Letting Sprint and T-Mobile Merge Is a Terrible Idea

[Commentary] The merits of some mergers make for a close case, but the proposed merger between the mobile carriers Sprint and T-Mobile, which would create a new telecommunications behemoth, is not one of them. Basic economics strongly suggests the proposed combination should be dead on arrival, at least if the nation’s antitrust law still stands for competition and lower prices for consumers. In addition, the recent history of telecommunications and similar industries indicates that allowing consolidation to just three “majors” — Verizon, AT&T and the new T-Mobile (merged with Sprint) — is a terrible idea. The problem for Sprint and T-Mobile is that they themselves have done such a good job of proving the merits of the four-way competition they now seek to eliminate. In short, competition has actually worked the way economists say it is supposed to, forcing firms to improve quality or face elimination. But it takes competitors to compete, which is where blocking mergers comes in. 

[Wu is a Columbia law professor who specializes in antitrust and telecommunications]