WASHINGTON (AP) — With their USD26.5 billion merger hanging in the balance, top executives of T-Mobile and Sprint are taking their case to Congress, arguing that joining their companies won’t hurt competition or jack up consumer prices for wireless service.
But they faced a skeptical audience at a hearing yesterday. The deal, which must win approval from federal regulators, would combine the nation’s third- and fourth-largest wireless companies, creating a new behemoth roughly the size of industry giants Verizon and AT&T.
Complicating their task is the fact that urban consumers are paying 22 per cent 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 one another. Unions have voiced concerns about potential job losses.
T-Mobile and Sprint said American consumers would get more and pay less as a result of the merger. They argue 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 merger would give the new company “the added scale and critical spectrum and network assets to supercharge our ‘Un-carrier’ philosophy,” T-Mobile United States (US) CEO John Legere said in his prepared testimony for the House hearing. “As a result, we can take competition to new levels. We will offer a much faster, broader and deeper network and new services at lower prices.”
That will force the companies’ rivals and big cable companies to improve their services and lower prices further, Legere said.
Legere and Marcelo Claure, Sprint Corp’s Executive Chairman, will appear before the House Energy and Commerce subcommittee on communications and technology.
The panel doesn’t have authority to rule on the merger, but members are likely to use their platform to ask pointed questions. Now that Democrats control the House, they have convened its first merger-review hearing in eight years.
The T-Mobile-Sprint deal faces reviews by the Justice Department and the Federal Communications Commission (FCC). US 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.
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. The three-year price pledge is an “empty promise” full of loopholes and difficult for regulators to enforce, says a group called the 4Competition Coalition, which includes labour unions, public interest advocates, satellite TV and cable company Altice and rural wireless companies.