T-Mobile Shares New Details on Proposed Merger with Sprint
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Now that the Federal Communications Commission has officially signed off on the merger agreement between Sprint and T-Mobile, T-Mobile CEO John Legere has shared new details on his company's plans, assuming the $26 billion deal is allowed to close.
He says the merger will allow T-Mobile to vastly expand the coverage of its 5G network, dramatically boost data speeds, and extend free service to first responders and underprivileged children, all without raising prices.
But consumer advocates maintain that behind those promises, the crux of the deal hasn’t changed--that offers of affordable service and investments in new tech can’t offset the fact that there will be one less major player in the industry.
The merger, originally proposed more than a year ago, also has the approval of Department of Justice antitrust officials, but it still could be upended by a lawsuit filed by more than a dozen states that say the plan will hurt competition and, ultimately, result in higher prices for consumers.
While T-Mobile has reached settlements with some states that had participated in the lawsuit, it still needs to broker agreements with 15 others plus Washington, DC, to keep the suit from heading to trial on Dec. 9.
“We’re extremely confident in our case,” Legere said in a conference call with reporters. “It’s just a matter of one way or another the new T-Mobile is going forward.”
But George Slover, senior policy council for Consumer Reports, says the states have a strong case, noting that there are well-established guidelines for antitrust concerns raised when companies grow so large they can completely dominate a market.
“And the levels here are far beyond that," he said, "well into the red zone.”
T-Mobile's Post-Merger Plan
Like the other major carriers, T-Mobile has been slowly expanding its 5G network; adding new markets every few months. It currently offers 5G service in certain parts of a handful of major metropolitan areas.
By combining forces with Sprint, the company will be able to “super charge” its 5G coverage, Legere said, with the hope of boosting capacity to 14 times what it would be on its own within a few years.
If the merger goes through, the combined company’s 5G network will cover 97 percent of Americans within three years, according to the FCC. And within six years, 99 percent of Americans will be covered.
If the companies don't make good on those promises within that six-year timeframe, though, they'll be required to make payments that could reach over $2 billion, the FCC says.
T-Mobile says it plans to take the first step by flipping the switch on its national 5G network on Dec. 6. It will initially cover 200 million Americans in 5,000 cities and towns.
The company is pledging not to raise prices or charge extra for 5G service. On top of that, it says it will roll out a new, $15-per-month prepaid service that offers unlimited talk and text, plus 2 gigabytes of data. And, for each year customers stay with the plan, they’ll see their monthly data allowance rise by 500 megabytes.
Legere says T-Mobile will keep the pricing plan in place for at least five years.
“A pricing move this aggressive will force the other guys to respond,” he adds. “This is what more competition is all about.”
T-Mobile also will make a 10-year commitment to provide free 5G service to U.S. municipal organizations such as state and local police, fire, and EMS departments. All of the major carriers, including T-Mobile, currently offer significant discounts to individual first reponders.
And T-Mobile will offer free wireless service and hotspots, along with lower-priced laptops and tablets, to 10 million U.S. families over five years. The idea is to bring internet access to kids who might not otherwise have it.
Those promises, unveiled this week, all are contingent on the merger closing. And they're added to committments T-Mobile and Sprint made earlier this year before receiving Department of Justice approval.
The companies still plan to sell Sprint’s prepaid division, Boost Mobile, to Dish Network, effectively creating a fourth carrier, but Slover argues that the deal amounts to trading an established carrier for an unknown player with no experience.
“We hope the court will agree and see this merger, as we do, as clearly anticompetitive and in violation of antitrust laws,” he says.
What Do You Think?
The results from Consumer Reports’ most recent wireless service survey, which rates carriers big and small on overall customer satisfaction and details such as value and customer support, suggest that consumers may have even deeper concerns.
While T-Mobile didn’t make it anywhere near the top of the ratings, it did place significantly higher than the other three big providers for overall satisfaction. In particular, the company earned a favorable mark for customer service. None of the other three did. In fact, AT&T and Sprint earned our worst rating on this measure.
Would a merger mean better service for current Sprint customers or just a drop in quality overall?
What do you think? Let us know below.
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