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A federal judge ruled today in favor of T-Mobile's takeover of rival telecom Sprint. The $26 billion merger would combine the country's third and fourth largest wireless carriers. So what will this mean for consumers? Here's NPR's Laura Wamsley.
LAURA WAMSLEY, BYLINE: The court rejected arguments by attorneys general from 13 states and the District of Columbia. The states had argued that if the merger is permitted, it will stifle competition and lead to higher prices for consumers. But U.S. District Court Judge Victor Marrero was persuaded by T-Mobile and Sprint that that won't happen. That's in part because of the maverick role that T-Mobile has played in the last decade, pressuring AT&T and Verizon with its lower pricing and unlimited data plans. The judge also said the cellphone business is unusually dynamic, pointing to the brick phones that quickly gave way to flip phones.
If the merger goes through, the new T-Mobile would be nearly the same size as Verizon and AT&T, creating a market with three mobile giants. Craig Moffett, senior analyst at MoffettNathanson Research, says that this might be the rare merger that isn't bad for consumers.
CRAIG MOFFETT: In this case, the judge was persuaded that prices will probably come down for consumers by having a stronger third competitor.
WAMSLEY: In order to get justice department approval, T-Mobile and Sprint agreed to help prop up Dish Network, the satellite TV company, so it could become a viable fourth-place mobile provider.
MOFFETT: The problem with that argument, obviously, is if Sprint wasn't capable of playing that role with a network that's already built, how is it that Dish Network, with an even weaker balance sheet and an even more rapidly declining business, is going to play that same role with a network that they haven't even broken ground on yet?
WAMSLEY: If the deal goes through, the bulk of Sprint's customers will become T-Mobile customers. Sprint's prepaid customers will become part of Dish Network if they decide to. Gigi Sohn is a fellow at Georgetown Law, and she says that T-Mobile merging with its biggest competitor won't be good for consumers.
GIGI SOHN: There used to be eight mobile wireless carriers, so the market's already greatly consolidated. But there is a great deal of evidence that when you go from four to three, the three tend to act in concert to raise prices.
WAMSLEY: T-Mobile has agreed not to raise prices for three years following a merger, but there's no guarantee prices won't rise after that. And the deal isn't quite done yet. New York's attorney general says the states are considering an appeal in the case. Laura Wamsley, NPR News.
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