Yesterday, the FCC, in a 3-2 vote along party-lines
(R-D), stated that the $26.5 billion T-Mobile-Sprint merger was in the public
interest with the negotiated concessions attached to the deal. The thumbs-up comes 4-months after the other
federal agency, the Department of Justice, approved the merger on antitrust
grounds. While the FCC’s Republican
leadership (Pai, O’Rielly, and Carr) contend that the merger will allow for 3
strong competitors to duke it out in the race to deploy 5G nationwide, the 2 Democrats
on the Commission feel that consumers will be worse off with fewer competitors (until
Dish deploys). In an article written for
The Atlantic, Commissioner Rosenworsel argued that the market structure
of the wireless telecom industry “will devolve into a cozy oligopoly”. She describes her concerns with what happens
in these types of market structures in a statement released by her office after
the FCC’s decision.
“We’ve all seen what happens when markets
become more concentrated after a merger like this one. In the airline industry, it brought us
baggage fees and smaller seats. In the
pharmaceutical industry, it led to a handful of drug companies raising the
prices of lifesaving medications.
There’s no reason to think this time will be different. Overwhelming evidence demonstrates that the
T-Mobile-Sprint merger will reduce competition, raise prices, lower quality,
and slow innovation.”
The other Democrat on the Commission, Starks, raised
similar concerns with a focus on the weak concessions and associated enforcement
of those concessions.
“In short, I believe that T-Mobile and Sprint
have not proven that their merger will benefit the public interest. Vague promises do not change what was true
when this deal was first proposed and what remains true today – the harms from
this merger are not overcome by any condition imposed in the majority’s
order. While I hope for the sake of
consumers that I am wrong, I fear that we will one day look back at this
decision and recognize it as a moment that forever changed the U.S. wireless
industry, and not for the better.”
The
last hurdle for T-Mobile-Sprint is the multi-state lawsuit filed by the Attorney
Generals (AGs) of 16 states and the District of Columbia. This
is hardly a bi-partisan action as there is only one party to the lawsuit with a
Republican AG and that is Texas, a state that employs a lot of AT&T
workers. Of the 8 states which have
reached an agreement with the firm so far, only one is led by an AG who is a
Democrat. That state is Mississippi, a
state that was part of the original lawsuit, but dropped out just recently when
T-Mobile agreed to 5G coverage goals and to hold prices constant for 5 years. How much more time and resources will it take
for T-Mobile-Sprint to “win” everyone over?
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