CWA meeting with FCC: T-Mobile-Sprint merger remains anti-competitive and harmful to workers

CWA filed an ex parte summary of an April 11 meeting with FCC Commissioner Jessica Rosenworcel and FCC staffer Umair Javed about the proposed T-Mobile-Sprint merger. As CWA staff and attorneys explained in their presentation, summarized here, the merger as presently constructed remains anti-competitive, harmful to workers, and against the public interest.

According to Debbie Goldman, CWA Research and Telecommunications Policy Director, “The fundamentals surrounding the proposed T-Mobile/Sprint merger remain the same. As currently structured, this merger would be anti-competitive and against the public interest, eliminating 30,000 jobs, lowering wireless workers’ wages, and failing to move the needle for rural America.”

CWA’s ex parte summary is available online here with key points summarized below:

Proposed merger is “presumptively anticompetitive”
During its FCC meeting, CWA detailed why the “HHI calculations for this transaction show that the proposed merger is presumptively anticompetitive under well-established antitrust case law.” CWA attorneys also explained why prepaid and postpaid are different products from a pricing, features, sales, marketing, advertising, and customer care perspective, and therefore why the FCC should evaluate prepaid wireless retail services as a separate product market. Finally, CWA reiterated its analysis that the “New T-Mobile” would exceed the FCC’s spectrum screen in two-thirds of the counties in the United States, where 92 percent of the U.S. population resides.

30,000 jobs at risk and companies’ jobs pledge is filled with loopholes
CWA reiterated why 30,000 jobs are at risk, presenting maps of T-Mobile and Sprint retail stores and Metro and Boost retail stores showing that the companies’ retail stores are often located within blocks and even across the street from each other. After the merger, CWA expects that T-Mobile will close duplicative stores, resulting in significant job loss for employees at the shuttered stores. CWA’s comprehensive analysis finds that the proposed merger would result in the loss of 30,000 jobs nationwide - 25,500 jobs as a result of overlapping retail store closures at postpaid and prepaid locations and another 4,500 jobs due to duplicative functions at corporate headquarters in Overland Park, KS and Bellevue, WA.

CWA also explained that the companies’ unsubstantiated jobs pledges are filled with loopholes. T-Mobile and Sprint sell wireless products and services at both corporate-owned stores and stores operated by independent authorized dealers. T-Mobile identifies employees working at corporate-owned stores as “internal” employees and employees working for authorized dealers as “external” employees. CWA estimates there are 120,000 people selling T-Mobile and Sprint wireless services and products and about 75 percent of them – or 88,000 workers – work at stores operated by authorized dealers. Employees of these authorized dealers, therefore, would not be covered by T-Mobile’s jobs pledges.

Labor market impact of merger: lower wages and iWireless case study
CWA also reiterated the impact of the proposed merger on the wireless labor market. Reducing the number of wireless carriers from four to three and shuttering thousands of duplicative stores will flood the labor market with unemployed retail wireless workers seeking jobs. The presentation summarized findings from the December 2018 study by the Economic Policy Institute (EPI) and the Roosevelt Institute,“Labor market impact of the proposed Sprint–T-Mobile merger,” which found that, in the 50 most affected labor markets, the average annual earnings of retail wireless workers would decline by as much as $3,276.

CWA also detailed the findings and implications of their February 2019 Disrupting Rural Wireless report. T-Mobile’s 2018 acquisition of iWireless, a regional carrier that provided postpaid and prepaid wireless service to approximately 75,000 customers in Iowa, western Illinois, and eastern Nebraska, provides a case study of the impact of a T-Mobile acquisition on rural customers, prepaid customers, and small business authorized dealers. After T-Mobile acquired 100 percent interest in iWireless, T-Mobile terminated 86 percent of iWireless’ retail locations, including the vast majority of iWireless’ rural locations.  

Marginal impact in rural areas
CWA’s presentation also explained the “proposed merger would have marginal impact in rural areas” because T-Mobile already holds low-band spectrum best suited for long distances in rural America, but not at high speeds. At the same time, Sprint contributes very little rural infrastructure, and its mid-band spectrum is poorly suited for rural areas because it has shorter range and is easily obstructed by foliage and terrain. CWA also highlighted that the companies’ own filings and analyses show that post-merger, the New T-Mobile’s mid-band coverage would not reach 84.6 million Americans by 2021 and would leave 45.9 million rural Americans unserved in 2024.

Links:

CWA’s April 15, 2019 FCC Ex Parte (CWA, Apr. 15, 2019)