Just one day after T-Mobile CEO John Legere published a blog about how the New T-Mobile will help bridge the digital divide, 24 entities—including Dish, the Communications Workers of America (CWA) and the Wireless Internet Service Providers Association (WISPA)—sent an open letter to federal officials urging them to reject the T-Mobile/Sprint deal.
The letter comes after The Wall Street Journal reported on Tuesday that the proposed merger appears to be running into trouble with Department of Justice staff. Several state attorneys general are also reviewing the deal.
Legere has promised that the deal will result in more jobs if it’s approved, but opponents insist it threatens thousands of American jobs and will give the remaining wireless carriers much greater market power to hold down wages across the sector.
In their letter to Assistant Attorney General Makan Delrahim and FCC Chairman Ajit Pai, the critics said opposition to the plan has grown over the past 11 months, and much of their concern rests with rural areas.
“While the parties tout the merger’s supposed benefits for rural Americans, the evidence demonstrates that the merger would do nothing to enhance service for these consumers,” the opposition’s letter stated. “As a technical matter, the merged parties’ spectrum would not be particularly well-suited for rural coverage. The parties would, instead, be faced with the same challenge that exists today, which is the need to make significant capital investments to reach sparsely populated areas.”
Even more troubling, they said, is that instead of enhancing coverage, the merger threatens to undermine services for rural Americans. “Today Sprint stands out for its willingness to wholesale its network to rural wireless carriers—making roaming services possible for their customers—as well as educational entities that lease spectrum to Sprint,” they wrote. “T-Mobile, on the other hand, has shown no such interest in partnering with rural providers or continuing the public-private partnerships with educational entities.”
In contrast, Legere said if the merger is approved, New T-Mobile will have a network that has the scale necessary to challenge the status quo and help bridge the digital divide. “T-Mobile has also already expanded our reach into rural America with our aggressive deployment of LTE on 700 MHz and 600 MHz spectrum,” Legere wrote.
“But by combining our coverage-rich 600 MHz spectrum with Sprint’s capacity-rich 2.5 GHz spectrum, we’ll blanket more of the country with 5G service than either company could on its own,” he added, repeating a pledge to cover 95.8% of the country’s roughly 62 million rural residents with 5G service and deliver mobile broadband service with download speeds of at least 10 Mbps or greater.
Proponents of the deal point out that even with the merger of Sprint and T-Mobile, Verizon and AT&T each would still have nearly three times the market cap of the combined companies.
Legere reiterated that the New T-Mobile would be a strengthened maverick and a strong third competitor to the Big Two. “We would have the ability to go toe-to-toe with AT&T and Verizon and make a meaningful impact, expanding access and ensuring ALL consumers have an option for mobile service at a price point that’s within reach,” he said.
Analysts at MoffettNathanson Research have pointed out that one of the arguments for AT&T to acquire T-Mobile when that was in play several years ago was that it would make a stronger player as a result, but T-Mobile then went on to pursue the “un-carrier” strategy and rattle things up for the broader industry. “Washington is still taking victory laps for that decision,” the analysts said in a note for investors earlier this month.