Everything T-Mobile, Sprint Merger Critics Predicted Has Come True
from the merge-ALL-the-things! dept
Last week T-Mobile annoyed customers everywhere by not only informing them they’d soon be facing a steep price hike, but by pretending it wasn’t actually a price hike. The company announced it would be moving customers to a more expensive plan unless they opted out (hoping that users wouldn’t notice the change). Leaked support docs show reps were told to lie to customers:
“The leaked documents show what customer service reps are being trained to tell users. Instead of saying the price is going up, reps will say, “We are not raising the price of any of our plans; we are moving you to a newer plan with more benefits at a different cost.” That’s the talking point customer service reps are supposed to use if a customer mentions that they saw commercials “about how T-Mobile won’t raise the price of my plan.”
But users say the new “benefits” suck and aren’t worth the headache. They also said the head fake violates the company’s previous pledges not to raise rates, which was used for years to pull customers to T-Mobile from AT&T and Verizon in the first place.
This is par for the course for the “new” T-Mobile in the wake of the 2020 Sprint merger. Gone are the interesting new promotions. Gone is the amusing ridicule of wireless giants like Verizon and AT&T. Gone is the pseudo-hip trash talking CEO in his magenta sneakers. In its place is a wireless provider that looks more and more like the companies T-Mobile used to ridicule.
Of course, this was all predicted by myself and a long line of deal critics. Not because we’re ornery bastards, but because this is what always happens in the wake of this kind of mindless consolidation. Claiming that this wasn’t going to happen (and there were a lot of industry-funded bullshitters dedicated to pretending this wouldn’t happen) was akin to fighting the laws of physics.
When T-Mobile and Sprint proposed merging back in 2020, historians, economists, and consumer groups weren’t gentle with their criticism. They noted that historically around the world, a reduction in overall wireless competitors from four to three almost always resulted in a bunch of layoffs, less competition, higher prices, and a lower quality product overall.
T-Mobile and former CEO John Legere’s response to those critics? To claim they were lying, and to insist the deal would be endlessly beneficial and “job positive from day one and every day after.”
But it didn’t take long before T-Mobile had not only laid off nearly 10,000 employees (and tried to lie about it), but had begun socking users with the exact kind of dodgy fees and price hikes T-Mobile had previously made fun of. Gone is the disruptive, creative, edgy brand consumers found refreshing, and in its place is more of the broken old status quo.
Trump-era regulators played a key part of the con. They approved the deal without even reading the details about the deal’s impact. They then concocted an elaborate but clearly doomed “fix” involving Dish Network designed to provide flimsy policy cover in the press.
You’d like to think the U.S. would learn from this experience and perhaps start doing some more diligent reviews of mergers and consolidation. But nobody will learn anything from this experience because reputational or financial penalties simply aren’t built into the mathematics.
The Trump era revolving door regulators who approved the deal have failed upward to new positions in industry. John Legere is off napping on a giant pile of money. The companies got massive tax breaks. And consumers and employees were once again left holding the bag after promises of amazing consolidation “synergies” are once again shown to be hollow, performative bullshit. You’d think we’d eventually learn.
Filed Under: 5g, consolidation, mergers, price hikes, prices, telecom, wireless
Companies: sprint, t-mobile
Comments on “Everything T-Mobile, Sprint Merger Critics Predicted Has Come True”
But they won’t while politicians directly appoint regulators and receive campaign funds from the regulated companies.
Re:
I’m concerned that even if they appoint the correct regulators, they can review and investigate forever, and still get bamboozled. That’s because the review process can’t see into the future and determine that the company will go back on its promises. I say corporate mergers need an un-merger plan before the merger can occur. Similar to a court approved bankruptcy reorganization plan, companies need to plan on dividing up the assets of a company merger in the event that the promises and conditions of the merger are not fulfilled. If the business lied in order to kill competition, then they get un-hitched.
