Sprint, T-Mobile Execs Continue To Hallucinate Competitors In Their Post-Merger Dreamscape

from the ill-communication dept

Both Sprint and T-Mobile have been pushing a large number of bogus claims justifying their competition and job-eroding megamerger. One, that the deal will create jobs (false). Two, that the deal is necessary to deploy fifth-gen (5G) wireless (false). Three, that reducing the number of major wireless competitors from four to three will somehow create more competition (false, just ask Canadians or the Irish how that works out in practice).

On that last front, the two companies have been trying to claim that because cable industry giants Comcast and Charter (Spectrum) have been flirting with wireless connectivity, that this constitutes enough additional competition to keep the sector healthy in the wake of such massive consolidation. In one T-Mobile deal-related announcement, company CEO John Legere was exceptionally creative in an effort to hallucinate up some additional competition:

"This isn’t a case of going from 4 to 3 wireless companies – there are now at least 7 or 8 big competitors in this converging market. And in 5G, we’ll go from 0 to 1. Only the New T-Mobile will have the capacity to deliver real, nationwide 5G,” added Legere. “We’re confident that, once regulators see the compelling benefits, they’ll agree this is the right move at the right time for consumers and the country."

Except if you spend a few minutes looking at the factual reality under the hood, you'll find that's not actually true.

For example, longtime Wall Street telecom analyst Jeff Kagan circulated a research note with investors last week (hat tip, Stop The Cap) indirectly acknowledging that the cable companies T-Mobile is counting as competition are not serious competitors in the wireless space. Pre-merger, T-Mobile CEO John Legere mocked these cable wireless efforts as "irrelevant." Now that he wants his deal approved, you'll note he's pretending they're a serious threat.

Cable's only real interest in wireless is in finding a way to nudge their existing "triple play" (fixed line broadband, TV, and digital phone) customers into an additional "sticky bundle" that includes a wireless offering. These companies don't even market these services to users unless they're already paying for cable TV, broadband, and phone. It's not a real competitor as it's not offered as a real competitor.

More simply, they want existing customers to bundle wireless because people are generally lazy and won't bother switching to alternatives (read: keep those users locked in and with cable), but they're not really interested in marketing the offering to other users and building a massive nationwide wireless footprint:

"The goal of XFINITY Mobile [from Comcast] is to offer their customers another service and to create a sticky bundle,” Kagan said. “It’s not to lead the wireless wars. It’s not to increase their market share for traditional reasons. It is simply to create a sticky bundle to stabilize and grow their customer base."

“Customers who use one service find it easy to switch away to a competitor,” Kagan said. “However, when they use multiple services and get a discount for the bundle, they become sticky and generally stay put. And the more services a customer uses, the larger the discount, the stickier they get and the less likely they are to wander.”

This is all generally been reflected in Comcast's wireless products, which many analysts note have a decidedly half-assed aspect to them. Both Comcast and Charter's offerings are heavily WiFi driven, but use the Verizon wireless network for cellular backup. Given these cable giants' investors don't want to pay to build a nationwide cellular network, and neither company really wants to upset their partnership with Verizon, there's little real incentive here to more broadly compete in the wireless space, undermining Legere's claims that the two companies will help mitigate much of the negative competitive impact of the deal.

A lot of the lawmakers (on both sides of the aisle) have bought into Sprint and T-Mobile's post-merger competition claims not really understanding this, and they probably should. If you've spent more than four minutes studying U.S. telecom merger history, there's just no real debate that this kind of consolidation usually only benefits sector executives and investors. U.S. consumers, who already pay some of the highest prices in wireless in the developed world, will almost certainly pay higher rates than ever as competition is reduced proportionally. If that sounds good to you, by all means applaud yet more sector consolidation.

Filed Under: competition, consolidation, mergers, wireless
Companies: sprint, t-mobile


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  1. identicon
    Anonymous Coward, 20 Feb 2019 @ 6:53am

    Lying has become so commonplace that it is accepted behavior for many. I wonder how these people communicate when no one believes a thing they say.

    reply to this | link to this | view in thread ]

  2. icon
    Anonymous Anonymous Coward (profile), 20 Feb 2019 @ 6:57am

    Re:

    "Lying has become so commonplace that it is accepted behavior for many."

