It’s finally happening: T-Mobile and Sprint, the No. 3 and No. 4 American phone carriers, are uniting.
The carriers, which trail AT&T and Verizon in size, have been angling to combine for a long time. On Friday, the Department of Justice approved the deal, after the Federal Communications Commission (FCC) had also signaled that the union could go ahead.
To persuade the Justice Department to approve the merger, T-Mobile and Sprint agreed to sell Sprint’s prepaid wireless business to Dish Network so that the satellite television provider could create a fourth wireless carrier.
Ajit Pai, the chairman of the FCC, has said the combined company would advance the country’s leadership in deploying 5G networks, the next-generation wireless technology, and close the digital divide in rural America, among other objectives. (The deal faces one last hurdle in the form of a lawsuit by state attorneys general.)
But what would the T-Mobile and Sprint union mean for you and your wireless service?
When two giant companies get together, critics have said, people typically get stuck with higher prices and service does not evidently improve. Supporters of the merger argue that the quality of wireless service will improve for T-Mobile and Sprint customers because they will gain access to a broader network when both are knitted together.
Here’s what’s you need to know.
Q: What will happen?
A: If you are a customer of Sprint, watch for the Sprint brand to be absorbed by T-Mobile, which T-Mobile last year signaled would happen. In other words, Sprint subscribers will become T-Mobile customers, and the executives overseeing T-Mobile will lead the combined company.
If you are a customer of Sprint’s prepaid brands — those include Boost Mobile, Virgin Mobile and Sprint prepaid — you will soon become a Dish Network customer.
If you are a T-Mobile customer, don’t expect much to change right away. It will take time for the company to integrate the two wireless networks so that they work well. Behind the scenes, there will be a lot of activity stitching the network technologies and assets of both firms into one.
It’s unclear how long it will take for these changes to go into effect. The deal could still hit a snag if the companies fail to overcome the lawsuit brought by several states that have said the combination could harm people by leaving them with higher cellphone bills.
Q: Will prices for wireless service go up?
A: Probably — but it’s not that simple. Pricing for wireless services already started inching up this year.
To understand why, let’s go back to 2013. That was when T-Mobile started a marketing blitz, labeling itself the “uncarrier” — the pro-consumer wireless company. It discontinued traditional two-year wireless contracts, eliminated early termination fees and made international roaming free.
The move won T-Mobile millions of customers from AT&T and Verizon. To compete, Sprint also released promotions that drove down prices of wireless plans. The upshot: Consumer spending on wireless services dropped significantly between 2014 and 2018, according to Chetan Sharma, an independent consultant for the carriers.
After T-Mobile increased its number of customers, it cooled down its promotions. That was when prices began rising again. Over the last few years, T-Mobile moved toward unlimited data plans, which start at $60 a month. In contrast, it had offered tiered data plans with cheaper options, like one that cost $50 a month, years ago.
In total, the average amount spent by wireless customers in the first quarter was $47.50 a month, up slightly from $46 in 2018, Sharma said. (The numbers look low because they include people who are on cheaper prepaid phone plans.) He added that people still spend less than they did in early 2014, when the average amount spent was $60 a month.
With the merger complete, we can expect prices to continue creeping up. That’s because, for now, AT&T and Verizon will have one less competitor. (While Dish agreed to buy Sprint’s prepaid business, it could take years for it to become a mature No. 4 carrier comparable to Sprint.)
In other countries, prices also rose after large carrier combinations. In India, for example, the number of wireless carriers dwindled to three big companies in 2018, down from about six in 2010 — and prices increased slightly, Sharma said.
Q: Will my wireless service quality improve?
A: For Sprint customers, maybe. Sprint has struggled to gain customers for years because its network was the smallest and least capable, which meant access to cellular phone service and high-speed internet was spotty in some areas.
But we will have to wait and see whether T-Mobile successfully merges Sprint’s network with its own. If all goes perfectly, Sprint and T-Mobile customers will gain access to a broader network on a par with the AT&T and Verizon networks in coverage and speed.
It remains unclear whether customer support quality will get better or worse after the merger. T-Mobile will now have to take on millions more customers coming from Sprint. In anticipation of the influx of new subscribers, T-Mobile said it plans to hire staff for five new customer service centers. But it will take time to train new workers, so in the near term, support quality might be inconsistent.
Supporters of the merger say that the combined company will accelerate the deployment of 5G networks, which are so fast that people can download an entire movie in seconds rather than a few minutes. T-Mobile will now have more resources to implement its 5G technology, which will pressure AT&T and Verizon to deploy their 5G networks more quickly, analysts said.
In the near term, though, 5G won’t have an immediate impact on you. The technology has very limited range, meaning the signals won’t travel very far. And the overwhelming majority of smartphones still work on the 4G network, not 5G.
Q: So should I switch to AT&T or Verizon?
A: It’s best to wait and see what happens to the pricing and quality of service.
T-Mobile still offers some attractive perks, like free international roaming and free in-flight texting with Gogo Wi-Fi, which AT&T and Verizon don’t. So depending on your lifestyle, the No. 3 carrier might still be your best bet.
The good news is that if you decide to switch, it’s not as difficult as it used to be. With the industrywide shift away from two-year contracts and the end of early termination fees, you just have to make sure you have finished paying for your cellphone before making the change.