My Thoughts On The Sprint-T-Mobile Merger

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Sprint and T-Mobile announced today that they will merge, pending regulatory approval.

Mergers rarely benefit consumers. Just take a look at the airline industry, where the loss of airlines like AirTran, Continental, Northwest, and USAirways over the past decade have meant that the remaining carriers can drive up prices and cut benefits without consequences.

I’d expect the same thing to happen with a merger between T-Mobile and Sprint. Currently those carriers are a distant 3rd and 4th place to Verizon and AT&T and they price their services to be able to compete with the big guys. They have forced Verizon and AT&T to lower their prices and bring back unlimited data offerings. For that reason alone I hope that the government challenges the merger.

T-Mobile and Sprint will argue that they need to merge to compete with Verizon and AT&T. I think that it’s far more likely that when there are just a big 3, they will collude to keep pricing high. That’s not unlike what the airlines have done with basic economy and the elimination of awarding miles based on flight distance.

T-Mobile and Sprint will also claim that they won’t cut jobs and that they’ll keep 2 headquarters in Washington and Kansas. That’s like when Jeff Smisek promised the Attorney General of Ohio that United wouldn’t dehub Cleveland in a merger with Continental if he didn’t oppose the merger and I wrote back then that I didn’t believe that would happen. United did indeed close their Cleveland hub and I’m sure that Sprint’s Overland Park headquarters would suffer the same fate. The new company will be run by T-Mobile, will be called T-Mobile, and will use their headquarters.

There is good news here for Sprint customers if regulators kill the deal. In lieu of a typical breakup fee, T-Mobile has agreed that if the deal is rejected they will give Sprint customers the ability to freely roam on the T-Mobile network when there is no Sprint coverage.

If the deal is approved, the merged company will become nearly as big as AT&T. I’d expect that people with grandfathered Sprint plans will eventually be forced off of those plans and that prices will climb significantly. Other perks that Sprint and T-Mobile customers enjoy now due to the underdog status that those companies have would likely be cut as well.

I’m definitely a beneficiary of the low-cost competition as I locked in Verizon’s intro unlimited offer for $30/line/month family plan for unlimited calls, data, and texting. With fewer competitors Verizon can always decide to kill that grandfathered intro plan.

I was a Sprint user for a solid decade from 2001-2011. I started off with a plan that was $39.99/month and included 350 anytime minutes and 2,150 night and weekends minutes. I signed up for a 3 month trial of free WAP internet that allowed for 3 lines of text only internet on my phone. As far as I know I was the only person in my yeshiva at the time that had a cell phone and I became the source of information for my fellow students and teachers some 2 weeks into the school year on 9/11, the day that will forever live in infamy.

I loved learning various systems in my free time and during my yeshiva years in YOEC in LA from 2001-2003 I racked up millions of airline miles and also delved into the cell phone system when I wasn’t studying. Soon enough I was getting a new Sprint smartphone every month and was running an 18 line business account while renting out cell phones to my fellow yeshiva students. It was all rather lucrative. My Rov used to call me the Sprinter Rebbe.

In 2011 Sprint figured out that selling me 18 lines of service for about $300/month wasn’t all that profitable and they gave me 30 days warning that I had to find another service provider.

I jumped ship to Verizon and the difference was night and day. I no longer dropped calls. My phone worked in the basement and in places it had never worked before. Data was much faster. The monthly billing mistakes went away. I was thrilled to have switched.

It reminded me of earlier that year when Mimi and I were in Tasmania looking at baby penguins returning from the ocean in middle of the night. The guide asked that anyone with Telstra please silent their phones and anyone with any other carrier not to worry about it as there was no way they would have service anyway.

Verizon has gone back and forth with their unlimited plan strategy and I hope it sticks around when they roll out their 5G network.

My point is that if you have Sprint or T-Mobile, you should be rooting against this merger so that you don’t lose benefits as prices rise. If you have AT&T, T-Mobile, or an MVNO it will still affect you. The more competitors that exist, the better the odds that your carrier will feel the need to compete for your business.

What are your thoughts on the merger?

