It’s official: the FCC has approved the merger of telecom giants Sprint and T-Mobile, a move that evens the playfield against juggernauts Verizon and AT&T, but critics say reduces competition and opens the door to anti-consumer behavior.
Now all that stands in the way of both companies joining up is a bipartisan lawsuit brought by 13 state attorneys general and the District of Columbia, according to AppleInsider (opens in new tab). Once that’s resolved, Sprint and T-Mobile can proceed with a long-planned merger that will shrink the major US telecom field from four down to three.
After the DOJ approved the merger back in July, the FCC vote was one of the last remaining obstacles. It was split down party lines: Chairman Ajit Pai joined two Republican commissioners in approving the $26.5 billion merger, while the two Democrat commissioners voted against.
One of the latter, commissioner Jessica Rosenworcel, wrote in the Atlantic (opens in new tab) that reducing the number of telecoms “will hurt consumers, harm competition, and eliminate thousands of jobs.” The same happened when mergers in other industries saw shrunk the number of major players, including airlines (which added baggage fees and smaller seats) and pharmaceuticals (raised prices for essential medications), Rosenworcel argued.
After the merger, Rosenworcel continued, there’s very little to prevent the newly-merged company from raising wireless prices on consumers - except the mega-telecom’s word that it won’t (for three years, anyway). Even though conditions for the merger require the new T-Mobile to help Dish Mobile become a new “fourth telecom,” ostensibly to preserve some degree of competition, it has little incentive to do so.
The other Democratic commissioner, Geoffrey Starks, echoed Rosenworcel’s dissent that fewer options would lead to higher prices in a memo. Further, he criticized the FCC’s approving a merger that had “changed significantly from the one that was originally proposed - twice” without allowing for public comment.
US Senators had previously urged US regulators not to approve the merger back in early 2019. But assuming the state attorneys general goes through, we’ll see the US telecom industry fundamentally change.
The post-merger telecom landscape
Initially, here’s how the telecom landscape is set to change. As part of the merger, T-Mobile and Sprint will cede prepaid phone subsidiaries like Boost Mobile and Virgin Mobile to Dish Mobile, along with some of Sprint’s 800MHz spectrum - a deal which will cost Dish $5 billion.
Dish will also have to build out a partial 5G network by June 2023 that must cover 70% of the US population - if not, it faces a $2.2 billion fine. Obviously, this requirement is intended to assure some degree of 5G competition.
That’s especially important given how much of a lead the new T-Mobile will have on 5G. With the old T-Mobile 5G’s high-frequency mmWave and low-frequency sub-6 networks it’s begun to activate in 2019, plus mid-range Sprint 5G active in nine cities by the end of the year, the combined mega-telecom’s 5G will have plenty of markets covered - and be poised to expand 5G into rural areas, which need longer-ranged lower-spectrum signals in the sub-6 frequencies to reach individuals outside cities.
We’ll have to see how the landscape actually changes, assuming the state attorneys general lawsuit gets resolved without shifting the mega-telecom’s plans.