DOJ's T-Mobile-Sprint Settlement Gets Claps, Slaps in D.C.

Industry players were ready with a torrent of reaction to the Justice Department's approval Friday (July 26)--with divestitures and conditions--of the T-Mobile-Sprint deal. It must still be voted by the FCC and faces a state legal challenge from various state attorneys general.

FCC chair Ajit Pai said the deal would help close the digital divide, for example, while Sen. Amy Klobuchar (D-Minn.) said what looked like a bad deal before still looked like one.

“I am pleased that the U.S. Department of Justice has reached a settlement with T-Mobile and Sprint," said Pai, who had already signaled he could support the meld with the spin-off of pre-paid business Boost Mobile and other conditions. "The commitments made to the FCC by T-Mobile and Sprint to deploy a 5G network that would cover 99% of the American people, along with the measures outlined in the Department’s consent decree, will advance U.S. leadership in 5G and protect competition. In addition, the transaction has garnered bipartisan support, including from Governor Laura Kelly (D-Kan.), Congresswoman Anna Eshoo (D-Calif), and former FCC commissioner Mignon Clyburn.

“Because of this transaction’s potential to help close the digital divide in rural America and maintain our nation’s leadership in 5G, as well as the commitments made by T-Mobile and Sprint to the FCC, I plan to present my colleagues soon with a draft order, consistent with the Department’s filings, favorably resolving the FCC’s review of the transaction.”

“I am pleased that the Department of Justice is now prepared to approve the T-Mobile-Sprint merger, albeit with conditions and divestitures that, in the current competitive communications environment, are likely not necessary to protect consumers, and which, in fact, may have the effect of reducing some of the benefits from the merger," said Free State Foundation president Randolph May.

“That said, DOJ’s decision after a lengthy review finally to allow the merger to be consummated is welcome. As a general matter, and in this case involving the rapidly changing communications marketplace driven by technological innovations like 5G next-generation wireless networks, it takes longer than it should for the government to reach a decision. The gap in time between due deliberation and delay often is far too large. So, I hope the FCC will quickly approve the merger, and the state Attorneys General will now withdraw their lawsuit, which has had more than a whiff of politics driving it from the get-go."

Five state AG's joined DOJ in the settlement that paves the way for the deal, but others signaled they are pushing ahead. If so, the deal can't close until that case is resolved, which won't be until at least late October at the earliest.

Democratic commissioner Jessica Rosenworcel had her doubts.

“Today the Department of Justice gave its blessing to the largest wireless merger in history," she said. "I remain skeptical that this combination is good for consumers, good for competition, or good for the economy. Before the FCC votes on this new deal, the public should have the opportunity to weigh in and comment. Too much here has been done behind closed doors.”

Deal opponent and presidential candidate Amy Klobuchar (D-Minn.) said the deal looked no better in the light of the spinoffs and conditions.

“Competition is critical to a strong economy—among the four largest cell phone carriers, that competition has led to lower prices, better service, and more innovation. That’s why, when this merger was first reported, I raised serious antitrust concerns about combining two of the four remaining nationwide wireless carriers, and I have since urged the Justice Department to reject the deal as anticompetitive," she said. "It looked like a bad deal then, and it looks like a bad deal today, despite the parties’ promises and this proposed consent decree.”

"Consummation of this revised transaction has more obstacles than many observers seem to recognize," said Benton Foundation's Andrew Schwartzman. "For one thing, even though a majority of the FCC has signaled its approval, the Commission must still issue its decision. The expected dissents from the FCC minority will provide more ammunition for opponents. Second, the new consent decree must also be approved by a federal judge. While that review has often been automatic in the past, this time the states and other opponents have already marshaled a vast array of evidence against the deal."

“It is clear that the Justice Department agrees with what we’ve said for the past year: the wireless market needs at least four viable competitors," said Joshua Stager, senior counsel at New America's Open Technology Institute. "But the agency’s response is needlessly convoluted. DOJ does not need to bend over backwards to fix a bad merger. It can simply block the deal."

“Makan Delrahim and the Department of Justice Anti-Trust Division have upheld the competition and consumer welfare standard," said INCOMPAS CEO Chip Pickering. "The DOJ agreement is great news for wireless customers, smaller providers, and fiber builders. This settlement preserves a market structure of four national carriers, unleashes a true race to new 5G, and will help rural broadband grow.

“The DOJ deal is both creative and competitive," he said. "[C]onsumers get greater portability and flexibility to switch providers. By empowering Dish, the DOJ preserves a fourth national provider that will benefit consumers and open up more wholesale opportunities for smaller wireless builders. Dish is a disrupter with a long history of providing service to underserved rural Americans and is well positioned to bring more competition to more communities. Makan is to be commended and congratulated for his commitment to the law and competition."

“Just a few months ago, reports indicated that the expert antitrust staff at the DOJ recommended the agency sue to block the T-Mobile-Sprint merger," said Common Cause special advisor and former FCC Chairman Michael Copps. "But rather than take the reported advice of career staff, Assistant Attorney General Makan Delrahim decided to approve a blatantly anticompetitive deal by bringing in Dish as a sham fourth competitor. Basic math tells you that replacing Sprint, a national carrier with 50 million subscribers, with Dish, a satellite company with zero wireless subscribers, is a recipe for competitive disaster. In addition, Dish has no wireless infrastructure of its own and has been sitting on spectrum for years without any clear plan to build a network. No type of network sharing arrangement with T-Mobile will lower wireless prices or actually force Dish to build out its own network."

“Today’s decision reduces the number of nationwide mobile carriers from four to three, with the hope of one day creating a new fourth competitor,” said Sen. Ed Markey (D-Mass.). “Unfortunately, the best way to ensure competition would have been for the Justice Department to simply block the merger so we would still have four competitors today. Instead, they chose a more complicated and uncertain path. I plan to closely monitor this deal because we must ensure consumers have at least four choices, not three, in the wireless marketplace.”

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.