Texas has joined a state effort to block the T-Mobile-Sprint merger, which the Department of Justice and a handful of other AGs' have agreed not to block given conditions the companies have agreed to, including spinning off pre-paid wireless operator Boost Mobile to Sprint in hopes of seeding a fourth facilities-based carrier (the merger would reduce the top four carriers to the top three).
“While we appreciate the time and effort that went into the agreement between the parties and the U.S. Dept. of Justice, the Texas Attorney General has an independent obligation to protect Texas consumers," said Texas AG Ken Paxton. "After careful evaluation of the proposed merger and the settlement, we do not anticipate that the proposed new entrant will replace the competitive role of Sprint anytime soon....The bargain struck by the U.S. Dept. of Justice is not in the best interest of working Texans, who need affordable mobile wireless telecommunication services that are fit to match the speed and technological innovation demands of Texas’ growing economy.”
The Communications Workers of America was celebrating the addition.
“The news that Texas has joined the states’ lawsuit underscores that the T-Mobile-Sprint merger is and remains anti-competitive and harmful to consumers and workers," said Debbie Goldman, policy director for the Communications Workers of America. "Nothing in the announced divestiture deal remedies these concerns, as Texas AG Paxton clearly recognizes. In fact, as we noted last week, through the announced divestiture deal with DISH, T-Mobile is creating its largest customer, not a new competitor. While we appreciate the time and effort that went into the agreement between the parties and the U.S. Dept. of Justice, the Texas Attorney General has an independent obligation to protect Texas consumers. After careful evaluation of the proposed merger and the settlement, we do not anticipate that the proposed new entrant will replace the competitive role of Sprint anytime soon.”
A New York district court this week granted the AG's request for more time for discovery in the case and to incorporate DOJ's settlement, so agreed to delay the start of the trial from Oct. 7 to Dec. 9. According to the AGs, other states may be seeking to join the settlement.
T-Mobile and Sprint have agreed not to close the deal until six days after a decision, so the deal won't close until at least early 2020.
The FCC has yet to weigh in officially, though the Republican majority has said it can support the deal with conditions including 5G buildouts with stiff penalties for noncompliance, as well as the Boost spin-off. FCC chair Ajit Pai said this week that he would be circulating an order to that effect this week. He also said Sprint would have the ability and incentive to provide real competition to the major carriers.
The other states suing to block the deal are New York, California, Colorado, Connecticut, the District of Columbia, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, Virginia, and Wisconsin.
Their concerns with relying on Sprint to be the new fourth competitor boil down to the following, according to the AGs:
"DISH has never shown any inclination or ability to build a nationwide mobile network on its own and has repeatedly broken assurances to the Federal Communications Commission about deployment of its spectrum;
"DISH does not have the network to operate as an independent competitor, like Sprint does today, and will, instead, remain reliant on the T-Mobile network for the foreseeable future; and
"T-Mobile and Sprint are asking Americans to trust that this new mega-corporation will act directly against its own economic interests by helping transform DISH into an independent competitor that rivals this new company."
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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.