8/27 FCC Petition To Deny T-Mobile/Sprint Merger
Regulatory/Legislative Filings

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Aug. 27, 2018
Filing at the FCC available here
Press Release available here
New America's Open Technology Institute, Common Cause, Consumers Union, Public Knowledge, and the Writers Guild of America West filed a Petition to Deny with the Federal Communications Commission (FCC). In the petition, OTI argued that the merger would be highly anticompetitive and would take a market that is currently limited to four competitors to a mere three. The merger would also rob consumers of two disruptive carriers that have forced AT&T and Verizon to compete and offer consumer-friendly services, such as Wi-Fi calling, unlimited data plans, and the end of 2-year contracts with termination fees. The groups also argued that T-Mobile and Sprint’s claims that the merger will benefit the public interest are false. Specifically, the companies' claim that the merger will bring "fiber-like" speeds through a combined nationwide mobile 5G network is a dubious claim that several analysts believe unlikely to happen, and specifically unlikely in rural areas. Further, the companies' purported benefit of bringing new jobs to the American people is incorrect. In fact, the merger is predicted to kill jobs and severely deepen the digital divide. Below is an executive summary of the petition:
The proposed merger of T-Mobile US, Inc. and Sprint Corp. would significantly harm the public interest. The transaction, if approved, would wreak havoc on competition and consumers by removing two disruptive competitive carriers from the market to bring the number of nationwide competitors from four companies to three. The anticompetitive nature of the proposed merger would also harm the prepaid and wholesale mobile wireless markets, and in particular would negatively impact low-income consumers. Meanwhile, the purported benefits claimed by T-Mobile and Sprint are either speculative and nonexistent or not specific to the proposed merger. The Commission should block the deal and protect a healthy, competitive marketplace for the industry and consumers.
T-Mobile and Sprint’s proposed combination is first and foremost a clear-cut case of a horizontal merger that would be likely to dramatically curtail competition in the wireless market and harm consumers. The current market sees four dominant, nationwide carriers, but if TMobile and Sprint are allowed to merge, 98 percent of the country’s wireless market would be in the hands of three providers. As the Department of Justice and the Commission concluded in 2011 when AT&T tried to acquired T-Mobile, higher concentration leads to higher prices, poorer quality, weakened innovation, and less consumer choice. The government’s analysis was correct at the time and remains correct today.
The merger would also harm the prepaid and wholesale mobile wireless markets, along with the low-income consumers that rely on the services in those markets. T-Mobile and Sprint offer competing prepaid services. Eliminating two direct competitors would give New T-Mobile the power to raise prices for prepaid service with no major challengers in the market. Additionally, T-Mobile and Sprint sell wireless capacity to mobile virtual network operators that facilitates reseller services under separate brands. The proposed transaction would increase the cost of capacity access for these low-cost resellers. In that vein, Sprint is the main facilities-based provider that participates in the Commission’s Lifeline program for qualifying low-income consumers. The proposed merger could drastically harm the public interest by potentially eliminating Sprint as a Lifeline participant altogether.
Despite the claims of T-Mobile and Sprint that the proposed merger would be a boon for American jobs, third party analysts have concluded that the transaction is likely to eliminate tens of thousands of American jobs. Further, T-Mobile and Sprint have failed to make any concrete commitments about bringing or retaining jobs in the United States, and either way the claim that the companies will bring in more employees to build a 5G network are not in any way specific to the proposed transaction, as both companies would likely need additional personnel to build their 5G networks regardless.
T-Mobile and Sprint argue that the two companies need one another to build a robust, nationwide mobile 5G network, and that the construction of such a network will benefit the public interest. Both companies have made several promises over the past several years—including as early as this year prior to the announcement of the proposed merger—that they would build out the nation’s first nationwide mobile 5G network, and that their company would be at the forefront of bringing mobile 5G to the United States. The companies made the promises of a mobile 5G network buildout to investors and through press outreach. The Commission should take the companies’ past statements to their investors and the public seriously and consider that both T-Mobile and Sprint have been prepared to build out strong, nationwide mobile 5G networks on their own and that their current argument that they need one another to do so is incorrect. Further, any purported deficiencies in spectrum holdings can be remedied through opportunities in the 3.7-4.2 GHz band coming up, as well as through upcoming auctions for millimeter wave spectrum.
The actual benefits of mobile 5G networks for consumers, and in particular those in rural areas, is highly exaggerated by T-Mobile and Sprint in arguing the proposed transaction serves the public interest. The claims of “fiber-like” speeds to come from a mobile 5G network is not iv only not merger-specific, but is also highly unlikely, in particular in rural areas. Analysts have predicted that mobile 5G networks might not see much more than an incremental improvement on LTE networks. Further, carriers have so far largely failed to deploy LTE networks to rural areas, and rural consumers are unlikely to see a sudden jump to mobile 5G as they still await the arrival of current-generation networks.
T-Mobile and Sprint have failed to meet their burden of proof that the proposed transaction would benefit the public interest and the Commission should deny their application to merge. The combined New T-Mobile would harm both competition in the wireless market and consumers, and the potential benefits described by the Applicants are dubious, and also do not require a merger to become reality.