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

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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49 Comments

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.

24. alpinejason

Posts: 262; Member since: Sep 06, 2011

lol thats funny!!!!!

2. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

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

42. Phoneguy007

Posts: 218; Member since: Jun 02, 2011

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

47. Goose Gosich unregistered

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

3. joey18

Posts: 648; Member since: Jul 20, 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

4. ECPirate37

Posts: 296; Member since: Jul 14, 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%.

13. vvelez5

Posts: 623; Member since: Jan 29, 2011

That's called predatory pricing and rarely ever happens.

14. vvelez5

Posts: 623; Member since: Jan 29, 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.

22. ardent1

Posts: 2000; Member since: Apr 16, 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!

29. remixfa

Posts: 14605; Member since: Dec 19, 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.

36. pattypatterson

Posts: 48; Member since: May 28, 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

37. ZayZay

Posts: 571; Member since: Feb 26, 2011

I did!

46. Galen20K

Posts: 568; Member since: Dec 26, 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. ; )

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.

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.

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.

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.

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.

7. CRICKETownz

Posts: 980; Member since: Oct 24, 2009

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

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.

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

11. Carlos unregistered

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

30. remixfa

Posts: 14605; Member since: Dec 19, 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.

9. Dj21o

Posts: 437; Member since: May 19, 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.

12. dandirk

Posts: 187; Member since: Aug 04, 2011

At&t lower their prices... vzq lower their prices... Yeah right! When Monkeys fly out of my butt

31. remixfa

Posts: 14605; Member since: Dec 19, 2008

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

43. Phoneguy007

Posts: 218; Member since: Jun 02, 2011

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

15. BReND0

Posts: 74; Member since: Dec 07, 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

16. VZW4LIFE

Posts: 34; Member since: Jun 11, 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.

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