CWA calls on the NY Public Service Commission to deny the T-Mobile-Sprint merger

CWA District 1 filed new comments with the New York Public Service Commission (NY PSC) calling on the Commission to deny the joint petition of T-Mobile and Sprint to merge and supplementing earlier comments submitted by CWA District 1 in November 2018. Detailed economic analysis by CWA has shown that the proposed merger, as presently constructed, would eliminate 1,705 jobs in New York and 30,000 jobs nationwide (see here for a detailed New York-specific fact sheet on job losses).

According to Dennis Trainor, Vice President of CWA District 1, “The proposed T-Mobile-Sprint merger is against the public interest in New York and should not be approved as currently structured. The merger would eliminate more than 1,700 New York jobs, put downward pressure on wages for New York retail wireless workers not covered by a union contract, and raise prices on New York consumers, with price-conscious consumers being particularly hard hit. Meanwhile, the merger would not meaningfully benefit rural New Yorkers. The NY PSC should deny the companies’ petition to merge, as currently structured, as it clearly fails the public interest standard.”

In their new comments to the NY PSC, available online here, CWA District 1 highlights that the companies fail to meet the public interest standard, noting:

“The proposed merger between T-Mobile and Sprint, the third and fourth largest wireless carriers with 77.2 million and 54.5 million subscribers, respectively, would result in considerable harm to the public interest with no countervailing public interest benefits in New York. The merger would substantially lessen competition both upstream, hurting workers, and downstream, hurting consumers. Besides fewer jobs, lower wages, and higher prices, the merger will concentrate valuable spectrum in a combined T-Mobile-Sprint, exceeding the FCC’s spectrum screen in 54 counties in New York where 97.5 percent of the state’s population reside. Consumer organizations, industry participants, antitrust experts, all agree: the proposed merger between Sprint and T-Mobile as currently structured is not necessary to build next-generation 5G networks, will result in considerable job loss in New York, and will reduce competition and raise prices for consumers, particularly low-income and price-conscious wireless customers.”

Among the other key analysis in the new CWA District 1 filing:

The merger would result in the loss of more than 1,700 jobs in New York, reduce wages for wireless workers, and combine two companies with a long history of labor and employment law violations. The comments include CWA’s detailed economic analysis showing that the merger would eliminate 30,000 jobs nationally and 1,705 jobs in New York; note how the applicants have failed to substantiate their vague job creation claims; and highlight the disturbing anti-worker track records of the applicants. The comments also highlight new research from the Economic Policy Institute and the Roosevelt Institute on how the merger would reduce the number of employers in the already concentrated wireless worker labor market, leading to a reduction in workers’ wages in the industry. The comments note that the study found that in the New York City metro area, annual earnings for wireless workers would decline by as much as $3,248 following the merger.

The merger would reduce competition and raise prices, with particularly negative impact on low-income and price-conscious customers. The comments detail how the merger would significantly increase concentration in the market for mobile telephony/broadband services and prepaid wireless retail services and eliminate the substantial head-to-head competition that currently exists between T-Mobile and Sprint. As a result, the merger would enable the merged firm to profit by unilaterally raising the prices on consumers. The comments reference analysis done by DISH’s economists from the Brattle Group, which demonstrated that the proposed merger would result in price increases as high as 9.1 percent for postpaid brands and as high as 15.5 percent for prepaid brands.

The applicants’ claims that the merger is necessary for 5G and rural deployment are overblown and misleading. As the comments note, “the Joint Applicants claim that the merger will benefit the public with the “a more powerful 5G network with faster speeds, more capacity and greater coverage” including in “many rural areas.””  This claim falls apart for two key reasons: both companies are viable on a standalone basis and are already in the process of improving their networks, including their ability to provide initial 5G services. Neither company needs the proposed transaction to be an effective competitor in the future; and while Sprint presently appears to lack the tools to offer 5G in rural parts of the country, the Applicants have made no showing that the merged firm would have either the incentive or ability to provide hallmark 5G services outside of densely-populated areas. The proposed merger does not change that reality for rural America.

As a result, CWA District 1 concludes:

“The Commission should not approve the proposed merger between T-Mobile and Sprint as currently structured because it would result in substantial public interest harm and offers no countervailing verifiable, merger-related public interest benefits.  Moreover, the Commission should require the Applicants to submit data on current and projected employment so that the Commission and the public can properly evaluate the job impacts of this transaction; not approve the proposed transaction without clear and enforceable commitments by the Applicants to protect jobs in New York; and require the Applicants to (i) ensure that the transaction does not cause a reduction in New York employment and that no employee of T-Mobile or Sprint loses a job as a result of this transaction; (ii) commit to return all overseas customer call center jobs to the U.S.; and (iii) commit to complete neutrality in allowing their employees to form a union of their own choosing, free from any interference by the employer.”

Link: 

Press Release: “Citing 1,705 New York Jobs at Risk and Higher Consumer Prices, CWA District 1 Calls on NY Public Service Commission to Deny T-Mobile and Sprint Merger as Currently Structured” (CWA, Jan. 7, 2019)