The T-Mobile/Sprint merger might be beneficial

FCC Chairman Ajit Pai announced his support of a proposed merger between T-Mobile and Sprint. It’s not often that Chairman Pai and I agree on anything, so I feel I should point out when it happens. T-Mobile and Sprint are the third and distant fourth place players in the U.S. cellular market. Combined they’d be second behind Verizon.

Normally, fewer players in a market means less competition. I think this may be the rare case where fewer players makes for more competition. Right now, T-Mobile competes on price, customer service (T-Mobile Tuesdays, anyone?), and speed (where you get coverage). Speaking from my experience as a T-Mobile customer, the service is top-notch, where it exists. And that’s where a merger might help. By combining resources, the larger T-Mobile can improve geographic coverage and perhaps give Verizon a run for the money when spectrum goes up for auction.

For all of T-Mobile CEO John Legere’s bravado, T-Mobile is basically yapping at the heels of Verizon and AT&T. Sprint, meanwhile, is destined to die at some point. Allowing it to merge with T-Mobile means that Verizon and AT&T don’t get to gobble up the carcass in bankruptcy auction. The Department of Justice disagrees, so it remains to be seen if the merger can complete. But I think it would give us three big players, instead of two big players and two smaller players. That sounds more competitive to me.

Full disclosure: I am a T-Mobile customer and shareholder.

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