You may have heard a little bit about the Sprint and T-Mobile merger, but you want to learn more. If you're a subscriber on either of these networks, you're probably wondering how the merger will impact you. In this article, we'll tell you everything you need to know about the T-Mobile and Sprint merger, including the latest news and status of the merger, the current timeline, and the latest breaking updates!
Why Are T-Mobile And Sprint Merging?
Sprint had been the fourth largest carrier in the United States for awhile. At first glance, this might seem like a good thing. However, Sprint's 54.3 million subscribers fell far behind AT&T (153 million), Verizon (118 million), and T-Mobile (66.5 million).
Together, T-Mobile and Sprint could assemble a subscriber base on par with both AT&T and Verizon. By joining forced, T-Mobile and Sprint became a serious competitor in the wireless market.
Sprint And T-Mobile's 5G Networks
Much like how Sprint and T-Mobile saw the benefit of combining their customers to compete with their larger competitors, their combined resources would also make their 5G network more competitive in the national market. When talk of Sprint and T-Mobile's merger first went public, 5G was even more sparse than it is now.
Much of the 5G currently available to consumers is either high-band or low-band. High-band 5G is very fast, but it has very short range and cannot penetrate walls. Low-band 5G has a wider range, but can be even slower than 4G LTE data at times. The third type of 5G, mid-band, is faster than low-band but stronger than high-band. Unfortunately, a lot of mid-band 5G networks aren't available for commercial use currently.
After AT&T and T-Mobile announced the merger in 2018, many people were especially excited because their combined forces would probably help increase the amount of mid-band 5G in the United States. Sprint owned a lot of mid-band 5G, but likely didn't have the budget to make it widely available. By combing with T-Mobile, these networks might finally be able to get out to the people.
It seems that this assumption was correct, as T-Mobile recently announced plans to roll out mid-band 5G to dozens of cities across the country by the end of the year. By the time 2021 comes around, T-Mobile claims that 100 million people in the US should have access to mid-band 5G.
What's The Status Of The Merger?
It took several months of legal and financial negotiations, but the merger officially went through in April 2020. If you're wondering why it took almost two years from the merger's original announcement in 2018, there were a number of factors that caused the delay.
In June 2019, Attorney Generals from fourteen states and Washington D.C. filed a lawsuit to block the merger. However, the federal courts signed off on it on February 11 of this year. That decision can be summed up by The Verge's headline of their article: “The Court Let T-Mobile Buy Sprint Because Sprint Completely Sucks.”
Although he didn't say it explicitly, that's essentially the point Judge Victor Marrero made when approving the merger. Marrero's decision highlighted many errors made by Sprint, summed best by the following line:
“Sprint has made multiple ill-advised technological and business decisions which resulted in a chronically underdeveloped network that is inconvenient for consumers to use.”
While some of the opposition appealed the verdict approving the merger, New York Attorney General Letitia James refused the appeal.
Another worry that many expressed during the merger approval process was pricing. A lot of people feared that T-Mobile would increase their coverage prices significantly after the merger went through. Shortly after the court decision, California Attorney General Xavier Becerra reached a settlement with T-Mobile. This settlement is designed to keep prices low for consumers, protect T-Mobile and Sprint employees, and increase staff diversity.
After a series of negotiations involving stock share distribution, all parties finally signed off on the deal. The merger officially closed on April 1, 2020. However, there was one last obstacle T-Mobile and Sprint needed to clear before everything was set in stone: the California Public Utilities Commission (CPUC) needed to approve the merger.
While closing the merger before the CPUC signed off could have resulted in serious consequences for T-Mobile, the organization unanimously approved the merger on April 16 and did not seek further litigation.
About 4 months later, August 2, the Sprint corporation permanently shut down.
Merger Rules
Due to antitrust and monopoly laws, this merger was only going to happen if there were four major wireless carriers in the United States. To abide by these rules, DISH Mobile is going to become the new fourth major carrier.
