The $26 billion T-Mobile Sprint merger, which cleared one of the last hurdles for approval Tuesday, includes several pledges to keep regulators happy — but the unification of two of the four largest phone service providers in the U.S. leaves some questions for consumers.
T-Mobile promised phone bills will remain the same for the next three years, and the Federal Communications Commission noted as much when it approved the deal last year. However, not everyone is convinced, given that the company must improve profitability for its shareholders.
“Over and over again, consumers are promised enormous benefits and so-called ‘efficiencies’ by merging parties,” said former FCC commissioner Gigi Sohn, a fellow at the Georgetown Law Institute. “But what they are left with each time are corporate behemoths who can raise prices at will, use their gatekeeper power to destroy competition and new voices, and hijack regulatory and legislative processes. We are already seeing this with the AT&T-Time Warner merger, where promises not to discriminate against rivals or raise prices were broken within months of being approved by a trial judge.”
T-Mobile has a wide coverage map, potentially improving calls for Sprint customers, but the two phone providers operate on different networks, a frequent headache for people looking to switch plans. T-Mobile is on a GSM network, while Sprint uses CDMA — which means Sprint consumers with older phones might need to buy new ones.
T-Mobile will soon be taking over Sprint’s billing once the deal is closed, but Sprint’s prepaid customers and those of Sprint-owned Boost Mobile and Virgin Mobile are being sold to Dish, the satellite company.
The merger may affect the continued availability of unlimited plans, because Sprint and T-Mobile fought hard on that turf, pushing AT&T and Verizon to compete. Over time, a lack of competition on the unlimited front could make it less likely that phone companies will offer them. The public interest group Free Press suggests customers could end up losing such plans in favor of capped plans that choke users after data limits are used.
“We’ll be watching to see which way things move now, but there’s a danger that unlimited plans could go away or get worse,” said Matt Wood, general counsel at Free Press.
The FCC wants to make sure rural Americans are well served, confirming Tuesday that T-Mobile and Sprint have committed to delivering high-speed 5G internet to 97 percent of the country within three years of closing.
The regulator also accepted promises that the two will cover 85 percent of rural areas in three years and will commit to new in-home broadband for rural households. The 5G network would also reach deep into rural areas, with 90 percent of rural Americans covered within six years.
“Like many of the companies that toss out rural promises to win governmental favors, T-Mobile is over-hyping the benefits of the transaction for rural customers,” Wood said.