Executives from T-Mobile and Sprint sat before a House panel yesterday for the first time in hopes of convincing lawmakers that their proposed merger would be a net positive for the telecommunications industry, rural communities. and the economy.
John Legere, T-Mobile CEO and the face of the entire company, has spent the last few weeks making a number of different promises in order to mislead regulators and lawmakers into passing the $ 26 billion proposal. Many of those same promises were repeated before the Commerce and Energy Committee panel that was called to investigate the executives yesterday, even though the body has no real power over whether the merger will ultimately be approved.
Throughout the hearing, Legere assured lawmakers that by merging with Sprint, the “New T-Mobile” would help enable US leadership in 5G, increase competition in wireless and home broadband, reduce prices for wireless plans across the board and be a catalyst for job creation. “Our merger will be positive for employment from day one, and we will move forward,” Legere said. “Everyone will benefit from this merger.”
But lawmakers and some of the experts who testified before them argued that it was unclear whether T-Mobile and Legere would be able to deliver on any of the promises they made.
When it comes to the pricing plan, Legere sent a letter to the Federal Communications Commission last week, saying that the combined company would offer the “equal or better” rates that T-Mobile or Sprint offered yesterday for three years after the merger. . But last year, T-Mobile said that it would probably take Sprint subscribers about three years to fully migrate to this new T-Mobile network. Therefore, T-Mobile would only promise not to raise prices for its own customers and would possibly increase them for Sprint’s once they have fully migrated to its network.
“Even T-Mobile’s own economic studies also show that this merger would lead to higher prices.”
Phillip Berenbroick of Public Knowledge told the hearing that consumers could see a price increase of up to 15.5 percent immediately after the merger. “While the companies are not surprisingly lower, even T-Mobile’s own economic studies also show that this merger will lead to higher prices,” Berenbroick said.
Over the past year, the US government has targeted what it sees as “adversarial” Chinese telecom providers like Huawei and ZTE. Yesterday, Legere assured lawmakers that the new T-Mobile would not build any of its new 5G networks with that equipment. Neither company currently uses equipment from those companies, and with a new executive order likely on the way from the White House that would ban its use across the board, it seems like a pompous promise that didn’t need to be made in the first place.
Legere promised Representative Darren Soto (D-FL) that he would not cut jobs for the first three years, once again, relying on the fact that the merger will not even be fully completed until then. Chris Shelton, president of the Communications Workers of America, told the House panel that the merger could cost the American workforce nearly 30,000 jobs and reduce wages among telecommunications workers by $ 3,000 a year.
“Nor will the employment effects of this merger be limited to direct job losses,” Berenbroick said. “Greater concentration in the wireless market would lead to lower wages across the industry.
“Our 5G network will be nationwide and will connect the entire country.”
One of the most prominent concerns of lawmakers was whether this merger would benefit consumers in rural and low-income communities across the country. Legere assured them that the deal would bring 600 new retail stores in these areas, bringing in 11,000 new employees. “Our 5G network will be nationwide and will connect the entire country,” Legere said. Many Republicans, such as Representative Billy Long (R-MO), who represents a largely rural population, agreed that the merger should continue and were optimistic that it would help close the digital divide.
Critics were much less optimistic. Shelton said that even six years after the merger was completed, 46 million people would still not receive 5G service. “Rather, they would be forced to settle for a service that performs significantly less than the urban and suburban parts of the network,” he said. “The ‘digital divide’ between urban and rural America is likely to get worse, not better.” But unless the new T-Mobile is in direct competition with many other major wireless providers, they may not have an incentive to enact competitive pricing.
While many Democrats raised concerns about the proposed merger, none really pressed Legere on his optimistic outlook. Neither member chose to delve into their team’s expensive and lengthy stays at the President Trump DC hotel. Representative Anna Eshoo (D-CA) chose not to ask questions at all, using her five minutes to make a statement approving the merger. Eshoo said that by merging, the company would create more competition in the market. Several other members of the Republican side also expressed their approval of the merger, even though they have no real authority to approve it.
The Energy and Commerce Committee has no real authority to stop the merger, but they did have the opportunity to present arguments that regulators at the FCC and the Department of Justice will be forced to consider. These arguments from both carriers and critics varied wildly. This deal will create or cut jobs, raise or lower wages, create more competition, or stifle innovation in the long run. Critics of the deal came up with evidence and examples of proposed mergers in the past, and T-Mobile and Sprint came up with empty promises that are in no way binding unless published by a regulatory body.
As the response from regulators draws near, Legere appears to be increasingly desperate, making bigger and bigger promises. Legere’s claim that T-Mobile won’t raise prices for three years, specifically, is unusual because there’s no way the network migration won’t even be over by then. Democrats now run the House of Representatives, but Trump appointees still run the agencies that are necessary for approval. They are unlikely to work to stop such a merger. Senate Democrats have spoken out about the merger stronger than any of their counterparts in the House, but in the end, the FCC and DOJ are the only two bodies that matter in this situation.
The House Judiciary Committee’s antitrust panel was scheduled to hear from Legere’s CEO and Sprint, Marcelo Claure, today, but that hearing has been postponed to an unknown date and time. It is unclear when the DOJ or the FCC will complete their reviews.