Dems question pledges in $26.5B T-Mobile-Sprint deal
WASHINGTON — Democratic lawmakers are challenging a pledge by T-Mobile and Sprint not to raise prices or hurt competition if their $26.5 billion merger goes through.
Although T-Mobile says it won’t raise prices for three years, Rep. Frank Pallone, D-N.J., chairman of the House Energy and Commerce Committee, said he isn’t sure that Trump administration regulators are willing to hold T-Mobile to that promise.
“How can we be sure that consumers who can least afford to pay more are not harmed by t he merger?” Pallone asked at a House subcommittee hearing Wednesday.
The deal would combine the nation’s third- and fourth- largest wireless companies and create a behemoth the size of industry giants Verizon and AT&T.
Congress doesn’t have authority to rule on the merger, but members are able to use the forum to ask pointed questions. Now that Democrats control the House, they have convened its first merger-review hearing in eight years.
T-Mobile US CEO John Legere and Marcelo Claure, Sprint Corp.’s executive chairman, defended the merger and said American consumers would get more and pay less.
Complicating their argument is that urban consumers are paying 22 percent less for cellphone service following AT&T’s failed bid to acquire TMobile in 2011, a combination rejected by federal regulators as anticompetitive. That data comes from the Bureau of Labor Statistics price index for wireless telephone service.
T-Mobile subsequently launched aggressive promotions and made consumer-friendly changes such as ditching two-year contracts and bringing back unlimited data plans, moves that its rivals soon copied.
Merger opponents claim those benefits will disappear if T-Mobile and Sprint no l onger competed against each other. Unions have voiced concerns about potential job losses.
The T- Mobile- Sprint deal faces reviews by the Justice Department and the Federal Communications Commission.
U.S. wireless carriers had been unable to get a merger deal through under President Barack Obama. But after President Donald Trump’s election, a more business- friendly FCC deemed the wireless market “competitive” for the first time since 2009, a move that some experts believe could make it easier to win approval for a merger.
The companies also say that the combination would allow them to better compete.
The combined company, to be called T-Mobile, would have about 127 million customers.
T-Mobile promised earlier this month not to raise prices for three years following the merger. Among wireless carriers, they have the largest numbers of lowincome customers, who are frequent users of prepaid phone plans.
The three-year price pledge is an “empty promise” full of loopholes and difficult for regulators to enforce, says a group called the 4Competition Coalition, which includes labor unions, public interest advocates, satellite TV and cable company Altice and rural wireless companies.
Analysts at New Street Research say the Justice Department may not be buying T-Mobile’s argument that combining with Sprint will bring lower consumer prices. Moreover, the head of Justice’s antitrust division doesn’t like merger conditions requiring regulators to keep an eye on the combined company’s behavior for years.
The companies also are promising they would have more employees after the merger, especially in rural areas, than they do as stand-alone carriers. TMobile has promised to deliver as many as 5,600 new jobs and five new call centers by 2021.
But an analysis by the Communications Workers of America labor union found that job cuts could number up to 30,000, mostly because T-Mobile would close thousands of overlapping stores.