Re: Re:
How do you ensure that the un-merger replaces one board of directors with two competent boards, or cripple one of the split companies by ensuring all the competent experts stay with one of the companies. it not as if an un-merger can bring back all the employees let go after the merger, and would be all too easy to set up one of the split companies to fail through lack of a competent board and employees.
Re: Re: Re:
I am Not a fan of having .gov manage shit in my life, but does cellular fall under Title 2 at some point?
Re: Re: Re:
I’m unconcerned about the board of directors. The board is designed to represent shareholders. After the stock split, if the shareholders don’t appoint competent board members to protect their interests, and they lose money in the process, then that’s their own fault. (Maybe you can’t afford to buy a $1B/yr vanity CEO straight away.)
Wait a minute, we were told there wouldn’t be layoffs!
Anyhow, you’re correct that they probably can’t hire the exact same people, but they can hire someone. And then this rehiring and training process will cost money, which would need to be accounted for in the un-merger plan, which would come out of the pockets of shareholders in the event of a merger fail.
This is what accountability looks like. Mindless mergers built upon lies ought to come with a price. And that price shouldn’t be paid by customers who pay more, or by front-line employees who lose their livelihood. Perhaps the shareholders could sabotage one of the resulting companies, but then they would pay the price directly.
Re: Re: Re:2 re: Punishment
Koby, I signed in (even though WordPress will invalidate my “stay signed in” cookie in a week) just to let you know that I’m the one proposing the following addendum to your statements. Note that I do not apologize for flagging you for your political viewpoints, you still deserve such as you have not changed at all on that score. But as I’ve also said, you do know how to think, and how to elucidate your thoughts when the topic is not political in nature. That’s my “left-handed apology”, take it or leave it.
Now. Your short treatise on the ramifications of non-punishment is spot on, but one more item needs to be added to the agenda:
Those government regulators who review and permit these mindless mergers also need to feel the lash. For them, I’d send them packing, but with the additional sanctions that they can’t work in any level of government for the following 10 years, nor can they become a registered lobbyist in any field nor for any company/corp at all, for those same 10 years. And to make sure it sticks, they can’t go independent and “advise” any company/corp that has a paid lobbyist on staff, period. Attempting to get around these sanctions with shell companies and/or third parties is just as verboten as if done directly, only in such a case, a short but meaningful period of incarceration would be indicated.
While I’m certain I’m missing something that will get through the cracks, I’m also certain that if a regulator (singular or multiple) does approve something that goes TU, and they get the boot, then if they are suddenly living well beyond their previous means, we’ll know that their approval was probably purchased by those very same companies/corporations that were looking for approval in the first place. Any such “under-the-table” gains should also be forfeited to the government. (But I realize that money isn’t the only way to ‘compensate’ a regulator, so something else will have to be put in place in order to make this all stick.)
In short, I too am tired of seeing government bureaucrats not protect the interests of the American people they are supposed to serve. I say it’s time to stop waving a carrot in front of them, and start flicking the lash a few times from behind them. But hey, don’t get me started…..
Re: Re: Re:3
I agree it would be nice to have government regulators held accountable as well, but I’m somewhat hard-pressed to think of a target. With large corporations and their mega mergers, they have asset value in the stock price of the company. I say it can be leveraged against the corporation if things go wrong, and incentivize shareholders to avoid bad outcomes.
But individual government regulators don’t seem to have a lot in the way of assets, certainly not enough to rectify a mindless merger gone wrong. About the only target that they have is perhaps their government funded pension plan. Even if threatening it would change regulators’ behavior, I’m skeptical that society would be willing to adopt that as a policy anytime soon. Maybe someone else can think of a longer-term asset target that could alter the way regulation operates.
Re: Re: Re:4
Koby,
(And I must apologize, even sooner than I predicted, either TD or WordPress or Automattic has tossed the cookie they laid on my hard drive, even like 20 minutes later. So yeah, I’m sumgai.)
