The Trump DOJ/FCC 'Fix' For The Crappy T-Mobile Merger Isn't Looking So Hot

from the regulatory-theater dept

Economists repeatedly warned that the biggest downside of the $26 billion Sprint T-Mobile merger was the fact that the deal would dramatically reduce overall competition in the U.S. wireless industry. Data from around the globe clearly shows that the elimination of one of just four major competitors sooner or later results in layoffs and higher prices due to less competition. It's not debatable. Given U.S. consumers already pay some of the highest prices for mobile data in the developed world, most objective experts recommended that the deal be blocked.

It wasn't. Instead, the Trump FCC rubber stamped the deal before even seeing impact studies. And the Trump DOJ not only ignored the recommendations of its staff, but former Trump DOJ "antitrust" boss Makan Delrahim personally helped guide the deal's approval process via personal phone and email accounts. Both agencies, the vocal chorus of telecom-linked industry allies, and many media outlets all behaved as if all of this was perfectly legitimate and not grotesquely corrupt.

At the heart of the DOJ's approval was a flimsy proposal that involved giving Dish Network some T-Mobile spectrum in the hopes that, over seven years, they'd be able to build out a replacement fourth carrier. As we noted at the time, there was very little chance this plan was ever going to work. In part because the remaining three wireless carriers (T-Mobile, Verizon, AT&T) have every incentive to fight against a major fourth wireless competitor emerging from this mess. But also because Dish has a long history of spectrum hoarding and empty promises in wireless (just ask T-Mobile circa 2019 or so).

And there have been several hints that we're already stumbling along this doomed trajectory. Including the 6,000 layoffs (so far) that the merging companies promised wouldn't happen if regulators approved the deal.

Last week, for example, Dish Network complained to the FCC that T-Mobile wasn't being particularly cooperative on a number of fronts, including their supposed spectrum and network sharing arrangements. To help build this "new" fourth wireless network, T-Mobile gave prepaid mobile brand Boost Mobile to Dish. But Dish is annoyed that the Sprint CDMA network, which is currently in use by many of these customers, is being shut down prematurely, making it harder for Dish to get an operational foothold:

"Dish's letter to the FCC addresses a range of concerns, but the largest issue relates to the shutdown of the CDMA network that had previously been used by Sprint and is still used by the majority of Dish's 9 million Boost Mobile subscribers...Dish had expected that T-Mobile would eventually look to shut down that network in three to five years, according to people familiar with Dish's thinking. But Sprint said late last year that it would look to shut it down far earlier, on Jan. 1, 2022.

But Dish's letter also generally complains about something else. Namely, that post-merger, T-Mobile is acting a lot more like AT&T and Verizon (which it used to mock), and a lot less like the consumer-centric company that disrupted the market in the first place:

"In the letter, Dish also accuses T-Mobile of flip-flopping on other spectrum issues. Where T-Mobile previously pushed for policies encouraging smaller competitors, Dish says T-Mobile is now adopting the same tactics as AT&T and Verizon.

"During its earlier life as the 'Un-Carrier,' T-Mobile championed policies that promoted competition, diverse spectrum ownership, and efficient spectrum use. How quickly things change," Dish says in its letter. "Now, T- Mobile opposes measures that would help new entrants and smaller providers compete."

This should surprise absolutely nobody, including Dish. When you reduce overall competition via consolidation, the remaining competitors will always take full advantage. People like to debate this stuff, but it's like debating whether water will be influenced by gravity. It (layoffs, higher prices, worse service) happened in numerous other countries (Germany, Canada, Ireland) that saw a 4-3 sector consolidation, and, as US regulators increasingly rubber stamp mindless merger mania in wireless, it's going to happen here. And absolutely nobody responsible for it will take ownership when rates skyrocket a few years from now.

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Filed Under: ajit pai, competition, doj, fcc, makan delrahim, mergers, mobile
Companies: dish network, sprint, t-mobile


Reader Comments

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  1. identicon
    Bobvious, 7 Apr 2021 @ 5:38am

    CDMA

    Cut Dish out of the Mobile Arena

    link to this | view in thread ]

  2. identicon
    Baron von Robber, 7 Apr 2021 @ 7:05am

    Trump has the Merde Touch on everything.

    link to this | view in thread ]

  3. identicon
    Glenn, 7 Apr 2021 @ 7:18am

    Actually we've gone from 2 competing carriers and 2 not-so-much competing as also-ran competitors to 3 competing carriers. Consumers win.

    link to this | view in thread ]

  4. icon
    Thad (profile), 7 Apr 2021 @ 10:58am

    There was an article last month sounding the alarm about criticisms of the consumer harm standard and efforts to revert back to the competition standard.

    This article demonstrates, once again, why that one is wrong.

    The Chicago School argument that reduced competition and consumer harm are separate and unrelated issues is farcical, and the last 40 years of corporate megamergers under the consumer harm standard prove it.

    link to this | view in thread ]

  5. identicon
    Anonymous Coward, 7 Apr 2021 @ 7:22pm

    TMobile just upgraded all its existing postpaid customers to unlimited. For free.

    How is this horrible for consumers?

    link to this | view in thread ]

  6. This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 8 Apr 2021 @ 11:22am

    LOL, Another Trump article? You guys need some new material.

    link to this | view in thread ]

  7. icon
    Mike Masnick (profile), 8 Apr 2021 @ 11:37am

    Re:

    Lol, another comment that doesn't understand the linear nature of time? You commenters need to get some new material.

    If we're talking about the results of something that happened under the Trump administration, we should mention it. The same way we talk about the Obama or Bush or whatever administrations. It's weird that you guys were all "Obama this/Obama that" after Trump was elected, but now you suddenly think we should never mention Trump again?

    Go away.

    link to this | view in thread ]

  8. icon
    nasch (profile), 8 Apr 2021 @ 1:17pm

    Re:

    Consumers win.

    Citation needed.

    link to this | view in thread ]

  9. identicon
    Tom, 8 Apr 2021 @ 2:26pm

    A lot of people do believe Sprint was dying and had no chance to compete and sooner or later Verizon or AT&T would gobble up Sprint for pennies after it’s bankruptcy if T-Mobile didn’t acquire Sprint which would be worse for customers. Regardless, we will see increasing prices and worse deal for customers. We are unlikely to see more competitive pricing for customers anytime soon. Carriers will keep pressuring people to opt into group plans as a family is less likely to switch than individual between plans. Individual shouldn’t have to pay twice for the same plan benefit. Ideally, what would have happened if another big player bought Sprint that isn’t Att, Verizon, T-Mobile or Dish. Even if nationally despised Comcast, bought Sprint (they already run MVNO on Verizon). Of course they would have to give up on penalizing non-landline Internet subscribers with extra “line access fee” which wouldn’t happen without strong regulations to protect consumers, which leave a lot of room for improvement in the US.

    link to this | view in thread ]

  10. identicon
    jacob, 10 Apr 2021 @ 10:38am

    u are blind if you think biden wouldnt have also approved the merger. both sides paid and bought by big corp

    link to this | view in thread ]

  11. icon
    Mike Masnick (profile), 10 Apr 2021 @ 3:38pm

    Re:

    I mean, the Obama FCC rejected the last attempt to merge T-Mobile, so... uh, that's not at all clear. But, even so, nothing in this piece argued that Biden wouldn't have approved it. It's just noting the factual point that this plan was designed by the Trump admin. Do you have a problem with that?

    link to this | view in thread ]


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