One condition of the merger is that T-Mobile has to allow DISH to use their network for three years. After three years, T-Mobile can cap the amount that DISH can use the network, which probably means lower data caps for DISH customers. All bets are off after that three-year period.
It seems unlikely that DISH will be capable of building out their own network infrastructure during that period of time. We'll talk more about this later.
However, we should point out that Judge Marrero is more confident:
“DISH's track record and numerous awards for innovation and customer experience, as well as evidence of the currently confidential and creative strategic partnerships that DISH is planning suggest that DISH would compete as a disruptive ‘maverick' in the wireless markets, offering low prices for innovative and high quality services.”
What The Merger Means For Consumers
T-Mobile has promised not to raise cell phone bills for the next three years. The carrier also plans to unveil a new $15 / month prepaid cell phone plan, which may make it more difficult for DISH Mobile to compete.
A few weeks after the merger closed, T-Mobile began replacing Sprint's 5G coverage with their own in certain areas throughout the country. This resulted with many Sprint customers immediately losing their access to 5G cellular networks, though T-Mobile did offer a rewards package to these customers if they agreed to switch to T-Mobile.
In July 2020, T-Mobile completely shut down Sprint's active 5G coverage across the country.
Can I Keep My Phone?
If you have a Sprint phone and it's CDMA locked, you might have to buy a new phone to get onto T-Mobile's network. You can see if your current phone is compatible by entering its IMEI number on T-Mobile's website.
Will 5G Roll Out Faster?
One reason people are excited about this merger is that it'll probably help 5G roll out faster. T-Mobile is already leading the way with the low-band, bottom-of-the-barrel 5G coverage nationwide. Sprint owned a large share of the more reliable mid-band 5G, which is not currently available to the public.
T-Mobile recently confirmed this prediction. By the end of 2020, there will be far more mid-band 5G available in the United States than ever before.
What Does The Merger Mean For Employees?
T-Mobile laid off several hundred Sprint employees throughout Summer 2020 to make room for new T-Mobile positions. Shortly after announcing the layoffs, T-Mobile also announced a new plan to open up thousands of new employment opportunities in their company over the coming years.
Other Implications Of The Merger
John Legere, the long-standing CEO of T-Mobile, stepped down on April 1, the same day the merge closed. Legere was primarily responsible for revolutionizing the wireless carrier market and branding T-Mobile as the Un-carrier. The man taking his position, Mike Sievert, currently serves as the company's Chief Operating Officer.
Concerns We Have About The Merger
Canada Parallels
Having a marketplace dominated by three carriers (no, we're not convinced that DISH Mobile will be competitive) has proven to be problematic. Canada has three major wireless carriers and their cell phone bills are incredibly high.
The problem has gotten so out of control that Canada's Liberal Party and New Democratic Party made lowering the cost of cell phone bills part of their Party's platform in the 2019 election.
Carriers Haven't Even Figured Out How To Deliver 4G Reliably
Wireless carriers are beginning to build out their 5G infrastructure before figuring out how to deliver 4G LTE to the entire country. About 10% of the United States still doesn't have reliable 4G coverage, yet T-Mobile and Sprint are promising to build a 5G network that reaches 99% of Americans in the next six years.
Furthermore, 5G isn't that necessary yet. Carriers are coming up with some crazy use cases to justify ramping up their 5G infrastructure development.
Can DISH Mobile Really Succeed?
We have a lot of concerns about DISH's ability to become a competitive wireless carrier. So do a group of economists from New York University, Georgetown, the University of Utah, and Northeastern University, who wrote a paper about the potential reasons DISH might fail.
T-Mobile and Sprint argue that the merger will increase competition and be good for consumers. However, that's not what these economists believe.
DISH's Cellular Network
First off, DISH Mobile's cellular network has not been built yet.
DISH Mobile says they have $10 billion lined up to build their 5G network. One analyst says this figure is not representative of the budget necessary to build a reliable network. In comparison, Verizon currently pays $15 billion just to maintain the network they've already built. If DISH fails to follow through with their side of the merger, they'll have to pay a $2.2 billion fine in 2023.
