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Study shows that Sprint could be forced to close its doors if AT&T buys T-Mobile

Posted: , by Alan F.

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Study shows that Sprint could be forced to close its doors if AT&T buys T-Mobile
A company called Chitika Insights decided to play "What If" and crunched some numbers based on the idea that AT&T would be allowed to complete its proposed purchase of  T-Mobile. After the deal, the new AT&T/T-Mobile would control more than 51% or 130 million subscribers. With that kind of control, the carrier could set prices which could spell disaster for the smaller mobile operators like MetroPCS and Boost Mobile. Even the nation's third largest carrier, Sprint, could be affected.

The chart shows what the carrier landscape in the U.S. would look like immediately if the $39 billion deal closes. You have to think ahead about what the impact of the deal would be. Right away, two of the nation's carriers would account for 84% of U.S. cell phone users which means that AT&T and Verizon would be able to control prices and do some serious damage to the smaller players like MetroPCS, Boost Mobile and, yes, Sprint.

It is this concentration of  business in just a pair of companies that has the government so worked up. In theory, a combined AT&T/T-Mobile could cut prices at first, lowering them to the point that Sprint would have to close shop. Once that happens, AT&T and Verizon would raise prices even higher than they were at originally. Eventually, there would be only two major U.S.carriers. None of this even comes close to happening if the DOJ gets its injunction against the deal.

source: Chitika via BGR

The cellular landscape in the U.S. now (L) and immediately after an AT&T purchase of T-Mobile

The cellular landscape in the U.S. now (L) and immediately after an AT&T purchase of T-Mobile

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posted on 12 Sep 2011, 21:46 5

1. dj (unregistered)

not to worry. the laser photon beam and super duper epic touch 4g 6 inch screen edition with unlimited wimax will save them.

posted on 13 Sep 2011, 02:30

24. alpinejason (Posts: 262; Member since: 06 Sep 2011)

lol thats funny!!!!!

posted on 12 Sep 2011, 21:47 9

2. Droid_X_Doug (Posts: 5993; Member since: 22 Dec 2010)

Letting the AT&T-Mobile deal go through is a form of economic terrorism.

posted on 13 Sep 2011, 16:28 1

42. Phoneguy007 (Posts: 218; Member since: 02 Jun 2011)

If that the case then the government should break up all big companies for example walmart....or lets say coke or pepsi...

posted on 14 Sep 2011, 12:22

47. Goose Gosich (unregistered)

Phoneguy007...how long you been out of the mental ward?

posted on 12 Sep 2011, 21:49

3. joey18 (Posts: 589; Member since: 20 Jul 2010)

Idont think so bcs att and verizon they have h prices so if sprint keep cheap plans people will go there i'm no going spenced r store

posted on 12 Sep 2011, 22:06 11

4. ECPirate37 (Posts: 195; Member since: 14 Jul 2011)

No, what the report is suggesting is that once the merger was complete, at&t would lower prices CHEAP, to be cheaper than Sprint. Then Sprint couldn't compete and would have to go out of business. Then, at&t would raise them back up to higher than they are now.

That is very, very possible. Look at what Netflix did to Blockbuster. Then when Blockbuster goes to it's death bed, Netflix increases prices 60%.

posted on 12 Sep 2011, 22:45

13. vvelez5 (Posts: 623; Member since: 29 Jan 2011)

That's called predatory pricing and rarely ever happens.

posted on 12 Sep 2011, 22:52

14. vvelez5 (Posts: 623; Member since: 29 Jan 2011)

Also Netflix didn't do anything to Blockbuster, except be better than them. Netflix had a better way of handling DVD rentals not to mention the cost Blockbuster had to deal with their brick and mortar stores didn't help them in a battle against an online company that only had to deal with a few warehouses. Though no one likes paying more for a product I didn't have a big problem with Netflix raising prices. I only pay 5 dollars more than I used to and I figured Netflix was going to raise prices anyways. If I was so upset at Netflix I would simply cancel service. Also the price I pay now still doesn't amount to the price I paid when I had Blockbuster. edit: I pay 4 dollars more a month just checked my statement.

posted on 13 Sep 2011, 00:38 2

22. ardent1 (Posts: 2000; Member since: 16 Apr 2011)

"Then when Blockbuster goes to it's death bed, Netflix increases prices 60%."

