The pending $26-billion T-Mobile-Sprint merger cleared a major regulatory hurdle on Monday when Federal Communications Commission chairman Ajit Pai gave his blessing to the corporate marriage.
But even if the merger of the nation’s No. 3 and No. 4 wireless carriers goes through, and the odds of that happening appear to have improved, uncertainties remain about the potential impact on consumers.
Opponents insist the impact won’t be good, resulting in reduced competition, higher prices for cellular coverage, and a loss of as many as 30,000 jobs.
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T-Mobile and Sprint have long claimed otherwise and previously committed to not raise prices for three years. Sprint has also suggested in regularly filings that, absent merger approval, Sprint’s very long-term viability is in question.
To win FCC approval and placate critics, the would-be merger partners agreed to concessions, including accelerating deployment of 5G broadband in rural America to help close the digital divide.
Industry analyst Roger Entner of Recon Analytics isn’t concerned about wireless prices, which he says “have always gone down,” a trend he expects will continue.
What isn’t quite clear, though, is whether the perks that come with some current plans –free streaming on Netflix and Hulu, for example – will last into the future.
T-Mobile and Sprint have also argued that the deal will help them compete against their much bigger rivals Verizon and AT&T, especially as all the carriers roll out speedy next-generation 5G wireless networks.
Critics aren’t buying it.
“The T-Mobile-Sprint merger is still anticompetitive and anti-consumer. The companies have made a handful of promises on 5G, rural buildout and in-home broadband that are speculative, not specific to the merger and completely unenforceable,” Gigi Sohn of the Georgetown Law Institute for Technology Law & Policy said in a statement.
Matt Wood, the vice president of policy and general counsel at the Free Press advocacy put out his own statement. “The digital divide isn’t just about rural buildout – though as others opposing the deal have shown, the merged companies’ spectrum wouldn’t allow for decent rural coverage at 5G speeds….Both T-Mobile and Sprint are already building 5G networks without the deal.”
Wood instead says “the FCC should focus on the affordability crisis” and an “adoption gap that makes it hard for poorer people to get online, and it keeps people of color disconnected more often than other demographic groups.”
T-Mobile and Sprint also agreed to part with Boost Mobile, a Sprint-owned prepaid carrier that competes against Metro by T-Mobile.
The service, which you pay in advance for is typically where you’ll find the cheapest prices, with Boost and Metro accounting for nearly half the market.
Boost Mobile founder Peter Adderton, who had been a vocal opponent of the merger, now describes himself as “absolutely ecstatic that the FCC made the right decision enforcing them to divest Boost.”
But he remains cautious with how the FCC concessions play out: “The devil is going to be in the details,” he says, with questions around “what, where, why and who is the referee (to) oversee it” yet to be answered.
(Adderton, who runs Boost in Australia from his base on Los Angeles, is interested in buying a newly independent Boost.)
For his part, analyst Entner doesn’t think surrendering Boost is that big a deal: “The new T-Mobile would have had three prepaid offers (Metro, Boost, and Sprint’s Virgin), which is two more than they need. You saw the inefficiencies at Sprint with two prepaid brands. Giving up Boost was sacrificing a pawn that was a dead man walking anyway.”
Wood is skeptical for other purposes: “Divesting Boost won’t do a thing. If and when that brand is actually cleaved off from T-Mobile and Sprint, it’ll no longer have access to those companies’ networks. It would, like other wireless resellers, need to lease capacity from the new T-Mobile, and that means that this divestiture would do nothing to address the vast market power T-Mobile is accumulating.”
Not everyone on the FCC thinks the outcome will benefit the public either. Commissioner Jessica Rosenworcel tweeted, “We’ve seen this kind of consolidation in airlines and with drug companies. It hasn’t worked out well for consumers. But now the @FCC wants to bless the same kind of consolidation for wireless carriers. I have serious doubts.”
Still up in the air, of course, is whether the Justice Department and state attorneys general will follow the FCC’s lead and approve the deal.
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