There’s sure to be plenty of back and forth about the merger of T-Mobile and Sprint in the coming months, with sides arguing for and against the deal. This week a former mobile CEO has weighed in.
Peter Adderton, founder and former CEO of Boost Mobile, has said that the T-Mobile and Sprint merger shouldn’t be allowed to happen unless Boost Mobile and/or MetroPCS are spun off. Adderton argues that with Boost, Virgin Mobile, and Metro, the new T-Mobile would hold a 40 percent prepaid market share, which he believes “has the effect of being a monopoly or extreme dominance in the category.”
A combined T-Mobile-Sprint would have incentive to restrict access to its networks for competing MVNOs, Adderton went on to say. He added that without wholesale pricing protections, the new T-Mobile could raise wholesale rates for MVNO competitors, limiting their opportunity for profit and possibly resulting in higher wholesale rates from AT&T and Verizon.
Adderton also argued that challenger brands like Boost Mobile and MetroPCS are aggressively competing for prepaid customers, but that that would go away if T-Mobile and Sprint combine. “This level of market domination virtually always leads to rising prices, more onerous terms and conditions and lower service quality,” said Adderton of the 40 percent prepaid market share that the combined T-Mobile would hold, “and young and credit-challenged prepaid subscribers simply can’t afford that.”
If the new T-Mobile ends up divesting Boost Mobile to get approval for its merger, Adderton says that he and a group of investors would make a bid for it. “As a founder of Boost it’s a passion of mine. It’s kind of like my baby,” he explained.
For now, Adderton plans to contact regulators and ask them to consider the effects that this T-Mobile-Sprint merger could have on prepaid customers. He also plans to lobby for formal regulation of wholesale pricing for MVNOs to ensure that prepaid operators can continue to compete.