HT: Ephraimh, via DDF

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100 Comments On "My Thoughts On The Sprint-T-Mobile Merger"

All opinions expressed below are user generated and the opinions aren’t provided, reviewed or endorsed by any advertiser or DansDeals.

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yb

Same as you. This is bad for us as consumers and bad for the industry at large as it will stifle competition as the big three stop trying to innovate and compete.

sam the man

Dan,you are amazing. You get involved in all you undertake 1000%
You should have Hatzlucha in all your endeavors and help us out along the way.

Dave

Couldnt agree more. Ive had a sprint family plan for more than a decade, the service isnt the best but the price is right. For now. Lets hope this merger doesn’t happen.

Yehuda

Same here. Have a grandfathered family plan for about 10 years now with sprint….. Service isn’t the best but the price is amazing.

D

We have a good family deal, but Sprint is always coming up with new rules that make it harder to remain in that plan at that price.
At one point they said we can no longer have 10 phones on the family plan, and have to split the plan to 2 plans of 5 lines each – of course that would cost double. We fought that, and they bill the second plan as an add-on to the first. But everything comes with a fight.
Another time they told us we needed to make some change due to service issues, then said sorry, this change isn’t supported by your old grandfathered plan, so we moved you to a new one. No, we can’t put you back, because we can’t add anyone (back) to a grandfathered plan.
There are always billing discrepancies, and each one requires loads of time and patience to deal with customer service. But at the end of the day, they have the least expensive family plan for our minimal needs. And the merger doesn’t stand to make it any better… 🙁

David Sudranski

I agree with the Sprinter rov. T-mobile is the reason Verizon has the truly unlimited plan. If T-Mobile becomes one of the big boys by acquiring marketshare rather than competing for it why maintain lower prices and better deals?

Rich

Pure Competition is better than Oligopoly is better than Monopoly.

Al

They’ll also argue the lines between cell/cable company have blurred, so the monopoly determination should be a broader analysis.

greg

The real discussion to come is, how does this affect MetroPCS and Boost Mobile customers?

Joe

Some good news for sprint users is that customer service will get much better since T-Mobile will take it over, T-Mobile has the best customer service from all providers,
Just one thing might be good news for T-Mobile users in the upstate NY catskills area there’s a chance T-Mobile will have LTE up their from Sprint network so will have to see if it will approve by the FCC and if consumers will benefit

Shonuffharlem

Don’t bet on this ATT customer service since eating Directv is way worse for both companies.

S

T-Mobile customer service is not great. They act very nice on the phone, but they are not actually helpful when needed for problems. I have spent many hours on the phone with them, and have been promised callbacks dozens of times that I have never recieved.
Sprint is also bad, T-Mobile is probably better, but I don’t believe they’re the best.

Lionel Mausberg

I agree. I was also lied to by a customer service manager who said T- mobile does not compensate customers whose problems are the company’s fault. After making repeated calls to higher level supervisors I was eventually given a credit for a total of
$135.

joe

wow i never got lied to and have a vip team for my account in Maine its the best

Mikey

Last December I signed up for free unlimited data (except for $4/month regulatory fee) with Sprint for a year. This required porting a number and BYOD. The device I bought was posted here as an unlocked phone. NO WAY these underdog deals will remain post merger.

Larry

I’m in for the free t-mobile roaming

But I own 10 shares of sprint stock, each is worth around $6, while t-mobile is worth $65+ so I will benefit either way

aa

t mobile is bad in the catskills while sprint roams on verizon

Mike

Off topic: Amazon prime is raising their yearly subscription to $119

Jsjcbs

Pricing may get effected but I believe you’ll see more plans that include Netflix, Hulu, DirecTV etc.

shvitz

not really, they wont need those gimicks anymore once they are a big powerful company with little competition.
anybody remember those days when sprint (nextel) was the best carrier in the united states

Sholom

Agree. Just look at Canada and the way Bell has a monopoly there. Cell phones plans are utter crap! I mean, heck, you get charged for roaming if you leave your CITY!

Chaim

The free unlimited plan from sprint will probably be dropped
If I am not mistaken they were still offering it a month ago

Daniele

As soon as I read the news, I looked at my son and said oh no, prices are going to be going up.

