T-Mobile's merger hits another hurdle, the argument that it will prevent 'future Apples'

T-Mobile's merger hits another hurdle, the argument that it will prevent 'future Apples'
Back in June, a number of state attorney generals plus the District of Columbia filed a lawsuit in New York seeking to block the formation of the New T-Mobile after its merger with Sprint. The argumentation is that the merger will raise prices by $4.5 billion a year or more in the longer run, despite T-Mobile's pledge that it will freeze its pricing for three years after the deal closes.

Even though the last regulatory hurdle - the Department of Justice - signed off on the deal with the condition that Dish will buy Boost and form a fourth carrier, that AG lawsuit will have to be resolved somehow if things are to proceed. The plaintiffs are now asking for the trial to be postponed from October 7 to December 9 with the argument that they need more time to acquaint themselves with all the DoJ-Dish-T-Mobile settlement details. New York AG Letitia James chimed in on last week's DoJ stamp of approval with the following:


While this may seem like another boilerplate statement in the same anti-trust vein, another player has now entered the fray, the consumer protection and privacy-obsessed Electronics Frontier Foundation (EFF). Their argument is actually broader than the one in the AG lawsuit:

5G services can reach U.S. Internet users without the merger. The means of delivering those services is through government-regulated licenses. Those licenses can be modified with new policies to promote competition and access. In particular, instead of approving anti-competitive mergers, the government could simply change the terms of the licenses it gives companies for their use of spectrum, the radio frequencies used to transmit services.

If the U.S. market is allowed to consolidate into three national carriers, future Apples will have fewer parties to negotiate with and there will be a greater reduction in risk-taking. Advancements from manufacturers in areas such as cognitive radio and other means to utilize spectrum in new and dynamic ways will have to hope that one of three carriers will engage productively with them, but that is exactly what mergers tend to diminish. It is well accepted in antitrust law that a smaller number of players have a greater propensity to behave like one another as they have fewer competitors to maneuver around and fewer reasons to rock the boat. The DoJ offers no solutions to this outcome, other than to say that DISH Network, which is acquiring a handful of assets from Sprint and T-Mobile, should hopefully fill that void (despite having no wireless broadband customers and no infrastructure to serve them). Such blind trust in a non-existent competitor to do a good enough job to compete with massive, entrenched incumbents is questionable at best. Ultimately, it argues in favor of just denying the merger.

Now it is up to the courts to decide if this merger can proceed. Ten state Attorneys General have sued to block this merger and they will make the case that what Sprint and T-Mobile are attempting is illegal. The difference this time is that unlike the last time the federal and state governments blocked a wireless telecom merger (the DoJ’s successful challenge to the proposed AT&T-TMobile merger in 2011), the DOJ and the FCC will be on the side of the monopolists in the courtroom.


As you can see, there is plenty for the courts to sift through here, and new arguments against the merger keep piling up. Whether or not these actions against the DoJ's approval of the deal will bear fruit remains to be seen, but one thing is for sure - the merger of T-Mobile with Sprint will not be happening this year.

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12 Comments

1. oldskool50

Posts: 1380; Member since: Mar 29, 2019

Dish buying Boost to be a 4th carrier is completely stupid. If you really wanna have 4 carriers, then stop the merger. The US Govt is stupid. Wonder how much TMO and Sprint paid to get this deal. This is as stupid as when TW bought AOL. After 3 years, TMO will cost exactky the same as ATT and VZW. With only 3 carriers, they all will increase cost simply because they can. Boost is a low end cheap carriers like MetroPCS. They don't have enough users to be a deterrent to the big boys. This is going to bite US consumers soon enough.

7. lyndon420

Posts: 6746; Member since: Jul 11, 2012

Yeah because God help you all if you end up having to pay what we pay for cell coverage up here in Canada. Mind you...it got slightly better when Rogers implemented a new pricing/data plan recently, which forced the other two big players here to follow suit.

11. Pretend7979

Posts: 2; Member since: Aug 01, 2019

As someone that works in the wireless industry this doesn't actually make sense. Have you seen Sprint's quarterly earning reports? They're losing customers and money. They're going under without a merger. Want 4 carriers? Sprint is dying no matter what, and have been losing money for the last many years.

2. harrisvt

Posts: 16; Member since: Nov 10, 2015

Spoken like someone that knows nothing about tmo. Our CEO like nothing better than beating up on dumb and dumber. Makes no difference what dish does. I truley believe tmo will keep pushing to one day be the #1 carrier. I've had verizon and att and I can tell you tmo is miles ahead of either with the exception of overall coverage. And that gap is almost non existent. Soon there wont be any gap if not tmo offering better coverage.

3. tedkord

Posts: 17318; Member since: Jun 17, 2009

CEOs come and go. Legere won't be there forever. And the one thing they all like better than beating the competition is making more profit. Once they don't need to compete to survive, they won't compete. T-Mo is publicly traded, and Legere is beholden to shareholders, and once T-Mo has a many customers as Verizon, those shareholders are going to demand profits like Verizon.

4. TBomb

Posts: 1418; Member since: Dec 28, 2012

The only way I see this working for consumers is allowing all tmo/sprint customers to stay with the merged company or go with the Dish (or other) company no strings attached. They would then have to let tmo/Sprint and Dish use the same towers and split costs evenly on them for x-amount of time. there's no way a 4th company can come in and be a national provider an worthy competitor on day 1 without being an MVNO. no towers, no stores, no dedicated employees to focus on the work. yeah, okay.

5. Vancetastic

Posts: 1131; Member since: May 17, 2017

“Future Apples”...?

8. lyndon420

Posts: 6746; Member since: Jul 11, 2012

Yeah I'm still trying to figure out that reference myself...

12. Pretend7979

Posts: 2; Member since: Aug 01, 2019

Yea... Didn't make sense to me. TMobile began selling OnePlus devices recently, fully supporting innovation and new manufacturers.

6. tedkord

Posts: 17318; Member since: Jun 17, 2009

T-Mobile has been great for the wireless market. Their willingness to shake things up and compete over the top forced Verizon and AT&T to compete. Without them, we would all be paying more, there would be no unlimited data. I do worry about losing that when they merge. I don't have T-Mobile, I'm on Verizon, but I benefited from their competition. My bill is not reasonable, and my plan is unlimited, neither of which would be true otherwise.

9. shaneg79

Posts: 2; Member since: Oct 01, 2017

If the merger doesn't go through Sprint will need to raise their prices in order to get 5G going and to increase coverage of they want to compete with Verizon anyway. Sprint has crap coverage and they won't be able to improve without changes. If I were Sprint I would start towards bankruptcy so that the states will see they can't make it and drop the case.

10. MIKEUNIX94

Posts: 1; Member since: Aug 01, 2019

Hey hey you the one riding rumors about TMobile and Sprint is bad you're wrong I don't want you in a fear with T-Mobile and Sprint let it go through I go with a deal and your damn wrong so do not interfere or hell will break loose.

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