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Reports: Judge to Rule in Favor of Dreaded T-Mobile and Sprint Merger

Sprint’s Marcelo Claure, left, and T-Mobile’s John Legere, right, at a House Commerce subcommittee hearing in February 2019.
Sprint’s Marcelo Claure, left, and T-Mobile’s John Legere, right, at a House Commerce subcommittee hearing in February 2019.
Photo: Jose Luis Magana (AP)

U.S. District Judge Victor Marrero is set to allow the $26.5 billion T-Mobile and Sprint merger to go forward, clearing the path to merge the nation’s third and fourth-largest wireless carriers into a single behemoth that would rival Verizon and A&T, reports indicated on Monday night.

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The New York Times and Wall Street Journal both wrote that Marrero is expected to rule against the attorneys general of 13 states and D.C. who are suing to block the merger on antitrust grounds, citing sources who have been briefed on the decision. That suit is the final legal obstacle between T-Mobile and the smaller, ailing Sprint finally being able to consummate their planned union, as antitrust officials at the Federal Communications Commission and Department of Justice have already signed off. Both papers reported that the verdict is expected to drop on Tuesday morning.

Allowing the merger to go through would drop the number of major carriers competing in the U.S. from four to three, for years at the very least. Under the terms of a deal with the DOJ, T-Mobile owner Deutsche Telekom would be forced to sell off wireless spectrum to Dish, while Sprint would have to do the same with Boost Mobile. This supposedly would create a replacement contender to fill the fourth spot, though the viability of Dish’s plans to create a competitive national 5G network have drawn extensive scrutiny. It will launch with around nine million customers, mostly from Boost Mobile, according to the Journal. Meanwhile, the merged titan, doing business as T-Mobile, will have over 100 million customers.

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Companies routinely claim that mergers will allow them to offer more competitive pricing with vague assurances of increased efficiency. But research has shown the exact opposite is much more likely to happen: price increases from increased market power. These kind of outcomes can be plainly observed in industries from medical care to pay TV. (A ProPublica investigation found that many academic proponents of mega-mergers often receive huge sums of money from companies that stand to benefit from friendly testimony in anticompetition lawsuits.) Sprint and T-Mobile have both promised not to raise prices and to build a 5G network, and T-Mobile has launched low-cost plans in an effort to assuage critics. However, fewer mobile network operators in a country is associated with much higher prices and the two firms were already planning on building 5G networks.

State attorneys general involved in the lawsuit argued that the Sprint/T-Mobile merger will cost subscribers of both companies up to $4.5 billion annually. The FCC and DOJ both argued in favor of it in the suit, according to Ars Technica, saying a victory for the plaintiffs could block “substantial, long-term, and procompetitive benefits for American consumers.”

What isn’t clear at this point is whether the ruling is a total win for Sprint and T-Mobile or Marrero has implemented further conditions on the deal. Those could ultimately have some impact on the ultimate outcome for consumers.

As the Times noted, Sprint executive chairman Marcelo Claure and T-Mobile CEO John Legere built DC connections while lobbying for the deal. Claure hosted a fundraiser for Republican senator and net neutrality opponent Marsha Blackburn’s successful 2018 campaign, while Legere spent a suspicious amount of time and money ($195,000) at a D.C. hotel owned by Donald Trump.

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DISCUSSION

Perhaps I am the minority, however..

My work takes me to some very isolated and rural parts of the country. My coworkers and I will compare our cell phone signal strength and often share each others phones to make calls depending on who has the best signal (if any).

I can say that Verizon and too a lesser extent, AT&T, consistently have better coverage. Most of us just gave up on Sprint and T-Mobile because they were so hit or miss outside of large metro areas. So for us, the only realistic choices are Verizon and AT&T. Perhaps with this merger (which include frequency spectrum licenses) they can legitimately compete for our business and give us another option.