I’m disturbed by the recent action of House Representatives, led by Rep. Pramila Jayapal, to dissuade approval of the T-Mobile / Sprint merger. As someone who follows the wireless industry, and understands business, I find this action in complete contradiction to the realities of the wireless industry.
Having watched the rise of T-Mobile, under the leadership of John Legere and his very talented management team, I am convinced the combination of Sprint with T-Mobile will create more competition and thus more jobs because they hire more people to handle support than other companies. What’s more, the race to succeed in the industry will demand headier competition, and that will require more technologists and other jobs to win the race.
“This is a bad deal for the American people,” states the Feb. 28 letter – signed by 37 members of Congress including U.S. Rep. Pramila Jayapal, who represents the Washington district that includes Seattle. “The proposed merger would kill American jobs, reduce competition in the already highly concentrated wireless market, and raise prices for consumers.” From Puget Sound Business Journal, March 11, 2019.
Blocking the merger will result in lost jobs for people right here in Western Washington, the home of T-Mobile. Why would these politicians want to reduce job opportunities in our own backyard?
Sprint, by comparison, is a weak company. The Japanese conglomerate that owns 85% of Sprint has lost interest and has been trying to offload it for years. If Sprint were to pivot into an MVNO, offering wireless services on someone else’s network, perhaps they could survive as a brand but running an individual wireless network is expensive and daunting, especially when converting to next-generation technology. If Sprint were to become an MVNO, thousands of workers jobs would obliterate around the country.
Competing with Verizon and AT&T requires a stronger company. Sprint has no chance in this environment.
If you genuinely want to employ more people and have a strong competitor to Verizon and AT&T, then T-Mobile/Sprint is your best opportunity. The delta between the #2 largest wireless carrier and #3, TMO, is over 50%. Even combined, they’ll be far from AT&T, the current #2 in subscriber base!
In my opinion and through my years of observing this industry, there is entirely no business reason to block this merger. There is no public-benefit reason for blocking this merger, either. Your ideas, citing wireless access for lower-income people can be easily resolved with a government provision in the merger. Perhaps all wireless companies should be mandated to provide low-income discounts, based on your argument. Why single out TMO? Why rely on Sprint to deliver these solutions when they’re struggling already?
That said, it seems like the lower price tier market you cite is well covered. Look to the countless MVNOs (check out https://bestmvno.com/ for a complete list). Many of them run on TMO and Sprint–they’re experts at providing wireless service to prepaid and low-income customers. There’s no business case to changing these arrangments so they will remain.
A stronger, combined company will be better for the public, better for competing against the virtual duopoly that is AT&T and Verizon, and better for employees. You and the other House Representatives against this merger are entirely wrong to fight it.
In full disclosure, I am a small shareholder of T-Mobile, but my ownership level is minute and inconsequential to this argument.