Tuesday, October 16, 2012

Sprint’s $20 Billion Deal Could Mean Lower Rates

For years, the U.S. mobile marketplace has been dominated by two heavyweights engaged in a Republican-versus-Democrat-style two-party contest for dominance.

As with many elections, consumers often end up feeling like they have to pick between the lesser of two evils rather than what they really want. But as with voting for third-party candidates, you can feel left out of the national conversation (literally) when you choose a company other than AT&T or Verizon.

SoftBank and its cash could give Sprint the heft it needs to become a relevant rival. The capital infusion lets Sprint build out its LTE network, creating a viable third high-speed option. And by combining forces for greater purchasing power, Sprint and SoftBank together gain serious leverage when negotiating with handset makers for access to the best new phones.

With better phones and a better network,  Sprint could at a minimum expect to claim at least one-quarter of the U.S. mobile subscribers, up from less than one-fifth. With a critical mass of customers, he says Verizon and AT&T will have to pay attention when Sprint offers lower prices. In the end, this could mean lower prices for everyone. “It puts pressure on the top two. The market can fluctuate,”.

SoftBank’s cash will also let Sprint continue to offer its unlimited plans while angling for a possible T-Mobile takeover, which would solidify Sprint’s status as the default third choice.