T-Mobile CEO John Legere (L) and Sprint Executive Chairman Marcelo Claure testify before the House Judiciary Committee’s Antitrust, Commercial and Administrative Law Subcommittee in the Rayburn House Office Building on Capitol Hill March 12, 2019 in Washington, DC. The corporate leaders and other experts testified about the “state of competition in the wireless market” and the possible impacts of the proposed merger of T-Mobile and Sprint would have on consumers in rural areas, workers and the future of 5G broadband internet access.
Photo: Chip Somodevilla (Getty)

The pending merger between T-Mobile and Sprint still has hurdles to clear before it becomes reality.

In addition to facing a lawsuit from 10 states attorneys to block the merger, the companies are also jockeying for approval from the Department of Justice where officials worry that the merger would take an already small U.S. telecom market and make it even less competitive.

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CNBC reports that a deal is in the works that would make Dish Networks into a wireless competitor, the fourth such company in the United States. The deal could reportedly require Deutsche Telekom, T-Mobile’s German parent company, to sell wireless spectrum to Dish and to give unlimited network access to Dish as the company builds up its wireless business. The specifics are still very much under negotiation, according to the report, and could vary wildly in the next few weeks.

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DOJ staff have reportedly considered a lawsuit to stop the merger on the grounds that it would seriously degrade competition and harm customers in the wireless market.

There’s been considerable attention paid lately to the behavior of Dish and its chairman, Charlie Ergen. Both Bloomberg and Fox Business have noted officials’ worries about Dish’s reputation as a “hoarder” of mid-band spectrum licenses.

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Here’s the Fox Business report summing up what they say are DOJ’s foremost worries about Dish:

He has until 2020 to use those licenses or lose them, and he is looking for an extension on his buildout in exchange for buying the T-Mobile-Sprint spectrum. Officials at DOJ and FCC worry Ergen may use the extension as a ploy to sell the spectrum to another player down the road at a huge profit and not go through with any meaningful buildout, these people add.

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The Federal Communications Commission also has to approve the deal. But FCC Chairman Ajit Pai has already recommended approving the T-Mobile–Sprint merger based on promises that critics have decried as vague and unenforceable.

“If allowed to proceed, this transaction would consolidate the nation’s wireless market from four to just three carriers, lead to price increases for virtually all wireless customers, substantially raise wholesale rates for smaller wireless carriers, and cause significant job losses—all while failing to deliver the promised benefits of accelerated 5G deployment or expanded rural coverage,” a coalition of organizations against the merger wrote to the FCC and the Justice Department in April. The group continued:

The case against this merger starts with the manifest harms it would cause wireless consumers across the country. Economic analysis in the public record demonstrates that this transaction would result in price increases of more than 15 percent in many cases. Moreover, the combined company would control more than 50 percent of the pre-paid wireless market. This concentration means that pre-paid wireless consumers, who are primarily lower income Americans, would likely see even greater price increases.

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Despite the opposition, the deal could reportedly be done as soon as next week. The challenges posed by the merger will last far longer than that.