    They just re-characterize it as spin.

    "I wonder how these people communicate when no one believes a thing they say."

    By dictum. When it is company policy to obey the boss, the choice the peons have is to go someplace else to work, which isn't always easy.

    reply to this | link to this | view in thread ]

  3. identicon
    Anonymous Coward, 20 Feb 2019 @ 7:35am

    Re: Re:

    which leads to double-think

    reply to this | link to this | view in thread ]

  4. icon
    Mason Wheeler (profile), 20 Feb 2019 @ 7:42am

    Three, that reducing the number of major wireless competitors from four to three will somehow create more competition

    I can actually see where this one is coming from. There's competition, and then there's competition, and there's a perception out there that Sprint and T-Mobile are "second-tier" wireless companies, not quite in the same league as AT&T or Verizon. But a hypothetical "Sprint-Mobile" would be big enough to play in the same league as the other two.

    Not sure if that's actually true, but it intuitively makes sense on some level.

    reply to this | link to this | view in thread ]

  5. icon
    Ed (profile), 20 Feb 2019 @ 8:21am

    Legere is an a**-clown who lies almost as much as Trump. Almost. Hopefully, this "merger" will be thwarted by sane people.

    reply to this | link to this | view in thread ]

  6. icon
    Gary (profile), 20 Feb 2019 @ 9:00am

    Free Market

    Mergers are the natural result of de-regulation. That's what we want, right?

    Bigger Corporations with no oversight. Who doesn't want that?

    reply to this | link to this | view in thread ]

  7. This comment has been flagged by the community. Click here to show it
    identicon
    Bailey Deast, 20 Feb 2019 @ 10:09am

    "competition and job-eroding megamerger."

    Right! Corporations, especially "Alphabet" and "Facebook" should all be broken up into tiny pieces so as to promote competition and create jobs.

    A rare bit of sense from Techdirt. Probably just a slip, as will be proven when this is contradicted.

    reply to this | link to this | view in thread ]

  8. identicon
    Bailey Deast, 20 Feb 2019 @ 10:10am

    Re: Free Market

    Bigger Corporations with no oversight. Who doesn't want that?

    Do you think Masnick is for stopping mergers or breaking up any corporations? -- IF SO, then show citations.

    reply to this | link to this | view in thread ]

  9. icon
    Gary (profile), 20 Feb 2019 @ 10:28am

    Re: Re: Free Market

    Do you think Masnick is for stopping mergers or breaking up any corporations? -- IF SO, then show citations.

    Well Mike doesn't write many of the more business related articles - the above was Karl. (But still a TD article against merging.)

    I'm not going to cite the many, many times folks have pointed out how wrong that "Blue Balls" poster is, so I'll skip those.

    It took me almost a minute to find one penned by Mike: https://www.techdirt.com/articles/20140620/17592427642/everytime-att-wants-federal-approval-me rger-policy-it-promises-its-necessary-to-deliver-100-broadband-then-doesnt-deliver.shtml

    reply to this | link to this | view in thread ]

  10. icon
    Gary (profile), 20 Feb 2019 @ 10:58am

    Re: "competition and job-eroding megamerger."

    Love of copyright is love of corporations. Spin away Blue Balls, you still can't use "Common Law" correctly.

    reply to this | link to this | view in thread ]

  11. identicon
    Anonymous Coward, 20 Feb 2019 @ 11:17am

    Re:

    Not sure how that might work, other than in the old usual ways where there is no competition.

    reply to this | link to this | view in thread ]

  12. identicon
    Anonymous Coward, 20 Feb 2019 @ 11:18am

    Re: "competition and job-eroding megamerger."

    How are those even similar, much less the same thing.

    reply to this | link to this | view in thread ]

  13. icon
    Gary (profile), 20 Feb 2019 @ 12:41pm

    Re: Re: "competition and job-eroding megamerger."

