The failed bid, which was stymied by some degree by Sprint’s alternative and aggressive market tactics, would have meant the merger of the country’s fourth and fifth biggest mobile phone companies. A takeover of this extent would have created more market share for Sprint, but less competition between the top five mobile companies. Ultimately, this would have likely caused price hikes for users, and a reduction in the sort of innovative new services and plans which help keep market competition fresh.
Similar deals have been shut down in the past by the Federal Communications Commission (FCC). Tom Wheeler, FCC Chairman, was quick to make comment on the collapse of the bid to Business Week when he said, “Four national wireless providers is good for American consumers. Sprint now has an opportunity to focus their efforts on robust competition.”
So could this actually be good news for the ever growing mobile market? To a certain extent, maintaining separation between the companies will provide dual motivation for T-Mobile and Sprint to continue competing with better offers for customers. These offers, along with further discounted promotions, could have dried up from all carriers if the merger had gone through.
On the other hand, if mobile companies aren’t making enough profit, services are likely to begin falling by the wayside. The danger is construction of new towers and the maintenance of the network could be hampered by both copanies going at it alone. It’s been well reported that Sprint has struggled with the increase in data consumption, leaving its customers without the airways, and therefore the speed, to provide true customer satisfaction. If these issues can’t be addressed, then the companies offering lower prices may end up costing consumers in both time and frustration.
T-Mobile hasn’t been left in the best situation either. They have issues with the FTC, and in order to truly compete against the top players in the market they’ll need funding and market power. T-Mobile Chief Executive Officer John Legere offers a realistic view of the situation, “It is in an industry where the No. 1 and 2 players are hugely more powerful from the standpoint of scale and capital, etc., than the rest of the industry…We see a path forward to be highly successful as a standalone company, but we also know that we could significantly accelerate that growth and create an even higher level of competition in the U.S. wireless industry by various forms of accelerating this platform.”
Despite these longer-term dangers, for the short term consumers should benefit with prices remaining lower than they likely would have with a merger. It’s anyone’s guess what’s going to happen next in the mobile market, but there’s one thing you can do today to make sure you’re getting the best price. Call your provider. Ask them if there’s any chance of a better deal, and you just may be surprised at what they have to offer.
(Photo courtesy of Kevin Cortopassi)