The landscape is changing for wireless companies as T-Mobile and Sprint get closer to completing their $26 Billion merger, and it could cause a new price war.
On Tuesday, a federal judge cleared the way for the merger. The attorney generals from several states continue to fight, claiming the merger would limit competition and cause higher prices.
The California Public Utilities Commission still has to approve the deal.
"Some in the industry argue the merger of Sprint and T-Mobile will create a faster path to 5G," said Scott Peterson, an analyst for Gap Intelligence. "Time and time again [we see] that when we reduce the players in an industry, we see that cost and price go up and ultimately doesn't benefit the consumers."
Peterson said the merger of the third and fourth-largest cell carriers will shake the industry.
"Sprint and T-Mobile combined will create a very powerful third player that AT&T and Verizon will have to take notice of," Peterson said. "It may increase competition in the very short term, but I have serious worries about the ramifications of this deal."
For this merger to work in the way they argued for consumers, we really need DISH Network to emerge as a hero.
Scott Peterson - Gap Intelligence
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In a statement, T-Mobile said the ruling "validates our view that this merger is in the best interests of the U.S. economy and American consumers."
Peterson said the only way prices will not rise in the long run is if DISH Network becomes a major wireless company and is able to compete with the other major carriers.
"For this merger to work in the way they argued for consumers, we really need DISH Network to emerge as a hero," Peterson said. "We really need to hold these carriers accountable for all the promises they're making in this initial phase."
Some industry experts think Sprint was forced into this merger because it was unable to compete with the emergence of 5G technology.
"At some point, Sprint would likely have gone out of business and that would not have been good," said SDSU Marketing Professor Miro Copic. "Then you would've had two big players and one player that would have been third place by a long shot."
California Attorney General Xavier Beccera led the states' efforts against the deal and released a statement after the judge's ruling in favor of the merger.
"Even in the face of powerful opposition, we won’t hesitate to stand up for consumers who deserve choice and fair prices. We'll stand on the side of competition over megamergers, every time. And our coalition is prepared to fight as long as necessary to protect innovation and competitive costs," said Attorney General Becerra.
"I fear for the future after all of [T-Mobile's] magenta dust settles," Peterson said. "Will consumers see higher prices and more hoops to jump through and more rigmarole with their wireless bills? I'm afraid the answer is going to be yes."