This is a terrible thing for the consumer.

Personally I have neither Sprint nor T-Mobile. My Straight Talk plan does ride on the T-Mobile system though, so I’m not sure how it’s going to affect me.

I seriously do believe it’s a terrible thing for the consumer, and I hope the deal IS squashed.

Jack

I wonder what this means for Project Fi customers. They are a MVNO after all…

Shonuffharlem

Unfortunately Sprint will cry they will fold without the merger thus the merger won’t reduce competitiveness. I don’t know if it’s true or not but I think they can make enough of a case that it will go through.

David

They are arguing that there are more than 4 big carriers since lines are being blurred. I would argue that is not true because the cable companies are only piggy backing off the big 4 as MVNOs.

Joe S

Based on what TMobile CEO claims, is that with the merger, the prices will be more economic for consumers: quote ”And, that will lead to more competition – competition that should make wireless, video, and broadband more affordable for everyone”. I don’t know if that will happen, but that is what he’s claiming now.

farmbochur

Have the free Sprint plan till July. Planning to switch to mint sim once the promotional rate expires.

David

When will we know what the outcome is?

eli

Wait! you’re telling me,that you had 350 anytime minutes and 2,150 daytime minutes?

Are you saying,That you only had 350 Nighttime minutes? Back then,I though it was the other way around?

Joshua

As long as T-Mobile grandfathers my existing Simple plan with the new merger I am ok with this. If they start some rent-seeking BS by forcing me to transition to their mediocre ONE plan, then it’ll be time to seek alternatives…

Mort

Can we expect the Sprint CDMA phones to work ok on the T-Mobile network? Will there be any quality degradation when using the Sprint phones on the T-Mobile network? Wonder if the GSM networks will have a CDMA phone trade-in program for people who want to leave Sprint/T-mobile?

Yitz

Any 4g phone is also gsm

Mort

From what I read, the Iphone se supports 4g but comes in two versions GSM & CDMA.

Ari

Why should the government get involved? They can do what they want with their business, and if you don’t like the product, then don’t buy it. You are not entitled to anyone else’s services just like I could go to another travel/deals blog. I can’t demand the CFPB walk into your house and post better deals.

Julian

Dan, what do you do when you travel internationally? Do you activate the Verizon international plan? Do you swap a sim card from the country you are traveling? Then what do you do if somebody tries to call your US number?

G

They say it’s important for 5G… Do you think they would be as efficient and effective at 5G implementation without a merger? What are your thoughts of pros vs cons of 5G implementation vs. increased costs?

Yitz

Sprint owns tons of 5g bandwidth as does T-Mobile

Pat

Dan, the cell phone industry is different than airline industry. You can be a small player in airline industry by running a few profitable routes, and that alone can already make price pressure on the big guy on those competing routes.

However, a successful US nationwide cell phone service company needs to have at least good and reliable cell phone coverage in all big cities and major interstate highways. To do so, it requires a lot of infrastructure (e.g. Cell towers, wireline backbone Ethernet…) and strong cash flow to maintain them.

Once 5G is prevalent, it will requires a lot of equipment upgrade cost and I doubt a weak company like Sprint would be able to invest that. Definitely it is better to have more competitions in the market, but unfortunately I think Sprint needs someone to merge with to make more money to keep themselves relevant. Otherwise, it is just a matter of time that they may disappear on its own.

Ed

@ Dan,

Nobody could care less that Cleveland was dehubbed. It doesn’t deserve a hub.

sue

i hate sprints guts i can invest an 35 minutes of my time into building a relationship with a representative and then boom a dropped call right before there about to do something for me, literally like pisom and ramses in eygpt beyond frustrating.

sue

we want a memoir

rob

” they will collude to keep pricing high. That’s not unlike what the airlines have done with basic economy and the elimination of awarding miles based on flight distance”

The advent of basic economy and elimination of flight distance miles might be bad for consumers at large, but it isn’t collusion.

I have no idea as to the legitimacy of the claims coming from T-M and Sprint, or whether this merger would be good or bad…. but this merger would be nothing like airline consolidation. The latter has far more difficult barriers to entry which allow legacy participants to have more pricing power.

