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What the Sprint/T-Mobile Merger Means for You (Hint: It’s Not Good)

What the Sprint/T-Mobile Merger Means for You (Hint: It’s Not Good)

Postby smix » Fri Aug 17, 2018 6:49 pm

What the Sprint/T-Mobile Merger Means for You (Hint: It’s Not Good)
The Greenling Institute

URL: http://greenlining.org/blog/2018/what-t ... s-for-you/
Category: Business
Published: May 2, 2018

Description: As you may already be aware, on Saturday, Sprint and T-Mobile announced their plans to merge—something the two companies have been planning to do for quite a few years now. I’ve been expecting a big communications merger for a while now—my money was on a Comcast/T-Mobile merger, but a Sprint/T-Mobile merger is no big surprise—and this one is huge. By “huge,” I mean really huge—the Sprint/T-Mobile merger would make the new company the second largest wireless company in the country. Additionally, it would reduce the number of nationwide wireless carriers from four to three. That’s a huge cause for concern. You have to evaluate every merger on its own merits, and it’s entirely possible that after we look under the hood and kick the tires, Greenlining will come out in support of this merger. If I had to decide today, however, I’d have to oppose it. The bigger a merger, the more skeptical you should be that the merger will bring benefits, and the more worried you should be that the merger will cause real harms. With a merger this size, reducing competition from four to three, there’s an enormous risk that it will lead to higher prices, worse service quality, and a lot less consumer choice. So if the Sprint/T-Mobile merger ends up being terrible, how likely is it that reviewing agencies will approve it? Well, at the federal level, the answer is pretty grim. Under the leadership of Chair Ajit Pai, the Federal Communications Commission has shifted from being a consumer protection agency to a corporate protection agency. Pai has pretty clearly indicated that industry’s going to get whatever it wants, so the Sprint/T-Mobile merger won’t be the last huge communications merger we see. And at the Department of Justice—the other federal agency that reviews communications mergers—merger enforcement has been, shall we say, inconsistent and unpredictable. So while federal agencies might block a bad merger, I’m sure not holding my breath. As grim as all that may seem, the fight’s far from over. Whether or not the FCC approves the Sprint/T-Mobile merger, the companies still have to convince the California Public Utilities Commission to sign off, which will be a much tougher job. To make a long story short, if this merger is bad, I’m pretty confident we can stop it. You may be thinking, “what can I do to make sure to stop Sprint/T-Mobile merger that’s bad for consumers?” The answer, believe it or not, is “lots.” You don’t have to be an attorney, or have worked on mergers before, or, for that matter, even have to know what a merger is—keep following this blog, and I promise, when the time comes, you will know exactly how to speak out. Watch this space.
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To Thwart Corporate Greed and Defend Consumers, FCC Called on to Block T-Mobile/Sprint Merger

Postby smix » Fri Aug 17, 2018 6:54 pm

To Thwart Corporate Greed and Defend Consumers, FCC Called on to Block T-Mobile/Sprint Merger
Common Dreams

URL: https://www.commondreams.org/news/2018/ ... int-merger
Category: Business
Published: May 1, 2018

Description: "Greed and a desire to reach deeper into people's wallets by taking away their choices are the only things motivating this deal."
Sen. Elizabeth Warren (D-Mass.) was among the critics of the newly-proposed merger between Sprint and T-Mobile who called for a thorough investigation into the deal, saying it would further reduce competition in the wireless marketplace and consolidate power in the hands of just three carriers.
The proposed merger between Sprint and T-Mobile could strangle competition in the telecom industry and end up hurting small businesses, entrepreneurs, and working families. @TheJusticeDept and FCC need to give this deal a long, hard look.
— Elizabeth Warren (@SenWarren) May 1, 2018

