According to NWIDA, most MVNOs already operate on slim margins in a network marketplace controlled by four companies: AT&T, Sprint, T-Mobile and Verizon. If no conditions are put in place to protect MVNOs from higher prices, the shift from four to three networks could cause many MVNOs “to lose money or close altogether,” said NWIDA president Adam Wolf, in the same May NWIDA statement.

Wolf told Event Driven he also has “spoken to some people on the state and federal level” about the merger’s impact on independent rivals in the prepaid market. If the government required Sprint and T-Mobile to divest only one of their prepaid brands for antitrust approval, the companies would most likely choose Sprint’s Boost prepaid brand over T-Mobile’s MetroPCS, Wolf said.

“I think there are multiple reasons why they would keep Metro,” Wolf said, asserting that Metro is “more compatible” with the current T-Mobile systems. He also said that Metro is T-Mobile’s brand and “they know the inner workings”, such as rate plans, commissions and distribution. Metro has more distribution points than Boost, he added.

The DOJ’s Sprint/T-Mobile case team has held multiple phone calls in recent weeks with wireless industry participants, gauging their thoughts about the deal’s effects on prepaid phone plans and mobile virtual network operators, or MVNOs, according to people familiar with the discussions.

During one call, Antitrust Division attorneys and economists questioned one industry participant about whether and how the participant thought T-Mobile’s purchase of Sprint could affect prices paid by retail customers for the merging companies’ Boost Mobile, MetroPCS and Virgin Mobile prepaid businesses, according to one person familiar with the matter. The participant also discussed the impact of the deal on the MVNOs who use the companies’ networks for their own prepaid businesses.

The industry participant proposed spinning off a portion of Sprint and T-Mobile’s prepaid brand portfolio into a standalone business, which the participant and other companies have suggested should have a combined customer base of between eight and 15 million subscribers.

According to the participant, the DOJ’s case team and various market participants have also discussed the idea of having T-Mobile sell some of its spectrum to this spun-off entity, as well as a separate proposal for an agreement with T-Mobile to lease usage of its network at a fixed rate to the spun-off entity.

In a statement in late May by the National Wireless Independent Dealer Association, or NWIDA, Boost Mobile founder Peter Adderton said the merger would likely lead to higher prices for prepaid customers, saying that it’s a “forgone conclusion” that the companies would merge the three brands together to save money.

Speaking with Event Driven, Adderton said that lost competition between Sprint’s Boost and T-Mobile’s MetroPCS would likely result in higher prices to customers. “Boost and Metro are very fierce competitors,” said Adderton, who has also spoken with DOJ staff in recent weeks about a spin-off proposal. “Those two have really been the two main competitors in prepaid. The majority of customers of the two switch from Metro to Boost and vice versa.”

NWIDA and other groups have also opposed the merger on the grounds that it would lead to higher prices paid by MVNOs to use the networks of the Big Four carriers, which the industry participant said caused “a lot of trepidation” during the phone call. “If you’re a new guy coming in, it’s going to be tough,” this person said. “T-Mobile prioritizes its retail traffic over its wholesale traffic, and both AT&T and Verizon are very expensive.”

According to NWIDA, most MVNOs already operate on slim margins in a network marketplace controlled by four companies: AT&T, Sprint, T-Mobile and Verizon. If no conditions are put in place to protect MVNOs from higher prices, the shift from four to three networks could cause many MVNOs “to lose money or close altogether,” said NWIDA president Adam Wolf, in the same May NWIDA statement.

Wolf told Event Driven he also has “spoken to some people on the state and federal level” about the merger’s impact on independent rivals in the prepaid market. If the government required Sprint and T-Mobile to divest only one of their prepaid brands for antitrust approval, the companies would most likely choose Sprint’s Boost prepaid brand over T-Mobile’s MetroPCS, Wolf said.

“I think there are multiple reasons why they would keep Metro,” Wolf said, asserting that Metro is “more compatible” with the current T-Mobile systems. He also said that Metro is T-Mobile’s brand and “they know the inner workings”, such as rate plans, commissions and distribution. Metro has more distribution points than Boost, he added.

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