The U.S. Justice Department has approved the $26 billion merger between T-Mobile and Sprint. That’s step one on the long road to a consolidated Sprint/T-Mobile and probably the only step that really counts. That means its time to consider how this will affect us all or if anything is going to change.
DoJ approval was the hard part and I expect the merger to be a reality by the end of 2019.
As noted, this isn’t a guarantee that the merger will happen. There’s the matter of FCC approval, though FCC Chair Pai and two other members have expressed support long before DoJ approval so consider it a given, and the Attorneys General of over a dozen states have filed suit to block the merger completely. Let’s take a look at how that will likely play out first, because it’s important, too.
The FCC (Federal Communications Commission) is an independent government agency that serves to regulate interstate communications, that means it has jurisdiction over all 50 states, D.C., and territories like Puerto Rico or Guam. It is the group that decides the rules around wireless communication, among other things. It’s comprised of five commissioners who were appointed for a five-year term by the president of the United States. Only three members of the board are allowed to be in the same political party, and the current FCC consists of three Republicans and two Democrats.
The three Republicans, including FCC Chair Ajit Pai, have expressed that they will approve the T-Mobile/Sprint merger given that better wireless access would be provided to rural areas. That’s not a completely partisan thing, as we should expect FCC commissioners to push forward any legal and safe business decision that would improve access for Americans. The FCC may not have officially voted yet, but it’s safe to consider their decision a YEA — they will approve the merger.
A judge asked to block a deal that’s Justice Department approved is not going to take that lightly.
The state lawsuits are a different matter though. These lawsuits essentially ask a judge to block a deal the DoJ has approved, and that’s not something a court will take lightly. With DoJ approval, the two companies are going to be less likely to work with state and local Attorneys General to modify the terms of the deal (which could mean another round of asking for federal approval). Technically, these lawsuits wouldn’t block the merger — only affect how things work in each of the states suing to block it.
It’s going to be as messy as it sounds, but ultimately the weight of DoJ approval will likely win and the two companies will merge. There is a chance that more concessions will be offered by the new company, so let’s look at what was done to satisfy federal approval.
The newly formed company will sell off Boost Mobile, Virgin Mobile, Sprint’s pre-paid service and subscribers, and 800Mhz spectrum assets to Dish Network, This would make Dish the de facto Sprint replacement and the fourth-largest carrier in the U.S. based on current subscriber counts. To help keep Dish’s dreams alive, over 20,000 cell sites and retail outlets plus free access to the current T-Mobile network for seven years is also part of the deal. Dish is optimistic that it can be the new Sprint and be better than the old Sprint was, and with this kind of help, it might be able to make that happen.
Minus one Sprint, Plus one Dish, plenty of red tape
That brings us to where we are today. We lose Sprint, gain Dish, and watch our government in action at the state level as the merger tries to wind its way through a dozen or so lesser courts. Love it or hate it, it looks like this is a done deal and that leads to what’s most important for us: will this make a difference in our service or our monthly bill?
A long and slow ride
No matter which carrier you use, you’re probably not going to see anything different for quite a while. Even if the merger were finished today and new names were being put on buildings and desks, nothing would immediately change.
The state lawsuits alone will make for slow movement in the new T-Mobile. While confidence is high that these suits will be either decided in T-Mobile’s favor or dismissed/withdrawn, it still makes sense to not go forward with any changes that may need to be rolled back. T-Mobile needs to be patient and try to woo over the opposition or try to overcome it.
There is no urgency for the new T-mobile to make any coverage or pricing changes.
Even when the deal is final, things will stay the same for a while. Your phone isn’t going to stop working and your coverage isn’t going to suddenly get better just because the company you make payments to has changed. There’s infrastructure to install or change, equipment that needs to be approved for use, and a lot of financing to be obtained before a single line is transferred to any all-new network. Expect everything to stay just the way it is until mid-2020 at the earliest.
Your monthly bill will probably remain unchanged, too. If you were an existing customer of either Sprint or T-Mobile, you most likely don’t like the idea of paying more money every month. The executives and accountants know that and have a good idea of what would happen if plan pricing were to increase because of the merger.
One day, though, you will be connecting through a new network and may see a different price. If we are to believe the persons in charge of the deal, our network will be better, more people will have access, everything will be cheaper, and rainbows will lie down with unicorns. The reality is probably a little less rosy, though.
