How the T-Mobile Merger With Sprint Affects Consumers
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T-Mobile and Sprint officially merged Wednesday, closing a deal almost two years in the making. So what does that mean for consumers?
The two companies had argued they have to band together to compete against Verizon and AT&T, particularly when it comes to needed investments in 5G technology. But consumer advocates worry that taking an established carrier out of the market could hurt competition and ultimately raise prices.
“When it comes to corporate power, bigger isn’t always better,” New York Attorney General Letitia James argued in 2019 after joining attorneys general from eight other states in a lawsuit that failed to halt the merger. “This is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”
Consumer Reports had opposed the deal, too.
“We’ll be watching closely as it unfolds,” said George Slover, senior policy counsel for CR. "But there is little that can be done now to change a wireless marketplace that will have less competition and more power in the hands of a few giant corporations.”
With the deal completed, the united company ranks a distant third behind its rivals in terms of number of customers.
Under the terms of the agreement, the company will keep the T-Mobile name and be led by T-Mobile’s new CEO, Mike Sievert, who takes the place of John Legere, the company’s colorful leader since 2012.
Alluding to the coronavirus pandemic in a statement, Sievert said that during this “extraordinary time,” it has become clear how important strong and reliable networks are, adding that the nationwide 5G network the company has promised to build is “mission-critical for consumers.”
How will the merger affect things such as prices, 5G development, and customer service?
Here’s a quick look at what could happen.
Will You Pay More?
As part of the agreement with federal regulators, T-Mobile has promised to freeze prices for the next three years.
It says it won’t charge extra for 5G connectivity, either. At the moment, Sprint offers 5G service only in its two most expensive unlimited plans.
But it’s unclear how the combined company plans to structure its service offerings. T-Mobile and Sprint currently offer about a half-dozen unlimited data plans.
In a note to investors that he shared with Consumer Reports, Craig Moffett, a senior research analyst and founding partner of the research firm MoffettNathanson, says T-Mobile is likely to shift Sprint’s customers (once noted for being cost-conscious) to its lower-priced plans—though not right away.
The most bare-bones unlimited talk, text, and data plans offered by Sprint and T-Mobile currently start around $65 for one phone.
Moffett expects T-Mobile to quickly move away from Sprint’s signature 18-month leases, as well. Deals like those offered consumers the latest in smartphone technology, usually at a subsidized rate. But in return, they had to stick with Sprint for the duration of the lease.
T-Mobile favors traditional financing practices used by Verizon and AT&T. Those allow people to pay the phone off over a period of two years or more. If they choose to switch carriers before the phone is purchased, they must pay off the balance immediately.
How Does the Merger Affect 5G?
From a business standpoint, building a 5G network is expensive and the merger will help cut costs. But consumers will see significant benefits, too, particularly when it comes to 5G coverage.
Within six years, T-Mobile says, its 5G network will cover 99 percent of the U.S. population. More to the point, it will be effective coverage.
While T-Mobile controls a significant amount of low-band and millimeter wave spectrum, Sprint brings coveted midband spectrum.
Many experts see midband as the “Goldilocks” of 5G. While low-band spectrum can travel long distances and penetrate walls, it isn’t much faster than regular 4G service. By contrast, millimeter waves offer superfast speeds but can’t pass through walls. That means that under most circumstances, you’ll get a 5G signal only when you’re outside and free of obstructions.
Midband spectrum provides a happy medium. It can pass through walls and deliver faster speeds than low-band waves.
Bottom line: The “unique combination” of the three wavelengths means “T-Mobile has an inside track for genuine 5G network leadership,” Moffett says. By comparison, he adds, AT&T is more dependent on low-band frequencies and Verizon on millimeter waves.
Better Customer Service?
For Sprint customers, the merger could be great news, at least in terms of customer service.
Most of the major carriers haven’t fared especially well in the Consumer Reports surveys that rate providers big and small on value, reception, and customer support.
All four have consistently trailed smaller companies like Consumer Cellular, which has topped our rankings for the past few years.
But while T-Mobile didn’t make it anywhere near the top, it did place significantly higher than the other Big Four providers for overall satisfaction. In particular, the company earned a favorable mark for customer support—unlike the other three. In fact, AT&T and Sprint earned our worst mark on that measure.
With T-Mobile’s CEO in charge of the combined company, Sprint customers could see at least some improvement. Other than closing some redundant Sprint stores, the so-called “Un-Carrier” has yet to make any changes in the way it runs things.
The company has promised to provide all new customers with the same “industry leading customer care” as its current ones.
Editor’s Note: This article, originally published on Apr. 1, has been updated to add comments from Consumer Reports’ advocacy division.
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