Editorial: The siren song of the Sprint-T-Mobile deal
Promises, promises. T-Mobile and Sprint, the third- and fourth-most popular mobile phone networks, respectively, have made a series of alluring pledges to federal regulators as they seek approval for their $26.5-billion merger. These include not raising prices for three years, not charging more for their forthcoming 5G service than their current offerings, and providing 5G more quickly and more extensively than their rivals, reaching 99% of the country’s population within six years.
Those pledges have won the support not just of the reluctant regulator who chairs the Federal Communications Commission, Republican Ajit Pai, but of the California Emerging Technology Fund, which works to extend broadband to underserved rural and inner-city communities across the state. They are persuaded that the benefits of the deal are worth the potential harms to consumers that would come if the four national wireless networks — Verizon, AT&T, Sprint and T-Mobile — were reduced to three.
History teaches us not to be so sanguine. Over the years, regulators have allowed the steady consolidation of the telecommunications and media industries based on promised benefits that were never delivered. Invariably, mergers have been sold as a way to speed deployment of new services and fortify competition, only to have no such effect. That’s happened in both the phone and cable TV markets; there’s no reason to expect the results to be different in mobile phones.
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Perhaps the sexiest part of the companies’ pitch is that by combining, they could roll out 5G service — which can theoretically move significantly more data with much less delay than the current networks, supporting self-driving vehicles and other technologies that rely on instantly updated information — faster than AT&T and Verizon, and faster than they could alone. That’s because Sprint has licensed lots of “mid-band” spectrum that, while not capable of the highest speeds, will require the deployment of fewer short-range transmitters to upgrade to 5G. But Sprint argues that it doesn’t have the resources to build out the new network quickly, and T-Mobile does.
That’s a persuasive argument only if Sprint, which has struggled with debt, is doomed to fail. Otherwise, allowing the merger would guarantee that the country would wind up with three 5G networks instead of four. The competition among four mobile networks has sparked plenty of innovation in pricing and features, led by scrappy T-Mobile and Sprint. And that sort of innovation is something regulators need to preserve.
The Justice Department’s antitrust division has the ultimate say, and it should not approve the deal based on the sort of promises that have won over Pai. Unless Sprint is truly dying, the department should oppose the deal unless T-Mobile and Sprint can divest enough assets and spectrum to bring a new, fourth competitor into the field. That’s a tall order, and the Justice Department shouldn’t be beguiled into settling for less.
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