In the telecom industry, the big 4 might have the vast majority of market share, but that is only because the dozens of smaller competitors don’t currently offer a value proposition meaningfully greater than 2 of them (Sprint and TM) in the areas they try to compete in which is cost.

Were that value proposition TM and Sprint currently offer to go away post-merger, the customers who choose them based on price (which is probably a good chunk of their share, unlike ATT/VZ), can and will have other options to take a strong look at. It’s not a given that they can just become another high-priced wireless company, and expect to prevent large outflows to MetroPCS, Boost, US Cellular etc. etc. etc.

While there is correlation between market concentration and pricing power, it is not necessarily causation. You can have markets with 2 companies where neither one has any pricing power, and you can have markets with 3 dozen where companies have some pricing power

Mark

FYI you can still get the 2017 Verizon unlimited plan that you mention. I just switched my family plan to it this week. Chat reps can move you onto it because they only removed it from one part of the system. Chat and ask for the New Verizon Plan with code 98127 and as long as the rep uses the “Plan Switch Tool” and types the code in, it’ll work. It took me a few tries before finding a rep to do it, but was quite easy.

Anyone with verizon should hop on this plan as i’m sure just as Dan mentioned prices will only go up with this merger

toeknee

Rep says they cannot do it as they don’t have that option anymore. anything else to ask??

Yehuda

Same thing here

Al

Hey Dan

Are you familiar with the late great comedy team of Wayne And Shuster,?

A line from one of their classic skits: “Will all those flying to Cleveland please report to the gate to explain why?” LOL

as23

anyway to get an blackberry keyone black edition on sprints network? I have sprint and i dont want the silver one their offering i want the black

as23

dan how do you use yur project fi you wrote about? you take out your verizon simcard when you travel and just pop in the fi one? do you go on fi and activate service first? can you do that with a sprint phone ?

Anither Dan

Meanwhile in Israel, you can get an unlimited plan (calls, text, 4g data), for 10$-15$.
Think about that the next time you aplaud Tmobile for their competitive pricing..

Gershon

Dan on which plan are you now from Verizon?

Lea

Dan, you didn’t mention the main reason of the merger and why T-Mobile believes it is a good thing, the idea of consolidation and building at 5G tower for two Networks, is way cheaper then Sprint and T-Mobile separately building 5G tower’s.

iahphx

I don’t know whether this cell phone merger will be good or bad for consumers, but don’t pretend that you know either. The reality is that there’s nothing wrong with the weaklings in an industry merging to keep up with the big boys. More often that not, that’s not only good for the businesses, it’s good for consumers, since strong competitors are much more likely to offer competitive products — AND stay in business.

Industry consolidation is not necessarily a bad thing. You gripe about the airline industry, but the reality is that we now have at least 4 strong airlines that can afford to improve their products and provide decent, secure jobs for their employees. Yes, it’s slightly harder to GAME (aka “take advantage of”) the remaining airlines, but nobody is going to cry about that for you (or me). There are still still TONS of great airfare deals, and nobody in their right mind would say airfares are historically “expensive” right now. Sure, you lost your Cleveland hub, but you SHOULD have lost that hub. Just like Memphis lost a hub, and Pittsburgh lost its hub and Cincinatti, etc. Some business ideas are not good business ideas, and it’s not the gov’ts job to keep bad businesses in business.

shulum

And what does it mean for Metro pcs?????????!!!!!!

jake

sprint has $50b in debt if the merger doesn’t go through they are history so its a catch 22. for further details check out Bloomberg article.

Charnie

Clearly not a good deal for consumers. The only thing that may save us from paying through the nose for our plans is that maybe the current “also rans” such as MetroPCS, Cricket and Boost will serve the roll that T-Mobile presently does versus Verizon. I left Verizon almost a year ago because frankly, I was tired of paying their rates. I live in a major metro area so coverage isn’t as big a deal as it used to be. Went to T-Mobile where I’ve been quite happy. But if this merger goes through, it’s likely I’ll no longer being saying that.

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