A proposed merger of T-Mobile and Sprint, the country’s third- and fourth-largest wireless operators, would have a profound impact on Californians.
If regulators greenlight T-Mobile’s bid to buy Sprint, wireless prices will rise for nearly every Californian. That’s no exaggeration. The deal would all but eliminate the competition that has allowed Californians to get more bang for our buck with wireless providers.
But, although Californians of virtually every stripe can expect an increase in their monthly cellphone bills, the merger will be particularly onerous for customers on tight budgets.
T-Mobile and Sprint are the dominant wireless service providers for low-income people nationwide, and they have a more diverse customer base than behemoths AT&T and Verizon.
That’s no accident. More poor people subscribe to T-Mobile and Sprint because their plans cost less. The two companies compete for millions of low-income users long ignored by AT&T and Verizon.
Both T-Mobile and Sprint also provide prepaid mobile options, which can be lifesavers for struggling families. Prepaid phones cost much less and don’t require credit checks.
In California especially, low-income customers tend to be people of color and immigrants. The merger would therefore disproportionately burden this vulnerable group — many of whom rely on cellphones as their only form of internet access. A significant portion of these customers use cellphones to meet basic needs.
Instead, the companies argue that the harms to one group of customers would be offset by the supposed benefits to another. They admit that poorer users would pay more for prepaid service, which would give a newly enormous T-Mobile the funds it needs to bring faster Internet speeds to wealthier users, whose rates and bills would also increase.
Taking from the poor (disproportionately people of color) to give to the rich (predominantly white people) is a form of structural racism. If regulators approve this merger, they will further entrench existing inequalities in the telecom sector, where companies are notorious for failing to adequately serve communities of color.
The deal would also undercut Lifeline, a program that provides low- and no-cost wireless service to individuals who fall below the poverty line. The FCC is already trying to eviscerate Lifeline with a plan that would severely limit subsidized services and cut off funding for some of the most vulnerable users. Even if that plan isn’t executed, the T-Mobile-Sprint merger would drastically reduce the quality and affordability of the Lifeline program across the country.
This indicates that incentives for carriers to offer Lifeline are already precarious, and that Sprint, whose rates are lowest, has a different view on this market than its suitor, T-Mobile.
Less competition in the Lifeline market means a raw deal for those who participate in it. When Tracfone received the very first Lifeline waiver to provide wireless services, it offered only 68 minutes per month for the same $9.25 subsidy in place today. But when Virgin Mobile entered the program with an offering of 200 minutes per month, Tracfone quickly increased its offering to 250 minutes.
Robust competition in the wireless market is essential, especially for carriers that provide more affordable services, such as T-Mobile and Sprint.
If higher prices and fewer options aren’t reason enough to block this merger, the deal also promises to eliminate nearly 30,000 U.S. jobs, including more than 3,000 in California, according to the Communications Workers of America.
The FCC, the Justice Department and the California Public Utilities Commission are considering conditions to mitigate the merger’s many harms. But let’s get real. Mitigations rarely work, and government bodies haven’t been able to enforce them. Regulators should reject this merger outright.