Would consumers benefit from a Sprint and T-Mobile merger?Anna Scantlin - Contributing Editor
The topic of merging between the four major wireless carriers in the U.S. has long been a topic that has been entertained within the industry. Whether it's Verizon and Sprint with their two CDMA networks or AT&T and T-Mobile using GSM, to many it would seem like the easier option just to combine and make two carriers. On the surface, sure; two carriers would be a lot less confusing. Having only two carriers would also be a lot less beneficial to the customer, who would have a lot less influence at that point when it comes to fair pricing, which is precisely why it hasn't happened. While it is unlikely that we will ever get to a point where we only have two major carriers here in the U.S., the idea of having just three major carriers has been brought up on more than one occasion. Most recently, you may recall AT&T's attempt to merge with T-Mobile.
When talks of the merge were starting out, and it was clear that AT&T was serious about the acquisition, I was just starting my career at Sprint. While I wouldn't say the merger was a big deal on the retail level of things while such a merge was unofficial, it was clear that if the merge ended up going through it was bad news bears for Sprint. AT&T already had the second largest consumer base among the four carriers, coming second only to Verizon Wireless. If AT&T acquired T-Mobile, not only would Sprint be last when it comes to competition, but they would be dead last. Sprint had, and continues to have, the third highest consumer base. Had that merger gone through, though, Sprint would be eating everybody else's dust with very little room to gain ground.
It seems unfair that Sprint would be opposed to a merger between AT&T and T-Mobile, and yet now we learn they themselves may be preparing to bid for T-Mobile. But in my head I see it in a slightly different light. Sprint and T-Mobile, separately, would seem like they have zero chance against AT&T and Verizon in their current states. If AT&T were to "merge" with T-Mobile, I would have seen it more as a complete acquisition. T-Mobile's towers combined with AT&T's would make for a very convincing argument against the amount of coverage that Verizon currently holds. But tower acquisition would have likely been where the line would have been drawn, and I imagine the AT&T influence would be overbearing. But if Sprint and T-Mobile were to merge, I could see it being more of a combined effort type of deal, and together the three carriers would still be in close competition with each other without one being left so far behind that it would never be able to compete. I think between Sprint's idea of having unlimited data at a somewhat fair price and T-Mobile's efforts to get rid of contracts, subsidized pricing, introducing early upgrades (which Sprint also does now) and free tablet data the two could make a pretty incredible team for what it's worth.
Honestly, I feel like T-Mobile would be able to hold their own a lot better if they had more coverage. To me that seems like the biggest thing holding them back. When asked why people stick with the carriers they do, the top answer always seems to be "Good coverage," which makes sense. What good is a phone if it doesn't even work? What are you paying for? It's also no secret that T-Mobile seems very hit or miss when it comes to areas that consist of good coverage. So despite all of their efforts, which I am sure has still gained them a significant amount of subscribers anyway, the issue still stands that T-Mobile's coverage area is certainly not the best out of the big four. Then again, the same could be said for Sprint.
And I say "could" because I feel like Sprint is putting a lot of effort into reworking their network by making it faster and more reliable since replacing their iDEN network with more LTE towers. This transition will continue through 2014, so even if you have Sprint and haven't seen the jump yet there is still time for it to happen. I have noticed that I'm getting more bars in more places (namely in my own home, but I've also noticed it in previously "dead" spots that I frequent around the city) lately. This could be because I live in Kansas City, which is pretty close to its headquarters in Overland Park. Regardless, I have noticed improvements - at least in regards to coverage. Data speed, on the other hand...
Maybe a Sprint and T-Mobile merger is what they need to gain leverage on AT&T and Verizon. Apart, their profits sit nearly worlds apart. Together, as shown in this graphic by Wall Street Journal, competition could look a lot closer and could be a lot more beneficial.
But this is all purely speculation at this point. Who is to say that Sprint and T-Mobile would actually do better together? More importantly, what do the consumers want? During the T-Mobile AT&T merger, I remember there being several outcries of people who were not interested in a merger happening one way or another. As a Sprint or T-Mobile customer, would you want a merger to happen between the two companies? Why or why not? Let us know your thoughts in the comments below!