Read more: The people who lose when companies merge
The T-Mobile–Sprint merger will end a golden age in wireless that helped bring to market lower prices and more innovative services. It will mean an end to the competitive rivalry that reduced consumer rates by 28 percent during the past decade. Similarly, the pressure to support unlimited-data plans and free international roaming will fade. Offers by carriers to pay early-termination fees to help families switch to plans that fit their lives will fall by the wayside. And the network improvements that will bring us the next generation of wireless service, known as 5G, will proceed more slowly and yield fewer jobs without the fuel of competitive pressure.
In short, our existing wireless market will devolve into a cozy oligopoly dominated by just three carriers. This will do nothing to make it easier for Americans to stay connected. After all, our wireless phones are how we communicate, pay for all kinds of services, seek out jobs, keep up on the news, and stay in touch with the world around us. Arguably, no service is now more central to our daily lives. But for all this connectivity, we pay a price. Most households now spend more than $1,000 a year on wireless service. Moreover, that figure probably understates the true cost because it does not include the expanding range of devices, applications, and content we use with this service. So it’s no small problem that, according to the Department of Justice’s complaint and the FCC’s own pricing-pressure analysis, this merger is likely to raise rates over time.
Why are the two agencies so eager to approve this blatantly anticompetitive deal? T-Mobile and Sprint have promised that if they are allowed to merge, they will hold off on raising prices for three years. They have also committed to deploying 5G networks nationwide within six years and divesting some assets to help prop up Dish Network as a new wireless competitor to replace Sprint. So the opportunity to use this transaction to advance 5G services and help bridge a digital divide that plagues too much of this country may seem compelling.
The promises that T-Mobile and Sprint are making do little more than camouflage the damage this transaction will cause the competition. For instance, the agreement to freeze prices is littered with loopholes for fees and surcharges. Plus, keeping rates constant is not an especially good deal for consumers when wireless prices have been falling.
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Likewise, the commitment to serve rural and urban areas with next-generation 5G service may sound attractive for a nation struggling with the digital divide, but it ultimately falls flat. Both carriers already pumped out a stream of press releases promising to build this network before the transaction. In fact, according to Sprint itself, far from failing, its 5G network today covers more Americans than any other carrier’s. Competition spurred U.S. carriers to build 4G networks that cover 99 percent of the American population, and competition will serve us best in 5G too.