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Feb 13, 2020

What $15 Plans Have to do with T-Mobile’s Sprint Merger

By Team Stash

Cheaper plans could make the merger look less like a monopoly.

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Update: On February 11, 2020, a federal judge ruled in favor of the merger between T-Mobile and Sprint in a lawsuit brought by 13 state attorneys general. The states could still appeal the decision, according to reports. While the merger is no longer on hold, it also still needs to be approved by California’s Public Utilities Commission.

Telecom carrier T-Mobile announced last week that it will offer consumers a $15-dollar monthly data plan if its $27 billion merger  with Sprint is approved.

The reduced-rate plan is reportedly being offered to ease the concerns of regulators and other industry watchdogs who fear that the merger could drive up plan prices for all wireless customers.

If and when the merger is finalized, T-Mobile executives have reportedly said the newly combined company would offer a plan that provides users with unlimited talk, text, and 2GB of data, at approximately half the cost of its cheapest plan currently. Additionally, T-Mobile said in a press release it will give emergency workers and first responders 10 years of free 5G service, and that it will provide 10 million homes in the U.S. and Puerto Rico with free wireless service and subsidized devices.

These initiatives could be designed to convince consumers and states attorneys general that a merger between T-Mobile and Sprint won’t mean that the company will only seek out the most lucrative customers who can afford the most expensive plans, according to reports.

While the merger was approved by the Federal Communications Commission in October 2019 and by the Department of Justice in July 2019 the deal still faces antitrust lawsuits from 12 states including New York and California. These suits, which object to the merger on the grounds that it could create a monopoly that will increase consumer prices, are set to begin in early December.

T-Mobile enters the price wars

By offering a $15 plan, T-Mobile has also entered a competitive market, with other providers offering cheap plans. AT&T’s Cricket offers a prepaid 2GB plan costs $30 per month, for example, and Sprint’s Boost costs  $35 per month for 3GB of data. (AT&T merged with cable and entertainment company Time Warner earlier in 2019.)

Details about the merger

  • T-Mobile and Sprint have been in talks to merge since April 2018. The companies are the nation’s third and fourth-largest mobile providers, respectively. And together they’d create a new telecom giant with a reported 126 million subscribers. Verizon would still be larger than the combined company, with 150 million subscribers, according to reports.
  • Big mergers like the one proposed between T-Mobile and Sprint have sparked monopoly concerns in the past.
  • Sprint and T-Mobile had floated a merger in 2014. Those plans, however, were thwarted by regulators who feared the combined company could create a monopoly. Similarly, in 2011, AT&T similarly attempted to merge with T-Mobile, a move that was also blocked by regulators.
  • A merger between T-Mobile and Sprint, if approved by regulators, would leave the U.S. telecom market with just three big players, sparking fears of a monopoly. A monopoly, generally speaking, is when one company has a lockdown on a market and can control pricing for its products and services without fear of competition.

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