The proposed $26 billion merger between telecom giants T-Mobile and Sprint is opposed by a growing number of consumer and citizens groups across the U.S. The combined companies would become the second largest wireless provider in the country. If the deal is approved by the Trump Justice Department. the further consolidation of the wireless phone market would leave only three major carriers in place, which many observers believe would lead to less competition and higher costs for consumers, as well as triggering the elimination of up to 30,000 jobs.
In the face of a lawsuit to block the merger launched by ten state attorneys general, the Justice Departmentt has asked the companies to divest themselves of certain assets as a pre-condition to approve the deal. The sale of Sprint’s discount pre-paid wireless service, Boost Mobile, is likely among the concessions that the companies will offer.
Between The Lines’ Scott Harris spoke with Tim Karr, senior director of strategy and communications with the media democracy group Free Press. Here, he explains why his group is opposed to the T-Mobile/ Sprint merger, and believes that if the deal is approved, the biggest losers will be low-income consumers and communities of color.
TIM KARR: There have been a number of efforts by carriers or wireless carriers to merge over the last couple of years. People may have remembered when T-Mobile and AT&T tried to merge and we successfully blocked that merger because a lack of competition, a lack of choice in the marketplace means higher prices and declining services. So we’ve been successful in the past blocking these types of what are called horizontal mergers, when you have direct competitors merging with one another. This latest proposal is to merge the third and the fourth largest carriers, T-Mobile and Sprint as one entity and lessen the number of choices that we have in the marketplace from four to three – that the two leading carriers being Verizon and AT&T. And, we have been successfully fighting this merger for more than a year now.
We were of the understanding that the antitrust staff – these are the people who are not politicians, but career bureaucrats within the Department of Justice – were recommending that the merger not go forward. But unfortunately, the decision is often made in political chambers and not amongst the experts. And so, prior to the DOJ making a decision on this, the FCC, the Federal Communications Commission, which is also an entity that looks at mergers of this sort came out. Its leader, Chairman Ajit Pai, announced that he was going to support the acquisition. And, so we saw that as a very transparent effort by Pai to try to influence the process. And now with conflicting reports in the media, that even the Department of Justice may be looking at this merger and that the political wing at the Department of Justice is supportive in many ways of the merger – that there’s some indication that the Trump White House is also supportive of the merger – we’re concerned that it may go through.
One of the things that’s happened in the last week that was really important is that 10 state attorneys general said that they’re planning to file suit to stop the T-Mobile merger, including some large states like New York and California. And so, having an attorneys general from states sue to stop this merger is really important. So, that’s a lot of information for your listeners. But essentially, this merger is still in an uncertain state. Unfortunately, we’ve made a very sound argument that reducing the number of choices in the marketplace is bad for consumers and it’s especially bad for people of color who rely more heavily on T-Mobile and Sprint and some of some of their what are called reseller brands like Boost to get online via wireless services. So, there’s a lot going on. We’re very happy that the state’s attorneys general have taken a strong stand and we’re hopeful still that this merger will not get approved.
BETWEEN THE LINES: Tim, more recently, I’ve read that the Justice Department is trying to work out some deal where T-Mobile and Sprint would divest themselves of certain holdings, certain companies, certain spin-off companies to maybe create a new national wireless competitor that would allay the concerns of opponents like yourself. You can certainly speak to that. But what is the behind-the-scenes negotiations going on now that that seem to, at least on the surface, address the concerns of opponents of the merger?
TIM KARR: Well, there have been reports that one of the services that T-Mobile and Sprint offers – what are called reseller services where they actually lease Spectrum to another entity that then resells it in the marketplace – Boost is one of those services. It’s used disproportionately by low-income people in communities of color. And there’s a thought that the 7 million subscribers that rely on Boost for services, Boost would be spun off and then another entity – there’s been talk of Dish or Charter – would come in and bring some of their assets to create a new competitor in the marketplace. So we’re very skeptical of this for a number of reasons, one of which is just because it takes a considerable investment in time and money to actually create a company that could be competitive at that level. So you would not see any – you know, even if that were to happen – you wouldn’t see those sorts of competitive pressures in the marketplace for a number of years. And, by that time, it may be too late for us to keep prices down and keep services at a level of quality that we would like to see.
For more information on Free Press, visit freepress.net.