From Left: T-Mobile’s John Legere and Sprint’s Marcelo Claure
T-Mobile and Sprint executives say their merger will benefit consumers and enable them to deploy 5G services faster. Critics say it may help them take a shortcut to 5G, but the combination means higher service prices for customers.
In a hearing before a Senate Judiciary Subcommittee Wednesday afternoon, lawmakers tried to get at the heart of the matter. Antitrust, Competition Policy and Consumer Rights Subcommittee Chair Mike Lee (R-UT) said: “We’re not here to decide the fate of the merger, but we can frame the arguments” both for and against the $26 billion transaction. The committee’s jurisdiction includes oversight of antitrust enforcement at the Department of Justice and competition policy at the FCC. Ranking Member Amy Klobuchar (D-MN), has “concerns” about the proposed deal that, if approved, would “transform the communications industry. Four competitors is not very many.”
Both T-Mobile CEO John Legere and Sprint Executive Chairman Marcelo Claure stressed the transaction would make them the number three nationwide carrier in the nation — numbers one and two would still be AT&T and Verizon. By combining, the “new T-Mobile” will be able to deploy 5G not just to cities, but across rural America. “AT&T and Verizon will be forced to follow our lead,” said Legere. “When we lower our prices, they must.” The deal will also enable the merged entity to take on AT&T, Comcast and Charter for the in-home broadband market, he said.
Claure said the company has been losing money for years, and struggles to attract and retain customers. Sprint has a plan to deploy 5G as a standalone company, but will struggle to do so, as it still needs to finish 4G deployment and its service would be in cities only.
Roslyn Layton, a visiting scholar at the American Enterprise Institute, favors the merger. Noting that T-Mobile and Sprint are wireless pureplays, if they take on other companies for the in-home broadband market, those other companies have many more platforms on which to spread out their costs. That will induce the merged company to keep innovating, she believes. Also, regulators have no guarantee the telecom market won’t continue to shrink to three competitors even if they reject the deal, said Layton, adding: “There is no penalty for antitrust authorities when they get it wrong. They get to keep their jobs.”
George Slover, senior policy counsel for the Consumers Union called T-Mobile and Sprint each other’s main competitors. “That’s what consumers stand to lose. The more concentrated a market gets, means less competition.” Public Knowledge President/CEO Gene Kimmelman agreed, saying the DOJ needs to look at the market structure and impact post-merger. “We’re against moving from four to three telecoms.” He believes the DOJ will agree it’s necessary to preserve four competitors and reject the transaction.
By Leslie Stimson, Inside Towers Washington Bureau Chief
June 29, 2018
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