Anna Eshoo, Other Lawmakers Offer Gushing, Facts-Optional Support For T-Mobile Sprint Merger

from the ill-communication dept

We've repeatedly explained how T-Mobile and Sprint's latest attempt to merge will be terrible for both jobs and competition. Despite what T-Mobile and Sprint executives have claimed, history suggests the reduction of total wireless carriers from four to three will likely result in less incentive than ever to seriously compete on price. Similarly, while T-Mobile and Sprint have told regulators that the deal will somehow create an explosion in new jobs, Wall Street analysts have predicted that the deal could kill off tens of thousands of US jobs as the new company inevitably eliminates redundant positions.

This was the same Sprint, T-Mobile merger that had been blocked previously by lawmakers. And it's not a far cry from AT&T's attempted takeover of T-Mobile, which was also blocked back in 2011. Generally speaking, people have recognized that reducing overall competitors in a telecom market never quite works out well for anybody other than executives and investors. Yet here we are, once again, with folks oddly not quite understanding that reality.

Case in point, Anna Eshoo and numerous other House lawmakers fired off a letter (pdf) this week to both the DOJ and FCC urging both agencies to approve the merger post-haste. One of the cornerstones of the letter is that the merger is essential for the US quest to deploy 5G networks, something the carriers themselves at various points have admitted is not actually true. It also repeats the claim that eliminating one of just four competitors will somehow increase competition, something disproven by any economics 101 textbook (and 50 years of telecom history, including Canada's).

But, as is usually the case when it comes to breathless support for harmful megamergers, the letter's primary claim is that the deal will somehow create all manner of new jobs:

"We anticipate that the combination of T-Mobile and Sprint, compete with the respective resources and strengths of each, will help to preserve the jobs of workers at each company. This holds the potential demand for new workers as a result of a more broadly robust, innovative, and thriving wireless telecommunications sector."

Again though, that's not what the actual data (or history) suggests. In fact, Wall Street analysts have been noting for two damn years now that the deal has the potential to cost anywhere between 10,000 and 30,000 jobs, particularly as redundant retail operations and duplicative HQs are streamlined:

"Direct payroll savings have been a big part of each analysis of a merger between the nation’s third- and fourth-largest wireless carriers. Few of those reports, however, have put a number on the headcount reductions. One that did was by Craig Moffett of MoffettNathanson Research. Last August, he put pen to paper and found reason to expect 20,000 job cuts from a merger.

Moffett’s report showed most of those would be retail workers. Sprint and T-Mobile each want more retail outlets, but a combined company wouldn’t need as many stores as both have currently. It would make business sense to close stores near each other. “We conservatively estimate that a total of 3,000 of Sprint and T-Mobile’s branded stores (or branded-equivalent stores) would eventually close,” Moffett’s report said. Each of those, he said, would mean the loss of five full time jobs, or 15,000 jobs in total.

Some analysts peg the losses closer to 10,000, while others believe 30,000 lost jobs is possible over time (more than Sprint even currently employs). Unions have argued that the number of total lost positions could be somewhere around 28,000, including 4,500 from the inevitable closure of Sprint's current Overland, Kansas HQ (which T-Mobile is telling everyone will remain open). If you've tracked megamergers at companies like Comcast, AT&T, and Verizon, these kinds of projections aren't really that outlandish, they just tend to get lost in the shuffle since only academics and consumer advocates tend to care about the reality post-merger.

The fact that T-Mobile CEO John Legere is kind of a fun dudebro has netted T-Mobile a lot of benefit of the doubt where it probably shouldn't exist, overshadowing how despite being a company with pro-consumer branding, much of the company's behaviors (like opposing net neutrality or pandering to Trump) aren't all that different from the companies (AT&T, Verizon) T-Mobile claims to be so much better than. Given more than a few of these Representatives have spent significant time insisting they're consumer allies on telecom issues, their breathless support of a bad deal is somewhat disappointing.

Filed Under: anna eshoo, competition, jobs, mergers, mobile phones
Companies: sprint, t-mobile


Reader Comments

Subscribe: RSS

View by: Time | Thread


  • icon
    Gary (profile), 30 Jan 2019 @ 7:04am

    Facts

    The fact is that mergers make big bucks for a few people. Mega-Mergers are the natural result of laissez faire economics.

    If you love deregulation, then you gotta love big corporations!

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 30 Jan 2019 @ 7:12am

      Re: Facts

      The mergers also open up a space for a new rival to compete.

      Breaking up a monopoly generally turns it into a cartel.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Jan 2019 @ 8:07am

        Re: Re: Facts

        The mergers also open up a space for a new rival to compete.

        Not when the incumbents control the available spectrum for mobile phones.

        reply to this | link to this | view in chronology ]

      • icon
        Thad (profile), 30 Jan 2019 @ 9:28am

        Re: Re: Facts

        The mergers also open up a space for a new rival to compete.