Then you forgot about the part where customers started to abandon Netflix after the 60% price hike!

posted on 13 Sep 2011, 07:14

29. remixfa (Posts: 14255; Member since: 19 Dec 2008)

i dont know too many people that left netflix after the price hike.

now the price hike + losing stars content might make a few leave, but there isnt much as an alternative for on demand movies. No, im not counting comcast on demand and crap like that.

posted on 13 Sep 2011, 09:41

36. pattypatterson (Posts: 48; Member since: 28 May 2010)

i personally dont understand why anyone would be with netflix now for the same price at blockbuster you get every movie in blu ray a much broader selection i dont have to wait another month for new releases and i can swap the blu ray they send me in the mail for another blu ray that same day not send it out wait 2 days for them to receive it then another 2 days for them to ship a new dvd...the only thing they got going for them is is streaming but that selection is just awful for movies but good for tv series

posted on 13 Sep 2011, 12:10

37. ZayZay (Posts: 571; Member since: 26 Feb 2011)

I did!

posted on 14 Sep 2011, 10:55 1

46. Galen20K (Posts: 541; Member since: 26 Dec 2008)

I didn't abandon Netflix, I only wanted streaming to begin with and never used the dvd in the mail system once. A lot of people feel that wayy, if the cheap people who nitpick and actually use the dvd in the mail, well then I say let them leave they are a minority. Don't worry, us streamers wont miss them. ; )

posted on 12 Sep 2011, 23:53

19. Codename: Infamous (unregistered)

Joey stop thinking...IF AT&T and VZW control 84% of the market, the phone manufacturers will always got to AT&T and VZW where their product be accessible to the majority of the market. Second the same manufacturer will take forever to supply similar devices to sprint and smaller carriers. Most instances they will not do it. Eventually the smaller carriers including sprint will loose customers who want the latest thing therefore putting them out of business.

posted on 12 Sep 2011, 22:16 1

5. hinesch1 (unregistered)

That chart is bogus!!! If the deal goes through majority of tmobile customers will leave dispite their contracts because at&t has horrible service (customer service and cellular) these are facts within the tmobile facebook page and other blogs. The FCC also believe they will lose customers.

posted on 12 Sep 2011, 22:26 1

8. Atrix 4g (unregistered)

Att serice is second to vzw smart one. Tmobile needs this deal anyways, they really need to improve there coverage area. Plus sprint is just playing dum.. Att is going to sell 25% of tmobile, that gives sprint a chance to better there game play and still be a big player, or let another carrier like metropcs to buy it so it will be the next big 4th carrier and competition booms because they will want to join theparty with the others.

posted on 13 Sep 2011, 00:30 5

21. NoWay (unregistered)

Why would Sprint buy yet another company with a completely incompatible network (T-Mo is GSM, Sprint is CDMA), when Sprint almost choked last time they bought a company with an incompatible network (NexTel)? Sprint already doesn't have a lot of spending money and they would have to replace all the Tmo phones and towers or maintain 2 separate and incompatible networks. That wouldn't be financially feasible.

posted on 12 Sep 2011, 22:18

6. Carlos (unregistered)

Well now if this does happen all sprint has to do is buy the smaller carriers ifthings do go bad for them. There stop whinning. Now you,guys see what I am talking about this merger doesnt mean high prizes, they can afford to criticly lower prizes for great srrvice.

posted on 12 Sep 2011, 22:23 1

7. CRICKETownz (Posts: 980; Member since: 24 Oct 2009)

the only flaw in your theory is that Sprint can't afford to purchase even the small wireless carriers out there...

posted on 12 Sep 2011, 22:27 1

10. the one (unregistered)

