Fewer players in the wireless business could mean higher phone bills<\/b>
\nSprint and T-Mobile are talking up their $26.5 billion combination as great for high-speed wireless investments, rural service and U. S. competitiveness. But there are reasons to doubt the deal would do much on any of those fronts \u2014 and that it could also result in higher wireless costs for consumers.
The deal announced Sunday would combine the nation\u2019s third- and fourth-largest wireless companies and bulk them up to a similar size as Verizon and AT&T, the industry giants.
Here\u2019s a look at how the deal might affect your phone bill and prospects for better service.
From four to three: T-Mobile and, to a lesser extent, Sprint have been leaders in shaking up the cellphone industry. The \u201cBig Four\u201d wireless carriers now offer lower prices and more choices, including the restoration of unlimited data plans. Two-year service contracts are gone. That\u2019s been a boon to consumers.
The worry is that with just three major carriers, there would be less incentive to keep innovating on prices and service. T-Mobile and Sprint might even raise prices now that they don\u2019t have to try to poach customers off each other.
On the other hand, the industry is evolving. The wireless carriers aren\u2019t just competing with each other, but also with Comcast and others as the wireless, broadband and video industries converge. The industry is also moving toward faster, 5G service; T-Mobile and Sprint believe they can build a better 5G network as one.
Having a strong 5G challenger to Verizon and AT&T might be better than \u201ctwo weak companies in lanes three and four,\u201d said Berin Szoka, president of the nonprofit think tank TechFreedom.
What\u2019s this 5G all about?: 5G is the next-generation mobile networks that wireless companies are banking on to replace current 4G services. Sprint CEO Marcelo Claure likens to switch to going from black-and-white to color TVs. While 5G aims for faster wireless service for your phones, analysts say the real key to 5G will be enabling its use in connected cars, homes and other infrastructure.
Jason Leigh, an analyst at research firm IDC, said that by joining forces, the combined network might be \u201cdeeper and broader\u201d than what either could have done individually.
T-Mobile and Sprint each has rights to different portions of the airwaves and say that a better network can grow out of combining those slices.
But there are still a lot of unknowns related to 5G. For one thing, it isn\u2019t set to roll out nationally until at least 2020. And some of the more innovative uses, such as cars and homes, won\u2019t come until after that.
As for the existing 4G network, service might improve marginally, but the companies already have roaming agreements to offer service where they don\u2019t have their own cell towers. And there\u2019s the mess of Sprint and T-Mobile each using different cellular technologies and frequencies. Leigh says that while about 20 million Sprint customers have phones that are compatible with T-Mobile\u2019s network, about 30 million Sprint customers would need to upgrade their handsets.
Shifting all customers to 5G in coming years will \u201csoften the blow somewhat,\u201d he said.
Rural service: Another selling point used by Sprint and T-Mobile is that it will open hundreds of new stores in rural areas, creating more jobs and service offerings. The companies didn\u2019t go into much detail about those rural plans, but promised to boost broadband competition by offering mobile connections that rival wired services such as cable.
But rural areas are not typically big money makers for telecom companies. That\u2019s one reason cable and other broadband offerings are poor in rural areas. It\u2019s also a reason wireless connections tend to be slower there, if there\u2019s service at all.
Some analysts believe the rural promises might be more an attempt to please regulators than a major part of the deal.
\u201cI don\u2019t think it will necessarily drive a whole lot of revenue but it makes it look good from the perspective of Congress,\u201d Leigh said.
Government approval: Any changes will likely take months, if not years. The deal isn\u2019t expected to finalize until the first half of 2019. Before that happens, the companies need the approval of both the Department of Justice, which will look at antitrust concerns, and the Federal Communications Commission, which examines whether deals are in the public interest.
MoffettNathanson analyst Craig Moffett said the companies\u2019 emphasis on 5G rather than lower prices is \u201cexactly what one would have expected\u201d to make the case for regulatory approval. He said the deal has \u201c50\/50\u201d odds of passing regulatory muster.
The U. S. is in a race with China and other countries to be on top as this technology is developed and implemented. In fact, the U. S. recently blocked Singapore-based Broadcom\u2019s takeover bid for Qualcomm due to concerns about giving China an edge on 5G technology. T-Mobile and Sprint say the deal is important for the U. S. to keep its lead in telecom, as it would allow the companies to build 5G much more quickly.<\/p>\n

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