Here’s a tidbit that you may have forgotten: The Revolving Door.
Former regulators who dished out regulations favorable to the companies they were supposed to be regulating, not to the populace they were supposed to serve, are hired by those same companies after they leave the government. They might just sit on their butts and collect a nominal ‘paycheck’, or perhaps they’re given an Advisory Board position, in order to make that paycheck look good, but I’ll bet you’re starting to get the idea, am I correct?
Here’s another one, and this has gotten Thomas and Alito in trouble: Favors that don’t get reported to the proper authorities (IRS, Commissions, etc.). Here things can be pretty ephemeral, but good detective work can ferret out such payments-in-kind that are worth money, usually loads of it. Clawing back those ‘favors’ can also be a deterrent to accepting bribes, and compromising the law along the way.
I could fill this column with potential means of hiding money like this, but the real issue is not bribery, but moral fiber. What we don’t have, and need, is a way to test incoming regulators for the potential to go ‘off the rails’. That would be a neat trick, for sure, but it’s raises questions of just how far can we go before we’re invading a person’s private sanctity. After all, some regulators are actually on the up-and-up. I’ll point to Tom Wheeler for one.
These are tough questions, my friend, tough indeed. But the first step on this long journey is to recognize that every finger that touched that pie has to be scrutinized. Planning for any retribution for any wrong-doing can be done later.
Re: Re: Re:2
Things like keeping the computer systems running need a large amount of institutional memory, so unless the relevant teams are split evenly at all levels, it is easy to set up one company with a team that will fail. Documentation helps, but familiarity is required to make the documents useful when things start to go wrong.
Re: Re: Re:2 Dear Koby
You seem to not understand Stocks.
Current Stocks, from the last 30-40 years, have NO ownership to the consumer.
Only stocks Internally, have ownership.
They use them as Payment of wages.
Re: Re: Re:3 what would happen
IF’
The lawyers took settlements OUT of the Profits, and wages at the top?
Where failure, means those responsible PAY and NOT the consumer.
Re: Re: Re:2 Quit because of the lies
The number of lies fed to the public about this merger have been scant when compared to the stack fed to employees. Promises of advancement opportunities top the list, followed by closing every path possible within months. It turned out to be a blessing in disguise when the more advanced teams suffered mass layoffs over and over.
Worse yet, it was said they were trimming the fat. One of the teams that was shut down completely was the one that fixed the endless issues with promotions that never apply correctly.
Fun times for the people who still work the call centers: being forced to lie about rate plans, forced to hit collections goals on past due accounts, forced to provide service to customers who are justifiably angry but don’t have the self control to stop yelling at reps and making some truly gross verbal assaults… all while the pay gets decreased at every turn.
Customers and media think it’s bad. They don’t have a clue how ritted that company has become.
Call in, tell them to block the rate change and lose every trade in or new purchase promotion you have. TMO is really set to screw its own income source. I hope there are lawsuits and fines for breachbof contract, because that’s precisely what the company is trying to get away with.
Find a different carrier, seriously. Speak to the company in the only language it hears, dollars.
Re: Re: Not that it would help...
Need to apply Sarbanes–Oxley Act type penalties to C-level types who make false statements leading up to merger approval.
If you say in public no loss of jobs and don’t stick to it, start packing your things for Club Fed.
It’s perfectly rational for the system with a regulatory environment that has been favorable since the 80s. TMO found a marketing niche to gain subs but enshittification asserted itself as soon as it was possible as with a stabilized oligopoly of telcos.
The stock market determines what appropriate investment and pricing strategies are taken. With CEOs being overwhelmingly compensated with stock, their personal interest is that of the market.
Well then.
If adding an extra few bucks to my bill meant I could actually have uninterrupted service and receive phone calls throughout my 20 minute commute less that 20 miles from D.C., I would be happy about it. I suspect, however, that once again, I will receive nothing but disappointment.
