What T-Mobile's acquisition of Mint Mobile means for competition in the industry
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MIKE SIEVERT: Ryan, we are so happy to have you and the whole Mint team join the T-Mobile family.
AYESHA RASCOE, HOST:
That's T-Mobile CEO Mike Sievert announcing T-Mobile's acquisition of Mint Mobile. And the Ryan he's talking to, of course, is Ryan Reynolds, part owner of Mint. The deal could cost T-Mobile as much as $1.35 billion. What could it cost you? Antonios Drossos is a managing partner at Rewheel, a mobile data strategy firm, and he joins us now. Welcome.
ANTONIOS DROSSOS: Thanks for having me.
RASCOE: T-Mobile says they'll continue to offer Mint's cheapest plan, which costs $15 a month, but does that indicate to you that this merger may be a good thing for consumers - that they'll still have this ability to get these really, really affordable plans for those who need them?
DROSSOS: My personal assessment is that probably T-Mobile is looking to rationalize the, you know, pricing in the market by removing a competitor that has lower prices than them.
RASCOE: Back in 2020 when T-Mobile bought Sprint, there was a promise to keep Sprint's prices in place for three years. It's been about three years now, so what do we know?
DROSSOS: It is important to note that these promises - actually, they are not significant, and in practice they don't really make a difference into the market because what is important to remember is that mobile prices, both the monthly prices and, as well, the unit prices, meaning gigabytes, have been coming down. If two network operators that are merging are promising to keep prices flat, well, that's not good enough, you know, because prices are falling anyway.
RASCOE: So that's not actually necessarily a benefit for the consumers.
DROSSOS: And to add to that, there is the many footprints, small print, and caveats and footnotes that usually, offers comes with. And in the U.S. you have a lot.
RASCOE: That - no one ever reads that stuff, so (laughter)...
DROSSOS: But we do because...
RASCOE: You do (laughter).
DROSSOS: We do. We do because that's our job. What I want to say about that - even, let's say, if T-Mobile were to retain the $15 per month, there is many other details - there's many other restrictions that they can impose even though the monthly price is the same. For example, they could make the service to be a 3G service while, at the moment, Mint Mobile service comes as 5G, meaning the latest technology.
RASCOE: So Mint was already using T-Mobile's network. And in fact, America really has three main cell phone companies - Verizon, AT&T and T-Mobile - and then you have a bunch of smaller companies that piggyback off of the physical network that these other companies have. Is that the optimal way to arrange a wireless telephone and data market?
DROSSOS: Well, you know, it is quite a typical way that markets are structured. If you look at European and OECD wireless markets, what you will see is that two-thirds of them - or a bit less than two-thirds - tend to have three network operators - that they have their own mobile network infrastructure. And one-third tend to have four or more mobile network operators. It's clear to us from a price point of view, markets with at least four are more competitive. Prices are lower. Consumers are getting much more for their money.
RASCOE: So how could you make it more competitive?
DROSSOS: Well, that's the problem that - the mobile industry, the wireless industry, is a market with very high barriers of entry. You could not really become a player with your own infrastructure because first, you need to purchase spectrum and the actual frequencies. Secondly, to start building up your network, you have to build the physical infrastructure. And when we are talking about building physical infrastructure, we are talking about tens of thousands of mobile antennas. So - and going back to what you said about the T-Mobile-Sprint merger, yes, the U.S. Department of Justice allowed that merger to go through with the remedy - the entrance of a new fourth mobile network operator, which was Dish.
RASCOE: Dish. OK, so you're talking about Dish Network, the satellite network.
DROSSOS: Yes. So Dish purchased spectrum assets and, as well, some infrastructure assets. And Dish is in the process of building their own 5G network, probably looking to cover 20% of the U.S. population this year and potentially, at some point in the future, might become a viable fourth competitor to the three big ones in the U.S.
RASCOE: That's Antonios Drossos of the firm Rewheel. Thank you so much for joining us.
DROSSOS: Thank you.
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