Sprint shouldn?t buy T-Mobile ? and faces high regulatory hurdles

Last week, Sprint edged closer to finalizing a deal to buy T-Mobile for an estimated $32 billion. And that only ramped up the debate over the merits and shortcomings of merging the third and fourth largest wireless carriers.

Opposition to the deal is coming from both consumer and financial analysts, as well as community and labor groups.

Law professor and former Obama administration technology official Susan Crawford spoke emphatically for consumers in a Bloomberg opinion piece this week. “A Sprint Corp./T-Mobile joinder shouldn't be permitted,” she wrote, “No matter how the deal is conditioned, it will cause a reduction in competition.”

Crawford attacked the argument that a merged company would be better able to compete with Verizon and AT&T. “Sprint, with about 16 percent market share, argues that combining with T-Mobile (13 percent) will create a viable third player,” she said. “But if a Sprint/T-Mobile deal is approved, the combined entity will have less incentive to be disruptive and more incentive to raise prices than either of them have now as separate businesses.”

In all probability, though, consumers will never find out, say many analysts. Todd Shields and David McLaughlin of Bloomberg wrote that Sprint chief Masayoshi Son is wrong to assume he’ll “... be able to ride the regulatory coattails of pending U.S. telecommunications deals.”

Shields and McLaughlin quote Jeff Blumenfeld, an attorney at Lowenstein Sandler LLP about the regulatory hurdles that face Son. This deal is “going to be the hardest one to get through. You have direct competitive overlap in an already concentrated industry,” said Blumenfeld.

And they quoted Blair Levin, a former chief of staff for the Federal Communications Commission. “The theory that because everybody else is getting big, so you have to let me get big, has a lot of political resonance,” he said. However, that’s not really the issue facing Sprint because “It doesn’t have antitrust resonance.”

So, while a Sprint/T-Mobile deal is still theoretically possible, it would harm for consumer, for workers and for overall industry competition.

Sprint-T-Mobile deal would face uphill battle (Speed Matters, Jun. 6, 2014)

Don't Let Sprint Buy T-Mobile (Bloomberg View, Jun. 10, 2014)

Deal Logjam Won’t Help Japanese Billionaire Get T-Mobile (Bloomberg, Jun. 5, 2014)