I agree Sprint would be smart to buy its smaller competition, but at the same time i do believe he is correct Sprint is in financial turmoil, maybe not as tmobile is right now but they are bleeding customers on the regular as well as profits.

posted on 13 Sep 2011, 15:21 2

41. box (unregistered)

Sprint doesn't have the cash on hand to buy those smaller carriers; they're losing money right and left with their pricing structure and their deal with Clear, and the now-to-be-abandoned WiMax network, and having to backpedal and having Clearwire build out LTE instead. Sprint is being fussy because it runs its business like Americans manage their finances: overspend, under-intake

posted on 12 Sep 2011, 22:28

11. Carlos (unregistered)

Lol good thing that was the only thing... Oh and why cant they??

posted on 13 Sep 2011, 07:15 1

30. remixfa (Posts: 14255; Member since: 19 Dec 2008)

thats not true in the least. As long as they keep their credit rating ok, they can buy things like Metro. Companies dont pay 100% up front.. lol.

posted on 12 Sep 2011, 22:26

9. Dj21o (Posts: 437; Member since: 19 May 2011)

ECPirate37's prediction is probably the most likely of what is going to happen. I cancelled my Netflix account. They screwed everyone over big time. I can see AT&T doing the same to everyone. "Oh, I'm on your side." Then, WHAM! "Prices just went up folks, go to Metro PCS if you don't like it." I can already see it.

posted on 12 Sep 2011, 22:30 5

12. dandirk (Posts: 187; Member since: 04 Aug 2011)

At&t lower their prices... vzq lower their prices...

Yeah right! When Monkeys fly out of my butt

posted on 13 Sep 2011, 08:48

31. remixfa (Posts: 14255; Member since: 19 Dec 2008)

I'd pay to see all 3 of those things happen..lol

posted on 13 Sep 2011, 16:30

43. Phoneguy007 (Posts: 218; Member since: 02 Jun 2011)

sprint is the only company (out of the big 4) that has raised prices in the last 2 years....

posted on 12 Sep 2011, 23:08 1

15. BReND0 (Posts: 74; Member since: 07 Dec 2010)

At the rate this economy's inflation rate jumps, there is NO POSSIBLE WAY rates for text,data or voice will ever go down.... cars go up, energy goes up, food and gas, home heating fuel, goes go up, tolls go up, taxes and electronics go up every year
...... but minimun wage and hourly wages decrease or stay neutral......
but enough politics back to the point....
no way will they even let them go down, what to get u signed show you a good deal, 0 down , 100 off a phone but still over 100 for a month , and this tiered data is a joke......
makes you all wish they just left it at CELLUAR PHONE.....haha

posted on 12 Sep 2011, 23:11 2

16. VZW4LIFE (Posts: 34; Member since: 11 Jun 2011)

I think this report is just trying to incite fear. If Sprint does ever go out of business it will only be because they were run poorly for the last several years. U.S. Cellular & Metro PCS are very small compared to AT&T, Sprint, T-Mobile, & Verizon Wireless, but they continue to thrive.

posted on 13 Sep 2011, 04:11 1

25. WakaFlakaD (Posts: 481; Member since: 30 Apr 2011)

But small companies will probably be bought out once a good offer is up. Imagine there is still t-mobile to stand up for small companies, then once t-mobile is gone, who stands up for those?

posted on 12 Sep 2011, 23:23

17. Prime Suspect (unregistered)

The Commerce Dept. Would be violating its own law by allowing first a monoply second anti-truzt.

posted on 12 Sep 2011, 23:26 1

18. The_Miz (Posts: 1496; Member since: 06 Apr 2011)

This is not true. This is just guess and speculation. It's good for business.

posted on 13 Sep 2011, 00:08 2

20. Stoli89 (Posts: 333; Member since: 28 Jun 2010)

Should AT&T buy T-Mobile, even with the proposed concessions, the deal is bad for consumers over the mid-term. For sure, both AT&T and Verizon would quickly move to consolidate market share by leveraging their massive scale to squeeze out the remaining players (Sprint + regionals). A duopoly on mobile service would form in a matter of a few years, exacerbated by AT&T's near monopoly wrt GSM.

