Competitive Effects of T-Mobile/Sprint: Analysis of a '4-to-3' Merger

48 Pages Posted: 22 Mar 2024

See all articles by Thomas W. Hazlett

Thomas W. Hazlett

Clemson University

Robert Crandall

Technology Policy Institute

Date Written: February 20, 2024

Abstract

Mergers in mobile markets are of keen interest to policy makers and scholars. Because carrier networks are subject to pronounced economies of scale and scope and given that communications regulators create substantial barriers to entry by limiting spectrum allocations for mobile services, wireless services generally exhibit relatively high levels of industrial concentration. Hence, antitrust authorities often struggle with the tradeoff between enhanced scale economies and enhanced market power. Between 2012 to 2016, for instance, four E.U. nations (Austria, Ireland, Germany, and Italy) consummated “4-to-3” mobile mergers while two such combinations were blocked (in Denmark and the U.K.). In the U.S., 4-to-3 transactions were blocked by regulators in 2011 and again in 2014, but a recent merger -- between the No. 3 (T-Mobile) and No. 4 (Sprint) carriers was approved in February 2020. This combination remains a subject of intense debate. We examine post-merger evidence of retail mobile subscription prices, network investment, service quality, market shares, and industry profits in the U.S. mobile communications industry. We conclude that the data are consistent with the thesis that the T-Mobile/Sprint merger produced consumer gains. This outcome is particularly interesting given that the government remedy imposed to mitigate potential anti-competitive merger effects, the creation of a new fourth network (DISH), has produced no plausible pro-competitive impact.

Keywords: ntitrust; merger policy; wireless network competition; industrial concentration; 4-to-3; 5G deployment; market concentration doctrine; broadband markets

JEL Classification: K21, L22, L86, L96, G34

Suggested Citation

Hazlett, Thomas W. and Crandall, Robert, Competitive Effects of T-Mobile/Sprint: Analysis of a '4-to-3' Merger (February 20, 2024). Available at SSRN: https://ssrn.com/abstract=4736059 or http://dx.doi.org/10.2139/ssrn.4736059

Thomas W. Hazlett (Contact Author)

Clemson University ( email )

Clemson, SC 29634
United States
8646563430 (Phone)
8646564192 (Fax)

HOME PAGE: http://hazlett.people.clemson.edu/

Robert Crandall

Technology Policy Institute ( email )

1401 Eye St. NW
Suite 505
Washington, DC 20005
United States

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