Proof Wireless Carriers Would Rather Not Compete on Price

          For years, I have expressed an educated opinion that wireless carriers would rather not “devote sleepless afternoons competing.” While I may have reached the boundary line of snarkiness, which I try hard not to breach, the point stands: carriers can better enhance share prices, profit margins, and bonus likelihood if they implicitly agree not to sharpen their pencils too often. Consumers pay a higher price for service.

          I also have frequently stated that industry consolidation enhances the likelihood of a mutual non-compete pact.  Specifically, the acquisitions of Sprint and other wireless carriers have so concentrated the market that the triopoly of AT&T, Verizon, and TMoble now collectively share a 96% market share. See https://blog.telegeography.com/2025-mobile-market-summary.

          I predicted the TMobile’s acquisition of Sprint eventually would eliminate TMobile’s iconoclastic, market disrupter posture.  See, e.g., https://telefrieden.blogspot.com/2018_06_17_archive.html.  The Judge who approved the merger disagreed, confidently concluding that TMboble would never relinquish its “uncarrier” maverick character.  He anticipated a “company reinforced with a massive infusion of spectrum, capacity, capital, and other resources, and chomping to take on its new market peers and rivals in head-on competition.” See https://storage.courtlistener.com/recap/gov.uscourts.nysd.517350/gov.uscourts.nysd.517350.409.0.pdf; https://telefrieden.blogspot.com/2018_06_17_archive.html.

          I was not surprised to read that several industry analysts have consider TMobile as a go along, get along, no so innovative and aggressive competitor, having its uncarrier disposition.  See Monica Alleven, What happened to T-Mobile's ‘un-carrier’ edge?, Firece Network (May 6, 2025); https://www.fierce-network.com/wireless/what-happened-t-mobiles-un-carrier-edge.

          Only a coined operated, sponsored researcher can unconditionally assert that industry consolidation “enhances competition.” Mergers make it more likely that the remaining ventures engaged in what antitrust economists term conscious parallelism. Rather than compete on price, the wireless carriers offer roughly the same rates.

          Apparently, AT&T, TMobile, and Verizon have identical costs of doing business, so much so they become price takers.  Lacking any efficiency cost advantage, the carriers set prices based on what the other two offer.  The highest rates offered by one of the three carriers becomes an  cap.  The carriers’ rate fit snugly at or slightly below the umbrella cap.

          Less is More? No, less is less: less innovation, little price competition, and reduced consumer welfare.

 

 

         

 

 

 

           

 

Antitrust Judicial Review That Gets It Right

             Just when one reasonably could assume that no federal appellate court could possibly do the right thing in a merger review, pigs fly!  Judge William G. Young of the District Court in Massachusetts did not buy the conventional wisdom that all mergers “promote competition.” He rejected the proposed JetBlue’s $3.8 billion acquisition of Spirit Airlines. https://www.nytimes.com/2024/01/16/business/jetblue-spirit-airlines-ruling-merger.html; https://www.law360.com/articles/1786317/attachments/0.

             Millions of dollars in sponsored research and litigation expert witnesses have persuaded jurists and their law clerks that even though a merger reduces the number flights and airlines operating on the same city pairs, consumer welfare somehow increases. The conventional rationale explains that the combined carrier will have greater resources and no less incentives to compete aggressively with larger incumbents.

             How could it ever make sense that a profit maximizing business venture would prefer to devote sleepless afternoons reducing consumers’ out of pocket costs and enhancing their value proposition?  Why would any merged venture take the harder glide path of aggressive pricing and innovation rather than “go along and get along” by matching the dominant carriers’ rates?    

            I remember the unshakable confidence expressed by Judge Victor Marrero of the Southern District of New York, that $37 billion merger between T-Mobile and Sprint would benefit consumers by promoting more competition in the wireless marketplace. See https://casetext.com/case/united-states-v-deutsche-telekom-ag.  

             It did not happen!  

            Since acquiring Sprint TMobile evidences nothing of its former iconoclastic nature.  It has become a happy camper more than willing to engage in “consciously parallel” conduct, quite willing to follow the lead of AT&T and Verizon on price, performance, handset deals, freebie streaming subscriptions, etc.  

            The combination of Sprint and TMobile tower sites has improved TMobile’s reliability, especially in rural locales. But what evidence can anyone show that TMobile now is a deep cost cutter and conscientious innovator?  

            The Big Three now compete on what “free” video streaming service they offer and how much they can deceive consumers about “free” access to the latest and greatest smartphone.  AT&T advertisements first touted free Iphone 15s “on us” https://about.att.com/story/2023/iphone-15.html.  Soon thereafter both TMobile and Verizon quickly used the same “on us” deception.  https://www.t-mobile.com/news/devices/get-iphone-15-pro-on-us-and-be-upgrade-ready-every-year-only-at-t-mobile; https://www.verizon.com/smartphones/apple-iphone-15-pro/.  

            You call this maverick innovation?  The three national carriers deliberately use the same slogan to imply that consumers can get a free handset on them. This is evidence of robust competition?  

            The con job usually works, but maybe someday more consumers will understand that a marketplace with Alaska Airlines, JetBlue, Hawaiian Airlines, and Spirit Airlines works better than if two evaporate.  

            It does not take a rocket scientist to conclude that consumers suffer when four national wireless carriers dissolved into three.