US mobile prices sky high after T-Mobile's Sprint buy – report

According to new figures from Rewheel, T-Mobile's purchase of Sprint in 2020 helped to keep mobile prices in the US sky high.

"Five years on, the Sprint / T-Mobile 4-to-3 mobile merger made the US one of the most expensive mobile markets in the world," the Finland-based research firm wrote in a new report. "While monthly prices were falling and continue to fall across mobile markets and while the same was true in the US mobile market prior to the merger, after the merger prices in the US either stopped falling altogether or fell at a much slower rate. The 4-to-3 mobile merger in the US led to higher prices and consumer harm."

Rewheel calculated its findings based on the monthly price of 50GB in voice and data plans with at least 1,000 mins and 10 Mbit/s speeds. The company provided the chart below, showing its results.

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Rewheel has long tracked prices in the global wireless industry. Indeed, the firm's new findings underscore its predictions made prior to the close of T-Mobile's blockbuster $26 billion acquisition of Sprint, then the fourth-largest wireless network operator in the US. As T-Mobile sought regulatory approval of its Sprint purchase in 2018, Rewheel reported that mobile prices for consumers generally fall faster in markets with four players rather than three players.

Rewheel's findings appear to contradict the messaging of CTIA, the US wireless industry's primary trade association, which found in its most recent annual report that "the cost per megabyte of data decreased by 98% from 2012 to 2022. At the same time, new offerings like 5G home broadband are introducing competitive pricing into home broadband markets, leading to savings even for those who don't subscribe to it."

The context

T-Mobile worked for almost two years to secure federal approvals to merge with Sprint. Part of the company's efforts involved ensuring that the US wireless market would still have four players after it merged with Sprint. 

Along those lines, T-Mobile and the US Department of Justice (DoJ) reached an agreement with EchoStar's Dish Network to position Dish to replace Sprint as the nation's fourth big, national provider.

So far Dish has managed to meet its federal obligations, having constructed a network covering vast portions of the US. But Dish continues to struggle in the US wireless market. The company has been unsuccessful so far in the postpaid wireless business and is struggling to finance the rest of its 5G network buildout.

Meanwhile, T-Mobile, Verizon and AT&T are all trying to cut spending and boost revenues. A major element of that strategy involves hiking prices for customers.

But so far the price hikes haven't pushed US customers to look for service elsewhere. AT&T, T-Mobile and Verizon all reported historically low levels of churn in the first quarter, according to a recent report from the financial analysts at TD Cowen. Churn is the measure of customers canceling service.