Trump is a known fan of competition, and a known fan of jobs.
I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!
— Donald J. Trump (@realDonaldTrump) March 7, 2017
JOBS, JOBS, JOBS! pic.twitter.com/wAkQMKdPXA
— Donald J. Trump (@realDonaldTrump) March 14, 2017Advertisement
But which is more important to him? And does the fairness to consumers factor in at all?
We’re about to find out in the context of the proposed Sprint and T-Mobile merger.
What’s the justification?
It’s hard to see how reducing the number of major cell phone companies from four to three would increase competition (especially while AT&T is trying to muscle into everything else), but that’s the case they’re making to Trump: Three big carriers instead of two big and two small.
Usually, more companies means more competition and more affordable prices. Frankly, four options is not a lot to start with, and why a lot of people are looking to cut their phone bill already. From the bottom, T-Mobile has moved the needle with its “Uncarrier” agenda — forcing its rivals to also offer unlimited plans and unbundling phones from contract plans to some extent.
Knocking Sprint out of the picture would offer some longterm cost savings to the combined company, but remove a permanent threat of competition.
The companies’ executives say the merger would allow them to shift focus to building out the next-generation wireless network, offering better service, and opening hundreds of new stores in rural areas. All of that would create some jobs, although what they don’t really talk about is how the merger would also eliminate some existing ones.
If you have deja vu here, it’s because they’ve tried to merge before — multiple times, with differing levels of agreement on the details. Four years ago, the Obama administration blocked the idea because they felt it would lead to higher prices. Now, they’re hoping to get a different answer from Trump. Because: jobs.
A bad deal
A combined T-Mobile and Sprint (remember when they gobbled up Nextel?) would have about 100 million customers, compared to AT&T’s 94 million and Verizon’s 116 million. Not quite an equal share of the pie, but comfortable enough that nobody will want to ratchet up the pressure or risk on the others.
The combined T-Mobile, in fact, would be in a weakened bargaining position, according to The New York Times: “Sprint has about $32 billion in debt on its books, while T-Mobile generates a fraction of the cash that Verizon and AT&T do.”
For the last few years, my bill (and I use T-Mobile) has pretty much stayed the same. Regulators claim the four-player market has held prices steady, but getting rid of one could change that. And the excuse would be easy: We have to raise prices to build out a faster 5G network! Or, at best, I would expect price to hold steady and service quality to decline.
Another reason this could go sideways is that some of the wireless carriers are also in the cable market (AT&T and Verizon) while the others aren’t. With AT&T trying to have its own merger, we could see see some sudden sticker shock on both our phones and cable in the near future. Neither of these deals should happen, but both together would be rough on consumers.
I’d rather keep the T-Mobile that’s interested in keeping the bigger competitors on their toes. I like rooting for the little guy. And Trump claims to, too. Hopefully he follows through and says no to T-Mobile and Sprint. (Although AT&T&T-Mobile would be fun to say, for a little while.)
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Article last modified on May 22, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Does Trump Care More About Fair Prices or Creating Jobs? - AMP.
Article last modified on May 22, 2018. Published by Debt.com, LLC .