Re:
“Consolidation” means needing to do less, not more for your satisfaction.
You’d think we’d eventually learn. But until CEOs and large corporations start getting meaningful punishments when their grand plans fail to come to fruition, nothing will change.
In the same way that “finance” YouTubers can sell obvious scams and get away with a pithy little footnote of “hashtag notfinancialadvice”, we’re not going to see actual consumer protection until people start to be taken to task for their influence.
"when their grand plans fail"
Everything went as planned, unfortunately.
It was obvious that the merger was designed to reduce competition so that there would be less pricing competition, because, in our Citizens United political system, crony capitalism reigns.
I think the merger called for no price hikes out of T-Mobile for a period of years, which has expired. So now we’re left with 3 carriers and higher prices.
Re: divorced from reality
while competition is good, there is a finite supply of frequency allotments, and what would be “best for consumers” would be a oligopoly with prices regulated by the FCC… oh wait, that’s what we already have.
https://www.fcc.gov/general/pricing-policy-division
If it werent
for Capitalism, opportunism, noncompetitive, Evil, corrupt, money grubbing…
Would it be the USA?
But what you are seeing _is_ merger synergies
The merger synergies are real. They allow to get along with less personnel, and they provide the opportunities for price hikes that a dearth of competition entails.
It’s perfectly understandable why the companies want those merger synergies, and they are real. What isn’t understandable at all is why they should get subsidies and other breaks in return for getting into a better position to rip off workers and customers.
It’s like the art of selling slaves on longer work hours because it helps you maintain a larger mansion. Or like hooking the voting masses on tax breaks for the ultrarich.
We had a term for this in the 90's
Welcome to the new slamming, ever-so-slightly different from the old slamming. I guess not changing my carrier and just charging me more for the same service is… better? Somehow?
TMobile
Been with T-Mobile for 20+years, it’s time to switch!
Stop assuming stupidity and ignorance
The Trump era revolving door regulators who approved the deal have failed upward to new positions in industry. John Legere is off napping on a giant pile of money. The companies got massive tax breaks. And consumers and employees were once again left holding the bag after promises of amazing consolidation “synergies” are once again shown to be hollow, performative bullshit. You’d think we’d eventually learn.
Who exactly is supposed to be learning anything here?
The companies involved know exactly what they’re doing and the results are what they want in the form of less competition from a more consolidated market.
The politicians and regulators know what’s going to happen but so long as the ‘retirement’ job positions and/or campaign donations keep coming they are happy to rubber-stamp the deals.
The public isn’t in a position to decide whether the deals go through or not even if they do have the luxury of being able to track what’s going on.
So who, exactly, is supposed to be learning from this?
T Mobile
Well, I guess the only thing left to do dump TMO and go back to Verizon or AT&t and get treated the same way!!
Oh look, more comments by the pro-regulation crowd
The funny thing is that the pro-regulation crowd thinks this wouldn’t be happening if the merger hadn’t been approved.
Instead you’d have Sprint laying people off and raising prices and T-Mobile laying people off and using the same scripts.
It’s just happening in the merged company instead of the two companies individually.
Re:
Oh look, another financial wizard who flunked Econ 101.
Let me suggest that you at least try to keep in mind that old saying; ‘If you think education is expensive, try ignorance’.
Oh, wait…. you’re already doing that last part. Well, good luck!
organized pushback
Is there any sort of organized pushback, an org lobbying gov regulators to sanction T-Mobile, anything like that?
I mean they’re ridiculously egregious. They’re pulling these shady price hikes because they think they can get away with it (and they’re right, in the absence of any regulatory action), while not being willing to keep their website functional for making payments. For the last couple days it’s been unpredictably going in and out of “Service Unavailable. // F451 : Uh-oh, it looks like we have our wires crossed. Please try again later.” For a merged national-scope company!
I’d be interested in following whatever is going on w/ regulators, if anything.