A group of Democratic lawmakers -- led by Senators Amy Kloubach and Elizabeth Warren -- recently expressed their concern over the potential merger between T-Mobile and Sprint.
Currently touted as the number three and number four cell phone providers in the country, the senators’ main concern involved the effect a deal would have on consumers nationwide, namely higher costs for services.
“T-Mobile and Sprint have led the way in offering wireless products and service options that are more appealing to lower-income consumers, including no contract plans, prepaid and no credit check plans, and unlimited, text, voice, and data plans,” the senators wrote.
The lawmakers sent a letter to the Justice Department’s Antitrust Division and the Federal Communications Commission (FCC) to express their thoughts on the areas of the merger they considered problematic.
“As more than three-quarters of American adults now own smartphones, including many who depend on these devices for their primary connection to the internet, an anticompetitive acquisition in the wireless market could result in higher prices for American consumers or force some people to forego their internet connection altogether,” the letter noted.
The merger takes shape
As reported in late April, T-Mobile made a formal bid to acquire Sprint for an all-stock deal of $26 billion. Initial news of the merger sparked debates in the political sector, as the U.S. Justice Department was tasked with deciding whether it would allow the companies to join forces -- reducing the number of cell phone providers from four to three -- or block the deal.
T-Mobile stands behind its decision to combine forces with Sprint, promising consumers a 5G network capable of competing with the likes of Verizon and AT&T.
John Legere, T-Mobile’s CEO and the proposed head of the merged companies, said in a recent conference call that adding Sprint to his company’s network will only help to bring customers “the highest capacity network in U.S. history.”
Legere is also confident that teaming up with Sprint will allow the two companies to achieve things for their customers that would be impossible on their own. He calls the combination a “fierce competitor” that will produce lower prices for consumers.
Will the past predict the future?
Mergers like the one proposed by T-Mobile and Sprint have been presented before the Justice Department in recent years, but they almost never come to fruition. In fact, the companies tried to merge once before in 2014, but their plans were thwarted after regulatory concerns were voiced by the Obama administration.
Regulators believed consumers benefited from having four major players in the arena, and since the wireless market could support them all, they remained as separate entities.
This time around, the senators are hoping for a similar outcome. The group sent the letter to FCC Chairman Ajit Pai and Makan Delrahim, the Assistant Attorney General for the Antitrust Division. The lawmakers were certain to note the hesitation from their predecessors in forging ahead with the merger, as less competition will more than likely lead to higher prices for consumers, as well as a decline in innovation.
“To date, T-Mobile and Sprint have exerted competitive pressures on their larger rivals in the wireless telecommunications industry, helping drive down prices, eliminating harmful contract requirements, and making more expansive and consumer-friendly data platforms the norm,” the senators wrote.
“The wireless business is already very concentrated - there were six national companies as recently as 2003 - and a deal that would further consolidate power is troubling,” Senator Elizabeth Warren noted in a New York Times op-ed. “Having fewer competitors emboldens businesses to raise prices and force consumers into long-term service contracts because they know people don’t have many options.”
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