Meanwhile hardware and network owners madly fight to stay relevant, like the aggressive customization of Samsung's android Touchwiz or the various telecoms lobbying against net neutrality.
The era of multi-year contracts and heavy device subsidies has primarily helped those with large market share maintain it. T-mobile in particular has been pushing to change how the market works and bring an end to some of the ways that customers have been locked in to carriers. I wouldn't be to surprised to seem them support further commoditization.
Instead what's going to happen, T-Mobile and Sprint both agree to offer the same performance, or focus on different regions.
It's like selling slices of pizza on the street. If you're smart, you and your competitor agree to sell at $5/slice. If you drop to $4, sure you'll get more customers for a short period of time, but then your competitor drops to $4, and now you both just cut 20% off your revenue for no reason.
Both Sprint and T-Mobile have to build physical infrasture, both to offer basic services (e.g. 3G, talk/text) but to also compete (4G, LTE, etc). Building infrastructure is really expensive. They need land, licences, power, and a network to connect that tower to (assuming it isn't just a relay).
So both networks have this HUGE sunk cost. In an ideal world they would be able to recruit enough users to consume each tower's capacity by 100% at peak. But because they're competing against other networks (with more users) and have to look competitive, they've over-built their network both in scope (e.g. servicing areas with few users) and capacity.
If Sprint and T-Mobile were confident that they could recruit enough users to fill their network they likely wouldn't agree to this deal. Just as AT&T and Verizon haven't. However the likely reality is that both Sprint and T-Mobile are well over capacity in certain areas and every penny that Google can bring in by stealing uses from the big two is just further helps Sprint and T-mobile, even if they just use it to further build out their respective networks.
Additionally: You could frame this as an "illusion of choice." You have Walmart/Target Cellular (Straight Talk/Brightspot) on the low end, T-Mobile themselves in the middle, and Google's Project Fi offering a niche service, but in reality they're all just T-Mobile aimed at a different user base. In all three cases T-Mobile grows, their network grows, and they could kick these brands off any time the contract is up for renew.
PS - T-Mobile actually host just under 30(!) different cellular providers in the US[0]
[0] https://en.wikipedia.org/wiki/List_of_United_States_mobile_v...