As Trial Begins, Evidence Shows Sprint, T-Mobile Know Merger Will Raise Prices

from the history-keeps-repeating-itself dept

With the DOJ (run by former Verizon lawyer William Barr) and the FCC (run by former Verizon lawyer Ajit Pai) eager to rubber stamp Sprint's $26 billion, competition-eroding merger with T-Mobile, a lawsuit from a bipartisan coalition of states is now all that stands in the way in the deal.

That lawsuit began Monday, with state AGs making 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. While Sprint and T-Mobile (and the army of consultants, lobbyists, think tankers, and government officials paid to love them) insist the deal will be wonderful for America, financially independent economists paint a decidedly different picture. One in which ongoing consolidation in the space only drives up wireless data pricing for American consumers who already pay some of the highest prices in the world for what's routinely ranked as mediocre service (whether we're talking about speeds or overall video quality).

But underneath the deal's marketing veneer, industry giants know very well the reduction in competition will let them charge higher rates. You'll notice that AT&T and Verizon haven't lifted a finger to thwart the deal, suggesting they're perfectly fine with its impact (something that wouldn't be happening if they actually thought the end result would be a more competitive sector). And at the trial this week, AG lawyers highlighted that Sprint executive emails make it perfectly clear they know the deal will raise rates:

"Roger Sole, Sprint’s chief marketing officer, said in a text message in 2017 to Marcelo Claure, the carrier’s chief executive officer at the time, that the deal could mean an increase of $5 a month in average revenue per subscriber. Industry leaders AT&T and Verizon Communications would also benefit with fewer players in the market, he said.

“And they DO NOT pay anything for this,” Sole wrote to Claure. “The benefit of a consolidated market.”

The goal of the deal is less competition, providing a green light for even higher prices, which is effectively the same outcome we've seen from every major telecom union over the last 30 years. Three decades of data also makes it abundantly clear that pre-merger promises are worthless. But if the state AGs lose this case, the federal government is going to ignore that data -- and history -- and rubber stamp the deal anyway. You know, just because.

Filed Under: competition, consumer harms, merger, mobile, prices, wireless
Companies: at&t, sprint, t-mobile, verizon


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  • icon
    ECA (profile), 11 Dec 2019 @ 10:42am

    better reason to riase prices?

    recoup the cost of doing it.
    Over and over and over...again..

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

  • identicon
    Adam, 11 Dec 2019 @ 11:51am

    Japan, wtf?

    It amazes me that Japan is arguably worse than the US. I know things are expensive there, but the reasoning in the US for high prices has always been about how large the country is and how difficult and expensive infrastructure is to set up. Japan doesn't have that excuse.

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

    • identicon
      Anonymous Coward, 11 Dec 2019 @ 5:07pm

      Re: Japan, wtf?

      What does Japan have to do with this? It was a suit brought by State AGs under the American court system against two companies operating in the US.

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

    • icon
      ECA (profile), 12 Dec 2019 @ 12:59pm

      Re: Japan, wtf?

      nope..
      Not quite there..
      Cost, is most of it..
      In china, the cost of the materials is dirt cheap, based on World econ...in the USA we have our Own stock exchange, that we inflate.
      Recntly the price on Wood went into the dirt, Why?? we raised the Tariffs... Now china was using our wood, the the corps Raise the price of wood Nationally to raise the price to china.. by 3-4 times.
      China quit buying. Prices FELL, because there was a Ton of wood to get rid of..
      Go look up Grains and fruit/veggie prices and then tell me Why in hell there is a 50 times markup..for the Cheap version, and even more for name brand.. and dont tell me cause there are 1000 people checking my food. There are about 4..before it gets Packaged.

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

  • identicon
    Anonymous Coward, 12 Dec 2019 @ 2:14am

    perhaps one extreme solution would be to get politicians to declare a war on corruption. the only reason these nationlevel companies can do as they wish is because nearly all politicians seem to be corrupt to the core.

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

    • identicon
      Anonymous Coward, 12 Dec 2019 @ 2:54am

      Re:

      The "war on humanity" is already underway with the "war on drugs" and the "war on terrorism". The idea of a "war on terrorism" is fine but they saddled it with such an expansive definition of terrorism that it fits everyone.

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

    • identicon
      Anonymous Coward, 12 Dec 2019 @ 2:55am

      Re:

      Anyway, the "war on corruption" will consume every last man woman and child as they participate and make enough small mistakes to become corrupt themselves.

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

    • icon
      That One Guy (profile), 12 Dec 2019 @ 5:23am

      Bad idea, VERY bad idea

      Given the various 'wars' in the US seem to increase the targets in question, declaring a 'war on corruption' would all but ensure that corruption would only increase(somehow).

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

    • identicon
      Anonymous Coward, 12 Dec 2019 @ 6:44am

      Re:

      Like all the other wars, it will end in failure.

      Endless war is unsustainable as a business model and a nightmare for the populace. This will not end well.

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

  • identicon
    Anonymous Coward, 12 Dec 2019 @ 3:57am

    Hey, Karl!

    Nice to see you still haven't given up your ridiculous rhetoric, so I'm going to show you how stupid you look right now when you bitch about the loss of "competition" and pricing. Maybe this will finally get you to shut up about a topic you know nothing about.

    Sprint:
    https://www.sprint.com/en/shop/plans/unlimited-cell-phone-plan.html?INTNAV=TopNav:Shop:UnlimitedPla ns

    Verizon:
    https://www.verizonwireless.com/plans/

    AT&T:
    https://www.att.com/plans/wireless/

    T-Mobile:
    https://www.t-mobile.com/cell-phone-plans

    Please explain to your readers how any of this is "competition", because I'm not seeing it.

    In case you can't read, Sprint literally has the most expensive plans of all 4 carriers and the other 3 have identical pricing, which is typical of price-fixing in an oligopoly (for more examples, please view ISP pricing plans in the US).

    As a former Sprint customer, I had to switch because paying $100/mo + extras was too much when T-Mobile (my current carrier) offered me more for only $60 (and that's rounded up, including fees and taxes).

    Sprint can't compete. It has no customers.

    You have yet to provide any methods for Sprint to remain competitive, especially since there's now literal proof the only way it can stay "profitable" is by screwing over its current customers with higher prices.

    Feel free to try and justify why this merger shouldn't happen, but facts are going to prove every point you bring up as hyperbole or just plain ignorance.

    Sprint is dead. Accept it and move on.

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

    • identicon
      Anonymous Coward, 12 Dec 2019 @ 5:41am

      Re:

      Goddamn it, Bennett, the least you could do was sign in.

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

    • identicon
      Anonymous Coward, 12 Dec 2019 @ 5:44am

      Re:

      Sprint's a fairly good company. I used to have a Sprint account but my phone got hacked and some horrible stuff happened to and around me.

      My family still uses sprint.

      I actually use a prepaid phone, which is a Sprint reseller for less than $100 a month and it too got hacked so it spends a lot of time turned off.

      Given the resources, severity, and duration of the attacks it is obviously state sponsored. Cyber war/terrorism sucks.

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

    • identicon
      Anonymous Coward, 12 Dec 2019 @ 6:45am

      Re:

      Vested interest?

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


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