T-Mobile and Sprint are making some big promises to sell their proposed $26.5 billion merger. They assert that the merger — which would reduce the number of national wireless companies from four to three — would give them the scale they need to build a high-capacity wireless network with 5G, or fifth-generation, technology. If the Federal Communications Commission and the Department of Justice approve the deal, T-Mobile and Sprint say, the company won’t raise prices and it will hire more people, rather than reduce the work force, which is more often the case in such mergers. And they say all this will be done while costs are cut by $6 billion a year and profits rise substantially.
All that’s missing from this list of promises is permanently blue skies.
Together, Sprint and T-Mobile would have more than 125 million customers, putting the combined company, which would keep the T-Mobile name, just behind Verizon and AT&T. Before this latest deal was agreed to on Sunday, the four companies had discussed several possible mergers in recent years. Indeed, the wireless business is already very concentrated — there were six national companies as recently as 2003 — and a deal that would further consolidate power is troubling. Having fewer competitors emboldens businesses to raise prices and force consumers into long-term service contracts because they know that people don’t have many options. That’s why the F.C.C. and the Justice Department successfully blocked AT&T’s proposed acquisition of T-Mobile in 2011 — and why regulators should be skeptical this time around as well.