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T-Mobile and Sprint Merger Could Boost Wireless Service Competition

April 9, 2020

Two telecoms complete a merger expected to speed 5G broadband deployment.

Broadband wireless company T-Mobile, the third-largest telecommunications carrier in the United States, completed the acquisition of its rival Sprint, the fourth-largest wireless company, the company announced in a news release on April 1.

The merger is expected to allow T-Mobile to successfully compete with AT&T and Verizon, the first- and second-largest telecoms, respectively. The merger is also expected to accelerate the rollout of fifth-generation, or 5G, wireless technology, and provide new broadband access in rural areas.

Approval of the deal by the Federal Communications Commission, the U.S. Department of Justice, and two U.S. District Courts required T-Mobile and Sprint to transfer some assets to the Dish network, which is primarily a satellite televion provider, creating what regulators hope will be a fourth nationwide wireless network.

Multiple Regulators and Courts

At various times over the past decade, Sprint sought to merge with AT&T or T-Mobile, but faced regulatory barriers, in addition to the difficulty of coming to an agreement with any of its rivals.

T-Mobile and Sprint signed a deal in April 2018 that took two years to jump through regulatory hurdles based on concerns about market concentration and competition.

The merger was further delayed by attorneys general of 13 states and the District of Columbia who sued the companies in federal court. The state officials argued that the Justice Department’s 2019 settlement with the companies would give consumers fewer choices for wireless service, driving up prices. U.S. District Judge Victor Marrero of the Southern District of New York, ruled against the AGs on February 11.

U.S. District Judge Timothy Kelly, of the D.C. Circuit, approved the DOJ settlement, eliminating a final regulatory hurdle, the Wall Street Journal reported, on April 1.

Another hurdle came from the California Public Utilities Commission, which claims the companies must have CPUC to merge operations in the state, under the California Public Utilities Code. However, the companies withdrew their application for CPUC approval, arguing that with no landline assets left in the state the commission’s authority over the deal was moot, on March 30.

Merger Creates ‘Stronger Competitor’

The merger will benefit both companies and increase competition in the industry, Joseph P. Fuhr, an economics professor at the University of the Sciences in Philadelphia and a policy advisor to The Heartland Institute, told Budget & Tax News.

“Sprint is financially weak, so the merger helps guard against what could have been a bankruptcy and the loss of subscribers to other competitors,” Fuhr said. “T-Mobile believes that with Sprint’s assets it will be a stronger competitor, because the combination now creates a company with the combined size to compete on the same scale as the other major competitors.”

Internet Info

Juliana Knot, “FCC Chair Supports T-Mobile-Sprint Merger,” Budget & Tax News, October 3, 2019: https://www.heartland.org/news-opinion/news/fcc-chair-supports-t-mobile-sprint-merger

Author
Joe Barnett was managing editor of Budget & Tax News, a publication of The Heartland Institute. He now serves as a volunteer policy advisor.
jbarnett@heartland.org

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