States Are Being Conned By Lobbyists Into Backing Off The T-Mobile Merger Lawsuit
from the empty-promises dept
While the DOJ (run by former Verizon lawyer William Barr) and the FCC (run by former Verizon lawyer Ajit Pai) are really excited to rubber stamp Sprint’s $26 billion competition-eroding merger with T-Mobile, a bipartisan coalition of states are all that stand in the way in the deal. What began as a coalition of ten states had been slowly expanding over the last few months to include states like Texas. Collectively, state AGs have made it very clear that every meaningful economic metric indicates the deal will erode competition, raise rates, and result in thousands of layoffs as redundant employees are inevitably eliminated.
But in recent months, T-Mobile lobbyists have had some success peeling states off from the lawsuit by making all manner of promises that history suggests aren’t likely to be followed through on. Last month, for example, Colorado’s AG pulled the state from the lawsuit after T-Mobile promised some additional jobs and 5G coverage to the state. In a press announcement, the Colorado AG says Dish Network (whose involvement we explain here) promised the state 2,000 additional jobs and broader 5G deployment to rural parts of the state if they back off the suit:
“Dish Network will locate its new wireless headquarters with at least 2,000 full-time employees in Colorado and T-Mobile will significantly build out a statewide 5G network, particularly in rural areas, under agreements the Colorado Attorney General?s office announced today. The companies agree to pay up to a total of $100 million if they fail to meet these commitments.”
The problem is that US Telecom history is filled with examples of companies making promises just like this one that magically evaporate at a later date. And more often than not, when it comes time for government to hold telecom giants accountable for failed promises of this type, any type of enforcement magically disappears. This isn’t just a one off; it has happened from state to state across the union for the better part of the last twenty to thirty years, and is a major reason we still have overpriced, middling broadband networks.
The other problem is that many experts doubt that Dish will ever even properly build a 5G network. After admitting the merger would reduce competition and raise rates (as data shows 4-3 telecom consolidation almost always does around the globe), the DOJ proposed a “solution”: force T-Mobile and Sprint to offload some spectrum and the Boost prepaid brand to Dish Network, which will, over a period of 7 years, try and cobble together a fourth replacement carrier. For the better part of the next decade however Dish will be little more than a glorified T-Mobile MVNO or reseller, which won’t offset any of the deals real harms.
Another problem: even T-Mobile has criticized Dish Network for spectrum squatting and a long history of empty wireless promises, and the proposal itself has been ridiculed for resulting in far less 5G coverage than the companies are promising. And those thinking they can actually confirm where 5G will be available should know T-Mobile and other wireless carriers are trying to prevent transparent public access to 5G mapping data.
For the Dish plan to actually succeed, the government will have to nanny T-Mobile and Dish to make sure they live up to their end of the bargain, and prevent AT&T and Verizon (which, you’ll notice, have been dead quiet and don’t oppose deal because it will reduce overall competition) from undermining the effort at every turn. Who’s going to do that: industry BFF Ajit Pai? Bill Barr’s DOJ? Most economists I’ve spoken to think this ends with Dish simply selling its spectrum to AT&T and Verizon after several years of what’s going to amount to little more than theater. It’s easier and more profitable.
When it comes to pre-merger promises, the US telecom industry burned through any benefit of the doubt decades ago. And yet the feds, states, and numerous press outlets still act as if these companies are trustworthy when it comes to said promises. In reality, pre-merger promises are meaningless, and endless telecom sector consolidation is good for just two sets of folks: investors and executives (and even then the proposition is sometimes iffy if you recall fiascoes like Sprint Nextel). Reducing sector competition by 25% will reduce raise rates and stifle innovative incentives. It’s just simple economics, as the remaining three companies are obligated to shareholders to take full advantage of the new reality.
Colorado was recently joined by Mississippi in backing off from the lawsuit after some T-Mobile promises. Still, the thirteen states involved in the suit are three more than they started with. The trial is set to begin December 9.