Google Joins Talks In Bid To Salvage T-Mobile Merger

from the frankenstein-competition dept

We recently noted that the DOJ seemed to have shifted its thinking and is now likely to approve T-Mobile’s highly problematic $26 billion merger with Sprint. Why? As it stands, not only do such telecom mergers almost always result in significant layoffs (despite what T-Mobile is promising employees), the deal would eliminate one of just four major US wireless competitors, dramatically reducing any incentive to compete on price. So T-Mobile lobbyists have launched a hail Mary pass: they’re proposing spinning off a part of the company and potentially selling it to a competitor like Dish Network, creating a new fourth carrier.

The problem: Wall Street doesn’t believe the assets Dish will obtain (like prepaid brand Boost Mobile) will be enough to craft a fully viable fourth character. There’s also a lot of doubt that Dish Network, with a long history of hoovering up valuable spectrum and then doing absolutely nothing with it, would actually be competent enough to pull such a plan off. Enter Google, which has now also been rumored as a possible dance partner in T-Mobile’s gambit to salvage the merger:

“Google is in talks to help create a fourth US wireless carrier, even as Sprint and T-Mobile struggle to get their controversial merger cleared by federal and state authorities, The Post has learned. Alan Mulally, a former chief executive at Ford Motor and a current Alphabet director, has recently been in discussions with satellite TV giant Dish Network about a plan to create a fourth US telecom player, sources said.

The idea is for Alphabet-owned Google and Dish to launch a new wireless giant with the help of assets acquired from T-Mobile, which is now under pressure from the Department of Justice to aid such a project in order to get clearance for its $26 billion merger with Sprint, according to sources close to the situation.”

Dish CEO Charlie Ergen has long enjoyed a reputation in telecom for being difficult to strike deals with, so there’s still no guarantee this proposal sticks together. Google has also been prone toward inconsistency on the telecom front after an executive sea change resulting in the company largely mothballing its Google Fiber expansion. It’s also possible that Google isn’t actually all that interested, and the leaks to the Post are intentional on T-Mobile’s part to sell the idea that there are alternatives to the far simpler approach: blocking the deal outright.

Whichever dance partners we’re talking about, the biggest problem will be regulatory oversight of the creation of this new fourth carrier. Ajit Pai has yet to hold any major company accountable on any subject of substance. Building and sustaining a viable fourth competitor will require some stringent oversight and meaningful penalties should the proposal falter, neither of which are exactly Pai’s strong suit. At the end of the day, the simplest way to maintain four competitors would be to block the deal outright and force Sprint to explore solutions outside of the merger process.

Filed Under: , ,
Companies: dish, google, sprint, t-mobile

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Comments on “Google Joins Talks In Bid To Salvage T-Mobile Merger”

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Anonymous Coward says:

4 competitors is better than 1, but it’s still an oligopoly in my book.
I wish Microsoft, Apple, Google, Amazon and Netflix would all become (price and service COMPETITIVE) ISPs as well–to give the big 4 some incentive to improve their services. These companies aren’t perfect either, but a larger oligopoly is better than a smaller oligopoly.

PaulT (profile) says:

Re: Re:

It’s not necessarily a problem as long as they’re force to actually be competitive – that is, net neutrality rules are put back in place and properly enforced, the ISP divisions are disconnected from the media arms of each corporation and proper penalties put into place to prevent them from leveraging any direct advantage from their non-ISP arms, and so on. The problem isn’t the number or size of them, it’s that there’s nothing currently to stop them locking consumers and computers out of a real market.

Of course, in the US this kind of effective regulation is somehow tantamount to communism and some people would rather have their rights bought from under them than have effectively regulated services.

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