$26B Merger of T-Mobile and Sprint Approved by DOJ

There are a few ways of looking at a consolidating wireless market. Less competition means crappier service as complacent companies can rest on their laurels and just milk their cash-cow spectrum.

Other industries such as the U.S. auto market in the 1980s had a pretty solid global monopoly on vehicle production.

Anyone who drove a car at the time knows just how bad the vehicles were.

This was before the whole diesel debacle where Detroit decided to make an engine popular in Europe but had no idea how and basically saw the engines they produced disintegrate.

The DOJ is betting wireless in the U.S. is a different situation.

John Legere has done an amazing job with T-Mobile, taking on the big carriers through tech and marketing innovation.

We will see if this is the case as the company grows in size.

Rolando Hernandez, vice president at Valid, a mobile solutions provider working in the 5G space with some of the world’s largest carriers, commented on what this merger means for industry competition.

“The approval of the T-Mobile-Sprint merger is great news for the industry because it’s an opportunity in the end for better services for consumers. Together, T-Mobile and Sprint can compete with AT&T and Verizon in more fair conditions given all of them will now be a similar size. Standing on their own, the two carriers were treated almost as equals, forcing them to offer similar services, coverages and prices. They couldn’t have grown or developed much further trying to compete in an unfair market. Now, that’s all changed. With the addition of Sprint’s assets, the new T-Mobile can focus on its technology initiatives, like expanding 5G across the country and increasing IoT connectivity.” 

Here are some other perspectives – mostly negative:

American Antitrust Institute, President Diana Moss:

“We said it a year ago, and we’ll say it again: the Sprint-T-Mobile merger is presumptively illegal. We look forward to the judicial review of this settlement, which assuredly is not in the public interest, and we renew our gratitude to State enforcers who are willing to stand up for consumers and fill the void created by the federal government.”

Common Cause, Special Advisor Michael Copps:

“Just a few months ago, reports indicated that the expert antitrust staff at the DOJ recommended the agency sue to block the T-Mobile-Sprint merger. But rather than take the reported advice of career staff, Assistant Attorney General Makan Delrahim decided to approve a blatantly anticompetitive deal by bringing in Dish as a sham fourth competitor. Basic math tells you that replacing Sprint, a national carrier with 50 million subscribers, with Dish, a satellite company with zero wireless subscribers, is a recipe for competitive disaster … Neither the DOJ nor FCC have the ability to enforce Dish as a viable fourth competitor.”

Communications Workers of America (CWA), President Chris Shelton:

“The T-Mobile/Sprint merger remains harmful to workers and consumers – it is anti-competitive and will kill 30,000 jobs. The announced divestiture deal with DISH does not save these jobs and does not remedy the fundamental, anti-competitive nature of the merger. In fact, through the announced divestiture deal with DISH, T-Mobile is creating its largest customer, not a new competitor … It is critical for the state lawsuit to proceed. The state attorneys general are doing what the Justice Department will not — protecting workers and consumers from the job loss and higher prices that will result from this merger.”

Consumer Reports, Senior Policy Counsel George Slover:

“The reported side deal with DISH would eliminate Sprint, an established competitor in the wireless marketplace, and replace it with DISH, an unproven newcomer that has no experience in building its own wireless network, which it will need to build essentially from scratch. The side deal reportedly gives DISH some of the building blocks it will need to make a go of it. But even under the best scenario, it could take years for DISH to get to the point where Sprint is now — if it ever gets there. They are trading a bird in the hand for a pig in a poke.”

Free Press, Research Director S. Derek Turner:

“By signing off on this merger, the Justice Department has done nothing to remedy the short- and long-term harms the loss of an independent Sprint will create for U.S. wireless users. Nothing about these divestitures would lower prices for customers. DISH can’t mount a retail operation that’s even close to what Sprint currently offers. And the loss of competition would disproportionately harm low-income people and communities of color.

Gigi Sohn, Distinguished Fellow at the Georgetown Law Institute for Technology Law & Policy, a Benton Foundation Senior Fellow & Public Advocate, and past Counselor to former FCC Chairman Tom Wheeler:

“The state AGs who sued to block the merger shouldn’t be fooled by this weak attempt to maintain competition in the mobile wireless market. … It’s mind-boggling that two of the most vociferous critics of behavioral conditions for media and telecommunications mergers, AAG Delrahim and Chairman Pai, would suddenly so heartily embrace them here, and that a Republican Justice Department would suddenly engage in exactly the kind of centralized industrial policy engineering it so despises in order to create this so-called fourth competitor. A new mobile wireless entrant that starts with zero postpaid subscribers and that must rely on its much bigger rival, the new T-Mobile, just to operate is not a competitor. It’s a mobile Frankenstein.”

The Rural Wireless Association:

“Allowing T-Mobile to acquire Sprint, and thus reduce the number of nationwide facilities-based wireless competitors from four to three, will result in higher prices for consumers and the reduced ability of consumers travelling through rural areas to access mobile wireless service. The conditions imposed on New T-Mobile by the consent decree are drastically insufficient to protect against the clear harms this market-consolidating merger would bring.”

The Greenlining Institute, Technology Equity Director Paul Goodman:

“We’re profoundly disappointed at the decision to approve an anti-competitive, anti-consumer merger. This deal does nothing to allay concerns that a larger T-Mobile will abandon low-income consumers and consumers of color. We see no indication that DISH has the ability or incentive to become a meaningful competitor that will serve communities of color.”

New America’s Open Technology Institute, Senior Counsel Joshua Stager:

“We welcome new entrants to the wireless market, but this is a dubious way to go about it. DOJ’s scheme appears half-baked, cooked up behind closed doors in the 11th hour of a year-long merger review. That is no way to enforce the antitrust laws or promote competition … No one who has followed antitrust enforcement over the past decade can seriously believe this will work.” 

Open Markets Institute, Executive Director Barry Lynn:

“The leadership at the Justice Department and the Federal Communications Commission have failed in their job at protecting America’s citizens from the concentration of power that would result from this deal. Americans across the country will likely pay higher prices for worse service in a wireless market dominated by AT&T, Verizon, and T-Mobile. The problem is especially bad for poor and rural customers.”

Public Knowledge, Policy Director Phillip Berenbroick:

“Allowing T-Mobile to acquire Sprint and consolidate the wireless market from four competitors to three would inevitably mean higher prices for consumers and a less competitive and dynamic marketplace. When the FCC tried to sell consumers short, the state Attorneys General stepped in and stood up for real competition in the wireless market. The good news is that the DOJ firmly rejects the FCC’s rubber-stamp approach and affirms the need for four nationwide, facilities-based wireless providers. The proposed consent decree concedes that the state AGs are right — letting the national market go from four players to three would create a tight oligopoly that would keep prices high and new competitors out.”

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