        Er, how do you figure? Are you operating under the assumption that there is a maximum number of cell phone providers, and that in order for a new one to enter the market, an existing one has to go away?

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 30 Jan 2019 @ 9:35am

          Re: Re: Re: Facts

          Microsoft gives way to Google, which gives way to Amazon search, which gives way to Apple. Walmart gives way to Target, which gives way to Costco, etc.

          No one stays on top forever.

          reply to this | link to this | view in chronology ]

          • icon
            Gary (profile), 30 Jan 2019 @ 10:11am

            Re: Re: Re: Re: Facts

            So breaking a monopoly is ineffective - because it leads to a cartel. But letting them proceed opens up the field to real competition?

            John Galt would agree. Then he'd push you down the stairs.

            reply to this | link to this | view in chronology ]

          • icon
            Thad (profile), 30 Jan 2019 @ 11:19am

            Re: Re: Re: Re: Facts

            You didn't answer my question.

            In what way does a merger "open up a space for a new rival to compete" that did not exist prior to the merger?

            reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 30 Jan 2019 @ 7:14am

      Re: Facts

      All the Regulations, in fact, make things harder for new companies to start up. It locks in these Mega company's.

      Why anyone would fall for these lies that it'll create more jobs, and it's better for everyone. A complete fantasy land. That has NEVER happened. Yet they keep on pushing out that narrative and I don't know if people are just that dumb and believe it, or they know and are getting something out of it.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Jan 2019 @ 8:09am

        Re: Re: Facts

        In the case of mobile phones, there is only a limited spectrum that can be used, and its use has to be carefully planned to avoid interference between cells. So an unregulated free for all is not possible in this case.

        reply to this | link to this | view in chronology ]

  • identicon
    Pixelation, 30 Jan 2019 @ 7:30am

    Between the lines...

    "...will help to preserve the jobs of workers at each company."

    The COE's job, maybe the CFO and a couple of other c's. Beyond that...

    reply to this | link to this | view in chronology ]

    • identicon
      David, 30 Jan 2019 @ 9:34am

      Re: Between the lines...

      "...will help to preserve the jobs of workers at each company." The COE's job, maybe the CFO and a couple of other c's. Beyond that...

      No, particularly not the jobs of those. It's just that there will be enough money to spread between them that you would not know the difference because half of them get to leave with showboat-sized golden parachutes.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 30 Jan 2019 @ 8:27am

    'reducing overall competitors in a telecom market never quite works out well for anybody other than executives and investors. Yet here we are, once again, with folks oddly not quite understanding that reality'
    surely 'not quite understanding' should actually read 'ignoring', shouldn't it?

    'when it comes to breathless support for harmful megamergers, the letter's primary claim is that the deal will somehow create all manner of new jobs'
    the exact opposite is actually true, even when massive tax breaks and government monetary incentives are given, as has been proven recently with job cuts at other telecoms companies. the only ones who wont lose their jobs (unless given colossal golden handshakes to encourage them to leave) will be the upper echelon of management! with the number of stores and engineers not being needed, where does anyone expect the job losses to come from? and dont expect any increase in jobs for a long, long time. the money has to be recouped from the merger, if it does happen, just as the bonuses paid to top management, again, for putting the merger together!

    reply to this | link to this | view in chronology ]

  • icon
    That Anonymous Coward (profile), 30 Jan 2019 @ 8:44am

    ""We anticipate that the combination of T-Mobile and Sprint, compete with the respective resources and strengths of each, will help to preserve the jobs of workers at each company. This holds the potential demand for new workers as a result of a more broadly robust, innovative, and thriving wireless telecommunications sector." "

    Narrator: But it would not, just like every other time they made these promises they were lying. Sadly elected leaders suffer from short term memory loss caused by the promise of money to keep their hold on their job.

    reply to this | link to this | view in chronology ]

  • identicon
    Pixelation, 30 Jan 2019 @ 8:48am

    Low hanging fruit

    Maybe Anna just needs to compensate for her last name being a sneeze?

    I'll see myself out.

    reply to this | link to this | view in chronology ]

  • identicon
    David, 30 Jan 2019 @ 9:01am

    It's not "facts-optional".

    When facts are in contradiction to the company statements, they are not optional but barred. It's more like only some facts are admitted. So it's "selected facts" or "curated facts", not "optional facts".

    reply to this | link to this | view in chronology ]

  • icon
    Ed (profile), 30 Jan 2019 @ 9:16am

    It would be interesting to see how much money certain companies and PACs have given to each one of the signatories of this joke, I mean letter. Eshoo lies almost as badly as Marsha Blackburn.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 30 Jan 2019 @ 9:49am

    Ah yes, fewer ads placed in Google...

    got it.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 31 Jan 2019 @ 6:16am

    Douchebag

    Douchebag

    reply to this | link to this | view in chronology ]


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)

Close

Add A Reply

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: Copying Is Not Theft
Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

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