The ramifications of this union are significant. Not only would this cut the number of US national carriers from four to three, but it could also spur serious change in the wireless industry, and it all boils down to one crucial reason: better competition. That sounds a little counter-intuitive, since cutting the number of national carriers seems on the surface like it’s reducing competition.
Why is competition such a big deal?
In the announcement, the companies take pains to spell out how the merger will “create more competition.” It isn’t just an effort to reassure subscribers, but also to convince regulators (in this case the FCC and the Department of Justice) to approve the union. Competition is a key point of consideration here, and history bears this out.
Back in 2011, when AT&T tried to take over T-Mobile, the DOJ’s Antitrust Division sued the companies involved to block that merger. The concern then was that the resulting carrier would become the largest wireless provider in the US, potentially driving up prices and limiting the options available to consumers. Ultimately, the FCC’s concerns over creating a monopoly were so overwhelming that AT&T withdrew its bid.
Capitalism relies on competition and consumer choice to drive down costs and spur innovation. A monopoly or oligopoly would give the sole (or few) service provider(s) full control over pricing, features and quality of service. Without healthy competition, the entire economic system that the US relies on falls apart.
Why did they do it?
By combining their powers, the “New T-Mobile” is much better…