Would a T-Mobile-Sprint Merger Hurt Consumers? (dslreports.com) 95
Following a report from Reuters claiming T-Mobile is close to agreeing on a deal to merge with Sprint, an anonymous Slashdot reader shares a report from DSLReports arguing how such a merger would remain "a very bad deal for consumers": The Sprint-T-Mobile merger could prove problematic for not only wireless prices, but the recent resurgence in unlimited data plans. While wireless carriers still often engage in theatrical non-price competition more often than not, the government's decision to block AT&T's acquisition of T-Mobile several years ago helped spur an unprecedented period of competition in wireless (something large ISPs and their policy armies like to ignore). The end result was a brasher and more competitive T-Mobile, who lead the way on a wave of improvements in the sector culminating most recently in the return of simpler, easier unlimited data plans. The government's decision to block Sprint from acquiring T-Mobile helped keep that competition intact, something large ISPs and their policy folk would similarly like you to forget. As a result, T-Mobile has added more customers per quarter than any other wireless carrier for several years running, as the resulting competition put an end to numerous, nasty industry tactics including overcharging for international roaming, to obnoxious fees and long-term contracts. And while the new, combined company will likely still be run by current popular T-Mobile CEO John Legere, the very act of eliminating one of only four major players in the wireless market will indisputably reduce the incentive to more seriously compete on price, and could help reverse the progress the sector has seen in recent years. It's well within reason that this reduced competition could also bring back metered plans and put an end to unlimited data.Wirefly is a good place to compare cell phone plans to see the difference between Sprint and T-Mobile.
Monopoly conditions (Score:3)
Since this essentially will lead to a monopoly or at least an oligopoly situation it will hurt the customers.
Re:Monopoly conditions (Score:4, Interesting)
There is still Verizon and AT&T
Still a monopoly or an oligopoly may not hurt consumers, however it makes it much easier for them to do so.
However if the two companies have similar cultures and processes the merger may be good for consumers as these were the underdogs in the market, If they can keep their underdog personality (with pushing their often better plans) with their combined infrastructure, they could really force Verizon and AT&T to compete more as well.
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When you have a single dominant market player, or only a few dominant market players, a merger is NEVER good for consumers. Mergers are always designed to benefit one or both of the merging companies, to make them stronger so they don't have to be as nice to customers. Mergers are never done for the benefit of customers, despite the insistence of the companies trying to sell it that way.
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The last time I tried them, I was getting an order of magnitude less bandwidth while using an iPad with cellular while standing on Market Street in downtown San Francisco compared to my Verizon iPhone at the exact same spot.
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Funny how everyone has virtually the same story but until TMO turned things upside down a few years ago, Sprint was well ahead of them in subscribers.
Re:Monopoly conditions (Score:4, Informative)
It won't *lead* to an oligopoly; it will remove one of the four oligopolists.
By reducing the number of oligopolists/increasing the concentration, the optimal price for the remaining members increases.
As a practical matter, if sprint is indeed already doomed to fail, the other three are the likely purchasers of its assets in bankruptcy--and I'd rather see it parceled out in bankruptcy then in a single deal like this.
We certainly have at least *some* evidence of the value to consumers of a fourth, smaller member of this oligopoly in tmobile's scrapping its own way back from near death a few years ago . . .
Also, this will give us some insight into the new administrations's monopoly policy--it *says* it will protect us from monopolies, antitrust enforcement has dropped from its highpoint in the Reagan administration, which bought into the Bork line that the *only* valid test was the effect on consumer welfare (instead of the prior "big is bad" which actually increased prices in widely dispersed industry), but has been watered down by each successive administration of either party. The DOJ now looks at "how much" pricing power the new entity will get, while the Bork/Reagan answer was, "if it's not zero, it's bad for the consumer."
hawk, displaced economics professor
Re: Monopoly conditions (Score:1)
Counterpoint, given our retarded spectrum management, T-mobile and sprint will always be a distant third, and if sprint gets auctione off in bits, the bigger cash reserves ofVerizon and AT&T will let them pick off the best parts of sprints spectrum and reduce the competition to two. Least bad case is that T-mobile gets all of sprint and can fill out their rural coverage, allowing T-Mobile to compete in much more of the market and dive AT&T to compete across all of the market instead of just the budg
Re:Monopoly conditions (Score:4, Insightful)
I'd rather see it parceled out in bankruptcy then in a single deal like this.
