Unsurprisingly, Ajit Pai's FCC Thinks The T-Mobile Sprint Merger Will Be Wonderful

from the man-of-the-people dept

For the last year, Sprint and T-Mobile have been pushing a large number of bogus claims justifying their $26 billion competition and job-eroding megamerger. One, that the deal will create jobs (false). Two, that the deal is necessary to deploy fifth-gen (5G) wireless (false). Three, that reducing the number of major wireless competitors from four to three will somehow create more competition (false, just ask Canadians or the Irish how that works out in practice).

There's really no debate over whether such significant consolidation is bad for the market, consumers, and employees. You need only look to 30 years of US telecom history to discover that such growth for growth's sake uniformly results in less competition, in turn resulting in higher prices, fewer jobs, and worse customer support. It's a major reason everybody hates Comcast. It's also easy to find a long, long list of companies that made all manner of pie in the sky promises pre-merger, only to fail utterly to adhere to any of them.

It's a major reason why similar deals--both AT&T's attempted acquisition of T-Mobile in 2011 and Sprint's attempted merger in 2014--were blocked by regulators, something that helped drive more competition to market.

Given Ajit Pai has become a sort of poster child for regulatory capture of late, he's not particularly keen on learning from telecom history. His agency this week unsurprisingly announced it would be approving the merger after T-Mobile made several concessions. Among them, T-Mobile promised to deploy 5G wireless broadband to 97% of the US population within three years of the closing of the merger and 99% of Americans within six years. That convinced Pai that the deal would be in the best interests of the American public:

"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 TMobile and Sprint would substantially advance each of these critical objectives....The construction of this network and the delivery of such high-speed wireless services to the vast majority of Americans would substantially benefit consumers and our country as a whole."

As usual, however, Pai was a bit casual with the facts. For one thing, both T-Mobile and Sprint were already on record saying they would have deployed these networks anyway to compete with AT&T and Verizon. The other major problem, obviously, is no matter how many conditions T-Mobile volunteers, consumer advocates are hard pressed to believe that Pai would actually enforce any of them:

"Industry watchers doubt whether Pai’s FCC would enforce conditions given the agency’s unwillingness to stand up to major carriers on a litany of subjects, ranging from the foot-dragging on implementing robocall tech, casual treatment of consumer location data, and repair delays in the wake of hurricanes in both Florida and Puerto Rico.

“Does anyone really believe that this FCC, which has asked nothing of the big mobile companies for over 2 years will require the companies to abide by these commitments?” former FCC lawyer Gigi Sohn told Motherboard via email."

For what it's worth, the Department of Justice remains skeptical that the deal's benefits will outweigh its harms. And there are several state AGs who've said they'll sue to block the deal even if it's approved.

While T-Mobile's disruptive nature (again, largely made possible because regulators blocked AT&T from gobbling it up) and its brash CEO tend to confuse some folks into thinking that somehow this merger will be different, you'd be hard pressed to find a single consumer group (you know, the folks paid a pittance to protect end users) that supports the deal. And unions continue to argue that the deal will be a mammoth job killer as the combined company inevitably eliminates duplicate HQs and redundant retail and support personnel. You'd be hard pressed to find a single telecom megamerger in US history that didn't result in higher prices, job reductions, and terrible customer service, a major reason Comcast is the country's biggest broadband provider and one of the least liked companies in America.

But time after time, companies are able to pay a rotating crop of consultants and economists to pinky swear that this deal will somehow be the one to finally fix a market broken by endless consolidation. And time after time, well-heeled lawmakers, revolving door regulators and unskeptical reporters are quick to believe them, driving the market further away from healthy competition and toward obvious monopolized dysfunction.

Filed Under: ajit pai, fcc, merger
Companies: sprint, t-mobile