T-Mobile/Sprint Deal: Let's see what Congress asks

On January 28^th, ranking members of the Judiciary and Energy and Commerce Committees of the House of Representatives announced that a joint hearing will be held on February 13^th to assess the potential impact of the T-Mobile and Sprint merger on “consumers, workers, and the wireless industry.”  T-Mobile CEO John Legere and Sprint Executive Chairman Marcelo Claure will testify at the hearing.  While Congress does not have a say in whether the deal goes through or not, that decision is in the hands of the Federal Communications Commission (FCC) and Antitrust Division of the Department of Justice, it provides an opportunity for House Democrats to go on record in opposition of the merger and in support of low-income consumers and communications workers, and to get the T-Mobile and Sprint executives to react to possible structural and behavioral conditions to a regulatory approval of the deal.  It’s a win-win for House Democrats.  It’s a win-win for the 4Competition Coalition that pressured Congress to have the hearing.  It’s probably a no-win for T-Mobile and Sprint.

It’s hard to argue that fewer competitors would be better than more in an already highly concentrated (HHI near 3,000) market characterized by high entry barriers.  Yet, in the domestic wireless market, the competition between Verizon, AT&T, T-Mobile, and Sprint is fierce on both price and product characteristics.  Post a hypothetical merger, it is highly likely that will continue as these firms are motivated by reducing post-paid churn, increasing average revenue per user (ARPU), investing in the latest technology, and gaining (not losing) customers in the wholesale and pre-paid markets. Without T-Mobile, Sprint will struggle to do all these things.

So, what will T-Mobile/Sprint have to agree to at the February 13^th hearing (possibly) and later with regulators to get this deal approve?  At a minimum, it will need to ensure that pre-paid services are “fairly” priced and available so that low-income households can afford access to wireless services.  It may need to detail its 5G deployment timetable and a coverage commitment in rural areas.   These would be behavioral remedies.  But, maybe, a structural remedy would provide the best outcome for shareholders and politicians and one that Legere and Claure should be prepared to talk about on the 13^th.  For example, would they be willing to sell their pre-paid services, MetroPCS, Boost, Virgin Mobile, to a new entrant or two?  Let’s see what they have to say.

https://www.4competition.org/about/

Update Note: The joint hearing has now been split into two.  The Energy and Commerce Committee will still meet on the 13th, but Judiciary Committee, because of a schedule conflict, will now convene on the 14th.