Reducing the number of national wireless carriers from four to three means higher prices across the country.
Today, Sprint and T-Mobile are the “maverick” competitors that drive down prices. If they combine, it would create a new incumbent with the ability and incentive to cooperate and collude with the other incumbents. Say goodbye to the “Uncarrier,” and say hello to price hikes.
- T-Mobile and Sprint have been “maverick” companies, forcing AT&T and Verizon to compete on price and match innovative service offerings. If a competitor is removed, consumer prices could go up by more than 15 percent in many cases, according to one analysis.
- Higher prices would be felt acutely by prepaid wireless users, since the combined company would control more than 50 percent of that market. Because the prepaid market predominantly serves lower-income customers, this deal would make it even easier for the company to increase prices on the most vulnerable consumers.
- Don’t take our word for it: In other countries, four-to-three mobile mergers have already resulted in price increases, providing further proof of the harms of consolidation in the mobile voice/broadband market. When two Austrian mobile providers merged in 2012, prices went up an average of 14 to 20 percent – and even more for prepaid users.
Eliminating Sprint and T-Mobile as “maverick” competitors would create a new powerhouse with the ability and incentive to cooperate and collude with the other incumbents, causing both consumer and wholesale prices to increase.