It’s official: Wireless carriers T-Mobile and Sprint have been cleared to merge. On Tuesday, a federal judge dismissed a lawsuit filed by attorneys general in Massachusetts, 12 other states, and the District of Columbia seeking to block the deal. The state AGs argued that the merger would lead to higher prices and poorer service for consumers; US District Judge Victor Marrero didn’t buy it.
Was he right? That’s hard to say. And some states may still appeal. But for now, here’s what to watch out for when the deal goes down.
- What will happen to my bill?
That’s uncertain, especially in the near term. But the omens are worrisome. The US had four nationwide wireless carriers; now it’s got three. That’s 25 percent less competition, which in theory could result in higher prices and fewer special offers.
Back in 2011, when T-Mobile was denied permission to merge with AT&T, the company responded with a series of brilliant marketing promotions, including free streaming of video and music and free access to Netflix movies. Post-merger, it’s hard to see how the new company, operating under the T-Mobile name, will put out breakthrough deals like those anytime soon. Indeed, the deal is great news for the nation’s other two wireless giants, AT&T and Verizon, because they now have less pressure to cut prices or offer new perks. That’s why George Slover, senior policy counsel at Consumer Reports, calls the merger “extremely damaging to competition.”
On the other hand, backers of the merger, such as Jessica Melugin of the Competitive Enterprise Institute, a free-market-oriented think tank, argues that the merged company will have no particular incentive to raise prices either. T-Mobile will still have to compete against AT&T and Verizon, as well as cable companies such as Comcast with its Xfinity Mobile service. And these days, it’s relatively easy to switch carriers, so nobody in the industry can afford to get too greedy.
In any case, T-Mobile has promised that it will offer service at its current rates or lower for at least the next three years. So that’s something.
- What will happen to my phone?
Sprint uses a cellphone technology called CDMA. But T-Mobile uses the dominant global standard, called GSM, which is incompatible with CDMA. The merged company will be all-GSM, and so some Sprint customers may have to buy new phones. T-Mobile claims these are a minority of customers, since most newer Sprint smartphones can function on either network. But if you’ve got a cheaper or older phone, maybe it’s best to start thinking about an upgrade.
- What’s Boost got to do with it?
All the major carriers resell phone service under different brand names. Sprint owns two: Boost Mobile and Virgin Mobile.
But if you’re a Boost or Virgin customer, you’re about to join Dish Network. As a condition of the merger, Sprint has agreed to sell off those two operations, with about 8 million customers, to Dish, which aspires to build out a nationwide network to rival the giants. But there’s a lot of industry skepticism about whether this will really happen, or whether it’s just a fig leaf to pretend that the US will still have four nationwide cellular networks once the deal is done. Time will tell.
In any case, Dish says it will keep providing phone service over the T-Mobile network for the next seven years. So there’s no need to panic. Still, the Boost and Virgin customers who own older phones with CDMA technology may have to upgrade.
- What about 5G?
To hear the merger partners tell it, quicker deployment of superfast 5G technology is the biggest advantage of the deal. But for consumers, the benefits of 5G remain far in the future.
T-Mobile and Sprint say that as independent companies, they’d have to build a pair of cut-rate 5G networks that couldn’t compete against 5G from AT&T or Verizon. Sprint was the smallest national carrier, with just 55 million lines, while T-Mobile had 85 million. They lacked the resources to match AT&T, with its 166 million lines, or Verizon, with 119 million. But thanks to the merger, T-Mobile becomes the nation’s second-largest carrier. It can now afford to deploy a state-of-the-art system as good as anybody’s, and give the US three first-class 5G networks. This will also put more pressure on AT&T and Verizon to speed deployment of their 5G networks.
It’s a lovely story, which might even be true. But so what? Right now, and maybe even for years to come, consumers will see little benefit from 5G. Few of today’s phones are compatible, and even when they are, 5G phones do pretty much the same stuff as 4G phones, only a little faster. 4G transformed the way we use mobile devices. It’s why millions of us watch TV and movies on the subway. But nobody has yet invented a world-changing consumer application for 5G. Until that happens, the race to 5G is the last thing T-Mobile users should worry about.