Their Goal
The target DISH Mobile is supposed to reach is 70% of American citizens. If they only reach 50% by 2023, they'll have to pay a fine of roughly $580 million. This fine is tax deductible, and they'll have two more years to finish building out the network once they pay it.
Many people doubt that DISH will ever build out their network because of the spectrum they own. DISH owns the 800 MHz network, which is worth notably more than the fine they'll have to pay should they fail to get it up and running. A lot can change in a few years, so it's possible DISH will surprise us and establish a successful high speed cellular network by 2023. However, we wouldn't be surprised if a larger company like Amazon or Google bought them out before they reach that deadline.
Why We Don't Think It Will Work
The fundamental flaw with this deal is that T-Mobile is supposed to support DISH Mobile for the next seven years, but DISH Mobile is going to be one of their primary competitors. T-Mobile isn't going to be incentivized to support a direct competitor after they're no longer legally obligated to do so.
In addition, the United States Department of Justice has appointed one person to make sure T-Mobile and DISH follow the rules laid out by the merger. With such limited supervision, there's a lot of legal wiggle room f0r both T-Mobile and DISH to explore.
How Will MVNOs Be Affected?
Since the merger, many Sprint MVNOs have had to rebrand or change up their coverage. Several Sprint MVNOs leased both Sprint and T-Mobile networks to their customers, but others have completely changed their coverage models since the merger closed.
MVNOs Explained
Every carrier outside of the big four in the United States is a mobile virtual network operator (MVNO), such as Boost Mobile, Mint Mobile, and Ting Wireless. DISH Mobile is going to begin by operating as an MVNO, using T-Mobile's and Sprint's networks. This isn't going to be good for other MVNOs.
Here's why: AT&T and Verizon have very strong customer bases. They're not incentivized to sell off their services to the smaller carriers at good prices. However, Sprint and T-Mobile are both smaller carriers, so they're incentivized to sell off their services to Boost Mobile or Cricket Wireless for lower prices. That helps MVNOs offer customers low prices on their cell phone plans.
How Will The Merger Affect These Systems?
The Net Institute notes that if you eliminate that competition between Sprint and T-Mobile for the wholesale prices of MVNOs, then all the MVNO prices will go up. Lower cost carriers may start disappearing because there isn't competition. Verizon and AT&T don't need to wholesale off their services because they have enough customers.
The final paragraph of the Net Institute really sums up the problems with the proposed DISH Mobile:
“This proposed settlement would permit a four-to-three merger based on a remedy that accepts competitive harms in the short and medium term even based on an exceedingly optimistic view of possible benefits in the longer term. This does not represent good policy. Rather, it suggests a determined effort to invent a basis for approval of a merger that is anticompetitive on its face. Indeed, if the substantial and acknowledged competitive problems with this four-to-three merger are remedied by this strategy of re-arranging some assets, negotiating some contracts, and then hoping for the best some years down the road, it is unclear what merger would not be salvageable with the same scheme.”
This isn't just a problem with DISH Wireless — it also sets a disturbing legal precedent of being able to justify eliminating competition and violating anti-trust laws based on hopes and dreams.
DISH MVNOs
One of the most interesting developments in the months since the merger closed is that DISH is now acquiring a number of MVNO companies of their own. Despite the fact that DISH is currently operating as a T-Mobile MVNO, they now own a handful of smaller companies like Ting Mobile.
So far, there is not too much concrete information available about how these relationships work. It is possible for an MVNO company to lease out cellular data from more than one major carrier, so the absence of DISH's cellular network shouldn't interfere with any MVNO carrier's ability to provide their customers with coverage. We look forward to seeing how DISH's relationship to their MVNOs evolves in the coming months!
Want To Learn More About The Merger?
Check out our YouTube video to learn more the T-Mobile and Sprint merger. We go in-depth about the implications of the merger for consumers like you!
T-Mobile And Sprint Merger: Explained
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