Democrats question pledges in $26.5B deal
Democratic lawmakers WASHINGTON — 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 the 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 roughly 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 the fact that urban consumers are paying 22 percent less for cellphone service following AT&T’s failed bid to acquire T-Mobile 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 longer 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 — not only with Verizon and AT&T, but also with Comcast and others as the wireless, broadband and video industries converge.
The combined company, to be called T-Mobile, would have some 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 low-income customers, who are frequent users of prepaid phone plans.
T-Mobile and Sprint also say the deal would help accelerate their development of faster 5G wireless networks and ensure that the U.S. doesn’t cede leadership on the technology to China.