Someone has to pay for a new T-Mobile 5G network and in the end that someone is you and me.
Someone has to pay for a new T-Mobile 5G-ready network. T-Mobile isn’t going to eat the costs without passing them along and pricing is going to have to change. Expect to see the “normal” adjustments to current plans because of inflation, but new 5G plans will have to be built in a way that turns a profit once billions are spent on the new T-Mobile network. I expect things to become very competitive in regard to pricing across the big three (sorry Dish) at first. T-Mobile won’t seem overly expensive but will lose the much-loved “budget-friendly” reputation it has today.
On the network side, most of what the two companies tell us is true — combined assets of Sprint and T-Mobile have the ability to build out a network that’s much better than either was individually, especially when 5G becomes part of the picture. A combined Sprint/T-Mobile could build a Sub-6 5G network that covers millions and millions of people without a huge expenditure. In layman’s terms, that means a T-Mobile network with the coverage and speeds of Verizon’s LTE network, which is nothing to sneeze at. With that in place, the company could focus on a second-generation 5G network that offers faster speeds and more bandwidth to offset its high infrastructure costs.
Remember though, don’t expect anything for a while, because things like this take a lot of planning and time.
Where Dish comes in
If everything goes as planned, Dish becomes the new Sprint: the fourth player in U.S. wireless providers. It’s a distant fourth, though, as the top three will have well over 100 million subscribers each, have a huge advantage when it comes to spectrum and other assets, and the benefit of an existing customer base. Dish has a momentous climb to relevance even with the concessions made as part of the merger.
Where Dish has an advantage is a well-established entertainment network. A Dish-owned network has a turn-key option for Satellite TV, Home Broadband, and now Mobile Broadband packages much like AT&T or Verizon offer. That’s a pretty big deal as an all-in-one package seems like a great value when we are shopping for any of those kinds of offerings. And Dish will be able to piggyback on T-Mobile’s network for seven years so it has plenty of time to find the right way to entice customers before it is forced to spend real money on a network.
Still, though, the idea of Dish becoming a strong competitor and the current landscape of having four different choices staying in place is, well, a lie. Let’s not mince words. Dish could pull this off and become a viable number four but as of today, it’s the proud owner of 50 million or so Sprint pre-paid network customers through all the concessions made. Going from that to a major player is no easy ride.
Is this good or bad?
I follow the U.S. carrier landscape daily because it’s my job. I’m also a semi-happy T-Mobile customer and live in an area where Sprint has a damn good LTE network. And since I’m also paid to offer an opinion sometimes, I have to say I hate seeing this happen.
It’s true that this is probably the only way Sprint doesn’t go bankrupt. The company has hemorrhaged cash for so long it can’t afford to follow its existing LTE roadmap let alone work on a 5G roadmap that is economically feasible, so the options for the company look pretty bleak. Today, as a Sprint customer, this approval means you might get to keep the service you have at the price you have instead of seeing the company chopped up and its assets auctioned off. Or worse — becoming a federally funded and controlled network carrier.
Some short-term gains don’t offset the long-term implications here. This is bad for us all.
As a T-Mobile customer, the short term gain here is a well-balanced plan for a 5G network rollout at scale. Sprint’s spectrum assets only need an influx of cash to become the basis for a strong 5G proto-network and T-Mobile has a strange knack for making money as well as plenty of its own 600mHz spectrum. These short-term gains can’t be ignored.
It’s the long-term that worries me, though. Sprint, in particular, carved a current niche as a carrier that offers nationwide network family access at a fraction of the price its competitors offer. Someone with four or more lines on a Sprint unlimited family plan is paying about $100 for it all, and chances are they are happy enough to keep paying it. For the individual, T-Mobile leads the industry when it comes to an affordable and strong unlimited network. In both cases, there are ways AT&T or Verizon outclasses the competition, but overall you get a good value from either Sprint or T-Mobile.
The new T-Mobile promises that this will continue, but there is no consumer model to keep them in check. Be honest — if you’re unhappy with the service from T-Mobile, would you consider a “lesser” network from Dish or a more expensive network from Verizon as an apt replacement? What if pricing on plans inches closer and closer to AT&T’s rates now that there is no viable budget carrier to keep things honest? Companies exist only to make a profit, and we should expect the new T-Mobile to do anything it can get away with to make that happen.
Taking away a choice has never made for more and better choices, and this will turn out no different in my opinion.