More Wireless Consolidation And Price Hikes Loom As T-Mobile Eyes U.S. Cellular Merger

Deals

from the stop-me-if-you've-heard-this-one-before dept

One of the primary reasons U.S. consumers pay some of the highest prices in the developed world for mobile data is because U.S. regulators — from both parties — routinely sign off on “growth for growth’s sake” mergers that reduce competition, lower product quality, raise prices, and trigger waves upon waves of layoffs. Usually under the pretense of “amazing new synergies” and job growth.

Yet every single time the exact opposite happens. And despite this happening repeatedly, year after year, nobody learns anything from the experience because the folks doing the wheeling and dealing got what they wanted (usually tax breaks, a short-lived stock price bump, and outsized compensation packages).

We just went through this via the Sprint T-Mobile merger, during which everything deal critics predicted pretty quickly came true (including 6,000 lost jobs). Now the U.S. wireless sector is poised to consolidate further, with the news that either T-Mobile or Verizon (or some combination) will soon announce a purchase of the nation’s fourth biggest wireless carrier: U.S. Cellular:

“The WSJ reports that a T-Mobile/US Cellular “deal could be reached as soon as later this month.” Verizon reaching its own deal with US Cellular could result in “separate transactions that would give both buyers access to valuable airwaves,” the report said.”

You might recall that when the Trump DOJ and FCC greenlit the Sprint T-Mobile merger (purportedly without even reading deal impact studies) they proposed a “fix” in the form of creating a new fourth major wireless carrier out of Dish Network. But that effort has been a preposterous mess, with most predicting a likely Dish bankruptcy and spectrum sale (likely to Verizon or T-Mobile).

Wall Street demands its quarterly growth at all costs. You can’t get there by offering a quality, affordable product people like. You can get there through subscriber growth at first; but eventually as a market saturates you need to start getting creative. That usually means nickel-and-diming consumers, price hikes, weird and annoying technical restrictions, layoffs, worse customer service, and wave upon wave of otherwise pointless megamergers (you see it happening in streaming TV right now as well).

But because the folks making these decisions (revolving door regulators and over-compensated fail-upward executives) never see anything remotely resembling accountability, nobody learns anything from the experience and the consolidation machine endless repeats itself — until there’s nothing left to buy.

Filed Under: 5g, consolidation, high speed internet, jobs, telecom, wireless
Companies: t-mobile, us cellular