    Copyright helps corporations far more than they help actual creators. The distribution monopolies are all large corporations.

    The copyright clause was in the (US) constitution to promote the public good, not lock away content behind paywalls. "Limited" means "Forever" to a corporation.

    Patent and Copyright Clause of the Constitution. [The Congress shall have power] “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

    reply to this | link to this | view in thread ]

  14. identicon
    Anonymous Coward, 20 Feb 2019 @ 1:30pm

    Re:

    Except Legere has produced real, measurable results that have turned T-Mobile from an also-ran to a powerhouse growth engine. Not bad for an ass clown.

    reply to this | link to this | view in thread ]

  15. icon
    ECA (profile), 20 Feb 2019 @ 2:36pm

    Lets be stupid..

    Anyone remember how the Pharma corps do this?? Add a little bit of something else to a medicine and you can Make it into a new Medicine, even if that little bit DOES nothing..

    What does 5G give you?? NOTHING...to understand this, lets look at what a cellphone is supposed to do...ITS A PHONE FIRST.. If you want to play a game I dont think WE' want you to do it while walking across the street.. You would sit down and concentrate on the game Using the better connection at Home, called WiFi...or a free service at Many other places, while you drink your coffee, or eat a Big Mac..

    Would you use 5G while sitting on a bus or Subway?? NOT REALLY, if you qiant a constant connection and no lag or cut out.. At most you would be playing a Local, single player game..

    Even if you could direct link to a local person(which they should be able to do, but no one does it, because that cant insert adverts)... It will eat up your battery do fast, you would bitch and complain until no one listened,..

    reply to this | link to this | view in thread ]

  16. identicon
    Anonymous Coward, 20 Feb 2019 @ 5:36pm

    Re: Re: Re: "competition and job-eroding megamerger.&am

    Social Media platforms are not Telcoms.

    reply to this | link to this | view in thread ]

  17. identicon
    Anonymous Coward, 21 Feb 2019 @ 5:12am

    Re: "competition and job-eroding megamerger."

    Break your RIAA and its international incestuous brotherhood, then you'll have the higher ground.

    reply to this | link to this | view in thread ]

  18. identicon
    greg, 21 Feb 2019 @ 6:21am

    Re: Free Market

    Yeah cause mergers never happened under dem presidents. Lay down the peace pipe bud.

    reply to this | link to this | view in thread ]

  19. identicon
    greg, 21 Feb 2019 @ 6:29am

    Re: Lets be stupid..

    Bit of old timey think. I get it...the new fangled device scares you but the cell phone is less phone than ever and it's only going to continue. In fact most of the times the way "phone" calls are made are completely different than how you probably think they are made. The advent of 5g isn't about cell phones anyway.

    A direct link to a person is done all the time while on 4g. Unless you mean 1 to 1 only which can easily be done with Bluetooth, tethering, etc...

    It's ok to stay where you are...we have jitterbug for that. I'd like to continue pushing the envelope and 5g will give you better connection than your "home" does.

    reply to this | link to this | view in thread ]

  20. icon
    Specter (profile), 21 Feb 2019 @ 6:36am

    Wow, maybe some facts will help

    Lots of uninformed opinions here. “Deregulated” industry with no oversight is mentioned. As a former product person in the wireless industry I can tell you that every product decision and promotion requires significant legal review simply to make certain there are no regulatory missteps. In other words there is tons of oversight. Secondly, did anyone happen to look at earnings reports? Cable Companies delivered ~400K. Much lower than big 4 carriers but significant growth and they are just getting started.

    reply to this | link to this | view in thread ]

  21. identicon
    Greg, 21 Feb 2019 @ 6:59am

    incorrect assumption

    the author is correct when he states cable companies aren't in the same space as telecom companies today...somewhat. Moving forward it is quite clear the cable, social media giants ( true evil man), and other technology companies are going to be direct competitors for a good portion of business. If there is not blending in this segment why are they buying similar companies outside of their current purview? convergence of technologies is allowing players to get into the game no matter what you originated from. For some it's a very easy logical leap to get into the game, others we hadn't even considered will be players in the near future.

