Two of the big four carriers could soon become one. According to a report from the Wall Street Journal, Sprint is on the verge of buying T-Mobile for $32 billion, creating a mega-carrier that would take on the top dogs at AT&T and Verizon.
A merger between Sprint and T-Mobile could have a range of implications for its combined 100 million subscribers. Aside from giving smartphone shoppers one less carrier to choose from, the deal could impact both the pricing and quality of service that both Sprint and T-Mobile customers are used to. While the impending consolidation has the FCC worried about a lack of competition, it could happen as soon as early this summer. No matter what service you currently subscribe to, here's how the deal could affect you if it's made official.
Less Competition, Higher Prices
With one less carrier to sway consumers away from, there's the possibility that Sprint will raise its prices. This would be especially unfortunate for T-Mobile customers, as we recently found that the company offers the best overall value in terms of family plans.
Conversely, the merger could encourage Verizon and AT&T to switch up their pricing strategies, should a consolidated Sprint pose enough of a threat. Still, according to NPD analyst Steve Baker, more competitors makes for a better smartphone market for shoppers.
"Having underdogs in the market who are big enough to be scrappy, aggressive and able to get attention of leaders is good for the consumer, said Baker. "We can all discuss whether early upgrades and installment plans reduce or increase price, but we can all agree that having a little more freedom in the product choice and ability to upgrade are good things for the consumer."
New Rules for T-Mobile
T-Mobile has been doing quite well under the leadership of CEO John Legere. The company's bold "Uncarrier" plan, which covers termination fees for those breaking contracts to switch to T-Mobile, helped it gain 2.4 million net new customers ins Q1 2014, according to Reuters. It also spurred the other carriers to consider similar open plans.
A merger with Sprint brings up the concern that T-Mobile customers might have to say goodbye to the latter company's inviting, non-restrictive policies. However, Baker feels that T-Mobile's innovations are here to stay, regardless of what happens in the future.
"They've already broken the mold open, and as long as Verizon and AT&T continue to see value in these plans, there's no going back," said Baker.
Despite the pitfalls that come with a lack of competition, a merger between Sprint and T-Mobile could benefit subscribers of both services. The carriers would be able to team up to provide broader coverage for subscribers, as well as potentially faster speeds.
During our recent NYC-wide 4G LTE showdown, Verizon consistently dominated the competition when it came to network speed for smartphones. T-Mobile was often in second place, but Sprint's Spark LTE service was consistently dead last, sometimes even failing to connect to the internet in certain locations.
Sprint clearly needs help in the LTE department, and a consolidation with T-Mobile's solid networks could be a big step toward speeding things up.
While a lack of competition is rarely good for consumers, a merger between Sprint and T-Mobile could bring the third and fourth biggest carriers closer to number one. This would mean more dependable coverage for those who have been stuck with either carrier. However, the improved performance could come at a higher cost. The deal has yet to go official, so smartphone shoppers will have to wait and see.