Washington is questioning the impact of the T-Mobile-Sprint merger on consumers in the United States. On January 24, five US Senators sent a letter to the Senate Commerce Committee to request a hearing on the impact of the proposed merger of T-Mobile and Sprint. Although a hearing was already held by the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights in June, the Senate Democrats believe that the Senate Commerce, Science, and Transportation Committee, which is the Committee of jurisdiction over the wireless industry and the FCC, has a responsibility to assess the impact of this merger on consumer choice and competition in the wireless industry. Sens. Edward Markey (D-Mass.), Amy Klobuchar (D-Minn.), Tom Udall (D-N.M.), Tammy Baldwin (D-Wis.), and Richard Blumenthal (D-Conn.) wrote:
“The merger of T-Mobile and Sprint would reduce the number of national wireless carriers from four to three. This reduction in competition raises a number of important questions that the Committee should address. Since the merger was announced, some have argued that it will lead to harmful repercussions for consumers such as higher prices, fewer choices, and less flexibility in switching carriers. For example, both T-Mobile and Sprint consistently offer competitive products that have exerted pressure on AT&T and Verizon to offer more consumer-friendly data plans and eliminate restrictive long-term contracts. We should examine the impact of combining these two disruptors into one mega company.”
The Senators have legitimate concerns. Here are three ways that the T-Mobile – Sprint merger may affect you:
1. Fewer Options
Currently, consumers only have four wireless carriers to choose from, and this merger effectively decreases this even further. Additionally, a T-Mobile – Sprint merger would prevent new competitors from entering the market. A combined T-Mobile and Sprint could potentially deny competitors wholesale access to their network, basically eliminating new entrants’ ability to compete in the market.
2. Higher Prices
As separate companies, T-Mobile and Sprint drive competition in the industry by challenging more established carriers like AT&T and Verizon with cheaper plans. If the merger is approved, the combined company will have less incentive to keep their prices lower. In fact, once the company becomes a corporate giant, it will likely pay a lot more attention to profit than it will to customer satisfaction.
3. Greater Burden on Lower-income Americans
Currently, T-Mobile and Sprint are direct competitors in offering pre-paid services. If the merger is approved, the new company will control over 50% of the pre-paid market and will have much more incentive to raise prices. This could adversely affect low-income consumers who would have far fewer wireless choices.
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