The T-Mobile Sprint Merger is Scrambling Telecom Politics
Representative Anna Eshoo (D-California) has sparred with the telecommunications industry over issues like net neutrality and privacy over the years. On Wednesday, however, she was swinging in support of T-Mobile and Sprint.
Eshoo spoke during a hearing of the House Energy and Commerce Committee on T-Mobile's proposed $ 26.5 billion purchase of Sprint, announced in April 2018. If approved, the deal would reduce the number of major US operators from four to three. But Eshoo claimed it's the wrong way to look at it.
"This is hardly a competitive, dynamic market we have," she said, noting that AT&T and Verizon together control two-thirds of the mobile services market and have done so for many years. "For our part, we have a duopoly in the country. Americans pay some of the highest rates of mobile wireless service in the developed world." Eshoo claimed that allowing T-Mobile and Sprint to merge will allow the combined company to compete more aggressively with AT&T and Verizon.
The proposed T-Mobile Sprint agreement distorts the telecoms policy, which Democrats have traditionally seen more skeptically. In 201[ads1]1, the Obama Justice Department sued to block AT & T's proposed acquisition of T-Mobile, and the Democratic-led Federal Communications Commission nailed a previous T-Mobile and Sprint merger attempt in 2014. This time, carriers are more sympathetic. Last year, six other Democrats joined Eshoo and six Republicans in a letter to the FCC and Justice Department who supported the merger, claiming that the combined company would be able to deploy the next generation of wireless services, known as 5G, faster than the two companies could independently. T-Mobile hired former FCC commissioner Mignon Clyburn, a democrat and strong defender of net neutrality, to advise the company on the merger. "I warn T-Mobile and Sprint that it intends to speed up the creation of an inclusive nationwide 5G network on how to best build a bridge over the digital part," Clyburn Politico told this month.
Critics of the agreement don Don't buy these arguments. Phillip Berenbroick, from the Public Knowledge law firm, pointed out that some of the allegations made by the two carriers about 5G echoes those made by AT & T and T-Mobile about 4G in 2011. When AT&T first announced that it was buying less carrier, It claimed that T-Mobile did not "have a clear way to deliver" 4G. Finally, T-Mobile built a 4G network that rivals networks from the two major in speed and range, according to OpenSignal; It also became profitable. The United States has led the world in 4G adoption, according to a report commissioned by the wireless industry CTIA last year.
Since the AT&T deal died in 2011, T-Mobile has simplified pricing, completed annual contracts and rushed past Sprint to become the country's third largest carrier, forcing other carriers to adjust their own pricing and contracts along the way. It is a rare bright spot for competition in the telecommunications industry, which has become increasingly consolidated. Over the years, the seven "Baby Bells" created by the break-up of the original AT&T in 1982 have been recombined in three companies: AT&T, CenturyLink and Verizon. Other parts of the telecommunications industry have also consolidated, with Sprint buying Nextel in 2004, Verizon acquired MCI in 2006 and XO in 2016, and CenturyLink bought Level 3 in 2016.
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WIRED Guide to 5G [19659009] I Instead of attempting to reverse or stop this consolidation, Eshoo claims, the best way to preserve the competition is to allow even more consolidation, otherwise smaller companies will be crushed by the giants. Groups representing carriers less than Sprint or T-Mobile disagree. Carri Bennet of the Rural Wireless Association said that Sprint is the only major carrier that offers rural carriers affordable roaming prices. "According to our members, T-Mobile's roaming rates are 20 times higher than Sprints," she said. She also claimed that T-Mobile refuses to enter into agreements that would allow T-Mobile customers to roam rural networks, and pointed to an FCC survey last year that found that T-Mobile had not linked many calls to rural networks and played fake ringtones to cover the error, which led customers to believe that a call had gone through unanswered. "We believe that T-Mobile's destructive behavior will continue, perhaps even more aggressively, when the rival Sprint is eliminated," she said.
T-Mobile CEO John Legere promised several times during Wednesday's hearing that the combined companies would lower prices if the deal was approved. However, the industry group Incompas, which Sprint founded in 1981, came out of the contracts in a statement before the hearing Tuesday, and pointed out that although T-Mobile did not increase its prices for its consumers, it could increase wholesale prices for dealers. "T-Mobile and Sprint have been important soldiers in these games for more competition," said Incompa's CEO Chip Pickering. While I understand their desire to marry, I believe that consumers want them to continue playing on the pitch. "Shortly after the announcement, Sprint announced that it left Incompas.
Although critics of the agreement can persuade the house to oppose the deal, there is little congress that can be done. The fate of the merger is in the hands of the Justice Department and the FCC. a long history of favoring telecom consolidation, and the FCC's Republican majority generally have industry equality.
But there is still no guarantee of the merger. Last year, the FCC canceled Sinclair Broadcasting's proposed acquisition of Tribune Company in a surprising move combined two of the country's largest television station owners, and the Justice Department's antitrust manager, Makan Delrahim, attempted to block AT & T's acquisition of Time Warner.
