T-Mobile and Sprint: How Fewer Competitors Could Increase Competition

Poring through hundreds of pages of documents submitted to the government by T-Mobile and Sprint and transcripts of testimony in front of Congress makes it clear that going from four competitors to three — AT&T, Verizon and a combined T-Mobile-Sprint — wouldn’t pose the problems that so many fear.

Every textbook would say that fewer competitors results in high prices. But if the Sprint-T-Mobile deal was given the green light, it would almost empirically create, at least in the short term, more competition for AT&T and Verizon, not less.

The entire premise of the deal is that by merging, the two weakest companies in the sector would be able to build out a meaningful a 5G network, possibly even more quickly than AT&T and Verizon. If T-Mobile and Sprint built out that network, the only way to make the math of the deal work would be to steal customers from AT&T and Verizon. The combined company would need to take millions of customers away from the big players. The only way to do that: lower prices. That’s especially true now that companies like AT&T, thanks to its new Time Warner holdings, will be able to offer customers extra perks that customers of T-Mobile and Sprint won’t be able to get.