TR Daily House Democrats Urge FCC, DoJ to Reject Sprint–T-Mobile Merger
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Tuesday, March 5, 2019

House Democrats Urge FCC, DoJ to Reject Sprint–T-Mobile Merger

Thirty-seven House Democrats have written the FCC and Department of Justice to urge them to reject T-Mobile US, Inc.’s proposed acquisition of Sprint Corp., arguing that the deal “is bad for the American people.”

In their letter the lawmakers said that the transaction “would kill American jobs, reduce competition in the already highly concentrated wireless market, and raise prices for consumers — with particular harm to low- and moderate- income consumers and people of color. Despite claims to the contrary, the record shows that the merger will not benefit rural America and that T-Mobile and Sprint do not need to merge to deploy next-generation 5G wireless networks.”

The letter was addressed to FCC Chairman Ajit Pai and Makan Delrahim, assistant attorney general in charge of the Antitrust Division. It was dated Feb. 28 but not released until today.

The lawmakers joined other members of Congress who have called on the FCC and DoJ to reject the merger. However, other lawmakers have endorsed the deal.

Meanwhile, the House Judiciary Committee today announced that it plans to hold a hearing on the merger on March 12 at 2 p.m. in Room 2141 of the Rayburn House Office Building.

The House antitrust, commercial and administrative law subcommittee had planned to hold a hearing last month, but that hearing was postponed to allow lawmakers to attend the funerals of former Rep. John D. Dingell (D., Mich.) and Rep. Walter Jones (R., N.C.).

Also today, proponents and opponents of the transaction — including two former FCC Commissioners — debated its merits and drawbacks at a Capitol Hill event organized by the Georgetown University Law Center’s Institute for Technology Law & Policy.

Speaking in support of the merger were former FCC Republican Commissioner Robert McDowell, a partner at Cooley LLP who has done work for T-Mobile; former Democratic FCC Commissioner Mignon Clyburn, who is advising T-Mobile and Sprint on the deal; and Seth Bloom, a former Hill aide who is president and founder of Bloom Strategic Counsel, a lobbying firm whose clients include Sprint.

Speaking against the deal were David Goodfriend, a lobbyist whose clients include the Communications Workers of America and Dish Network Corp., which oppose the merger; Yosef Getachew, director of Common Cause’s Media and Democracy Program, which opposes the deal; and Ben Moncrief, vice president–government relations for C Spire Wireless, Inc., another opponent.

Proponents argued that a combined T-Mobile and Sprint would be able to deploy the most far-reaching 5G network and would be able to effectively compete with market leaders Verizon Communications, Inc., and AT&T, Inc. They said that the combined entity would have eight times the capacity and would lower prices and bolster coverage in rural areas, including indoors. They also said that the new T-Mobile would create thousands of new jobs.

But opponents said the transaction would result in less competition, higher prices — including for lower-income and minority prepaid subscribers — and cost tens of thousands of workers their jobs.

“This merger is illegal because it would harm consumers and kill competition. None of the professed benefits add up or stand up to scrutiny,” Mr. Goodfriend declared.

But Mr. McDowell said that rather than reducing the number of nationwide wireless carriers from four to three, the deal would ensure that a third stronger player is able to compete with Verizon and AT&T. He said the combined company would be able to deploy 5G service faster by investing $40 billion over three years and combining its low-, mid-, and high-band spectrum portfolio. The new T-Mobile would create jobs, not destroy them, and would compete with cable providers for in-home broadband service, he said. Under the combined entity, 95.8% of rural areas would be covered, he added.

“This deal should be approved as quickly as possible,” Mr. McDowell said.

Opponents suggested that loopholes exist in T-Mobile’s commitment not to raise prices for three years, including a commitment not to raise handset prices.

But Mr. Bloom dismissed that suggestion, calling it an “iron-clad pricing commitment. There’s no exceptions to it.”

Mr. Moncrief said T-Mobile made the pricing commitment because prices are going to increase, “and that’s what antitrust law should be focused on in this instance.” He and others also said that the companies’ commitment to expand rural coverage doesn’t hold up because they are not planning to deploy the necessary fiber backhaul.

Mr. Moncrief also noted that rural carriers such as C Spire fear that the deal would hurt the wholesale market — mobile virtual network operators and roaming.

Sprint is “the most reasonable, the most innovative roaming partner” for rural carriers, he said.

T-Mobile has pledged to honor Sprint’s existing agreements.

Mr. Getachew said that approval of the deal would result in prepaid prices increasing, which he said would disproportionally hurt minorities and lower-income people who rely on those services.

Ms. Clyburn said she supports the T-Mobile–Sprint merger even though she opposed AT&T’s failed attempt to acquire T-Mobile because there was a “very different” ecosystem then. She said that AT&T had 44% of the market share and T-Mobile was in the single digits. That deal would have “cemented a duopoly,” Ms. Clyburn said.

While deal proponents said the combined company would have an incentive to lower prices to attract customers to use its extra capacity and to compete with Verizon and T-Mobile, Mr. Goodfriend disagreed.

“The shareholders will get the benefits. That’s how it works,” he said. —Paul Kirby, [email protected]

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