This single deal would be likely be better for consumers. If the oligopoly is going to go from 4 to 3, it is better for the 3 to be roughly the same size. Sprint and T-Mobile combined are still smaller than Verizon in number of subscribers.
Re: Monopoly conditions (Score:1)
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Look at it this way: if it wouldn't hurt consumers then why are they even proposing it?
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"No, we don't want any cars or for that matter trucks on our roads, b.t.w. ban meat as well." - Green Parties over the world.
Comment removed (Score:5, Interesting)
Re: Yes, but... (Score:2, Interesting)
If consolidation is necessary here, then the question should become how to lower the barriers to entry in this market. Construction of a nationwide network requires a huge investment, which is the main barrier. The same could have been said for telecom prior to deregulation. Is there anything that can be done to lower the barriers to entry and increase competition?
Re: Yes, but... (Score:1)
The fundamental problem is that the spectrum leases are forever. The solution is to eminent domain them, and re-issue as 5-7 year leases. That would also make a shit-ton more flexibility then the incumbents having indefinite oligopolies.
Re:Yes, but... (Score:5, Interesting)
I totally disagree.
Sprint is going to die, one way or another, and if it doesn't merge with T-Mobile the likely result is that it'll just go bankrupt and the assets will end up split across the big three anyway.
No. In bankruptcy, Sprint's assets would be sold off to the highest bidder. With none of the "Goodwill" charge you'll see on T-Mobile's balance sheet which will hurt T-Mobile's shareholders.
Sprint should just completely die. They're a shit company and there is no way that T-Mobile is gonna change that company's corporate culture. Kill it with the fires of bankruptcy and everyone - except for the CEOs - will be better off.
And that's all this is: CEOs helping each other out. See, in bankruptcy all those stock options and whatnot the Sprint CEO owns becomes worthless - as well as all of the big shareholder's. There are some bigshots shots who will lose big if Sprint goes under. So one calls a buddy and gets a buyout and all the rich people keep their money.
We little people will get it in the ass. Less competition; we get it. Never works any other way.
This is a perfect example of the perils of Capitalism that Adam Smith warned us about.
Re:Yes, but... (Score:4, Interesting)
I'm not as convinced it's a horrible plan, but you make some excellent points. The problem with allowing Sprint's assets to be simply auctioned off are not minor. T-Mobile, being the smallest of the "Big 3" means they will probably be priced out of the auction for the best assets, further pushing them aside. As for CEOs helping each other out., that's not entirely wrong, but I have good reason to suspect the reality is more complicated.
I had to do an ethical analysis of CEO compensation for a class some time ago, and it got pretty deep. Most executives have big egos and hate the notion of getting help from each other, but love being the one the other person needs. As for competition, T-Mobile likely wants to gain specific assets that are in Sprint's portfolio that can't simply be siphoned off in an auction anyway. More to the point, T-Mobile's CEO is not going to take a hit on his personal balance sheet to help a "not-really-a-friend" friend.
Thank you, though, for pointing out Adam Smith wasn't full-on laissez-faire. It seems most miss this.
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Also known as the 80% rule; the two big ones make up 80% of the market; leaving 20% niches all the way down.
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Sprint + T-mobile network does not equal better coverage. I would bet that both T-mobile and Sprint are both represented in cities and surrounding areas, but weak in lower populated areas. Combining the network (which are totally different protocols last I checked anyway) will do very little to increase coverage to areas that neither network covered.
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On day one, it would not...probably.
But giving one company access to the spectrum of both (plus the physical infrastructure which surely will require some adjustment) is a huge benefit. TMO has already begin building out lower frequency infra and has a very aggressive schedule for it which will solve their building-penetration problem.
