If Sprint had proposed buying T-Mobile at around this time last year, my reaction would probably have been, “Sure, why not?” After all, neither carrier had been doing well for years and neither of them were providing an especially effective counterweight to the AT&T-Verizon machine, so American wireless customers probably had nothing to lose from the two joining up. However, something happened this year that has made me seriously doubt whether a Sprint-T-Mobile merger would be good for wireless consumers: Namely, T-Mobile started being a serious force for disruption in an industry that’s badly needed it.
This was why I grimaced a little bit when I read that Sprint is preparing a bid to buy T-Mobile sometime in the first half of 2014. To be sure, this particular merger proposal didn’t make me recoil in horror as the proposed AT&T-T-Mobile merger or the rumored Comcast-Time Warner Cable merger did, but it still seems like a bad idea to me.
To get a sense of why a Sprint-T-Mobile merger is the last thing we need right now, let’s take a look at what the two carriers have done over the past year. T-Mobile has legitimately shaken up the wireless industry with its moves to ditch wireless service contracts, to give customers the option of upgrading their smartphones earlier and to offer free international data roaming. Rival carriers have scrambled to offer similar plans for early smartphone upgrades and Verizon has signaled that it would be open to dumping two-year service contracts if T-Mobile proves it can be successful without them.
This has all helped T-Mobile post net subscriber additions for the first time in a while. Suddenly, the carrier that for years struggled as America’s No. 4 player has become a trend-setter in the wireless industry. And with T-Mobile CEO John Legere promising even more fireworks soon, the carrier seems poised to make even more of an impact in 2014.
As for Sprint? Well, it’s been an ungodly mess for years and only continued to stink things up in 2013. A Consumer Reports survey released last month showed that Sprint ranks dead last in terms of customer satisfaction among American wireless carriers and it’s continued to lose money while watching its customers flee to rivals. And for good measure, TechHive’s survey of American wireless carriers this year found that Sprint’s data network lags behind badly in terms of average download speeds compared with Verizon, AT&T and T-Mobile.
Why in the world would it be good to let such a lumbering dinosaur gobble up the one wireless company that’s actually making moves to create a more competitive wireless industry?
To be fair, Sprint may well be planning to head in the same “uncarrier” direction that T-Mobile went down this year. Now that it’s been purchased by Japanese wireless company SoftBank, it seems to have some sense of direction for the first time in years. More importantly, SoftBank itself has a reputation for making disruptive moves that aggressively put competitive pressure on big-name incumbents. In theory, a Sprint that’s committed to buying T-Mobile so it can take its “uncarrier” initiative to the next level sounds enticing.
Even so I’d like to see SoftBank try to fix Sprint’s many, many problems first before trying to gobble up one of the few remaining nationwide wireless carriers that we have. If SoftBank were to spend the next year significantly boosting Sprint’s network capabilities and customer service while at the same time getting much more aggressive in terms of pricing and policy flexibility then I’d be more open to a merger with T-Mobile.
For now, though, any deal that takes T-Mobile off the market as a separate entity deserves to be shot down.