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The T-Mobile Sprint Merger Just Got Rubber Stamped and We All Lose

There’s 40 years of history showing telecom megadeals erode competition, raise prices and kill jobs. It’s a lesson America simply refuses to learn.

by Karl Bode
Feb 11 2020, 2:46pm

A federal judge has ruled in favor of T-Mobile’s $26 billion merger with Sprint, despite ample historical evidence showing the deal will likely erode competition, raise U.S. wireless data prices, and result in significant layoffs as redundant jobs are eliminated.

In the ruling, U.S. District Judge Victor Marrero shot down the complaints of numerous state attorneys general, insisting that eliminating one of just four major U.S. wireless carriers was “not reasonably likely to substantially lessen competition” in the wireless space.

At times Marrero was strangely esoteric as he tried to justify approval of the controversial deal.

“How the future manifests itself and brings to pass what it holds is a multifaceted phenomenon that is not necessarily guided by theoretical forces or mathematical models,” Marreno wrote. “Instead, causal agents that engender knowing and purposeful human behavior, individual, and collective, fundamentally shape that narrative.”

A coalition of state attorneys general collaboratively sued to stop the deal last year, claiming the reduction of competitors in the U.S. market from four to three would reduce the industry’s incentive to compete on price, driving up already expensive U.S. wireless consumer bills.

From Ireland to Canada, there’s abundant evidence that similar “four to three” mergers routinely result in significantly higher rates courtesy of less overall competition. Regulators have blocked similar mergers in the U.S. for just this reason; from AT&T’s attempted acquisition of T-Mobile in 2011, to a seperate Sprint T-Mobile merger proposed in 2014.

The deal had already been a source of major controversy after the Ajit Pai FCC quickly approved the merger before staffers had even had a chance to review the proposal. The DOJ then rubber stamped the deal against the advice of many agency staffers.

To justify its approval, the DOJ signed off on a T-Mobile proposal that would involve shoveling some of T-Mobile’s spectrum to Dish Network, which would then build an entirely new, replacement fourth carrier over a period of seven years. But Dish has a history of empty promises in wireless, and economists have warned the plan isn’t likely to work.

Under the proposal Dish will spend several years as little more than a rebranded version of T-Mobile’s existing service. Economists say it’s unlikely the Trump FCC—which has been little more than a rubber stamp to the telecom industry over the last three years—will be willing to hold either company accountable should the deal not deliver on its promises.

“From the start, this merger has been about massive corporate profits over all else, and despite the companies’ false claims, this deal will endanger wireless subscribers where it hurts most: their wallets,” New York Attorney General Letitia James said of today’s ruling.

Then there’s the layoffs.

Contrary to T-Mobile’s claims that the deal will create jobs, analysts have predicted that the merger could eliminate anywhere between 10,000 and 20,000 jobs as redundant retail, support, and middle management positions are inevitably eliminated. Unions claim the merger could eliminate as many as 30,000 positions over the next five years.

T-Mobile and Sprint have claimed that Sprint would collapse unless the deal that was approved, though economists were quick to note there were numerous deals (like collaboration with Comcast) that didn’t require the elimination of a major, direct competitor. Similarly, experts have shot down T-Mobile’s claims that the deal was necessary to speed up 5G deployment.

“In the end, consumers will be the losers, as they have over the past three decades of massive telecommunications and media mergers,” former FCC lawyer Gigi Sohn told Motherboard.

U.S. consumers already pay some of the highest prices in the developed world for wireless service, thanks in large part to revolving door regulators and lax antitrust enforcers that repeatedly refuse to hold the industry accountable for market failure, Sohn said.

“Over and over again, consumers are promised enormous benefits and so-called ‘efficiencies’ by merging parties,” she added. “But what they are left with each time are corporate behemoths who can raise prices at will, use their gatekeeper power to destroy competition and new voices and hijack regulatory and legislative processes.”

While Congress routinely hyperventilates over the many justified problems with “big tech,” “big telecom” continues to get a free pass from both Congress and the Trump administration, despite engaging in many of the same (or worse) behaviors.

Comcast and NBC Universal; AT&T and Time Warner; AT&T and BellSouth, AT&T and Cingular; Spectrum and Time Warner Cable; there’s 40 years of clear historical data showing that mindless consolidation in the telecom space results in higher prices, fewer jobs, and steadily-worse customer support. It’s a history lesson America refuses to learn.

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