“Two
of the FCC’s top priorities are closing the digital divide in rural America and
advancing United States leadership in 5G, the next generation of wireless
connectivity. The commitments made today
by T-Mobile and Sprint would substantially advance each of these critical
objectives.” A. Pai, FCC Chairman, May 20, 2019.
On Monday, May 20th, Chairman Ajit Pai,
announced that, within the next few weeks, he would present a draft Order for
consideration by his fellow commissioners which would approve the T-Mobile/Sprint
merger with structural and behavioral conditions attached. Using the public interest lens for regulatory
approval, it is expected that the other Republicans on the FCC, Michael O’Rielly
and Brendan Carr, would join Pai in approving the merger. The terms of the approval include:
· deploying a 5G
network that would cover 97% (85% rural) of the nation’s population within
three years, and 99% (90% rural) within six years
· guaranteeing that 90% of Americans would have access to
mobile broadband service at speeds of at least 100 Mbps, and 99% would have
access to speeds of at least 50 Mbps
· promising that the
network would cover at least two-thirds of the nation’s rural population with
high-speed, mid-band 5G
· divesting Boost
Mobile to address competition concerns in the prepaid wireless market, and
· agreeing to pay penalties
if commitments are not met.
On
Tuesday, a day later, it was reported by Bloomberg that the Department of
Justice staff, using the antitrust lens, was going to recommend to their boss,
Makan Delrahim, that the deal should not be approved. From anonymous sources, it was reported that
the staff was concerned with the impact that one fewer competitor would have on
prices in an already highly concentrated market.
On
Friday, three days later, it was reported by the New York Post that Pai consulted
with Delrahim prior to his public statements on Monday. A conversation between the regulators
possibly suggests that Delrahim might be in favor of approving the deal and
overriding the recommendation of his staff.
At
the end of the day, can regulators convince the public that as long as the
right remedies are attached to the deal there will be a net gain to consumer
welfare (faster 5G deployment (innovation) > likelihood of higher prices
from fewer competitors in the market)? Let’s see what next week brings!
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