier’s definition of unlimited). They are, IMHO, the company responsible for bringing mobile phone plans down to a reasonable plateau.
We also know that Verizon has always had the best coverage, followed by AT&T. Sprint was never much of a contender and it took T-Mo a long time to provide relatively decent coverage. Therefore, to say there has been real completion and price pressure is not entirely correct. Yet, the DoJ has said little before this merger popped up.
I am not sure what the DoJ’s agenda is in being such a stickler about this merger. One of the facts, I am convinced of is that, without this merger, or some sort of handout, Sprint is history. So why is the DoJ being such a spoil sport about this?
Much of what this is about is that the DoJ is stuck on the fact that the merger will harm competition. Have they not been privy to the carrier ecosystem over the years? As I noted earlier, for the most part, there has never been much difference in the major carriers pricing, or plans. And, seriously, does the DoJ really think that if this merger happens, the new ecosystem will raise prices dramatically – especially with the weak 5G showing?
If one looks around the world, most developed countries all have only three or four major carriers. Germany has three. France has four, the Netherlands has three, Sweden has three, and the UK has four, and so on. Most countries have three or four carriers, some of which cross borders (like T-Mo, Vodaphone, Orange). So it seem that three is working out as well as four.
One of the things I find ludicrous is that the DoJ is toying with conditions that if the merger is approved, they would have to create a fourth national carrier to preserve competition. Hmmm… so when the merger happens we will have Verizon, AT&T, T-Schmobile (Sprint and T-Mo) and??? Exactly what is that intended to accomplish? They are being asked to use their assets to create competition to compete with their assets.
Creating a competing carrier using network and spectrum will only weaken the position of the newly merged business. Would this not undermine the initial justification for the merger? So now we have a failing carrier being propped up by a better positioned player just to have the combined assets weakened by creating competition? That makes no sense. Nobody I know thinks that is a realistic option.
I am surprised the DoJ even came up with that. It makes me think they do not have a clue as to what they are doing. But then, who am I to question the wisdom of a government agency?
The DoJ claims to be focused on preserving competition and choice for the consumer. To me, that is a moot point. I am willing to bet my professional reputation that if this merger goes through, prices will remain, relatively, the same for equal service – all eyes are going to be on the carriers for, precisely, that reason. And do not forget, there are many more regional carriers. With the abundance of geography in the United States, and the billions of users, I Just cannot accept that the merger wills stifle competition.
If the merger is denied and Sprint fails (which it will) the end result will be the same, there will be only three national carriers. On top of that, jobs will be lost, and there will be economic fallout. As well, there is the question of redistribution of Sprints spectrum assets. Is the government going to manage that as well, in the name of keeping completion fair?
The FCC has given the merger its blessing. They are far more well versed about what is going on in the wireless business than the DoJ. I believe the DoJ is in over its head and is looking for a way to save face. That is why they came up with the fourth carrier option. I believe they should adopt the FCC’s position, say OK to the merger (with normal judicial oversight, of course) pick up their toys and move on to business that they know a bit more about.