Sprint, T-Mobile Try To Sell The Public On A Job-Killing, Competition Eroding Megamerger

from the more-of-this-shit dept

Sprint and T-Mobile are once again talking megamerger. The two companies tried to merge in 2014, but had their romantic entanglements blocked by regulators who (quite correctly) worried that the elimination of one of just four major players in the space would eliminate jobs, reduce competition and drive up costs for consumers. Emboldened by the Trump FCC's rubber stamping of industry desires, the two companies again spent much of last year talking about a potential tie up, though those efforts were ultimately scuttled after the two sides couldn't agree on who'd get to run the combined entity.

But the two companies appear to have settled their disagreements, and over the weekend announced they'd be attempting to merge once again as part of a $26 billion deal. Executives for both companies spent most of the weekend trying to convince the public that dramatically reducing competitors in the sector would magically somehow create more competition:

Of course that's not how competition works. While T-Mobile has had a net positive impact on the wireless sector on things like hidden fees and absurd international roaming costs, the four major carriers had already been backing away from promotions so far this year as they try to avoid something the telecom sector loathes: genuine price competition. As our friends in Canada can attest, reducing the overall number of major competitors from four to three only reduces the incentive for real price competition even further. It's simply not debatable.

And while the two companies are trying to claim that Sprint couldn't have survived on its own, that's not really true. The company's debt load is notable, but with Japanese owner Softbank the company had slowly but surely been getting a handle on its finances. And if a deal was inevitable for survival, there's plenty of potential merger partners (from Dish Networks to a major cable company like Charter Spectrum) that could have been pursued without eliminating a major competitor.

The two companies are also amusingly trying to claim that the deal will somehow create jobs:

And while that's adorable salesmanship, it's indisputably false. History has proven time, and time, and time again that such consolidation in telecom erodes competition, jobs, and quality service. Mindless M&A mania is a primary reason why you all loathe Comcast, since growth for growth's sake consistently means service quality takes a back seat.

Wall Street analysts had previously predicted that a tie up between the two companies could result in the elimination of anywhere from 10,000 to 30,000 jobs (the latter being more than Sprint even currently employs) as redundant retail locations, middle managers, and engineers are inevitably dismissed. And while both companies are spouting the usual lines about how "nothing will really change," anybody that has lived through a deal like this one (or, say, just paid attention to history) should realize the folly of such claims.

Whether the deal will be approved by the Trump administration is uncertain. While the Ajit Pai run FCC has made it abundantly clear it's willing to rubber stamp every fleeting sector desire regardless of its impact (net neutrality, privacy), the Trump DOJ has become a bit of a wildcard in the wake of its lawsuit to thwart the AT&T Time Warner merger. Some analysts see the deal as having only a 40% chance of approval, though Sprint and T-Mobile are trying their best to pander to the Trump admin by claiming that the miracles of next-gen wireless (5G) can only arrive if they're allowed to merge.

But there's a reason both companies announced the deal on a Sunday when everybody was napping or tending to the lawn. There's also a reason they're trying to rush this deal through now before adult regulatory supervision inevitably returns at the FCC. And that's again because this deal, like so many telecom sector megadeals before it, will only benefit investors and shareholders, not the public or the internet at large. Since companies can't admit that these deals are largely harmful to anybody but themselves, we get obnoxious sales pitches that aggressively ignore common sense -- and history.

Filed Under: antitrust, competition, consolidation, doj, fcc, jobs, john legere, marcelo claure, mobile
Companies: sprint, t-mobile

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  1. icon
    That One Guy (profile), 1 May 2018 @ 9:44am

    Re: Re: Noose vs Axe

    So much cognitive dissonance with your response.

    Just for entertainment purposes, define 'cognitive dissonance'.

    Your regulations are not keeping anything honest either? How is it that everyone eles's ideas are require to keep the market honest but your ideas do not have that same requirement?

    That they're not perfect does not mean they should be tossed entirely, and if you're going to propose an alternative(which is what? Ah yes, 'regulations') the minimum standard is that they meet the standard you set. If the current system isn't working because it doesn't keep things honest, then yours had best meet that standard or you're just wasting time.

    I am okay with anti-monopoly and anti-trust regulations... the ones that promote a free-market than "enable" for the market to "keep itself honest" as you so dishonestly state it.

    And cue the backpeddling that happens every time this situation comes up. You may enjoy your 'Regulations are the best thing ever and can do no wrong' strawman you like erecting so much and applying to everyone but yourself(followed of course by blaming everyone for wanting regulations), but it does tend to lead to entertaining moments when you have to allow nuance to enter the discussion and you suddenly find yourself defending regulations as sometimes necessary, otherwise known as 'the position those around you are already at'.

    It also requires you to perform a little due diligence about how you do business with as well, but we all know that blame shifting is your end game at the end of the day.

    Watching you, who does nothing but sling around blame, accuse someone else is just brilliant. Thanks for the laugh.

    But by all means, tell me how much time you spend in 'due diligence' before buying from someone. Tell me how many companies and services you have added to your blacklist and refuse to do business with, even when it completely cuts you off from something.

    It clearly isn't internet service, yet if you're in the US odds are very good you're either lucky enough(which has squat to do with you) to be in a location where you can avoid paying one of the major ISP's, or you're not, and you're hypocritically paying them anyway.

    So which is it, lucky or hypocrite, or will you perhaps claim that you were rich enough that you could afford to pack up and move simply to live in an area with actual competition?

    You are the opposite. You need to be hand fed and controlled by the government because you are a fear driven creature that rightfully sees that humans are default evil, but wrongly chooses how to fight it!

    As entertaining as your wild-ass guesses are, I'm happy to say that they are just that. Unlike you apparently I don't see humans as 'default evil'(that's got to be a fun life to live with that viewpoint), and while you may enjoy being controlled and hand fed by private corporations(which is just as accurate as your assertion about me), I can safely say that that is not my position with regards to government.

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