Add in what Sprint offers and you've got spectrum for oodles of bandwidth, lots of users, building penetration/coverage and consolidating the extra costs associated with havi
Um, which is it? (Score:2)
And the answer is yes, this will hurt consumers. T-Mobile stopped charging overage fees for data use because they were about to get swallowed up and needed something to compete. It worked, but they only did it to compete. The cell phone market is completely saturated and they're not competing for the same pool of users. The point of the merger is to eliminate that competition by elimina
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Good points. Also, now is a much different time in the cellular technology roadmap, where these originally completely non-interoperable, non-compatible systems can actually use the same fielded infrastructure. Remember T-Mobile was the first and only true GSM carrier, while Sprint (and Nextel) were weird mashups of other technologies. There was no common component. With that all changed now,
While most people think about their personal handset as their interaction with the carrier, the carriers are extremely
The problem isn't too few carriers (Score:2)
If you break up that vertical integration, then most of the monopoly/oligopoly problems disappear.
Re: Yes, but... (Score:2)
> The reputation is unfair: T-Mobile is superb right now
Unless you're in South Florida, where a big chunk of Dade & Broward counties STILL have no working T-mobile data service almost TWO WEEKS post-Irma (Verizon and AT&T had few outages that were mostly resolved within a day or two). Somehow, they're STILL having backhaul problems for data service.
I mean, fuck, even SPRINT had data service mostly restored a few days ago. T-Mo must have somehow found shittiest, least-resilient south Broward backh
Re: Yes, but... (Score:2)
Update: apparently, if a Nexus 6P with N2G47W radio modem firmware is without working LTE, HSPA(+), and GPRS for several days, it stops even TRYING to use them until the next hard shutdown & full reboot.
I've done numerous "hot" reboots over the past two weeks (restarting Android, without going all the way and rebooting everything), toggled wi-fi off and on, and tried using T-mobile away from my home's wi-fi multiple times over the past 12 days, to no avail. Zero data.
For the hell of it, I decided to tr
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The first is that both Sprint and T-Mobile are silo'd, in the public consciousness, with "Cheap and poor quality", in comparison to their other two competitors. The reputation is unfair: T-Mobile is superb right now, and Verizon has always been overrated, concentrating on technical metrics studied in surveys while running a network that ignores critical usability features like call quality and user friendliness.
It's also unfair because T-Mobile is no longer particularly cheap.
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Add to that - it's a zero sum game. There's a finite number of subscribers (even allowing for additional market penetration, having 17 cell phone carriers wouldn't magically make more subs appear), and a finite amount of frequencies which are divided up between the carriers - and various other uses of course.
A single company using all those resources and available to all subscribers - in theory - would be best for everyone. Of course, corporate greed makes that a non-starter. The concern here is TMO merg
I don't think so... (Score:2)
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What normally happens in Mergers.
You have the larger failing company, and the smaller growing company.
They merge. The fact the larger company (although failing) has more stock of ownership they make the rules, and normally push out the management in the smaller. Thus often killing what caused the smaller company to succeed. So you now have a larger failing company but it will now take longer for it to fail.
Sometimes if the smaller company has enough personality and loyal customer base then they may do th
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We'll see what happens in the regulatory world. If AT&T and Verizon oppose the merger that will mean they've decided that the combination of Sprint/T-Mobile is dangerous. If they don't oppose the merger...
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From what little I know of T-Mobile's operations side, I think they are well ahead of Sprint for long-term planning and have a much better/leaner operational model. The value of Sprint is almost entirely in their subscriber base, and T-mobile would be paying a premium for them through a merger.
Sprint used to have a lot of their own fiber, which could be a value for smaller regions or POPs, but again it is limited.
While I would prefer four viable competitors, that doesn't appear to be viable much longer. B
What's the point of a merger anyway . . . ? (Score:2)
A merger is supposed to help the companies' and their investors. A merger is not meant to "help" consumers. So asking if a merger will "hurt" consumers is kinda sorta irrelevant.
If what "helps" the companies' and their investors also "helps" consumers . . . well, that's great.
If what "helps" the companies' and their investors "hurts" consumers . . . well, that's just tough luck.
When planning a merger, the interests of consumers are the last thing that the merger cabal will consider, if even at all . .
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The point of a merger is to stuff money into the pockets of thr executive board. When Sprint sold 75% to Softbank (China), the board took home billions. I don't like it when huge infrastructures are sold to foreign states, and I switched from Sprint to TMobile when that happened (yes, even though Mobile is not a US corp.) So my question is, to what extent does this merger make TMobile park of Softbank?
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T-Mobile IS a US corporation and they're even publicly listed on Nasdaq.
DK may have a controlling interest but also access to much deeper pockets and in a large part responsible for enabling TMO to be disruptive to the US-based cellular industry.
