After over a year of waiting, the US Justice Department approved a $26 billion merger deal taking place between T-Mobile and Sprint after Dish reached an agreement with the carriers. Now, Dish is becoming the replacement fourth major carrier now that T-Mobile and Sprint have become one. Both T-Mobile and Sprint are required to provide at least 20,000 cell sites and hundreds of retail locations to Dish.
The reasoning for the merge between companies was that they believed combining their assets would make them a bigger competitor to AT&T and Verizon. Verizon and AT&T are much bigger than the other two companies, so this merge can potentially create more revenue and more competition. They also believed that their merge would allow lower prices for consumers and a faster spread for next-generation 5G networks around the country.
I believe that this merge is a smart economic idea for Sprint and T-Mobile because the companies are now able to combine the perks from both companies and make it one. They also claim that their plans will be lower than they previously were, so more consumers may switch to this new company from AT&T or Verizon.
https://www.theverge.com/2019/7/26/6646158/t-mobile-sprint-merger-justice-department-approves-26-billion-fcc
https://www.cnet.com/news/t-mobile-sprint-deal-wins-justice-department-ok-what-you-need-to-know/
I agree with you. Before T-Mobil and Sprint merged neither company was maximizing its profit, but now that they are together, they can merge their technologies and grow into a larger brand. This will allow them to reach more consumers and start competing with Verizon and At&t. Know just because the two of them merged, doesn't mean they will take over and become the dominant firm in the industry. I still believe that Verizon and AT&T will continue to dominate, but by have Sprint/T-Mobile pose a threat to that dominance, it will allow the bigger companies to push for more innovation, which in turn will help everyone.
ReplyDeleteA merger always beneficial to the company that makes it, but it doesn't look to me like this benefit applies to consumers as much. Sprint has often been considered the low-cost alternative to bigger cell carriers, and offers plans that are up to half the cost of the larger alternatives. Sprint offers these deals as a result of their precarious position as the 4th largest cell carrier company. Their current market is lower income consumers, but with their merger with T-Mobile, it is entirely possible that they will get rid of this plan and start selling the more expensive plans as a result of their more stable financial situation. So the merger might help the 2 cell companies, but consumers need to ask more questions about the benefits of this merger.
DeleteThis is a very self-contradicting idea that the two companies are arguing here. In order to promote competition, the two companies will combine to become an even bigger company, quashing smaller competition. The fact that such contradictions arise in any attempt to topple a monopoly demonstrates how easily our modern markets become confined in oscillating between oligopolies and monopolies.
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