A difficult call

[Commentary] Could Sprint Nextel, T-Mobile, MetroPCS and Leap Wireless join together in some combination that would allow them to more effectively challenge Verizon and AT&T, and win the blessing of regulators?

For there to be a truly viable third competitor, T-Mobile and Sprint would have to join up. But it is not clear that Washington would allow an enlarged T-Mobile and Sprint to come together. In its ruling against the AT&T bid for T-Mobile last year, the Department of Justice routinely referred to the “Big Four” wireless carriers – Verizon, AT&T, Sprint and T-Mobile. Nowhere did it advocate the creation of a stronger third player to rival the two industry leaders, and there is little reason to suspect regulators would want to see T-Mobile and Sprint join together. “Their goal is not to ensure viable rivals,” said Craig Moffett, senior analyst with Bernstein Research. “Their goal is to ensure price competition.” Regulators are likely to let T-Mobile, or perhaps Sprint, acquire MetroPCS without much trouble. The thornier issue will come if and when the victor in that battle decides it wants to take on Verizon and AT&T. At that point, Washington will be faced with an unsavory choice: either allow Verizon and AT&T to retain their duopoly by blocking the formation of a third real rival, or further reduce consumer choice by allowing yet another wireless company to be swallowed up. Unfortunately for consumers, you cannot have it both ways.