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FCC reportedly skeptical about the idea of a merger between Sprint and T-Mobile

The FCC chairman is reportedly highly skeptical about a potential merger between Sprint and T-Mobile. We've seen a failed T-Mobile acquisition before, and if early indications hold true, objections from the FCC may stop a new deal as well.
February 5, 2014

We’ve seen a failed T-Mobile acquisition before, and if early indications hold true, objections from the FCC may stop a new deal as well. On Monday, Sprint chairman Masayoshi Son and CEO Dan Hesse broached the idea of a potential acquisition of T-Mobile with Tom Wheeler, Chairman of the Federal Communications Commission. Despite reportedly admitting that he would keep an open mind, Wheeler was described as being “highly skeptical” of the proposal.

Sprint, who was acquired by Japan’s SoftBank Corp. last year, suggests that the top two wireless carriers, Verizon and AT&T, are so dominant that only by combining themselves, as the third largest carrier, with T-Mobile’s fourth largest carrier rating, could they adequately supply sustainable competition.

In 2011, the Justice Department and the FCC both objected to a $39 billion deal that would have seen AT&T acquire T-Mobile. As with that blocked deal, a merger between Sprint and T-Mobile would be subject to a very hard look by the Justice Department’s antitrust division. In a general statement, “it’s going to be hard for someone to make a persuasive case that reducing four firms to three is actually going to improve competition for the benefit of the American consumer” admits William Baer, chief of the Justice Department’s antitrust division, in an interview with the New York Times last week.

We’ll have to wait to see if Sprint actually decides to pursue an official bid for T-Mobile, but for now, we wonder what this combined company would mean for the everyday user. T-Mobile has been a leader in the push for contract free and commitment free services. On the other side, Sprint is a little bit ‘more mature’ of a brand and has been seemingly reluctant to join in the off-contract rate plan race. Without going into too much detail here, I worry that a Sprint controlled T-Mobile service would include rate hikes and steer back away from the currently popular Bring-Your-Own-Device service plan trends. On the flip side, the two carriers’ combined infrastructure could bring users improved coverage of 4G data speeds across the country.

What are your thoughts – can a Sprint/T-Mobile company create better competition against the Big Two and ultimately better plans and service for the user?