Sprint has reportedly been eyeing a merger with T-Mobile since December. Together, the two companies might have the size and clout to stand up to the nation’s two largest mobile carriers, Verizon and AT&T. But could T-Mobile’s small size and untraditional strategies actually be the roadblock preventing the purchase from happening?
As Bloomberg reports, T-Mobile’s “maverick” pricing may indeed present a major obstacle to Sprint’s merger plans. An analyst told Bloomberg that there isn’t “political appetite” among regulatory officials “for seeing the national field reduced by one, especially if that one is a maverick carrier,” adding in a terrible phone pun that such a move “would hit a lot of static.”
How has T-Mobile earned this reputation for being plucky? It’s not just the big personality of their party-crashing CEO John Legere. Despite–or maybe because of–being the smallest of the four major national mobile companies, the carrier has been making a clear mark for itself with pricing models that the larger companies still shy away from.
In just the past year, T-Mobile has dropped a number of international use fees, offered to pay early termination fees for families who make the switch to their service, and dumped contracts for customers who provide their own phones. They also broke with the standard subsidized-phone model, separating the cost of phones from the cost of their usage plans.
On top of all that, last week T-Mobile snapped up a chunk of the wireless spectrum from Verizon, a move that increased their coverage reach in both cities and rural areas.
Last year the head of the anti-trust division at the Justice Department cautioned that regulators needed to “maintain vigilance against any lessening of the intensity of competitive forces” in the mobile arena. If Sprint and T-Mobile were to merge, there would be only three major national wireless carriers remaining. Such a merger could also kill off a company whose pricing models have actually been managing to shake up the industry a bit.
If regulators are hesitant to let that happen without thinking it through, then good. When companies truly have to compete for business against innovative rivals, consumers tend to be the winners.