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.

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Companies: dish, sprint, t-mobile

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Comments on “States Are Being Conned By Lobbyists Into Backing Off The T-Mobile Merger Lawsuit”

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Anonymous Coward says:

Hey Karl,

Instead of writing about this fucking idiotic belief you have about "anti-competitive" business practices regarding the merger, will you please take 5 fucking seconds out of your pathetic rhetoric and explain what Sprint is supposed to do?

You CLEARLY do not do your fucking job well, as if you had, you’ll know Sprint is losing money. Millions, actually.

Maybe you failed economics, but here’s the gist: IF A BUSINESS ISN’T MAKING MONEY, IT CAN’T PAY ITS EMPLOYEES.

I know this concept is extremely difficult for you to understand, but the reality is simply this: SPRINT. IS. DYING.

NOTHING is going to save it at this point. The company has tried various attempts at getting people to sign up, and all have failed (and it doesn’t help with current contracts locking people into 1 or 2 year restrictions).

This merger is the BEST FUCKING OUTCOME for Sprint.

Yes, people WILL lose their jobs, but I cannot agree with your idiotic assessment the merger will be the cause of raised prices WHEN THE US TELECOM INDUSTRY RAISES PRICES JUST BECAUSE THE FUCKING SUN ROSE TODAY.

I’d rather 10k people keep their jobs, while 10k lose their jobs, than 20k all losing their jobs.

I know this math may be hard for someone like you to understand, but it really is just that simple.

You have offered NOTHING to change the current economic position of Sprint. NOTHING.

So either shut the fuck up or find a solution, because this bullshit rhetoric is getting old.

No, I don’t work for T-Mobile.
No, I don’t work for the telecom industry.

Just tired of reading your stupid, stupid opinions formed on ignorance, such as believing "unlimited data" = "unlimited speed" without realizing BOTH ARE IMPOSSIBLE.

Grow up already.

Solidus says:

Re: Re:

No, it doesn’t work that way.

Barl Kode is not supposed to tell you how to save Sprint, because that’s not his beat: if it was, he’d be making a hundred million dollars as the heroic CEO of Sprint.

His beat is the effect on consumers, and this merger may save Sprint, but from a consumer perspective, it will do no good and in fact a great deal of harm, even if it is the least worst of all possible worlds.

Also, unlimited data and unlimited speed are BOTH POSSIBLE in every country on Earth but ‘murrica. Bark Lode has told you so, and the people in the comments will attest to it, because we live there, and we know what we’re getting, and for what price we’re getting it.

It would involve, sure, some changes, capacity would have to be built- but if that stops you, why are you advocating for anything other than shutting up and leaving everything as it is? Do you think the internet is like a geological feature that was discovered in the 50’s? Obviously it involves changes, and there’s more than one way to do them, but it’s not impossible by any stretch of imagination.

Forgive me if I don’t meet you halfway.

Faithfully yours,
-the Goalposts

Karl Bode (profile) says:

Re: Re: Re:

Thanks for beating me to the punch.

Sprint’s eminent doom is overplayed for effect by those pushing this shitty deal. They’ve still got debt problems but have dramatically improved their finances in recent quarters. They’re also owned by one of the wealthiest companies in Japan.

And there’s a universe of ways to fix Sprint that don’t involve merging with a direct competitor in a deal every single economic predictive metric suggests will be terrible. It could merge with Comcast. Or Charter. Or Dish in a deal that doesn’t integrate T-Mobile. Or hire better executives.

I have no idea why this guy is so personally upset that I simply pointed to factual reality and the 40 year history of deals like this being terrible for consumers, competitors, and the market.

This comment has been deemed insightful by the community.
Mike Masnick (profile) says:

Re: Re:

You CLEARLY do not do your fucking job well, as if you had, you’ll know Sprint is losing money. Millions, actually.

I’m sorry, but when did someone appoint Karl to be CEO of Sprint, in which case this would actually matter to Karl’s job.

However, as a commentator on telecom and related policy, his job here (I’m his boss, so I should know…) is to cover the issues that he does cover and explain the issues he explains. And he does a good job of it.

If you wish to hire him away from us to go be CEO of Sprint, well, that would be disappointing for us, but then you can question him about how Sprint should fix its business.

JoeCool (profile) says:

Let me laugh harder

The companies agree to pay up to a total of $100 million if they fail to meet these commitments.

I can’t believe he’s so gullible… actually, I can… or maybe he’s corrupt. In any case, notice it says up to $100 million. $0 is certainly part of the set of all numbers "up to" $100 million. Now if they had a legal contract that stated a minimum of $100 million, that might be more conceivable that the AG would pull out because of it. Of course, they’d never offer that. Instead, you get weasel words that mean nothing, and in the end, promise nothing.

That One Guy (profile) says:

Re: Let me laugh harder

Nonsense, it’s not like the companies in question have ever made use of the ‘up to’ wording in questionable ways to screw people over, I’m sure they wouldn’t even think of doing so here.

On a less ‘dripping with sarcasm’ note I suspect that it’s less gullibility and more corruption, in that in exchange for dropping their part in the lawsuit Dish hands them some cheap and almost certainly completely empty PR they can use to make themselves look better, safe in the knowledge that by the time it’s clear that Dish has zero interest in actually upholding their end of the bargain people will have forgotten the original ‘trade’ and/or they’ll have moved on to other jobs.

jezra (user link) says:

the 5G rural buildout will never happen

it is simply not possible for TMo to provide coverage in rural hilly/mountainous areas without building a lot of new towers, and in areas like mine, the local government practically has a moratorium on new cell towers. Upgrading their current towers to use the 600MHz signal will help, but TMo is slacking on upgrading their 4G transmitters in rural areas to 600MHz.

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