Will the Sprint and T-Mobile merger create competition?

A Q&A with Benton Senior Fellow Gigi Sohn.

When you have four [competitors in the wireless marketplace], you had a situation where T-Mobile was not only competing with AT&T and Verizon and changing their behavior, but it was also competing with Sprint and Sprint with it for the low-value customer. Once you shrink that to three evenly sized companies, the incentive to go after the low-value customer goes away because you’ve gotten rid of Sprint, who is keeping your prices down. And we’ve seen this in many markets in Europe. The incentive becomes to act more like AT&T and Verizon and raise prices and not have as family-friendly plans. And in fact, the record at the FCC shows that this is exactly what would happen. The prices would go up. Now the companies say, “Yeah, well, you’re right. Prices will go up, but you’ll get more for your money.” But where does that leave the value-conscious customers? Maybe they don’t want to pay 15 dollars more a month or whatever. I think it said between 15 and 21 percent more a month. Maybe they don’t want that super speedy service. So what happens to them? Again, the problem is, as we’ve seen over and over again in four-to-three markets, prices go up, and people are left out in the cold.