The deal was reached after numerous past attempts by the two companies to merge, as well as a proposed takeover of T-Mobile by AT&T, which was blocked by the Federal Communications Commission (FCC) in 2011 on the grounds that it would stifle competition. The $26.5 billion deal would give the newly-formed corporation a combined 125 million customers and, according to T-Mobile and Sprint, would enable the entities to create a high-capacity 5G wireless network that could compete with at-home broadband connections provided by cable companies. Groups including Free Press argue that the merger would serve only the interests of the two companies, despite T-Mobile and Sprint's claims that they would merge while increasing hiring and without raising prices—both uncommon for corporate mergers. "No one but T-Mobile and Sprint executives and Wall Street brokers wants to see this merger go through," said Matt Wood, policy director of Free Press, in a statement. "Greed and a desire to reach deeper into people's wallets by taking away their choices are the only things motivating this deal. What we know about the wireless market is that customers actually win when mergers are blocked." As the New York Times Editorial Board noted, the benefits promised by the two companies are "implausible," especially as T-Mobile and Sprint say they plan to cut their costs by $6 billion per year. "T-Mobile is promising that it will continue to operate as a scrappy upstart even after swallowing Sprint, which has struggled to win over customers and is saddled with $32 billion in debt," wrote the editors. "But there is no guarantee of that. In fact, becoming much larger could change the financial calculus at T-Mobile, encouraging it to raise prices to lift profits and pay off Sprint's debt." As former FCC Chairman Michael Copps, now an adviser at Common Cause, noted, "Low-income consumers and other vulnerable communities seeking more affordable mobile communications services would be particularly hurt from the merger," considering the two companies have offered lower prices in the past than AT&T and Verizon. FCC Chairman Ajit Pai has shown no indication in his 15-month tenure that he'll halt deals like the T-Mobile and Sprint merger, reversing a 42-year-old broadcast ownership rule last year that had prevented the consolidation of power by media companies. "There's a reason [Sprint and T-Mobile] are trying to rush through a deal before adult regulatory supervision inevitably returns to fashion," wrote Karl Bode at VICE. "Unless Ajit Pai wants to add yet another blemish to his already disastrous tenure at the helm of the FCC, the chairman should speak out and show us he's willing to do more than rubberstamp any harmful deal that crosses his desk," said Wood.
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The Implausible Promises of a T-Mobile-Sprint Merger

Postby smix » Fri Aug 17, 2018 6:59 pm

The Implausible Promises of a T-Mobile-Sprint Merger
The New York Times

URL: https://www.nytimes.com/2018/04/30/opin ... sible.html
Category: Business
Published: April 30, 2018

Description: T-Mobile and Sprint are making some big promises to sell their proposed $26.5 billion merger. They assert that the merger — which would reduce the number of national wireless companies from four to three — would give them the scale they need to build a high-capacity wireless network with 5G, or fifth-generation, technology. If the Federal Communications Commission and the Department of Justice approve the deal, T-Mobile and Sprint say, the company won’t raise prices and it will hire more people, rather than reduce the work force, which is more often the case in such mergers. And they say all this will be done while costs are cut by $6 billion a year and profits rise substantially. All that’s missing from this list of promises is permanently blue skies. Together, Sprint and T-Mobile would have more than 125 million customers, putting the combined company, which would keep the T-Mobile name, just behind Verizon and AT&T. Before this latest deal was agreed to on Sunday, the four companies had discussed several possible mergers in recent years. Indeed, 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. Having fewer competitors emboldens businesses to raise prices and force consumers into long-term service contracts because they know that people don’t have many options. That’s why the F.C.C. and the Justice Department successfully blocked AT&T’s proposed acquisition of T-Mobile in 2011 — and why regulators should be skeptical this time around as well. It isn’t clear that T-Mobile and Sprint need this deal to roll out a 5G network. Executives of both companies have previously said that they would offer such service across the country and that their networks would be the best in the industry. Now, executives say the companies’ combined wireless spectrum will allow them to offer a 5G service so good that some people will use it to replace their home broadband connection, providing competition to the likes of Comcast and Charter. That sounds great, but there is a long history of telecom executives failing to deliver on grand promises about abundant and cheap broadband. There is also plenty of evidence that more competition is good for consumers and the economy broadly. Just look at T-Mobile. After the AT&T acquisition fell apart, T-Mobile slashed prices and offered wireless service without long-term contracts under an aggressive chief executive, John Legere. The bet paid off handsomely — T-Mobile has added nearly 40 million subscribers in the past five years, and the rest of the companies in the industry have had to lower prices and change how they do business. If AT&T had been allowed to take over, many experts believe, prices would have gone up and cellphone contracts would have become much more onerous. T-Mobile is promising that it will continue to operate as a scrappy upstart even after swallowing Sprint, which has struggled to win over customers and is saddled with $32 billion in debt. But there is no guarantee of that. In fact, becoming much larger could change the financial calculus at T-Mobile, encouraging it to raise prices to lift profits and pay off Sprint’s debt. Many experts worry that the F.C.C., led by Ajit Pai, who tends to side with large telecommunications companies on important policy questions, will be overly receptive to T-Mobile’s arguments. That means the Justice Department’s antitrust division and its chief, Makan Delrahim, could play a decisive role. Mr. Delrahim has already surprised many experts by suing to block AT&T’s acquisition of Time Warner — a judge is expected to soon rule in that case — suggesting that he might be more open to challenging the T-Mobile-Sprint deal than other regulators appointed by President Trump. That said, Mr. Delrahim might only be trying to block the AT&T-Time Warner deal in order to please the president, who has railed against that acquisition and frequently criticizes CNN, which is owned by Time Warner. Regulators ought to closely scrutinize mergers between dominant players in any industry. That responsibility, however, is heightened when they’re asked to analyze deals in industries, like telecommunications, that have high barriers to entry and few competitors. Customers count on it.
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