Newspaper article The Christian Science Monitor

Sprint and T-Mobile Merger Fails. What It Means for Cellphone Users

Newspaper article The Christian Science Monitor

Sprint and T-Mobile Merger Fails. What It Means for Cellphone Users

Article excerpt

Since SoftBank bought Sprint, it has had its eye on buying T- Mobile. But on Wednesday, the the mobile carrier announced that it would no longer pursue an acquisition.

Sprint offered to buy T-Mobile for $32 billion, an attempt, it said, to create a third viable company to compete against industry leaders, AT&T and Verizon Wireless. But the Federal Communications Commission (FCC) told Sprint that even if it was able to make a deal with T-Mobile, it would have a hard time getting it approved by regulators due to anti-trust laws.

"Four national wireless providers are good for American consumers," Tom Wheeler, the chairman of the FCC, said in a statement on Wednesday. "Sprint now has an opportunity to focus their efforts on robust competition."

Even though the Sprint and T-Mobile merger is no longer a possibility, there is little doubt that someone will buy T-Mobile, which is currently owned by Germany-based Deutsche Telekom. That could have a major impact for the average cellphone user.

Americans pay some of the highest rates for cellular coverage in the world, an average of $48.17 a month versus $32.51 in France, according to research firm Informa Plc. The lack of competition has allowed Verizon and AT&T to set high prices for monthly coverage.

"I think what it takes [to drive down the price of monthly coverage] is competition," said Scott Dinsdale, a vice president at KDP Advisors. "All you need is one company to set a much lower price and people will switch."

But, Mr. Dinsdale adds, the price of entering the US mobile market is tough, really tough. Companies like Century Link and Windstream were expected to break into the mobile market but never did because they couldn't quite afford it. Cable providers, Cox Communications, Comcast, and Time Warner Cable, all tried to make their name in the mobile market, only to sell all of their cellular infrastructure over the past few years. They opted instead for packaging cable, internet, and land lines, and then adding cellular in with partnerships with existing companies, according to Dinsdale.

"The big guys just have too much of the market [for other companies to enter]," Dinsdale said. …

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