Sprint/T-Mobile: Three Isn't a Crowd

It isn't often companies have reason to cheer for a competitor's deal. But if Sprint moves forward with a bid for T-Mobile US, as it is considering, AT&T and Verizon Wireless might not necessarily object to having a bigger rival to deal with. But that, in turn, might put the kibosh on any deal happening at all.

The past year has seen a raft of consolidation at the lower end of the wireless market, including Sprint's purchase of Clearwire, the acquisition of MetroPCS by T-Mobile and AT&T's deal to buy Leap Wireless. But unlike those deals, combining Sprint and T-Mobile, the No. 3 and No. 4 U.S. carriers by subscribers, respectively, would eliminate a national provider, reducing the choice for most U.S. consumers from four to three. A deal would be a boon for the two carriers, offering greater scale, significant spectrum holdings and one fewer competitor. But it would also benefit Verizon Wireless and AT&T. Eliminating a competitor would mean less pressure from an upstart willing to undercut prices as T-Mobile has done.