    Sprint and TMO should go through just so they can complete on the same playing field as the duopoly that exists now with ATT and VZ. Without TMO and Sprint merging you will be down to 3 telecoms anyway because Sprint can't make it on it's own at this point. So either you make the best by going merger or you lose a player and have a duopoly with an outlier...similar to what the TMO/Sprint merger will be anyway but with the pockets to be able to complete against dumb and dumber.

    reply to this | link to this | view in thread ]

  22. identicon
    Anonymous Coward, 21 Feb 2019 @ 7:16am

    Nonsense - 5g will eventually become a direct replacement for cable internet access. Most cables have monopolies in their respective areas. Too few areas are fortunate enough to be served by multiple providers (i.e choosing xfinity or fios or "X"). Most areas are only served by one. 5g will put an end to that. You will be able to chose VZ/T/(new-Tmobile), or your current cable broadband provider for internet access. Even if you are already served by VZ-FIOS or ATT-uverse for internet and TV, it will force those two and any cable provider to compete for your $$$ for internet access. Either way, what they can get away with charging you for internet access today will have to drop because of added competition.

    reply to this | link to this | view in thread ]

  23. icon
    Bergman (profile), 21 Feb 2019 @ 11:59am

    Definition of Competitive?

    I think what we're seeing here:

    "Three, that reducing the number of major wireless competitors from four to three will somehow create more competition (false, just ask Canadians or the Irish how that works out in practice). "

    Isn't precisely a lie per se, just a different definition. Perhaps not even a willful one, I could see it becoming a psychological blind spot if you use the worth competitive often enough the right way -- people hear it and think it means something specific that the speaker didn't mean.

    Here's my thought: To be competitive in a marketplace has a very specific meaning for a corporation. They have to be able to claim market share from other companies, and claim enough to be profitable. As they claim a bigger share, they become more competitive in that marketplace.

    So by the logic that competitive == market share, a monopoly would be the most competitive of all, and the market would be full of competition because the only company in it would be extremely competitive!

    So we keep talking about increasing competition, and they don't have a clue what we mean because we use a different definition of competitive than they do. We demand increased competition, they build a monopoly to satisfy us, then are confused when we complain they aren't competing at all.

    reply to this | link to this | view in thread ]

  24. icon
    ECA (profile), 21 Feb 2019 @ 2:08pm

    Re: Re: Lets be stupid..

    So a company that want syou to play with 4 other friends is connecting you directly to each of them while you are sitting on a bus/subway with Random interconnects being passed thru and you arent getting ???? lag?? Fine think about it, like you wish..As a company I wish to insert adverts into your phone, so I would rather have a server connect you, and HOLd your signal as long as possible so the Carrier can watch your CAP go bust. and you go down to 3g/2g signal..

    And 5g hasnt been standardized even...and you are saying it will beat my 1 gig connection?? go for it..

    reply to this | link to this | view in thread ]

  25. icon
    ECA (profile), 23 Feb 2019 @ 2:20pm

    Re: Wow, maybe some facts will help

    you sure about that 400k Im in S. Idaho and cable gives us 100meg + starting at $50... Im sitting on 150meg So almost 5 times that speed. and most of the small towns int he area get this speed from cable. There are even business speeds..allot higher.

    reply to this | link to this | view in thread ]

  26. icon
    Specter (profile), 24 Feb 2019 @ 6:59am

    Re: Re: Wow, maybe some facts will help

    I was referring to new customers, not service speeds. The combined cable companies acquired nearly 400,000 new wireless customers in 2018, up from less than 200,000 in 2017. That’s a lot of growth in a market that is very mature. At this rate I predict they will add more customers than Sprint in 2019. The point is, with internet + TV + wireless service the cable companies are a real threat to and serious competition for existing wireless providers. If you need more evidence look at the $B’s AT&T is spending to get into internet + TV. The Sprint/T-Mobile merger would give the small guys a chance to compete.

    reply to this | link to this | view in thread ]


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