Leading observers agree: T-Mobile-Sprint commitments insufficient, proposed merger remains anticompetitive

Earlier this week, several FCC commissioners stated support for the proposed T-Mobile and Sprint merger, after the companies announced several new commitments. The commissioners signaled their support before inviting comment from interested parties and the public. In the aftermath, leading observers argued that the announced commitments are insufficient and unverifiable; the proposed merger remains anticompetitive and harmful; and that the Department of Justice and state reviewers should block the merger. Read excerpts of some of these key voices below:

• Gigi Sohn in Wired: “Why a T-Mobile/Sprint merger would be bad for the public” - Sohn, a former counselor to FCC Commissioner Tom Wheeler and a current fellow at the Georgetown Law Institute for Technology Law and Policy, calls the companies’ announced promises: “speculative, unsubstantiated, and entirely unenforceable,” noting that “nothing in T-Mobile’s filings prove that they can meet”  ambitious and “wildly optimistic” 5G goals. Regarding the pricing pledge, Sohn notes, “the mere fact that T-Mobile believes it must make this promise is itself an admission that post-merger, there would not be enough competition in the wireless market to constrain price increases. […] Moreover, this so-called ‘pricing commitment’ is for a limited time and is riddled with ambiguities and loopholes […] Simply put, promises are not enough. […] The Justice Department should move to block the merger without delay.”

• Karl Bode of The Verge: “T-Mobile’s merger promises are meaningless” - Bode, a prominent telecom journalist, notes: “if you’ve seen telecom mergers go through this process before, there’s plenty of reason to be skeptical. Consolidation tends to make prices higher, connectivity worse, and customer service even more terrible. Pre-merger promises to do better are usually hollow, as consumer advocates, unions, and many antitrust experts all agree. For Sprint and T-Mobile, the biggest new wrinkle is the promised arrival of 5G, but that new tech is just cover for the same promises of better service and broader access — promises that are shaky at best […] Reducing the total number of competitors only reduces the competitive incentive to improve service or invest in broader availability. Given the US government’s history of terrible service maps, confirming T-Mobile adhered to its promises would be an uphill climb, even for a third-party auditor.”

• Matt Wood of Free Press: new conditions are “a tiny Band-Aid on what would be a fatal wound to wireless competition and affordability” - Wood, the Vice President of Policy and General Counsel of Free Press, calls the companies’ announced conditions, “a tiny Band-Aid on what would be a fatal wound to wireless competition and affordability in this country. DOJ’s staff seems to get that, even if some of the political appointees leading the FCC don’t […] Allowing this merger to go through would drive up prices for everyone, as T-Mobile’s own expert economists admitted to the FCC. The merging parties’ so-called pricing commitments, and their promise to divest the relatively small Boost prepaid band — while keeping Boost reliant on access to T-Mobile’s network and good graces — would do nothing to prevent price hikes and restore lost choices.”

• The New Yorker economics columnist John Cassidy: FCC Chairman Pai ignores “voluminous evidence” regarding the anticompetitive nature of merger - After recapping the competitive concerns posed by the proposed merger and assessing that “the wireless industry is a conspiracy against the consumer waiting to happen,” Cassidy notes that FCC Chairman  Pai’s supportive statement ignores “the voluminous evidence, from the wireless industry and other sectors of the economy, that higher levels of concentration are associated with less vigorous competition and higher prices […] If T-Mobile and Sprint are allowed to merge, the danger is that the combined company, which would be called T-Mobile, could be tempted to disavow this competitive past and settle into a cozy relationship with AT&T. and Verizon, offering similar plans and avoiding disruptive price wars.”

• Los Angeles Times columnist Jon Healey, “T-Mobile and Sprint might get their merger. The rest of us might get their broken promises” - Healey writes, “Letting T-Mobile absorb Sprint would reduce the number of national network builders from four to three, and when that sort of shrinkage has happened in other countries, it has led to higher prices and less innovation. The companies, which have promised not to raise prices for three years, argue that the merger will enable them to upgrade to 5G faster, but that’s the sort of assertion that merger-seekers always make […] Even if the FCC does bless the merger, the deal still has to be approved by the Justice Department, whose top antitrust lawyer, Makan Delrahim, does not consider promises like the ones T-Mobile and Sprint are making to be adequate protections against harm.”

Telecom analyst Craig Moffett: FCC hurdle “neither the highest nor the most important hurdle” - Tony Romm of the Washington Post noted, “Analysts said the Justice Department’s skepticism could also fuel a challenge led by state attorneys general. Even if the DOJ doesn’t ultimately sue, the odds are growing that ‘state attorneys general for the blue states will sue in Federal court to try to block the transaction,’ warned Craig Moffett, a senior analyst at the firm MoffettNathanson, in a note to investors this week. ‘The deal looks like it has crossed one important hurdle (the FCC),’ he wrote. ‘But that was neither the highest nor the most important hurdle.’”