What Sprint’s New Ownership Could Mean For Consumers

Image courtesy of (frankieleon)

As you’ve probably heard, Japanese wireless company SoftBank is set to snap up majority control of Sprint at some point next year. There has been lots of talk about what this means for Sprint as a business, but little of what it means for Sprint’s more than 50 million customers.

Sprint recently announced it would begin rolling out 4G LTE service around the country, though it still lags significantly far behind Verizon Wireless and AT&T in that regard. The cash infusion from SoftBank will surely improve Sprint’s effort to offer next-gen data speeds, but given that it will be several months before the actual purchase happens, any ramped-up roll-out of the LTE network will have to wait.

However, Sprint must not put all of its LTE eggs in the SoftBank basket, in case the deal falls through at the last minute. Look at what happened to tiny T-Mobile, which put its LTE plans on hold while waiting to merge with AT&T. When that marriage never happened, T-Mo customers were left without the iPhone and with the same old service as before.

iPhones and other Devices
Though other brands of smartphone are gaining ground on this Apple device, it is still considered a huge draw in getting customers to switch providers. Sprint has already pledged millions to buy iPhones during the next few years, but its alliance with SoftBank, which also offers the device to its customers in Japan, could give the combined company more leverage in negotiating with Apple.

Similarly, a merger with SoftBank would give Sprint more buying power with the other device manufacturers, bringing down the costs for the phones it offers to customers — especially those phones sold at a discount to entice people to switch carriers or re-up their Sprint contract.

If Sprint can save on the price it pays for phones, that means it’s spending less money to acquire each customer who gets one at a promotional price. This improved margin could allow Sprint to continue offering unlimited data, even over 4G.

Additionally, the improved buying power could mean that Sprint customers have access to better Android phones that have typically gone to Verizon or AT&T as exclusives because of their much larger customer base.

Pricing Plans
The two largest U.S. providers, AT&T and Verizon Wireless, recently began shifting customers out of standard tiered data plans and toward “shared” data plans that give the subscriber a fixed pool of data to be used in a month across a number of devices. Sprint has bucked that trend, continuing to offer an unlimited data plan for customers at a reasonable rate.

Because the SoftBank purchase isn’t just about keeping Sprint afloat, but in making the company a true competitor on par with AT&T and Verizon. Thus, it’s likely to stick with its current pricing plans in the short run, if only to stand out from the crowd and offer consumers a viable alternative.

Whether or not Sprint ultimately moves toward the shared model will likely depend on the success that its competitors have with their plans. By the time the SoftBank purchase is complete, both AT&T and Verizon will each be about a year into the transition to shared plans and the industry will have some idea if shared data is the goldmine these two companies hoped it would be.

The deal still requires regulatory approval, though it’s believed that there will be fewer concerns about this deal because, unlike the AT&T/T-Mobile deal, or even the pending purchase of MetroPCS by T-Mobile, it would not remove a major competitor from the marketplace.

The investment from SoftBank should at least give Sprint the funding to see if it can compete with the big two, or perhaps allow it to carve out enough of a niche so that customers are not worried about the company going out of business.

There has been some speculation that a strengthened Sprint would attempt to purchase T-Mobile — which it reportedly tried to do before AT&T swooped in — but that seems very unlikely given the government’s apparent desire to prevent the wireless market from falling into the hands of only two or three companies.

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