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T-Mobile Sprints Toward Smaller Carriers To Rally Deal Support – Forbes

T-Mobile Sprints Toward Smaller Carriers To Rally Deal Support – Forbes

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Telecom giant T-Mobile plans to persuade regulators to approve its pending $26 billion merger with Sprint, by leveraging smaller wireless carriers that use its network. If this deal is consummated the newly minted company would have more than 127 million customers. This would leave the U.S. wireless market dominated by three national players instead of four and, perhaps leave budget conscious consumers with higher prices and fewer options.

The Breakdown You Need to Know

CultureBanx has questioned where this deal leaves black consumers in the wireless carrier race? T-Mobile and Sprint sell their airwaves to smaller wireless carriers that primarily operate in the pre-paid space, which gnerally serves low-income and minority customers. Currently T-Mobile has 38% of the U.S. pre-paid market, while Sprint has 16%, according to S&P. Now if you look at the breakdown by race, Nielsen’s Digital Media Vice President Jerry Rocha found that 15% of Sprint users and 14% of T-Mobile users are black.

Reuters reported T-Mobile wants these smaller carriers known as mobile virtual network operators (MVNOs) to take steps like, issue public statements or even write newspaper editorials. The company hopes these gestures will help convince antitrust regulators this deal is a good idea. It may be prudent for MNVOs to go along with this plan since they purchase access to T-Mobile and Sprint’s network at wholesale rates.

Regulatory Fray: There is a major uphill battle in front of these wireless carriers to win over skeptical regulators. The telecommunication giants believe the merger would create thousands of jobs and help the U.S. beat China in creating 5G, the so-called next generation mobile network. T-Mobile COO Mike Sievert explained to CNET, once the merger is complete they will be able to work on their own 5G ambitions. This should boost the company’s capacity and lower its cost of operation.

Consumer advocates have warned the combined company would raise fees for pre-paid and other low-cost mobile phone plans, Sprint and T-Mobile had previously been driving down. The median household income for black people was $39,000 in 2016, putting them directly in T-Mobile’s sweet spot  among customers who make less than $75,000 per year. Sprint’s pre-paid brand Boost counts 83% of its users in that income range, according to data from Kagan, S&P Global Market Intelligence data.

Antitrust Mindfulness

Low cost options are unlikely to remain with the market dominance this deal would bring about, though customers could see coverage and data speeds improve. The FCC along with antitrust regulators are already looking at the details of the deal. For T-Mobile and Sprint they hope the deal will successfully close in early 2019.

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Shutterstock

Telecom giant T-Mobile plans to persuade regulators to approve its pending $26 billion merger with Sprint, by leveraging smaller wireless carriers that use its network. If this deal is consummated the newly minted company would have more than 127 million customers. This would leave the U.S. wireless market dominated by three national players instead of four and, perhaps leave budget conscious consumers with higher prices and fewer options.

The Breakdown You Need to Know

CultureBanx has questioned where this deal leaves black consumers in the wireless carrier race? T-Mobile and Sprint sell their airwaves to smaller wireless carriers that primarily operate in the pre-paid space, which gnerally serves low-income and minority customers. Currently T-Mobile has 38% of the U.S. pre-paid market, while Sprint has 16%, according to S&P. Now if you look at the breakdown by race, Nielsen’s Digital Media Vice President Jerry Rocha found that 15% of Sprint users and 14% of T-Mobile users are black.

Reuters reported T-Mobile wants these smaller carriers known as mobile virtual network operators (MVNOs) to take steps like, issue public statements or even write newspaper editorials. The company hopes these gestures will help convince antitrust regulators this deal is a good idea. It may be prudent for MNVOs to go along with this plan since they purchase access to T-Mobile and Sprint’s network at wholesale rates.

Regulatory Fray: There is a major uphill battle in front of these wireless carriers to win over skeptical regulators. The telecommunication giants believe the merger would create thousands of jobs and help the U.S. beat China in creating 5G, the so-called next generation mobile network. T-Mobile COO Mike Sievert explained to CNET, once the merger is complete they will be able to work on their own 5G ambitions. This should boost the company’s capacity and lower its cost of operation.

Consumer advocates have warned the combined company would raise fees for pre-paid and other low-cost mobile phone plans, Sprint and T-Mobile had previously been driving down. The median household income for black people was $39,000 in 2016, putting them directly in T-Mobile’s sweet spot  among customers who make less than $75,000 per year. Sprint’s pre-paid brand Boost counts 83% of its users in that income range, according to data from Kagan, S&P Global Market Intelligence data.

Antitrust Mindfulness

Low cost options are unlikely to remain with the market dominance this deal would bring about, though customers could see coverage and data speeds improve. The FCC along with antitrust regulators are already looking at the details of the deal. For T-Mobile and Sprint they hope the deal will successfully close in early 2019.

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