T-Mobile/Sprint Should Go Down in Regulatory Flames, Various Groups Tell FCC
The fight is on. Dish Network, public interest and consumer groups, and groups representing mostly rural carriers asked the FCC to deny T-Mobile’s takeover of Sprint, in petitions filed by the Monday deadline in docket 18-197. Commenters underscored the negative effect on competition of any deal that would reduce the number of national wireless carriers from four to three. Some filed earlier (see 1808270049).
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New Street Research analyst Blair Levin, reading through the filings, found no surprises. “Getting approval is possible, but an uphill battle,” Levin told us. “Significant opposition to the proposed deal was expected and is no surprise,” said Paul Glenchur, analyst at Hedgeye Potomac Research. “The arguments made in the oppositions were largely predictable so I don't think the filing of the petitions, standing alone, alters the dynamics of the regulatory review process.”
"We are confident that the merger of Sprint and T-Mobile will create more competition and will be incredibly positive for consumers," the combining carriers said. "These filings are part of the normal FCC open comment process and we welcome the opportunity for this important dialogue. We look forward to submitting our responses by the September 17th filing date."
Dish said the two carriers don’t need to combine to deploy 5G or for Sprint to remain a viable competitor. The wireless industry has reached a “tipping point” in terms of market concentration, Dish said. “In 2003, there were eight major national wireless carriers,” Dish said. “If this merger is approved, only three will remain, leaving each of the remaining three carriers with more market share than even the largest carrier possessed in 2003.”
The Rural Wireless Association said T-Mobile largely neglects rural America, while Sprint has worked with rural carriers. “Sprint has offered rural carriers reciprocal, strategic roaming agreements at commercially reasonable rates,” RWA said. “Sprint has also leased its spectrum in rural areas to rural wireless carriers to build out networks that serve both rural Americans and those traveling in rural America.” T-Mobile favors unilateral roaming agreements under which a rural carrier’s subscribers can roam on T-Mobile’s network, “but with no possibility of T-Mobile’s subscribers roaming on the rural carrier’s network,” RWA said.
NTCA raised similar concerns on the loss of Sprint as a roaming partner. “T-Mobile has not traditionally focused on rural consumers and markets and the loss of Sprint as a competitor and partner as a result of this transaction could be devastating,” the group said. Rural providers rely on Sprint, NTCA said: “There are no assurances that New T-Mobile will honor and extend current Sprint agreements or enter into future spectrum use agreements or reciprocal roaming arrangements that permit its customers to roam on rural providers’ networks.”
Common Cause, Consumers Union, New America’s Open Technology Institute, Public Knowledge and Writers Guild of America West said the deal isn't in the public interest. It "would wreak havoc on competition and consumers by removing two disruptive competitive carriers from the market to bring the number of nationwide competitors from four companies to three,” the groups petitioned. “The anticompetitive nature of the proposed merger would also harm the prepaid and wholesale mobile wireless markets, and in particular would negatively impact low-income consumers.”
Free Press filed the comments and signatures of more than 6,000 members opposing the takeover. "This is like a bad recurring dream,” one of the comments said. “Mergers always lead to less competition not more. Combining Sprint and T-Mobile will harm consumer choice.”
“The proposed transaction would seriously harm consumers from communities of color and low-income consumers; these public interest harms outweigh any potential public interest benefits,” the Greenlining Institute said.
In 2011, the FCC and DOJ stopped AT&T/T-Mobile, the American Antitrust Institute said. That “led to significant gains for consumers, just as the DOJ had predicted,” AAI said. “It should not sacrifice those gains now by allowing a merger that would create the Big 3.” Relative to 2011, the market dynamics are the same, the group said. Nothing has changed then-Assistant Attorney General Bill Baer’s observation that “it’s going to be hard for someone to make a persuasive case that reducing four firms to three is actually going to improve competition for the benefit of American consumers,” AAI said.
The California Public Utilities Commission told the FCC it also will review the transaction with an eye on concentration in the wireless market. “The CPUC’s review of the T-Mobile and Sprint’s application for approval of the proposed transaction in California has just begun,” the regulator said. “Neither the scope of the CPUC’s review nor the procedural steps that the CPUC may take have been decided.” The attorneys general of New York and California also advised the FCC they're examining the deal and sought access to confidential data filed as part of the FCC’s review.