T-Mobile Five Forces

In: Business and Management

Submitted By winte409
Words 1607
Pages 7
Kevin Winters
Five Forces Article Assignment

T-Mobile Turns an Industry on Its Ear

The article I found relating to Porter’s Five Forces was about T-Mobile and how their rejected merger with AT&T has caused them to go against many of the previously accepted practices of the mobile carrier industry. This started in 2011 when the Federal Communications Commission and the Justice Department blocked AT&T’s proposed $39 billion acquisition of T-Mobile. After the deal was called off, AT&T owed T-Mobile a breakup fee worth $3 billion in cash and $1 billion in rights to wireless spectrum which has allowed to T-Mobile to expand their service to better compete with the three other major carriers. Since the failed merger, T-Mobile has become an agitator in the industry and has said they want to eliminate every pain point for consumers in the industry. One of the major issues in the mobile carrier industry is how much the four major carries (Verizon, AT&T, Sprint, and T-Mobile) have started to dominate the market, making it hard for smaller companies to penetrate the industry. Consumers have a strong brand loyalty towards the major carriers because of how much better their coverage and service compare to smaller firms in the industry. Smaller firms cannot expect to have the capital to match the network size of any of the four major carriers which can be a major deterrent for customers switching to their carrier. These four major carriers hold an absolute cost advantage over smaller firms attempting to enter the market because of the many years they have been in the industry and resources they have been able to invest into their networks and services. There are also significant switching costs for customers looking to switch carriers, as all of the carriers charge early termination fees when customers attempt to leave their current carrier and switch to a…...

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