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T-Mobile, MetroPCS Merger Adds New Jolt of Competition

T-Mobile, MetroPCS Merger Adds New Jolt of Competition

October 5th, 2012 by James R. Hood of ConsumerAffairs in News

It was a year and a half ago that the headline read: AT&T Buys T-Mobile, Leaving Sprint a Weak Third. Well, that deal got squashed on anti-trust grounds but this time around, it's T-Mobile doing the acquiring, merging with MetroPCS.

And Sprint? It's still a weak third.

After the Justice Department blocked the AT&T/T-Mobile deal, there were fears that the wireless world would soon be dominated by AT&T and Verizon, with only marginal players offering consumers anything remotely competitive.

The deal announced this week isn't likely to raise anti-trust objections, since it actually strengthens two smaller competitors. 

T-Mobile's owner, Deutsche Telekom, has been looking for a way out of the U.S. market and the new deal may accomplish that. It's being engineered as a reverse merger, in which MetroPCS, the smaller of the two, acquires T-Mobile. Since MetroPCS is publicly traded, this enables Deutsche Telekom to eventually sell down its shares and retreat to friendly shores.

It's a little early to say what this means for consumers. The two carriers use incompatible technology so merging their networks is going to be a complex process. However, both have been leaders in offering lower prices and innovative service plans, so one can hope that tendency survives the merger.

Consumers rate Metro PCS

MetroPCS offers no-contract, month-to-month service and T-Mobile has traditionally undercut Verizon and AT&T in its contract offerings. 

Neither carrier covers the entire country with its network and the combined company won't either. Also, neither offers the iPhone. That's estimated to have caused the loss of 1.7 million customers at T-Mobile.