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Why a T-Mobile/Sprint Merger Would Be Bad for the Public

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Earlier this week, FCC chair Ajit Pai announced that he would soon be asking his fellow commissioners to approve the merger of two of the four nationwide wireless carriers, T-Mobile and Sprint. After a year of deliberation, including thousands of pages of legal and economic filings by proponents and opponents and three congressional hearings, Pai has now decided that a handful of promises, made just days ago by the merging parties, puts this $26 billion transaction in the public interest. And it appears that at least two of his fellow commissioners agree with him.

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Gigi Sohn(@gigibsohn) is a fellow at the Georgetown Law Institute for Technology Law and Policy, a Benton senior fellow, and former counselor to FCC chair Tom Wheeler.

But these promises are speculative, unsubstantiated, and entirely unenforceable. For example, T-Mobile and Sprint commit to deploying a new 5G network that would cover 97 percent of Americans within three years of the closing of the deal, and 99 percent of Americans within six years. They further promise that 85 percent of rural Americans will have access to those networks within three years, and 90 percent will be covered within six years. But nothing in T-Mobile’s filings prove that they can meet these goals, and much like the broken promises of other big broadband, telephone, and cable providers, they are wildly optimistic.

Given that at a minimum 6 percent of all Americans and nearly 25 percent of rural residents don’t have either fixed or mobile broadband coverage today, these numbers appear to be nothing more than an enticement for the Trump FCC to declare a fake victory in the so-called race to 5G.

Pai also points favorably to the companies’ vow not to raise prices on its services for three years after the merger is consummated. But the mere fact that T-Mobile believes it must make this promise is itself an admission that post-merger, there would not be enough competition in the wireless market to constrain price increases. Moreover, this so-called “pricing commitment” is for a limited time and is riddled with ambiguities and loopholes. It is supremely ironic that the FCC chair who led the charge to abdicate the agency’s role protecting consumers, competition, and an open internet because of fears that the agency might one day engage in rate regulation is proposing that his FCC do just that.

How will this FCC enforce these pledges? If Pai is still around when the promises come due, it likely won’t do much at all. In the two and a half years since he took over the agency, it has not made one decision contrary to the interests of the big mobile broadband carriers. Even in the face of uncontroverted evidence that T-Mobile, Sprint, and AT&T sold specific geolocation information to data brokers who then sold it to bounty hunters without their customers’ permission, this FCC has done nothing about it.

But even if there is a new FCC more willing to enforce the companies’ promises in the future, doing so will be extremely difficult, if not impossible. As has been the case with the Comcast-NBC Universal merger, big and powerful companies will litigate every condition to the death, and they have far more resources to do so than the government. When it comes time to determine, for example, if the new T-Mobile is covering 97 percent of Americans in three years, the company will almost certainly create maps that show that it has succeeded. But T-Mobile has been accused of lying about the extent of its 4G coverage to prevent smaller carriers from getting subsidies for serving rural areas. And the FCC’s broadband maps have been universally condemned for being based on flawed data. So neither the company nor the government can be relied upon to show that the companies’ promises have been kept.

For many of these reasons, Makan Delrahim, the assistant attorney general for antitrust, has said on several occasions that he disfavors these types of “behavioral remedies,” which as the name implies, require companies to be good actors. Even the one proposed condition that could be said to be “structural”—the divestiture of prepaid carrier Boost Mobile—depends on good behavior by the combined company, because Boost must have access to the company’s network to operate. Simply put, promises are not enough.

With a majority of the FCC seemingly in favor of approving the merger, the final decision now falls to Delrahim. Thankfully, he has shown a willingness to reject anticompetitive and anticonsumer deals in media and telecommunications, including the mergers of AT&T and Time Warner, and Sinclair and Tribune. This should be an even easier call both for the DOJ and for the courts. A T-Mobile/Sprint combination is a classic four-to-three merger that will raise prices, reduce competition and innovation, and harm rural carriers and low-income Americans. The Justice Department should move to block the merger without delay.

WIRED Opinion publishes pieces written by outside contributors and represents a wide range of viewpoints. Read more opinions here. Submit an op-ed at [email protected]


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