House, Senate Hearings on T-Mobile/Sprint Seen Likely

"As the committee with primary jurisdiction over the wireless industry, [House Commerce has] a responsibility to understand the potential effect of this merger,” Pallone and Doyle said in a letter to House Commerce Chairman Greg Walden, R-Ore., and House Communications Chairman Marsha Blackburn, R-Tenn. “The transaction would directly affect the 120 million wireless subscribers for the two companies, but it would also trigger ripple effects for everyone who uses a mobile phone,” they said. “Considering that the combined company would be overwhelmingly controlled by foreign entities, this transaction also raises significant questions about foreign control of major players.” House Commerce didn’t comment.

House Commerce has “not had a single hearing to examine the state of competition” in the wireless industry as it moves forward with deployment of 5G or “how a loss of a competitor could affect consumers or workers,” Pallone and Doyle said. Lobbyists said House and Senate Commerce would likely be interested in delving deeper into the 5G ramifications of T-Mobile/Sprint since the companies say the deal would help them deploy the technology. Trump administration officials cite national security implications of maintaining U.S. leadership in 5G innovation, which lawmakers and industry officials told us is a sign Congress needs to act on broader telecom policy issues that would help sustain that dominance (see 1712180071, 1712270032 and 1803210019).

Senate Consumer Protection Subcommittee Chairman Jerry Moran, R-Kan., promised to “closely monitor developments,” noting his interest in ensuring the U.S. continues “its mission of closing the Digital Divide by bringing high-speed broadband access to rural America.” Sprint “has been a vital source of economic development and jobs in the Kansas City area for many years, and I urge” the combined company “to continue growing and innovating in Kansas,” Moran said. The second headquarters will be there, the first in Bellevue, Washington, where T-Mobile US is. Subcommittee ranking member Richard Blumenthal, D-Conn., vowed to “scrutinize this merger closely to ensure that consumers and workers -- and not just shareholders -- benefit from what would be a significant consolidation.” Reducing “the number of major carriers from four to three certainly rings alarm bells,” he said in a statement.

Democrats on House and Senate antitrust subcommittees also voiced skepticism. It "raises serious antitrust issues, and is exactly why I urged the FCC and DOJ to investigate a potential merger last year,” said Senate Judiciary Antitrust Subcommittee ranking member Amy Klobuchar, D-Minn. “I remain concerned that increased consolidation could undermine benefits to consumers.” Klobuchar and now-former Sen. Al Franken, D-Minn., jointly urged the DOJ in October to begin an investigation now into the impact of a potential T-Mobile/Sprint (see 1710100021). House Judiciary Antitrust Subcommittee ranking member David Cicilline, D-R.I., tweeted he expects “close scrutiny of this transaction. Consolidation rarely results in better services, prices, or choices.” T-Mobile/Sprint “threatens to eliminate direct competition among wireless carriers -- a market that is already highly concentrated -- raising the specter of higher phone bills and less choice,” he said.

Industry observers expect there will be at least one hearing each in the House and Senate, though it’s unlikely to happen before the November midterm elections. “I don’t think Republicans will deny [the Democrats] an opportunity to hold a hearing," but “it’s probably going to take a long time” before that happens, said R Street Institute Technology Policy Manager Tom Struble. “I would expect Congress to wait until after the FCC has at least taken up the case for a while.” Any hearings would probably happen during the post-election lame duck session given the legislative cycle, he said. It’s “not completely unreasonable” Congress would wait until after the election to move forward on hearings, partly because Sprint and T-Mobile are only just beginning to officially make their case in Washington, said American Action Forum Director-Technology and Innovation Policy Will Rinehart.

The Commerce and Judiciary committees can both lay claim to hold a hearing on T-Mobile/Sprint, but Rinehart and others pointed to the Commerce committees as being the likeliest to do so. Rinehart noted the Trump administration’s response will be seen as a harbinger for others in the communications sector of the administration’s overall view of the market. There has been uncertainty over whether DOJ’s antitrust case against the AT&T/Time Warner (see 1804300020) is an aberration, he said. Commerce would have an interest in using the hearing as “soft power” and a “bully pulpit” to get concessions on public interest items, Struble said.

The deal could also figure into any FCC oversight hearings the Commerce committees hold, but since the commissioners would likely decline to comment because they would still be reviewing the deal, separate hearings are preferable, said Public Knowledge Vice President Chris Lewis. “It gives elected representatives to take a broader view of the state of the marketplace, not just to zero in on a particular merger,” he said. “It points toward the possible need for a review of competition policy generally.” Rinehart also pointed to deal-specific competition issues as the likeliest focus for any hearing since “that seems to be what lawmakers are focused on.”