December 9, 2019
Sprint Trying to Survive as T-Mobile Pulls Away
For some time now, the mobile telecom market in the United States has been a four-horse race. Verizon maintained a strong lead, AT&T managed to keep pace, and two companies – T-Mobile and Sprint – fought for third place using a revolving combination of pricing incentives and cool consumer PR.
Now, though, it appears a clear, consistent third-place brand has emerged, one that will essentially erase one of these brands, but make the company an instant contender to challenge the perennial top two. How’s that? T-Mobile and Sprint are trying to merge. And, if the $26 billion merger is approved, things in mobile telecom will change immediately.
No one needs this more than Sprint. The company has tried, and failed, to woo customers and keep them. Touting “almost as good” networks and drastic pricing discounts, including free phones in an age where most people are making payments on handsets. It hasn’t been enough, which leads us from news that is bad to worse for Sprint. The proposed merger, which would kill the brand but could save the company, is being strongly opposed in at least 15 states.
According to multiple lawsuits, a merger of this kind will “lead to higher prices and fewer options” for consumers. Not news the consumer market wants to hear, especially as mobile costs continue to rise, both equipment and service costs, even as mobile handsets have become nearly universally necessary communication, business, and lifestyle devices.
Market watchers say this merger is vital for Sprint, who, they say, is in a clear no-win situation. The company’s failure to gain a consistent, solid footing, combined with certain business mistakes, are pushing the brand toward bankruptcy, if the merger doesn’t happen. And may happen even if it is approved.
This is not the first time Sprint has used a merger to jumpstart its economic situation. Back in 2004, Sprint merged with Nextel in an effort to more effectively compete with Verizon. That gambit didn’t work. Incompatible tech and networks created infrastructure issues that shifted the company’s focus from increasing market share to fixing the internal issues.
Despite these missteps, Sprint is back selling a message that, this time, a merger will work, while not “really” reducing consumer choice or raising costs. This scenario creates a need for two parallel messages: one for regulators and one for consumers who are worried that losing a fourth option will give Verizon and AT&T a clear road to increasing prices and decreasing service. That’s going to be a tough sell.