Published: Tue, May 21, 2019
Electronics | By Kelly Massey

Reasons Why the Sprint-T-Mobile Merger Looks Headed for Approval

Reasons Why the Sprint-T-Mobile Merger Looks Headed for Approval

T-Mobile US Inc. and Sprint Corp. also said Monday that they would sell Sprint's prepaid cellphone brand Boost Mobile to address antitrust concerns.

Pai released a statement saying that because T-Mobile and Sprint have committed to covering nearly the entire country with 5G over the next three years (97% of the population), increasing buildout of their mid-band spectrum holdings, creating another home broadband choice for rural customers who don't have many, and selling off Boost, Sprint's prepaid brand, he is willing to recommend an approval. Part of the delay was due to changes that T-Mobile made to documents it filed with the FCC regarding projections it made related to the merger.

Pai said he will present a draft order to his fellow FCC members in the coming weeks connected with the merger. "Still waiting on that investigation of T-Mobile & others for selling geo-location info to brokers".

T-Mobile and Sprint also "offered specific commitments regarding the rollout of an in-home broadband product, including to rural households", Pai said. "These consequences, which could include total payments to the U.S. Treasury of billions of dollars, create a powerful incentive for the companies to meet their commitments on time", the FCC chairman said in his statement backing the merger. Commissioner Brendan Carr and chairman Ajit Pai have both signaled their support on Twitter.

What's more, said Free Press vice president of policy and general counsel Matt Wood, "the merged companies' spectrum wouldn't allow for decent rural coverage at 5G speeds", and "T-Mobile and Sprint are already building 5G networks without the deal".

T-Mobile has about 80 million customers and Sprint has about 55 million customers.

As for the commitments themselves, they appear entirely focused on a promise to roll out 5G networks. So with Sprint-T-Mobile, regulators added a major financial penalty, too.

Now, with T-Mobile the most innovative and fastest growing of the four major USA wireless operators, it no longer needs a merger to survive.

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She also questioned the rationale for approving such a larger merger in a market with so few companies.

Critics of the merger are concerned that removing one of the four big wireless carriers in the USA will stifle competition and hurt consumers.

Sprint has pushed hard for a combination with T-Mobile, citing deep concerns about being able to continue on as a standalone company given years of losses and withering competition in the wireless business. In their bid for approval, the two companies agreed to sell off Sprint's Boost Mobile and committed to having 5G coverage for 85 percent of the USA within three years and 90 percent within six.

The speed gains from deploying 5G on the low- and mid-band spectrum used for 4G will be minor in comparison.

"T-Mobile and Sprint have promised that their network would cover at least two-thirds of our nation's rural population with high-speed, mid-band 5G", Pai said. "We've seen this kind of consolidation in airlines and with drug companies". It hasn't worked out well for consumers. "But now the FCC wants to bless the same kind of consolidation for wireless carriers".

The new company, said Berenbroick, could "charge consumers higher prices by increasing fees and surcharges, or by merely eliminating its legacy rate plans entirely and replacing them with more expensive plans offering more data".

The deal still requires approval by antitrust attorneys at the Justice Department. "I have serious doubts".

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