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

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. identicon
    Anonymous Coward, 1 May 2018 @ 1:50pm

    Re: Re: Re: Re: Re: Noose vs Axe

    ""Have regulations for "no false advertising". Immediately contradicted, it seems. That is a regulation on how the business operates. In fact, any law or regulation would be, by their nature. they are restrictions on how people act."

    I see, you are wanting to get technical. Lets drop the short hand.

    I am not anti-regulation, I am anti-anti-free-market regulation. There really is a critical difference that I think many people do not "care" to understand.

    "Removing the regulator doesn't fix the problem, Politicians are still the ones making the laws even if you throw it back to congress."

    I am not saying remove the regulator, I would say that they need to be removed from the decision making game and be enforcement only. No, the politicians are not making that many laws any more, the regulators are. In fact it is unconstitutional that regulators make laws...

    "All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives."

    and the Last part of Section 8.
    "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof."

    Congress never had the power to give any agency law making power.

    "Huh. So you want businesses to work like politicians. Throwing the blame for any infraction on an underling,"

    Yikes!!! Why would you think that? Underlings cannot approve of these things in a business. The boss goes to jail because they are part of the approval chain. If the owner of a company wants to let a subordinate make a decision that could put him in jail that is his decision. All advertisements should just automatically require the signature of the business owner/CEO. No company or business should be so big that the CEO cannot be responsible for what it is doing. Period!

    "I apologize for the rant."

    No need, you did mistake a lot of my intentions, but there is NO WAY to ever prevent corruption. All you can do is put things in place to help deal with it has it presents. This is why Free-Market has to be the way forward, it is the ONLY method that allows the consumers the most freedom to deal with corrupt businesses. Right now regulatory capture and government involvement has destroyed the free market and secured monopolies for these businesses to the detriment of the people. Almost everything is regulated and part of an umbrella company or a franchise. You don't have a choice, you just get to decide what they have allowed you to decide.

    "But you ask us to not rely on politicians, by relying on politicians."

    No, I am saying do not rely on a politician to "save you". There is a big difference. People look to government like they look to religion.

    https://www.richarddawkins.net/2018/04/government-vs-god-people-are-less-religious-when-gov ernment-is-bigger-research-says/

    People are insane to rely on a politician to do anything other than to administrate government affairs... to let them decide how a business should run via regulation is insane. We only need regulations enough to make dishonest business practices easy to tackle by the people, that is it, any more and we will invite regulatory capture and result in the oppression of the people instead!

    If you really think we can have utopia at the hands of a human then let me be the first to invite you to what is known as "complete and utter failure".

    The person you ask to protect you becomes your master!

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Techdirt Gear
Shop Now: Techdirt Logo Gear
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Report this ad  |  Hide Techdirt ads
Recent Stories
Report this ad  |  Hide Techdirt ads


Email This

This feature is only available to registered users. Register or sign in to use it.