T-Mobile's proposed $26 billion merger with Sprint, which would leave the country with three major wireless carriers, will result in “less competition, fewer choices, and higher prices for consumers,” two dozen advocacy organizations and unions say in a new letter to the Justice Department and Federal Communications Commission.
The organizations -- including Consumer Reports, Open Markets Institute and Writers Guild of America West -- are urging regulators to block the deal.
“If allowed to proceed, this transaction would consolidate the nation’s wireless market from four to just three carriers, lead to price increases for virtually all wireless customers, substantially raise wholesale rates for smaller wireless carriers, and cause significant job losses -- all while failing to deliver the promised benefits of accelerated 5G deployment or expanded rural coverage,” the groups write.
The letter comes days after reports surfaced in The Wall Street Journal and other publications that DOJ is unlikely to approve the merger. (T-Mobile CEO John Legere and Sprint executive chairman Marcelo Claure disputed the Journal's story in tweets.)
The organizations opposing the merger argue to regulators that it could lead to price hikes, while also leaving the combined company in control of more than half the pre-paid wireless market. “This concentration means that pre-paid wireless consumers, who are primarily lower income Americans, would likely see even greater price increases,” they write.
T-Mobile and Sprint have said that if the merger goes through, they will invest nearly $40 billion to roll out a nationwide 5G network. The companies say the new network will offer 5G speeds four to six times faster than each company could achieve independently, which will spur competition by forcing Verizon and AT&T to improve their own networks.
But Consumer Reports and the other critics say the companies have already started to build out 5G networks, and can continue to do so without merging.
“Sprint boasted about its 5G progress at the recent Mobile World Congress, citing plans to bring 5G to four cities in May 2019 and another five cities in the first half of 2019,” they write. “T-Mobile, for its part, claims it will deploy 5G in 30 major American cities this year.”
The opponents also say the deal won't benefit rural parts of the country, because the combined spectrum of T-Mobile and Sprint “would not be particularly well-suited for rural coverage.”