Boost Founder Wants to See Boost/MetroPCS Divested If Sprint/T-Mobile Merger Goes Through
At least one person thinks Sprint and T-Mobile should be required to divest their respective prepaid businesses if they are allowed to merge. Peter Adderton, founder and former CEO of Boost Mobile, firmly believes the market will become less competitive — particularly in the prepaid space — if Sprint and T-Mobile are allowed to merge without any divestitures. “If this merger is approved without the divesture of Boost Mobile and/or MetroPCS, the new combined entity will hold a 40% market share in the prepaid segment — which I would argue has the effect of being a monopoly or extreme dominance in the category,” said Adderton in a press release. “This level of market domination virtually always leads to rising prices, more onerous terms and conditions and lower service quality, and young and credit-challenged prepaid subscribers simply can’t afford that.” Sprint owns and operates Boost Mobile and Virgin Mobile USA, while T-Mobile owns and operates MetroPCS. Sprint and T-Mobile “will have significant incentive to restrict network access to competing MVNOs. If that happens, MVNOs, who already run on extremely tight margins, have little or no opportunity to make a profit, and we can expect many of them to close their doors,” argued Adderton. Boost, Virgin, and MetroPCS do not own or operate their own networks, so it’s unclear how Adderton believes such a divestiture could work. Each would have to be given spectrum and other assets to launch functioning service around the U.S. Though Adderton said “I would love to take control of it, that’s not the driver here.” Instead, he insists his goal is to ensure the wireless market remains competitive. Adderton plans to take his case to Congress as well as the public. Sprint and T-Mobile believe their proposed merger will pass regulatory scrutiny, but the government has yet to make its case.
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FCC Chairman Ajit Pai announced that he will recommend the agency approve the proposed merger between T-Mobile and Sprint. To secure the recommendation, the companies have promised to divest the Boost prepaid brand and not raise prices for three years.