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Sprint-Nextel merger is another blow to consumers’ pocketbooks

Wednesday, Dec. 15, 2004
Contact: Janee Briesemeister
(202) 462-6262

Sprint-Nextel Merger is Another Blow to Consumers’ Pocketbooks

Second Major Merger of Telecoms Could Signal Reduction in Price Wars and Innovative Service; Customers Likely Will Have to Buy New Phones

(Washington, D.C.) – The proposed merger between Sprint and Nextel is another blow to consumers’ pocketbooks, as the further reduction of competition in the wireless market likely spells an end to the lower prices and innovative services consumers have received from cell phone companies, Consumers Union said today.
“This merger will do little for consumers, but most importantly, it signals the likely end to the possibility of building vibrant wireless competition to the dominant, local Bell telephone companies,” said Gene Kimmelman, senior director of public policy for Consumers Union.
This proposed merger comes on the heels of the merger between cell phone giants Cingular and AT&T Wireless, which Consumers Union opposed due to the resulting lack of competition not only for wireless, but also in traditional phone service. At the time, Consumers Union predicted that merger would set off a wave of similar mergers and takeovers in the industry.
“In giving a green light to Cingular-ATT Wireless, the government effectively established a ‘three companies is enough’ standard for wireless competition,” Kimmelman added. “Under this approach we fear the cell phone market will start to function the way the cable and satellite market has, where prices go up year in and year out due to lack of competition.”
In addition to resulting lack of price competition, the merger between Sprint and Nextel likely will require the companies’ customers to buy new cell phones, since the two entities operate on incompatible wireless networks. Consumers Union renewed its call on the Federal Communications Commission to ensure that all new cell phones can be used on all providers’ networks.
“The fact that Sprint and Nextel customers’ phones likely won’t be compatible on the combined network will be a major headache and expense for consumers,” said Janee Briesemeister, Consumers Union senior policy analyst. “Given this enormous consumer expense, and the fact that competitive pressures diminish substantially in this consolidated market, we’re renewing our call on the FCC to ensure that all new cell phones that come into the market can be used by all providers.”
On Thursday, Consumers Union is launching an innovative new Website, www.HearUsNow.org to help consumers navigate issues like cell phone mergers by providing consumer tips, how-to advice and policy analysis on the full array of communication issues, including traditional phones, wireless service, the Internet and broadband, radio-TV-cable, and digital content.