The DOJ would be remiss in not challenging this deal. However, it seems more likely that the deal will eventually get approved given the way US politics work. The average US citizen/consumer is the very last stakeholder to be considered these days.

posted on 13 Sep 2011, 01:40

23. gallitoking (Posts: 4718; Member since: 17 May 2011)

kill two birds with one stone... T-Mobile and Sprint..... who needs the them.. Wimax is a joke and t-mobile 3G+ is slower than the ford bike powered by the Hercules... lol

posted on 13 Sep 2011, 04:13

26. WakaFlakaD (Posts: 481; Member since: 30 Apr 2011)

Actually, there are reports out there proved that T-mobile 3G is faster than others network...only in those major cities... .Blame t-mobile for their low coverages

posted on 13 Sep 2011, 06:48

28. kenshiro (Posts: 42; Member since: 12 Sep 2011)

Don't listen to Gallito, he's talking out of his Fundio again.

posted on 13 Sep 2011, 08:49 1

32. remixfa (Posts: 14255; Member since: 19 Dec 2008)

hes just trying to get his jajaja's off by trying to incite another stupid flame war.

posted on 13 Sep 2011, 06:42 1

27. ibap (Posts: 758; Member since: 09 Sep 2009)

From their website:
"Chitika Insights is the research arm of online advertising network Chitika."

This whole thing is BS for Chitika to get its name publicized. And publishing their drivel without scrutinizing it critically is irresponsible. For current customers with existing phones, it won't mean a thing, since they use different frequencies. Over time they might be able to use the combined tower network to improve things, but in the near-short term it will take a lot of capital investment to see any improvement, and current T-mob phone owners will get nothing in return.

Their graph is a joke - all it shows is what happens when you add 43 + 8. Why does this mean Sprint goes away? It leaves them where they are, as a smaller player, both using and helping to support the Verizon network.

This is the kind of reporting that let Bush get away with invading Iraq. I guess anyone can publish a 'study' and someone will pick it up and repeat it.

posted on 13 Sep 2011, 08:54

33. remixfa (Posts: 14255; Member since: 19 Dec 2008)

i wouldnt listen to this report

If ATT lowers their prices, then so will VZW to stay in competition. One wont raise prices back up without the other doing it first, so they will stalemate eachother into lower pricing. And as history has shown, generally its VZW that changes its plans to lower prices or more services and then ATT follows suite.

Sprint can easily stay in competition by staying under them, and if it needs to free capital, then it can do so by making some hard decisions like turning off IDEN immediately and consolodating its networks, as well as allow more prepaid services to run off its exessive bandwith for extra revenue. Tmobile is making money right now on $60 unlimited everything, so there is plenty of room for everyone to drop and make money. That might mean changes in pay structures for emlpoyees which would suck, but the point is there is still room.

Chitka or whatever they are called have no idea what they are talking about. period.

posted on 13 Sep 2011, 16:32

44. Phoneguy007 (Posts: 218; Member since: 02 Jun 2011)

I agree .....what the hell are the talking about....I mean really!

posted on 13 Sep 2011, 09:04

34. snowgator (Posts: 3583; Member since: 19 Jan 2011)

What I do not like about this Graph is that it shows AT&T owning 100% of T-Mobile with all it's spectrum, coverage areas, and customers. We KNOW that if this deal gets approved, that is not true. To what degree T-Mobile is actually taken by AT&T and how much it is broken down to other investments, and other carriers, is a complete unknown.

