This town ain’t big enough for the four of us, says T-Mobile

November 16, 2012

    t-mobile logo

    The U.S. mobile market is a big one, with 321.7 million subscribers as of second quarter of 2012. That’s a 101% mobile penetration, which means the number of lines equals the population. But while the nation is serviced by four major carriers today, T-Mobile thinks the market is not big enough for four big carriers to service.

    In a meeting with shareholders, COO Jim Alling said the industry might see some adjustments and consolidations in the next few years. “Is it possible that four major players could go down to three? I think that is possible, and likely in the longer term,” he said, referring to the possibility of the country’s four major carriers merging into just three. This actually almost happened when AT&T made a bid to acquire T-Mobile from its parent company Deutsche Telekom in 2011. That $39 billion acqusition deal did not push through, though, having been shot down by regulators for possible anti-competition.

    But even as the so-called AT&T-Mo deal was halted, the major U.S. carriers have found themselves entering into mergers and partnerships with other companies. For instance, there’s the planned Sprint acquisition by Japanese telecoms provider Softbank. There’s also T-Mobile’s acquisition of super-regional carrier MetroPCS.

    Of course, this will depend on the regulatory environment, Alling, says. As such, whatever consolidation may happen is set for the longer-term. The statements made by T-Mobile’s COO probably assume that his company will be on the winning end of the deal, if the industry were to consolidate into a fewer — but bigger — major competitors.

    But are four major competitors really too big for a country to handle? In some regions, the mobile industry has seen consolidation into three or fewer carriers. For instance, China has China Mobile, China Unicom and China Telecom, which have almost a billion lines shared across the three. However, another big market, India, has eight major mobile carriers. Which is the best model for the U.S.?

    Will the American market benefit from a fewer major competitors? If the big four — AT&T, Verizon, Sprint and T-Mobile — were reduced into three major players, will this result in improved services and reduced prices?

    Comments

    • Justin W

      I think this would end in higher overall prices here in the U.S. because there wouldn’t be as much competition. I think that the more major carriers there are, the more competition there is, so the lower the prices on their products are. This is why Wal*Mart’s prices are so low – they have to compete with tons of competitors, and they typically have the lowest prices. The same could be said of mobile carriers.

      • JosephHindy

        ^ what Justin said. Fewer companies means less competition means higher prices. Basic supply and demand :)

        ALTHOUGH, the services would like get better. With 3 instead of 4, all the money is being funneled into fewer places. Which means each company would have more to spend on stuff like LTE upgrades, 3G upgrades, and call quality increases.

        • me

          The question is, would they be as willing to spend that money?

          • JosephHindy

            Of course not :P but we’re only talking hypothetical situations here ^_^

      • HAF1

        This is a paradox. There aren’t enough nationwide customers and density (customers per area of coverage) to fuel the capitalization of four nationwide carriers. While, true, consolidating either the GSM (ATT/Tmobile) and/or CDMA (Sprint/Verizon) carriers may be anti-competitive and lead to higher rates, it would push these networks into newer, faster interfaces that wouldn’t be possible with four players. If we remain at four carriers, spectrum sharing in some form may be the only answer- especially in rural areas that have seen coverage actually reduced.

    • olbp

      .

      Without a doubt, merger into 3 super carriers instead of having 4 would be a shock to competition in the US. If ANYthing, we should see the big 3 split up so allow more competition, hence lower prices and better service. As it is, there is little or no chance of either of these.
      .

    • http://twitter.com/MysteryMannnnn Mystery Man

      T-mobile your not in the red. Keep offering low prices and expanding your network and people will migrate

    • Larkhillv

      How about we just not have a bunch of crappy carriers that charge an arm and a leg.

    • http://twitter.com/hawaiiinsomniac hawaiiinsomniac

      Cell phone carries in the U.S are crazy expensive. Having moved from the U.S. to Spain, my cell phone bill is less than $10/month.

    • Alu Zeros

      Tmobile customer service blows, learn what service means

    • earl

      Want expensive, try Canada…

    • DANIEL-.A

      It’s never about the users.It’s always about market shares,stock prices and share holders

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