A merger between T-Mobile and Sprint, which is beginning to look more likely, is certain to help the bottom line of both telecommunications companies, but their customers may not be so lucky.
The cost of wireless service in the U.S. has fallen 13% in the past year, according to the Labor Department. That’s the biggest drop in 16 years. That’s due, in large part, to the return of unlimited plans by carriers.
All major carrier offer those these days (even though Verizon had to be dragged back to unlimited kicking and screaming). The good news is, experts say they don’t expect them to fade away.
“I think unlimited is the future,” says Jeff Kagan, a telecom industry analyst. “That’s what keeps the customer using services and not worrying about what its going to cost them. … It’s a bumpy road, but we’re headed in that direction.”
The rates for those plans could go up, however. While Sprint and T-Mobile target Verizon and AT&T in their commercials, they’re largely competing against each other, says Kagan, since both are trying to lure customers away from the two giants of the industry. Should they become a single company, the incentive to lower prices would decrease.
“The question is: Will they need to still provide savings? And if they do, will the savings be as great as they are now?,” Kagan says. “I don’t see this being helpful on price. If anything, prices will stay the same or go up.”
There may not be refuge with smaller carriers like Cricket Wireless or MetroPCS, either, since those companies buy network access from larger carriers at a wholesale price and then resell it. If those prices increase because of the merger, so too would those of “bargain” phone companies.
One notable advantage for customers of both T-Mobile and Sprint will be the upgrade to network coverage. Both services have invested heavily in their network in recent years, so a merger would create a number three company that could better compete against AT&T and Verizon.
The hiccup there is the two companies use different technologies to power their 2G networks – CDMA for Sprint and GSM for T-Mobile. And most phones that use CDMA networks don’t have SIM cards, which could force customers to get a new phone.
Then again, it could be the excuse customers were looking for to buy an iPhone 8.