Could the Sprint-T-Mobile merger mean higher bills for Boost or MetroPCS customers?
If the government approves Sprint and T-Mobile’s bid to merge, customers of lower cost pre-paid plans — say from Boost and MetroPCS — could see some changes.
Both Sprint and T-Mobile sell prepaid services at lower costs and under different brand names: Sprint has Boost and Virgin Mobile USA, while T-Mobile offers MetroPCS. The two also wholesale their networks to such third-party resellers as Consumer Cellular, Republic Wireless and Ting; AT&T and in particular, Verizon, are less open to the resellers.
These prepaid and resold services have allowed many customers to lower their bills by buying only the level of data they need; some also rank higher in customer-satisfaction surveys than these carriers’ own subscription services.
Weaving together Sprint and T-Mobile’s networks could upgrade those services, but the combined company could also choose to consolidate its own prepaid brands. Meanwhile, resellers—in trade jargon, MVNOs, short for “mobile virtual network operators”—that now offer service from both firms would find themselves tied to one.
Among Sprint and T-Mobile’s in-house prepaid options, MetroPCS is by far the biggest player, said analyst Jeff Moore, principal at Wave7 Research. T-Mobile has 20.9 million prepaid users, most on MetroPCS, and Sprint has 9 million, most on Boost Mobile, he says.
In urban areas, Moore added, the prepaid market is dominated by MetroPCS, Boost and AT&T’s Cricket Wireless prepaid brand.
“Boost Mobile and MetroPCS are easily the most competitive and aggressive of the three,” he said. Having the merged company close one of those brands would not help customers: “A union of MetroPCS and Boost Mobile would make the prepaid market in urban America far less competitive, leading to higher prices.”
The advocacy group Free Press pointed to the disproportionately high share of low-income customers among MetroPCS, Boost Mobile and Virgin Mobile USA as a key reason for the government to quash the deal.
But Moore said his current guess is that a combined firm would either retain both brands or cut Boost loose to appease regulators. “Boost is smaller than MetroPCS and could easily be spun off to help secure merger approval,” he said.
Sprint and T-Mobile have not commented on plans for their prepaid services.
As for third-party resellers, some may have the same bargaining power after a merger as before. TracFone and its constituent brands like StraightTalk and Net10, which Moore said constitute the largest MVNO with a total of 22.8 million customers, resell all four carriers. And Consumer Cellular, a well-regarded reseller that markets heavily to seniors, resells AT&T and T-Mobile.
But Republic Wireless and Ting, both Sprint and T-Mobile resellers, would go from two carriers to one.
Michael Goldstein, vice president of sales and marketing for Ting, called himself “more optimistic here than uneasy” because of the merger’s prospects for a network that customers will see as matching AT&T and Verizon’s (note that independent tests have already ranked T-Mobile’s network above AT&T’s).
“I can tell you that every day we have prospects who look at our coverage and are just not comfortable leaving those big two networks,” he said in an e-mail. “If the new T-Mobile puts us in a position to compete and compare better with them on network coverage and performance, it is a big win.”
But Sprint and T-Mobile don’t need to persuade the likes of Ting, they need to persuade officials in Washington.
Source by:- usatoday