After a nearly three-hour hearing Wednesday on whether the proposed merger of T-Mobile and Sprint is in the public interest, some lawmakers and witnesses remained skeptical of the deal. House Energy and Commerce Committee Chair Frank Pallone (D-NJ) noted that reports concerning whether the combined entity would eliminate jobs and raise prices afterwards meant, “The facts of this merger are in dispute.”
Indeed, the issue of whether the combined entity, to be called the “New T-Mobile,” would offer rural telecom services and particularly 5G, was heavily debated.
Both T-Mobile US President/CEO John Legere and Sprint Executive Chairman Marcelo Claure told lawmakers they need the merger to be approved, so they can combine their spectrum holdings, to build the kind of nationwide 5G network they envision to go beyond urban and suburban America.
Claure said the carrier doesn’t have the cash flow now to build a 5G network and would need to borrow about $5 billion. Even at that, it would only be for urban areas, he said. Legere said T-Mobile could still build a 5G network, but it would be more limited than what it prefers, and the carrier would not be able to get into new businesses like IoT and the home broadband market. Legere is especially interested in the latter, saying the ‘un-carrier” wants to “free customers from the stranglehold of cable.”
The merger is not in the public interest and is “unlawful,” said Public Knowledge Senior Policy Counsel Phillip Berenbroick. He pointed to evidence the carriers submitted to the FCC and DOJ. He says it implies going from four to three national competitors, will raise prices for consumers and harm small, rural carriers.
Rural Wireless Association General Counsel Carri Bennet, said T-Mobile doesn’t have a great track record on roaming in rural America, rural call completion and as a Lifeline provider. T-Mobile’s roaming rates are 20 times higher that Sprint’s, according to Bennet. A rural carrier can be on the T-Mobile network but not vice versa, she noted. Legere said that’s because T-Mobile has traditionally operated in urban areas. Bennet said the FCC recently settled a case against T-Mobile for inserting false ringtones into a call so the caller in a rural area would think a call had gone through. She said that behavior, “harms rural telephone companies who make payments to a larger carrier for those calls.”
Legere corrected one lawmaker who said T-Mobile had dropped Lifeline participation. Legere said the carrier switched to become a wholesale provider in the program that provides subsidies for low-income customers. If the merger is okayed, the new T-Mobile would honor Sprint’s Lifeline contracts with small, rural carriers, Legere declared.
Doug Brake, Director, Broadband and Spectrum Policy for the Information Technology and Innovation Foundation, told lawmakers that the combined company would have, “the spectrum assets and financial strength” to build a nationwide 5G network more quickly than if they tried to separately. He refuted arguments that there must be four national carriers to maintain competition in the wireless market. “More competitors is not always better,” said Brake.
The most contentious debate concerned potential jobs lost if the entities combined. Communications Workers of America President Chris Shelton said CWA research shows 30,000 people would lose their jobs. The number is hard to arrive at, said Shelton, because T-Mobile uses contractors for tasks like tower work and retail positions. “Let’s tell it like it is. This merger will kill American jobs,” said Shelton. Legere said the analysis fails to consider new jobs created by the new businesses the new T-Mobile plans to get into. Comments? Email us.
By Leslie Stimson, Inside Towers Washington Bureau Chief
February 14, 2019