If they merge, part of it would include softbank divesting their interest in sprint OR softbank getting a certain interest in the combined company afterwards.
You confuse classic ownership (this is my baseball, I do with it as I please) with corporate share-based own
Re:What's the point of a merger anyway . . . ? (Score:5, Insightful)
Unfortunately the term "The companies first priority should be to the share holders" has been taken out of context.
Back when it was written, Companies would often take the share holders money and use it just to enrich themselves, or will give it away to their church, or other crazy cause, even at the companies expense. So the shareholders were often investing in companies that were killing themselves. With the change of focus to prioritize the shareholder, it means that the company should use their money to invest back into the company, sell more product, higher people to make better products... Even if this is at a cost of a bad quarterly report. However the statement had been taken out of context so now it is about hacking the numbers to keep the shareholders quarterly profits high. At the expense of long term growth.
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Unfortunately the term "The companies first priority should be to the share holders" has been taken out of context. Back when it was written, Companies would often take the share holders money and use it just to enrich themselves, or will give it away to their church, or other crazy cause, even at the companies expense. So the shareholders were often investing in companies that were killing themselves. With the change of focus to prioritize the shareholder, it means that the company should use their money to invest back into the company, sell more product, higher people to make better products... Even if this is at a cost of a bad quarterly report. However the statement had been taken out of context so now it is about hacking the numbers to keep the shareholders quarterly profits high. At the expense of long term growth.
I would mod this up 100 times if I could. Once a company goes public, it's no longer about running a good, solid organization and producing a good product. Instead it becomes maximizing profits at the cost of what made the company attractive in the first place to keep from getting murdered by Wall Street.
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Companies can be a good company after going public, however normally the owners still have majority share, and the other investors realize that profits are not expected to show for a while.
Normally with stock prices the companies profits is actually usually only a small factor in it, as the day traders will not hold onto the stock long enough for the quarterly report. But the longer term investors (the more conservative ones) will normally look at all the data before making their decisions. They may see a
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Companies exist to generate money for investors (shareholders, etc.). That's it. Not for consumers, not for employees...
With that said, a merger of TMO and Sprint combines their spectrum and offers significantly more opportunity to build out complete coverage with good speeds...which consumers like and buy into...which generates more revenue. Sometimes consumers do benefit from corporate greed...particularly when a CEO understands that giving consumers what they actually desire can drive business growth.
Whelp, (Score:3)
Re: Whelp, (Score:1)
This has nothing to do with Betteridge's Law. If that applied to any question, the answer to any Ask Slashdot question would also be no. That's absurd. This headline is asking your opinion of whether the lending merger between T-Mobile and Sprint will harm consumers. Betteridge's Law does not apply here.
Ian Betteridge observed that sometimes journalists who hadn't adequately researched a story and couldn't confirm the story would still run with it. To avoid printing false statements, journalists would write
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Merger Details Matter (Score:3)
OTOH, if T-Mobile signal starts originating from the towers used by Sprint, then they'll finally be getting strong enough signal to provide for more than intermittent text messages to my house. I eagerly await the 600 MHz LTE.
The Republicans (Score:2)
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I wanted compulsory GSM, not a Merger. (Score:2)
I wanted compulsory GSM, not a Merger.
Everywhere CDMA goes, you wind up with people who can't switch, who wind up unable to keep their devices when they switch carriers in the US, Canadian users who pay exorbitant Roaming fees, so on and so forth. But the truth is there are only four real carriers in the US, two are GSM, and two are CDMA. Those CDMA carriers should not be there, there should be 5 or 6 GSM carriers that own Towers, and this confusing MVNO scam needs to stop.
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You don't want that (Score:5, Informative)
CDMA (code division multiple access) phones don't use timeslices. They all transmit simultaneously and the tower tells them apart because they're using orthogonal codes. Kinda like writing horizontally and vertically on the same sheet of paper. Your letters overlap, but they're distinct (orthogonal) enough that you can still figure out what the letters are in the direction you're reading. CDMA has no problem with data because each phone sees the other phones as an increase in the noise floor. Since the data bandwidth is the signal to noise ratio, the more phones are transmitting, the higher the noise and the lower the data bandwidth for a single phone. If fewer phones are transmitting, the noise floor drops, and each phone gets more data bandwidth. So in CDMA the data bandwidth available to each phone scales automatically. If there's just one phone using data, it can use all of the tower's 50 Mbps. If there are 50 phones transmitting, each gets 1 Mbps.
