Though it's still possible that regulators will reject the deal, it's safe to say that the odds of the T-Mobile US (TMUS) planned merger with Sprint (S) being allowed to go through have improved over the last few weeks.
FCC chairman Ajit Pai has given his blessing to the deal, stating he's pleased with the commitments T-Mobile and Sprint have made regarding mobile broadband and rural 5G connectivity. And a flurry of media reports have indicated the DOJ is leaning towards approving the deal, provided T-Mobile and Sprint enable the creation of a fourth nationwide mobile carrier by unloading some spectrum and Sprint's Boost Mobile prepaid business. The most recent of these reports suggest Dish Network (DISH) , which has amassed a giant spectrum hoard, is the frontrunner to buy these assets.
If the DOJ clears the deal in exchange for asset sales to Dish, and an effort by 10 state governments to block the deal doesn't succeed, U.S. consumers probably won't see major changes in the near-term, outside of T-Mobile's stated plans to bury the Sprint brand and integrate Sprint's network and retail footprint with its own. But over the next several years, the fallout could be considerable.
Here are three ways in which a T-Mobile/Sprint deal could eventually upend the U.S. telecom landscape as we know it.
1. Reduced Wireless Price Pressure
With an eye towards appeasing worried regulators and politicians, T-Mobile promised in February that it will offer "same or better rate plans for our services as those offered today by T-Mobile or Sprint" for three years after the closing of a merger with Sprint. However, no promises are being made regarding how T-Mobile will price its services after those three years are up.
It isn't hard to see why Verizon (VZ) and AT&T's (T) shares have often risen on media reports that boded well for a T-Mobile/Sprint deal's approval. T-Mobile's "Un-carrier" strategy, through which it has competed aggressively on price and tried to lower or eliminate various service fees, has fueled share gains and forced its larger rivals to adjust their own pricing and service terms. If Sprint, the one nationwide carrier that truly went toe-to-toe with T-Mobile on price, is taken out of the picture, it's possible that T-Mobile (though still likely to undercut Verizon/AT&T) will adopt a more measured pricing strategy.
2. Greater Home Broadband Competition
T-Mobile has repeatedly claimed that with the help of Sprint's high-band spectrum, it will be able to provide credible home broadband competition to cable companies and wireline telcos. In March, the company promised to "deliver 100+ Mbps speeds for wireless broadband to 90% of the population and in-home service to over half the country's households by 2024," should the Sprint deal be approved. T-Mobile added its post-Sprint business plan calls for having 9.5 million in-home broadband customers by 2024.
Only time will tell whether (in the event a Sprint deal clears) T-Mobile will make good on its home broadband targets, and also what average and peak-hour download speeds will look like in more congested urban areas. It's quite possible that cable companies will remain in good shape when battling for more affluent urban and suburban consumers who are willing to pay extra for higher download speeds and service quality guarantees.
But at a time when a significant minority of U.S. households still have only one broadband ISP and average U.S. broadband prices remain much higher than those of many other developed nations, it's not hard to imagine T-Mobile causing some headaches for cable and telco incumbents by unleashing a broadband version of its Un-carrier strategy. The company might especially see strong traction with lower-income consumers, a demographic for which smartphone-only Internet usage has grown considerably.
3. An Opening for a Cable or Tech Giant
Should Dish buy the assets that the DOJ reportedly wants T-Mobile and Sprint to sell, chances are good that the company won't proceed with an effort to build a nationwide wireless network all on its own -- not when it already has about $15 billion in debt and is dealing with major subscriber losses for its core satellite TV business. And in the event that Dish seeks a deep-pocketed partner to help build its network, the company might have a number of potential options.Comcast ( CMCSA) and Charter ( CHTR) , which have begun offering mobile services that rely on Verizon's network, could give Dish a call. So might a tech giant such as Amazon.com ( AMZN) , which was previously reported to have interest in the assets that the DOJ wants sold. And provided national security concerns aren't an issue, foreign telcos looking to crack the U.S. wireless market could also explore a deal with Dish.