I still would like to see T-Mobile in someone elses hands. I, like nearly everyone else, do not see the advantage of a two monsters and one smaller carrier market. But I still do not buy into the worst case that Sprint dies off. The consumer tends to help everything even out. Sprint still has name reconigtion and some solid plans for the next 5 years to upgrade their service. In the end, Sprint will survive based more on what they do, not so much the merger.

posted on 13 Sep 2011, 09:04 1

35. PRTaz3 (unregistered)

What confuses me about these graphs is that its showing Verizon as the number 2 largest in the US before the merger. I thought part of the reason for the merger was AT&T (#2) would merge with T-mobile (#4) to become the #1. So I personally can not take this information for much but a companies uninformed opinion.

posted on 13 Sep 2011, 12:24

38. darth8ball (Posts: 520; Member since: 02 Aug 2011)

These studies are based on guessing and not always non-biased. Only time will tell on this matter.

posted on 13 Sep 2011, 12:30

39. youguysareidiots (unregistered)

This isn't a graph of what the future will be like exactly. They aren't predicting the future! It's what will mostly likely happen. And yes, it is a study, and it makes "business sense" that this would happen. Undercutting a competitor happens all the time. How do you think Walmart has done so well? That is all they do! They just undercut everyone else, and the only way they can do that is because they have so many stores -- they still earn more than everyone else with lower prices. And then the local guys go out of business. Of course AT&T and the almighty (ha) Verizon will undercut the competition to get them out of the game. Verizon even said it themselves that they would just rather watch Sprint die than try to take over Sprint. Sure, Sprint hasn't been managed correctly for a little while now, but they are still competitors, and they are rebounding. I go with Sprint because I get the same customer service, coverage, speed, phones as the competitors but pay half the price. Don't tell me this won't happen because this definitely will. That's why this deal isn't going to go through. Thank GOD! Maybe Sprint is thinking about merging with T-Mobile... I mean they are upgrading their base stations to handle multiple technologies... That would make more sense to me. It would still be an oligopoly, but at least we'd have more options, and thus we wouldn't be forced to pay what Verizon Wireless would like us to pay.

posted on 13 Sep 2011, 15:18 2

40. VZW4LIFE (Posts: 34; Member since: 11 Jun 2011)

Youguysareidiots, stop using AT&T & Verizon as scapegoats for Sprint's poor performance. Just because one company offers lower prices than another doesn't necessarily mean they'll go out of business. Using your logic, Sprint & T-Mobile should've been able to drive AT&T & Verizon Wireless out of business (since both have been offering lower prices for years.) AT&T & Verizon offer superior services, that's why more people choose them. Sprint has conducted business poorly for years & it' s finally catching up to them. Years ago, before Verizon bought Alltel, Sprint & Verizon were closer to the same size. Even then, Sprint was still doing poor as a company (what excuse do you want to use for Sprint's misfortune during that time period?) since you can't blame it on Verizon being considerably larger. If Sprint gets their s**t together, they can still remain in competitive & in business.

posted on 13 Sep 2011, 16:36

45. Phoneguy007 (Posts: 218; Member since: 02 Jun 2011)

wow I agree 100%...

posted on 14 Sep 2011, 12:24

48. Goose Gosich (unregistered)

I don't see Sprint folding.

As against the AT&T/T-Mobile merger as I am, I will tell you that this story or take is an EXTREME scare tactic.

posted on 01 Oct 2011, 13:15

49. Autoteester (unregistered)

Been following feed...i've been a loyal AT-T customer for over 20 years..yeah--from way back when AT-T WAS a great company and before they folded, was bough tout by SBC and then by Cingular and "renamed" the company back to AT-T.. The "new" AT-T is nothing like the old version--this one SUCKS!! The ONLY thing that saved ATT was APPLE.. now that the iphone is opening up to other companies, there is no reason to say on ATT... SPRINT was crap back in the day, but they are starting to inch their way back up.. they saw the writing on the wall..IF the rumors are true..and Sprint gets OS5.. just watch 'em run away from the pack!! I AM switch today my company's 25 phones to SPRINT this week... their unlimited data plan is the best and truly is what it says it- UNLIMITED.. with no restrictions..IF Sprint stays the course and keep true and continues to build their internals... they will rise... and this merger wont make a difference.. folks will probably start switching anyway....

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