Sprint and T-Mobile USA have reportedly settled on the terms of a $32 billion deal to merge the two companies. The deal’s supporters say that instead of reducing the number of competitors in the wireless phone industry, it would add a strong competitor to a market dominated by AT&T and Verizon. However, antitrust regulators have not been convinced and their skepticism has resulted in delays in the talks between the two companies during the past several years.
The merger of Sprint and T-Mobile USA would join the No. 3 and No. 4 wireless carriers in the country. The chief of the Justice Department’s Antitrust Division has gone on record in the past saying that any merger among the top four wireless companies would have a hard time gaining approval. Tom Wheeler, the chairman of the Federal Communications Commission previously stated his belief that the competitive balance among mobile carriers is working well in its current state.
In 2011, the Justice Department stopped AT&T’s plan to buy T-Mobile’s wireless business in the United States with the reasoning that the reduction in competition in the industry would be damaging. Some people believe that the communications world has changed enough since then that regulators will change their minds about the Sprint-T-Mobile merger reducing competition. Sprint backers say that it must reach a deal now to be able to compete with AT&T and Verizon.
The cellular market now bears little resemblance to the market of 2011. Now, the telecommunications companies have the ability to offer a full suite of services, including high-speed Internet, wired and wireless phone, and TV. Mobile broadband service is becoming an increasingly effective substitute for wired broadband, putting companies like Sprint in the same businesses as cable companies like Cablevision.
Hal J. Singer, a principal at Economists Incorporated and a senior fellow at the Progressive Policy Institute, said, “If regulators continue to see the wireless and wireline business as discrete markets, they will continue to be skeptical. But if they can be convinced that the lines between wireless and wireline are beginning to blur,” there might be a chance for approval of the merger.
