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.

Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

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


Reader Comments

Subscribe: RSS

View by: Time | Thread


  1. 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!

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
Special Affiliate Offer

Essential Reading
Techdirt Insider Chat
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it
Close

Email This

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