Talking simply as a consumer, I've had pretty mixed feelings about the T-Mobile/Sprint deal from the start.
On one hand, you don't need to be an expert in antitrust law to see why merging the two lowest-cost nationwide carriers in a U.S. wireless market featuring just four nationwide players could be bad news for consumers over the long-term -- particularly given that the U.S. wireless market has seen a fair amount of price pressure in recent years.
To be fair, T-Mobile (TMUS) has promised to keep its prices at or below the levels that they're at as of the time of the Sprint (S) deal's closing for three years. And to win regulatory approval, T-Mobile/Sprint struck a $5 billion deal with spectrum-hoarding Dish Network (DISH) that aims to create a fourth nationwide carrier by giving Dish Sprint's prepaid businesses and some of its low-band spectrum, as well as access to the post-merger T-Mobile's network for seven years.
In addition, T-Mobile, whose coverage still trails Verizon (VZ) and AT&T's (T) in many non-urban areas, has promised to make giant 5G network investments. That's a big reason why Nokia (NOK) and Ericsson's (ERIC) shares, as well as the shares of mobile infrastructure chip suppliers such as Marvell Technology (MRVL) , have rallied strongly in response to the T-Mobile/Sprint deal's approval by a federal judge.
But there are no promises regarding what T-Mobile's pricing will be like after three years. And it's also far from clear right now just how large and competitive a player Dish, which has a sizable debt load and is prohibited from reselling the assets it's buying from Sprint for three years, will be over the long run.
However, for all the legitimate concerns that exist about T-Mobile/Sprint's potential impact on wireless pricing, the deal could ultimately do a lot of good for a U.S. broadband market where competition, pricing and availability are often far from ideal.
A 2018 FCC study found that 30% of developed U.S. census blocks had only one broadband provider delivering 25Mbps+ download speeds and 3Mbps+ upload speeds, and that 13% had no such providers. Another study found that among countries where 60Mbps+ download speeds are available, the U.S. has the sixth-highest average broadband bill in the world, trailing only the UAE, Qatar, Guatemala, Iceland and Saudi Arabia.
T-Mobile, which upended a U.S. wireless market that was dominated by Verizon and AT&T with the help of aggressive pricing and promotional activity, has insisted it will do the same for a U.S. broadband market still dominated by cable and telco duopolies, should the Sprint deal close. Among other things, T-Mobile has promised to deliver -- with the help of Sprint's spectrum and big 5G investments -- 100Mbps+ speeds to 90% of the U.S. population, along with home broadband service to more than half of all U.S. households, by 2024.
Even if T-Mobile makes good on its promises, many affluent consumers will probably remain loyal to cable and telco ISPs, given the speed advantages these ISPs will likely maintain on the high end.
But provided that T-Mobile prices aggressively and can reliably deliver speeds of at least 25-30Mbps on a large scale -- not a stretch, given its spectrum resources and 5G's technical abilities -- it could peel off a decent number of more cost-sensitive consumers, the same way it did in the U.S. wireless market despite having less spectrum and coverage than Verizon and AT&T.
Also, though there's no way to know for sure right now, T-Mobile's track record provides at least some reason to hope that the self-proclaimed Un-carrier won't embrace an AT&T/Verizon-like wireless pricing strategy after three years. Verizon and AT&T are still dominant in the corporate and high-end consumer wireless markets, and the T-Mobile of 2023 might still be eager to undercut them.Certainly, the federal judge who just approved the T-Mobile/Sprint deal believes this will be the case. American consumers can only hope that he's right.