T-Mobile Sweet-Talks The FCC: No Price Increases For 3 Years Post Merger

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T-Mobile and Sprint announced its merger last April and now that the government shutdown is over, the FCC has resumed its review of the proposed merger. T-Mobile CEO John Legere has sent a letter to the agency to address the concerns surrounding the deal. Opponents of the deal allege that consumers would be worse off if it goes through. However, Legere has rebuffed those claims and has provided the reassurance that the New T-Mobile will not hike prices after its merger with Sprint. More specifically, prices will not be raised for three years following the merger and the legacy rate plans of both the carriers will continue until better plans that offer either more data or a lower price are introduced.

The letter also implies that following the merger, consumers will get more bang for their buck.  Legere says that the merger would facilitate the deployment of its 5G network and due to its enormous capacity and lower marginal cost per customer, customers will receive better service and more data at same or lower rates. Sprint customers have separately been assured that once the deal closes, they will get a rate plan that's equal to or better than the plans currently being offered by their carrier.

T-Mobile also says that raising prices could backfire anyway, as loyal customers would lose faith in the carrier and migrate to other companies. The company also thinks that all wireless consumers would be better off after the merger as AT&T and Verizon would most likely reduce prices also to remain competitive. That being said, T-Mobile has given itself some leeway as the letter says that the retained legacy plans could be subject to cost increases that are not within its control, such as increases in taxes, fees, and surcharges.

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Although the letter seems reassuring on the surface, the condition related to cost increase that it states has not gone down well with opponents, particularly the 4Competition, a coalition which was formed to convince the authorities to block the merger. The group says that the pledge is full of loopholes and contains a provision for higher monthly bills in the future on the pretext network improvements.

The FCC, Department of Justice, and other state utility regulators must approve the merger that would combine T-Mobile and Sprint. Despite being the fastest-growing carrier in recent years, T-Mobile rounded out 2018 with 80 million subscribers. On the other hand, AT&T and Verizon have 153 million and 118 million customers, respectively, and Sprint reported a figure of 54 million. The third and fourth largest wireless providers in the U.S. say that joining forces would allow them to roll out the next generation of wireless networks more quickly and compete better with the top players AT&T and Verizon. However, critics argue that not only would the proposed merger result in reduced competition and consequently higher prices, it may also lead to unemployment.

The $26 billion deal has already won U.S. security approval and if everything proceeds smoothly, it could be finalized by the end of the March quarter.

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