Sprint Threatens AT&T

Sprint Threatens AT&T

Antitrust regulators are debating whether allowing wireless carrier Sprint to acquire T-mobile threatens fair competition with AT&T and Verizon Wireless. Sprint Chairman and CEO of Softbank, Masayoshi Son, is spearheading the deal. Son is currently discussing the viability of merging Sprint and T-Mobile with the Federal Communications Commission (FCC). Son reasons that merging Sprint and T-mobile will create market beneficial competition among all carriers. The issue is to determine whether allowing Sprint and T-Mobile to join will result in a monopoly, or will strengthen competition and allow consumers more choices.

This is not the first time one of the bigger players in the carrier game has looked to buy T-Mobile. Back in 2011, AT&T was eager to fork out $39 billion for a merger with the income friendly T-Mobile. Antitrust regulators thwarted this transaction, which allowed T-Mobile to grow into a stronger market entity over the past three years. Lately T-Mobile seems to have posed such a threat to AT&T’s market dominance, that AT&T released a promotional offer of $450 compensation to customers to switch over. Perhaps the money saved from forgoing the merger was applied towards enabling AT&T’s costly promotion. T-Mobile responded by maintaining their low-cost wireless plans and offering customers the ability to change phones twice a year. The result of the delayed merger was increased competitive pricing, which is a benefit to customers regardless of carrier. The boost in T-Mobile’s business growth as a result of maintaining a market independent status, looms heavy against Sprint’s likelihood of gaining support from the FCC.

At present, Sprint holds a solid third among the carrier ranks, but is nowhere near AT&T or Verizon. For example, Sprint barely made the map of data speed available during the Superbowl.The one aspect of wireless service Sprint was able to boast about is their voice call: during Superbowl Sunday they maintained 97 percent of their calls. However, the number of people inclined to make voice calls while at the Superbowl is uncertain. One would assume audience participants would be more interested in watching the games and sharing pictures or video. AT&T and Verizon Wireless currently share the market majority of 200 million subscribers nationwide. Conversely, Sprint and T-Mobile don’t even break 60 million in terms of subscribers. As a result, Son’s argument that carrier market competition would be more fairly distributed with the merger is based on the assumption that their combined subscriptions could break 100 million.

Sprint is unlikely to gain support from the FCC. While the fairness in competition seems plausible should the merger result in the projected subscribers, the effects on US employment are laudable. At present, roughly 70 percent of Sprint’s call centers are located overseas. The Communications Workers of America (CWA) issued a statement explaining their concern that the merger would result in moving T-Mobile’s U.S.-based call centers abroad. The history of AT&T’s blocked merger in the past, coupled with the voices of the CWA, make it so that AT&T will continue to threaten Sprint’s capacity to boot them from the top.

By Victoria Chuidian

Sources

CNET

Wallstreet Journal

Bloomberg News

CNN Money

Ars Technica

BGR

One Response to "Sprint Threatens AT&T"

  1. Russ Kirkpatrick   February 5, 2014 at 2:48 pm

    AT&T offered $39 Million for T-Mobile? I think your # is a bit low. Try $39 BILLION.

    Reply

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