CDMA completely destroyed GSM in cellular data performance. Within a year GSM threw in the towel and amended the GSM spec to add UMTS [wikipedia.org] which used wideband CDMA for data. That's why GSM carriers took about a year longer than CDMA carriers to move to 3G data. That's why GSM phones could talk and use data at the same time - they had two different radios, a TDMA radio for voice, a CDMA radio for data. CDMA phones only had a single CDMA radio so couldn't do both at once.
If you'd gotten your wish and the U.S. had gone along with the rest of the world and mandated GSM, CDMA wouldn't have happened and cellular data speeds today would probably be 1-2 Mbps. We would not have LTE because most LTE implementations use OFDMA (orthogonal frequencies instead of orthogonal codes). CDMA was the proof of concept that this crazy "everyone transmits at the same time and we tell them apart by orthogonality" idea actually worked when scaled up to a nationwide cellular network. Without that proof, there would've been little incentive to develop the higher-power consumption OFDMA.
GSM vs CDMA is actually a perfect example of why market competition produces better results than government-mandated standards. (The SIM card is very cool though and I'm glad it got incorporated into LTE.) Government should not be mandating technological standards. It should stick to mandating standardized requirements, and leave it up to the market to come up with the best technologies to meet or exceed those requirements.
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To be sure, no one is bitching about CMDA-the-technology. They're bitching about CDMA-the-Qualcomm-standard, which is an anti-consumer, vendor lock-in pain in the ass.
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I know it's all the fashion to bitch about how Slashdot has declined from its glory days, but it's posts like this that make it worthwhile to keep reading.
Thanks, Solandri, for that informative post.
My plan is grand fathered. (Score:2)
Most people don't use that much
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I agree with you completely. Those of us who don't use much data really don't want to be forced into "unlimited" plans which end up costing significantly more and starts the path of saturating the networks again. I was not happy when T-Mobile started up "Unlimited" again and offered no lower-cost, limited plans for those who don't want tons and tons of data. Fortunately, T-Mobile was perfectly happy to grandfather my plan, and even upgrade it twice with more data and features at no extra cost. This doesn
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On
Physics and Vacuums (Score:2)
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Isn't the spectrum pretty much fully allocated? If Sprint merges with T-Mobile, will there be enough surplus spectrum for any new entrant to even build a network?
If I was the head of the FCC, I would seriously consider a mandate that wireless carries be forced to enter into a technology consortium and standardize their wireless radio systems for universal handset compatibility & portability. I think there's probably a "best" radio technical standard out there and that carrier technical "innovations" o
History (Score:2)
Yes, of course (Score:2)
Fewer offers leads to either lower quality or to higher prices or both.
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Less competition is always bad (Score:2)
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Oooooh, lookit the shill, see how he spins!
The exception has been found! (Score:2)
Finally, the exception to Betteridge's Law has been found...
Betteridge's Law: "Any headline that ends in a question mark can be answered by the word no."
In this case, however, YES, a T-Mobile-Sprint merger WOULD hurt consumers. Have no doubt about this, customers rank dead last in things that T-Mobile or Sprint give a shit about.
hear we go again (Score:2)
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OFCOURSE (Score:2)
I suspect... (Score:2)
They will largely dismantle the Sprint Network over the next decade. That it will primary be done to acquire more customers, for leveraging some of their deals like free Netflix. And for them to essentially acquire a bunch of spectrum for their upcoming 5G rollout.
It still feels like an oligopoly (Score:1)
MaBell (Score:2)
In one of the more unusuall opinions I have... (Score:2)
No, I actually don't think it will.
T-Mobile seems to have it's goal set on becoming the Netcom of the Internet. (Remember Netcom? Back in the days when you paid by the hour to access the internet thru AOL, Prodigy, CompuServe, etc. Netcom came out with the flat $20/month rate and forever altered the industry.
T-Mobile seems to be attempting to do the same. Sprint while by far the cheapest cell network provider, is often routinely the lowest in coverage, etc. T-Mobile, while not always as competitive as Spr