One of biggest question marks in the wireless industry during the past couple of years has been the pending merger between T-Mobile and Sprint. In November, the FCC (U.S. Federal Communications Commission) officially approved the merger with conditions, but a lawsuit led by the states of New York and California is still working to block the merger. Though the number of states participating in the antitrust lawsuit is dwindling, the latest to drop out being Texas, the lawsuit will go to court on December 9.
T-Mobile and Sprint first announced their agreement at the end of April 2018. In a YouTube video initially announcing the news, CEOs John Legere of T-Mobile and Marcela Claure of Sprint, promised the combined T-Mobile company would be stronger than ever, creating competition and lower prices in the wireless and broadband industries. They said it would create new jobs in the U.S. and help bring about the era of 5G. Legere also made big promises about bringing high-speed broadband to millions of rural residents, reaching about 96% of these customers. The deal would also better position the new T-Mobile to compete with big dogs in the wireless industry, Verizon and AT&T.
But not everyone was sold on the merger. Upon first glance, it looks like a merger between T-Mobile and Sprint would simply bring what’s essentially a four-way race down to a three-way race in wireless. Consumer advocates called foul, saying fewer competitors leads to fewer choices and higher prices for consumers. To mitigate these concerns and others, Legere and Claure have promised to deploy 5G service that will cover 97% of Americans within three years and 99% of Americans within six years.
Fast-forward to today, and some critics have been placated, but others remain critical, saying the promises made aren’t enforceable. In a November 5 dissenting statement to the FCC’s decision to approve the merger, Commissioner Jessica Rosenworcel points to the airline and pharmaceutical industries as examples of what can happen within a market after a merger. In the airline industry, for example, Rosenworcel says consumers were forced to absorb new fees, like baggage fees, even though fuel prices had fallen. She says the FCC and the Dept. of Justice have been “wooed” by T-Mobile’s and Sprint’s concessions to hasten the era of 5G.
And yet, it’s hard not to be wooed by these promises. For example, T-Mobile introduced the Connecting Heroes Initiative in November, which guarantees free 5G access for first-responder agencies for 10 years, if the merger goes through. The initiative is part of an even bigger “5G for Good” plan the company has planned. In general, the promise of 5G is incredible. Applications for 5G not only in first response but also in healthcare, manufacturing, transportation, and beyond will enhance life and business, making people, places, and things more connected than ever before. It will also make processes more data-driven, helping industries leverage predictive capabilities to streamline, enhance, and improve. If the merger goes through, will it truly accelerate the path to 5G? If so, it could be a good thing for the U.S. And yet, consumers at the mercy of three main wireless carriers instead of four could limit choice and lead to fewer competition-driven incentives that benefit consumers.
The antitrust lawsuit is about play to out in the courtroom, and then the fate of the T-Mobile and Sprint merger will be closer to being decided. Keep an eye on www.connectedworld.com to follow these proceedings.
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