Consumers seemed to have caught a big break with the news Wednesday that Sprint and its corporate parent, Japan’s SoftBank, have decided to drop merger plans with T-Mobile US.
Sprint/SoftBank conceded that antitrust regulators would likely block such a deal because it would stifle competition in an industry dominated by Verizon and AT&T. Combined, the separate entities of Sprint and T-Mobile control less than a third of the United States’ wireless market.
Creating fewer players in a playing field limited by infrastructure, as with ISPs and cellular carriers, is widely seen as a losing proposition to consumers, whose choices in cable television and home-based Internet services are already limited, and still shrinking.
Cellphone customers could see higher prices with few carriers, especially after T-Mobile has shaken up the industry, introducing novel no-contract pricing plans, and becoming the darling of analysts and investors.
Sprint, meanwhile, needs to upgrade its network. The No. 3 carrier has been losing customers for several quarters.
Mergers in the home television/internet industry has shaken up the consumer landscape in recent months. Comcast’s $45 billion takeover of Time Warner Cable and AT&T’s $49 billion purchase of DirecTV has concerned the Obama administration, which is worried about the concentration of too much power in so few companies.
Sascha Segan, of PCmag.com puts it this way: “There’s limited spectrum and, most especially, the barrier to entry is way too high. Since new competitors are unlikely to appear, the best way for investors to create value in that industry is to merge all the carriers into a single mass and charge sky-high prices for as little investment as possible. Only by making that impossible can we force them to compete. “