DOJ may not bless T-Mobile/Sprint, while outcries swell

Mixed messages from news reports caused both stocks to careen today. (Getty Images)

The outcries came fast and furious today after FCC Chairman Ajit Pai announced his support for T-Mobile’s $26.5 billion proposed merger with Sprint. But it’s important to note that the Department of Justice and many state attorneys general are still reviewing the transaction. And Bloomberg reported that the DOJ is leaning against approving the merger because of anticompetitive concerns.

The DOJ’s antitrust chief, Makan Delrahim, is rather unpredictable. He fought hard against AT&T’s takeover of Time Warner.

The mixed messages from FCC and DOJ caused the stocks of both T-Mobile and Sprint to careen for a while. Trading was even briefly suspended for Sprint due to volatility. Both stocks closed higher at the end of trading today compared to yesterday, with Sprint's stock up more than 18% and T-Mobile up about 3.8%.

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With the merger's fate still unclear, detractors raised the volume on their complaints.

The Communications Workers of America (CWA) remain opposed to the merger, largely due to fear of job cuts. Debbie Goldman, CWA research and telecommunications policy director, said, “The merger would mean the elimination of 30,000 U.S. jobs as the new T-Mobile shuts down duplicative retail stores and consolidates headquarters functions. T-Mobile has made no written, verifiable commitments to the FCC to protect jobs.”

RELATED: FCC Chairman Pai endorses Sprint/T-Mobile merger with rural 5G conditions

Claude Aiken, president and CEO of the Wireless Internet Service Providers Association (WISPA), said he appreciates the concerns expressed from the two carriers about rural broadband, but he’s concerned about unintended consequences. WISPA members serve nearly 4 million individuals in the areas T-Mobile and Sprint have reportedly committed to serve.
 
“The stakeholders in this long, drawn-out process are many, not solely the merging parties,” said Aiken. “Yet, only a small handful of individuals were at the table, negotiating matters that have wide-ranging effect on U.S. communications policy, rural Americans and the providers – like WISPA’s members – that risk private capital every day to expand broadband. To this end, we are wary of any unintended consequences which could occur from such a large merger.  In particular, what would be the effect on investment for those already providing high-speed service in the areas T-Mobile / Sprint say they will serve?  Will the merger thwart buildout of new broadband, especially from small providers?” 
 
Gigi Sohn, a distinguished fellow at Georgetown Law who was also counselor to former FCC Chair Tom Wheeler, said, “The T-Mobile-Sprint merger is still anticompetitive and anticonsumer. The companies have made a handful of promises on 5G, rural buildout and in-home broadband that are speculative, not specific to the merger and completely unenforceable. Does anyone really believe that this FCC, which has asked nothing of the big mobile companies for over two years, will require the companies to abide by these commitments? Moreover, they are the type of behavioral conditions that Assistant Attorney General for Antitrust Makan Delrahim has said time and again are unenforceable and over-regulatory.”

RELATED: Dish, C Spire, CWA, others form 4Competition Coalition against Sprint/T-Mobile merger

The 4Competition Coalition released a statement saying, “The conditions being proposed today are wholly insufficient to protect consumers against the clear competitive harms this market-consolidating merger would bring. They do nothing to alleviate the reduction in choice for hundreds of millions of wireless users. They do nothing to ameliorate the anticompetitive effects that come from eliminating the industry’s most active wholesale competitor, harms that would befall rural Americans in particular.”

New America’s Open Technology Institute (OTI) said it “strongly opposes” the transaction because it will increase prices, kill jobs, devastate the prepaid and wholesale markets, and threaten the Lifeline program.  Michael Calabrese, director of the Wireless Future Project at OTI, said “The commitments announced by T-Mobile, Sprint, and Chairman Pai do not add up to real 5G services for rural and small town America.”
 

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