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Expect Broken Promises From T-Mobile/Sprint Merger
The merger between T-Mobile and Sprint is moving forward, notwithstanding legal opposition from multiple state attorneys general. In a recent article, Christopher Mitchell Director of the Institute for Local Self-Reliance's Community Broadband Networks Initiative, and Paul Goodman, Technology Equity Director from The Greenlining Institute, explained the tenuous reasoning behind the recent court decision and why they expect nothing good for subscribers and the state of competition as this deal comes to fruition.
We've shared the article in full here; you can also read it at The Greenlining Institute website.
EXPECT BROKEN PROMISES FROM T-MOBILE/SPRINT MERGER
By Christopher Mitchell and Paul Goodman
Earlier this week, a federal judge dismissed a lawsuit to stop the proposed merger between T-Mobile and Sprint. As a result, it’s highly likely that by the end of the year, Sprint will no longer exist, and that AT&T, Verizon, and T-Mobile will be the only major wireless providers in the United States. The judge’s decision is 170 pages long but boils down to this: The judge believes that even though T-Mobile will have the ability to increase prices, it won’t, because T-Mobile promised not to.
What, Exactly, has T-Mobile Promised?
The same things that communications providers have promised us for decades when drumming up support for a merger—lower prices, the creation of thousands of jobs, and new and exciting service offerings. As a result, the company argues, T-Mobile will have the size and resources to transform itself into a company like AT&T.
It’s that last sentence that’s particularly troubling. In 2018, AT&T purchased Time Warner Media, arguing that doing so would result in lower prices, the creation of thousands of jobs, and new and exciting product offerings. Which sounds fantastic, except for the fact that AT&T failed to deliver on those promises:
Top Experts Sound Off on Sprint and T-Mobile Merger - Community Broadband Bits Podcast 366
The Sprint / T-Mobile merger has been in process for about a year now, with a series of odd, dramatic twists and turns. Recently, a group of state attorneys general sued to stop the transaction. This week, Christopher talks with telecom policy experts Gigi Sohn and Blair Levin to get their takes on the whole affair.
We originally recorded the interviews for the Institute for Local Self-Reliance’s Building Local Power podcast, but decided that we needed to share them with the Community Broadband Bits audience. Gigi Sohn is a Distinguished Fellow at the Georgetown Law Institute for Technology Law & Policy and Blair Levin is a Senior Fellow at the Brookings Institute. Both have been on the show before. You'll also hear Hibba Meraay, our Communications Manager, give Christopher a hand.
During their conversation, Christopher and his guests discuss how the T-Mobile and Sprint merger will likely end in higher rates, affecting low-income subscribers the most. They talk about the history of the companies' roles in the industry and how this merger, if it goes through, will shift the field. They also look back on precedent that provides a guidepost for blocking this merger, and compare the attitudes Wall Street and Washington take toward mergers.
You can download the report mentioned in the podcast, Cooperatives Fiberize Rural America: A Trusted Model for the Internet Era [PDF], here.
This show is 50 minutes long and can be played on this page or via Apple Podcasts or the tool of your choice using this feed.
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Listen to other episodes here or view all episodes in our index. See other podcasts from the Institute for Local Self-Reliance here.
Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.
ILSR Joins 4Competition Coalition to Oppose Sprint and T-Mobile Merger
At the Institute for Local Self-Reliance, we believe that competition for goods and services helps communities, consumers, and the economy. This belief carries over into the mobile Internet access market, which is one of the reasons we oppose a merger between Sprint and T-Mobile. We’re not alone and we’ve now joined with other organizations as part of the 4Competition Coalition.
As the prospect of 5G wireless connectivity becomes more probable, these two companies claim that they need to merge in order to remain competitive with the other two mobile Internet access providers. In reality, reducing mobile subscriber options from four to three, creates no benefit for anyone except the companies with less competition.
In a press release announcing ILSR’s decision to join the Coalition, Christopher stated:
“Market competition between Sprint and T-Mobile has made mobile Internet access available to millions of low-income households. We are deeply concerned that this merger will harm those households and leave them without any affordable Internet access.”
Along with ILSR, trade group INCOMPAS joined the 4Competition Coalition. INCOMPAS also strongly advocates ample choice in the broadband arena and recognized Sprint and T-Mobile’s past work to keep competition alive.
So Much to Lose
Losing a mobile Internet access provider as an option is bad, but it isn’t the only consequence that we face if the merger goes through. The Coalition recognizes that results will likely be job losses, higher rates, locking out new entrants to the market, broken promises regarding 5G, and harm especially to people in rural areas. At least 11 states are also not convinced that a Sprint/T-Mobile merger is in the interest of their citizens and are reviewing the proposal.
Antitrust Enforcement Yields Increased Investment in Wireless
We have long argued that smart antitrust policy promotes investment and competition in the market. Allowing a few firms to consolidate too much power allows them to ignore our needs because we lack alternative service providers. In economic terms, they can use their market power to prevent market entry from innovative new firms.
Harold Feld recented provided more empirical evidence for our view by comparing the present cellular wireless market against that of 20 months ago. He notes new investment from abroad in T-Mobile and Sprint and that U.S. Cellular plans to expand its footprint; AT&T is planning upgrades in its spectrum holdings. Bottom line - investment is starting to happen, which was not the case a year ago.
Feld breaks out details in FCC and DoJ activities to show the relationship. In addition to the DoJ and FCC mutual block of the AT&T/T-Mobile deal, Feld notes the FCC's new attitude regarding regulatory reform. From the Feld blog:
On top of this, the FCC sudden[ly] started getting all serious about regulatory reforms designed to keep carriers other than AT&T and Verizon in the game as serious players. This included not just the long-awaited data roaming order (which now looks like it will probably survive review by the D.C. Circuit after all), but also revisiting special access, 700 MHz Interoperability, and renewed interest in clarifying the spectrum screen/possibly reviving the spectrum cap. While the last three are still in progress, the fact that the FCC is even talking about them in a serious way is so radically different from what folks expected at the beginning of 2011 that it puts heart into investors and competitors who were looking for some sign that anyone in DC gave a crap or if competitive wireless would end up going the way of competitive telecom and competitive ISPs.
Feld acknowledges that there will be those that jump to conclusions and discourages an all-or-nothing viewpoint in favor of a more measured approach. Also from his blog post: