Northwest Arkansas Democrat-Gazette
T-Mobile, Sprint merger faces questions
WASHINGTON — Democratic lawmakers challenged top executives of T-Mobile and Sprint on Wednesday over their pledge not to raise prices for wireless services or hurt competition if their $26.5 billion merger goes through.
At a hearing by a House committee, the two executives defended the deal, which would combine the nation’s third- and fourthlargest wireless companies and create a behemoth about the size of industry giants Verizon and AT&T.
Committee members from both parties fretted about the potential impact of a T-Mobile-Sprint merger on rural customers and carriers in rural areas that strike deals with major wireless companies. Many of the lawmakers on the Energy and Commerce subcommit-
tee represent rural areas and small towns, and they voiced concern over jobs that could be lost in the merger in the companies’ call centers and other facilities.
T-Mobile has committed to federal regulators, who must approve the deal, not to raise prices for three years following the merger.
But Rep. Frank Pallone, D-N.J., chairman of the full Energy and Commerce Committee, said he isn’t sure that Trump administration regulators would be 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.
Congress doesn’t have authority to rule on the merger, but lawmakers can ask pointed questions and raise concerns to regulators who are reviewing it. Now that Democrats control the House of Representatives and the Energy and Commerce Committee, they have convened the panel’s first mergerreview hearing in eight years.
Chief Executive Officer John Legere of T-Mobile US and Marcelo Claure, Sprint Corp.’s executive chairman, defended the merger and said American consumers would get more and pay less. Legere said T-Mobile’s analysis shows that consumers would save $7 billion to $13 billion a year by 2024.
“We can take competition to new levels,” he testified. “We will offer a much faster, broader and deeper network, and new services at lower prices. This will force our rivals — AT&T, Verizon and the cable monopolies — to improve their services, increase their own capacity and lower prices even further.”
“Rural America will disproportionately benefit,” Legere assured the lawmakers.
Complicating the executives’ 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 consumerfriendly 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 worry about job losses.
“Let’s tell it like it is: This merge would kill American jobs and raise prices on American consumers to enrich two foreign companies,” said Chris Shelton, president of the labor union Communications Workers of America, referring to the parent companies of T-Mobile and Sprint. Trusting T-Mobile with jobs, Shelton told the panel, is like “trusting a vampire at a blood bank.” The union has a long history of disputes with T-Mobile, saying the company has violated federal labor laws.
The union’s analysis found that job cuts could number up to 30,000 mostly because TMobile would close thousands of overlapping stores.
Legere said the merger would deliver some 5,600 new jobs by 2021. They would include positions in five new “customer experience centers” around the country.
T-Mobile’s German parent Deutsche Telekom would own about 42 percent of the new company, while Japan’s SoftBank, which controls Sprint, would own 27 percent.
At least one Democrat, Rep. Anna Eshoo, a Democrat from California whose district includes Silicon Valley, said she supports the merger.
The 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 combined company, to be called T-Mobile, would have some 127 million customers. Among wireless carriers, Sprint and T-Mobile have the largest numbers of low-income customers, who are frequent users of prepaid phone plans — another area of concern expressed by lawmakers.
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.
Legere said the deal “can ensure U.S. leadership in 5G, increase competition and create American jobs.”
“I want to be very clear, in any which way you’d like to ask it: Prices will go down,” he said.