10 State AGs Join Forces, Will Sue To Stop T-Mobile Sprint Merger

from the bigger-ain't-better dept

While the FCC has indicated it’s more than eager to approve T-Mobile’s $25 billion merger with Sprint (despite an endless list of red flags), other regulators have proven to be a harder sell. The DOJ, for example, seems a bit sheepish on signing off on a deal that will reduce already semi-tepid US wireless competition by 25%. They’re correct to worry: US telecom is awash with examples of how such consolidation tends to devastate employment, and results in significantly higher rates for consumers and businesses alike.

Granted with the DOJ now run by former Verizon attorney Bill Barr, it’s still very possible the DOJ approves the deal anyway. But even then, the deal is going to have to get past a new coalition of 10 state attorneys general, who say they’ve joined forces and will file a lawsuit to block the deal whether the DOJ approves it or not. New York Attorney General Letitia James and California Attorney General Xavier Becerra were fairly blunt in a statement announcing the move:

“When it comes to corporate power, bigger isn?t always better,? said Attorney General Letitia James. ?The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country. That?s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”

While everybody is certainly welcome to their own opinions when it comes to tech policy, there’s really not much of a debate when it comes to the impact mindless M&As have had on the telecom sector.

Comcast (and it’s comically terrible customer service) was born from the mindless sector obsession with growth for growth’s sake. This consolidation, especially in wired broadband, has left us with a clearly unhealthy sector with little real competition, resulting in some of the highest prices and slowest speeds in the developed world. There’s not a single telecom metric the US isn’t mediocre in, and it’s a direct reflection of two things: regulatory capture and mindless merger mania. That’s now being extended to wireless, where the reduction of overall competitors from four to three will dramatically reduce any incentive to, you know, actually try.

It’s also pretty clear that when government tries to “fix” these anti-competitive unions via condition, it rarely works out well. The conditions imposed in these deals are often flimsy and proposed by the companies themselves (usually because they know they don’t actually do much). Even then, companies are routinely free to ignore conditions without meaningful penalty, and many bipartisan incarnations of the FCC have simply refused to enforce them anyway. Pre-merger promises (and there’s plenty attached to the T-Mobile deal) aren’t worth the paper they’re printed on, yet US policymakers adore pretending otherwise.

With former Verizon lawyers running both the FCC and DOJ, the chance that this administration imposes and then enforces tough deal conditions is slim to none. That leaves the more simple option: blocking the deal entirely. Some variant of this deal has been blocked twice already (AT&T’s attempted T-Mobile acquisition in 2011, and Sprint’s attempted merger in 2014), and for obvious reasons. Still, T-Mobile and Sprint executives are hoping that the Trump administration opens the door wide to approval anyway, leaving it (yet again) up to state AGs to actually protect the market and consumers in the face of federal apathy.

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Companies: sprint, t-mobile

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Comments on “10 State AGs Join Forces, Will Sue To Stop T-Mobile Sprint Merger”

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Mason Wheeler (profile) says:

To be perfectly honest, I can see a legitimate case for the idea of the merger improving competition. It hinges on this idea being based on a mistaken premise:

The DOJ, for example, seems a bit sheepish on signing off on a deal that will reduce already semi-tepid US wireless competition by 25%.

That statement would work if AT&T, Verizon, Sprint, and T-Mobile were all approximately equal in size and power, but… come on, you know that’s not true. The reason Sprint’s been trying to get this merger to happen for so many years is because they’re painfully aware that they’re just not big enough to stay relevant without it. And T-Mobile has caused a lot of interesting changes over the last few years with their "scrappy underdog" competitive tactics, but that’s the thing about underdogs: they are, by definition, at a big disadvantage when it comes to size.

The simple truth is that AT&T and Verizon are first-tier mobile phone providers, while Sprint and T-Mobile are second-tier mobile phone providers. They’re well-known names, but they’re just not in the same league as the Big Two. The question is, would the hypothetical "SprintMobile" company be big enough to be a legitimate first-tier company that could compete on the same level as AT&T and Verizon? If so, it’s quite possible we could see improved competition as a result, because it wouldn’t be "going from four providers to three" but "going from two first-tier providers to three."

(Please note that I’m not saying that this is necessarily the case; I don’t know how big "SprintMobile" would be compared to the Big Two or how much overlap there is currently between T-Mobile and Sprint that would become redundant. I’m just saying that it’s plausible, and worth considering from that perspective.)

Anonymous Coward says:

Re: Re:

The contrast between the trends in the stock prices of the two companies is remarkable. T-M has shown steady growth over the past several years, whereas Sprint has been heading in the opposite direction.

As a Sprint customer I harbor concerns that on its own Sprint may not be able to marshall the financial resources it needs to remain viable.

Personanongrata says:

The Cynic in Me

10 State AGs Join Forces, Will Sue To Stop T-Mobile Sprint Merger

It will be interesting to see if this is merely an exercise in misdirection put into effect by the 10 State AGs in order to help fill their campaign coffers with oodles and oodles of lobbyist/corporate speech (ie money).

Another potential charade of similar vein is the US Senate seeking to block the sale of US weapons to Saudi Arabia by the War Criminal in Chief (ie Trump).

It will be interesting watching where any lobbyist speech (ie money) is heard (ie deposited).


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