The T-Mobile Merger Closes, Highlighting Vast U.S. Media, Legal, And Policy Failures

from the less-competition-ahoy dept

T-Mobile and Sprint finally closed their controversial $26 billion wireless mega merger this week, opening the door to a new era in U.S. wireless with notably less overall competition and, inevitably, higher prices. The government, courts, much of the press, and many "top policy thinkers" of the era happily ignored 40 years of very clear global data showing that such consolidation in telecom reduces competition, raises overall prices, and inevitably results in a steady parade of layoffs. And most of them did so for all the usual reasons: either rigid partisan ideology, or the prioritization of profit above reason, empathy, or common sense.

But the deal's approval was also rife with an unprecedented amount of corruption, fraud, and regulatory capture -- even for the U.S.

The FCC rubber stamped the deal before it had even seen its own impact analysis data, with Commissioner Brendan Carr meeting with T-Mobile behind closed doors nine times to help the deal gain approval. T-Mobile slathered Trump's businesses with cash and hired Trump ally Corey Lewandowski shortly after Lewandowski mocked a kid with Down Syndrome on TV. DOJ antitrust boss Makan Delrahim, instead of doing his job, personally helped guide the deal's approval process via personal phone and email accounts.

Former FCC Commissioners from both parties lobbied for the deal, often without making their financial motives clear in media appearances and a steady parade of editorials. And that's before you get to the comically broken U.S. court system, which tied itself in knots ignoring every last shred of hard data just so the deal could proceed.

It's a merger that could only have been approved in the Trump era, given similar competition-eroding deals (AT&T T-Mobile in 2011, and Sprint T-Mobile in 2014) were shot down for good reason: global data, from Canada to Ireland, shows this kind of consolidation is almost always problematic. Less competition means higher prices. Unions and Wall Street analysts alike have estimated this particular deal could result, in time, with anywhere from 10,000 to 30,000 employees being fired as redundant retail and management positions are eliminated. Studies even suggest people at other companies will likely be paid less.

And while the DOJ floated a half-cooked deal that will try to create a new replacement fourth carrier out of Dish Network and some twigs, most experts strongly doubt much ever comes from it for a laundry list of reasons. The most obvious being that AT&T, Verizon, and T-Mobile will all be incentivized to make sure, via relentless lobbying, that this new fourth carrier never fully materializes. And barring any election-triggered change, the current FCC, known for being a glorified rubber stamp to industry, isn't likely to engage in the kind of nannying necessary to make sure the deal works, or punish companies that fail to live up to pre-merger promises.

As the deal closed this week, media outlets covering the news failed to include any of this as context. CNET, for example, largely repeated T-Mobile's claims with a focus on network performance, with not so much as a peep on how or why such a deal might be problematic for your wallet or T-Mobile employees. Ditto for TechCrunch, which briskly broke down the last year or two of sleazy lobbying as little more than "months of regulatory maneuvering" while giving extra weight to merger conditions that U.S. history makes clear will never actually be enforced:

"After months of regulatory maneuvering, T-Mobile and Sprint officially completed their $26 billion merger today....For consumers, it will seemingly take a little time before the effects of the transition are meaningfully felt. T-Mobile did not comment on the future of the Sprint brand in today’s announcement, but they have previously promised that subscribers will have access to “the same or better rate plans” for three years as part of the deal.

It's a form of tech news whitewashing, in which essential context is either downplayed or omitted entirely, giving the readership a false impression of the human and market cost of merger mania. It's a major reason why, like a purgatorial version of Charlie Brown and Lucy football, we keep making the same mistakes over and over again without learning from experience. Press outlets won't tell the full truth to protect ad revenue and source access. Regulators won't tell the truth to protect future lobbying appointments. Many analysts and consultants won't tell the truth because they're either blinded ideologically, or paid by companies to massage the math and ignore inconvenient data.

If the T-Mobile deal follows similar telecom deals of years' past, the next year won't see much change on T-Mobile's part, as it tries to pretend critics of the deal were wrong (while attention is still fresh) via a few theatrical promotions. While there have already been some layoffs (despite endless T-Mobile promises this deal would create jobs), the real layoffs won't arrive until year two or three. By year three, as AT&T, Verizon, and T-Mobile have grown comfortable with the lack of competition and a forgetful public and government, you'll see prices steadily climb upward for Americans, who already pay some of the highest prices for mobile data in the developed world.

By then, none of the press outlets that happily parroted pre-merger promises will be bothered to go back and fact check whether those promises were true. Most of the regulators that approved the deal will be off to jobs at telecom-funded think tanks, and not a one will acknowledge resulting problems--or their role in them. Same thing for the analysts and experts that blessed the deal based on ideology or financial motives instead of logic; they too will have long moved on to providing cover for the the next profitable bad idea. And as always, it's the consumers and employees left holding the bag, higher bills, and pink slips. Rinse, wash, and repeat.

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Filed Under: antitrust, competition, doj, fcc, merger, mobile, regulatory capture, wireless
Companies: sprint, t-mobile