T-Mobile is one of the few bright lights in the wireless industry. Here's hoping that regulators ensure that it stays in the game.
That's a big question right now because, according to published reports, the Bellevue, Wash.-based company, which has aggressively taken on its peers over the last year, is in talks to merge with one of them -- Sprint.
No deal has been announced, but negotiations between the two companies appear to be serious. Sprint officials recently talked to federal antitrust regulators about a potential deal, according to The Wall Street Journal, and T-Mobile CEO John Legere has spoken favorably of a possible merger, saying the combined company would be in a better position to battle the "duopoly" of Verizon and AT&T.
Regulators have indicated they would be skeptical of a merger. But whatever they may be saying now, they have rarely stood up for competition in this industry. So there's reason for concern.
For now, there's a lot to like about T-Mobile. Over the last year, the fourth-largest wireless carrier has rolled out a series of consumer-friendly policies.
Last year, it broke with its peers and abandoned the industry's standard two-year contract. It also introduced a plan allowing users to send texts and access the Internet at no additional charge while out of the country.
More recently, the company announced that if AT&T, Sprint or Verizon customers switched to its service, it would cover up to the $350 of any early termination fees they may get hit with.
At the same time, T-Mobile has been shoring up its network, which long offered slower service and more spotty coverage than its rivals. The company now has nearly nationwide coverage and one of the fastest networks around.
Consumers, competitors and analysts have been taking notice. In its most recent quarter, the company signed up more new customers than AT&T. Its service has been getting high marks -- at least relative to its peers -- from organizations like Consumer Reports and RootMetrics, an analysis firm that rates wireless coverage.
When my father-in-law got his first smartphone recently, I recommended that he sign up with T-Mobile. I've also been seriously considering switching my wife's phone to the upstart carrier when her current AT&T contract expires.
Meanwhile, T-Mobile's rivals, most notably AT&T, have been trying to answer its moves.
After T-Mobile introduced a policy that allows customers to upgrade their phones at a discounted rate earlier than the normal once every two years, AT&T and Verizon introduced similar programs. Even before T-Mobile rolled out its plan to cover consumers' costs of switching from other networks, AT&T announced a similar plan targeted specifically at T-Mobile customers.
All these moves have been great for consumers. They're exactly what you'd hope for in a competitive market -- companies bending over backward to win new customers.
Unfortunately, that's not the way the wireless industry has always been. In fact, the industry has generally been marked by high costs, onerous contracts and often poor service. Until recently, companies have typically felt little need to be more responsive to consumers because they knew the switching costs -- in the form of long contracts, early termination fees and expensive phones -- were so high that few users would switch.
T-Mobile's success is a direct result of regulators, in a rare move, actually standing up for competition in this sector. In 2011, T-Mobile was the target of another potential acquisition, that time by AT&T. Breaking with their recent past, federal regulators sued to stop the merger, arguing it would give too much market control to too few players. AT&T soon dropped the buyout effort and ended up having to give T-Mobile a breakup fee of $3 billion in cash and another $1 billion worth of wireless spectrum.
The company has turned around and used those gains to improve its service -- and offer better deals to consumers.
At the time of AT&T's attempted acquisition, the companies and industry apologists argued that consolidation was inevitable and that there was no future for T-Mobile if the merger fell through. They argued that the merger was the best thing for consumers because it would allow AT&T to acquire more spectrum, which would help it improve its service.
You're likely to hear similar arguments this time around. You'll likely hear that Sprint and T-Mobile together will make a more formidable competitor to AT&T and Verizon. You'll likely hear that either Sprint or T-Mobile or both won't last long unless they link up. And you'll likely hear that the deal will be good for consumers.
Those arguments were wrong last time, so you shouldn't believe them this time. T-Mobile has not only survived without AT&T, it's thrived. While Sprint has been struggling of late, there's no reason to believe that it's doomed without T-Mobile, because it has a deep-pocketed backer in Japan's SoftBank and it's sitting on a treasure trove of wireless spectrum.
Let's hope federal regulators see things the same way and block any attempted merger. Because T-Mobile has offered just what consumers have needed: some good, old-fashioned competition.