Commentary

AGs' Challenge To T-Mobile, Sprint Gets Underway In Federal Court

The on-off-on-off-on $26.5 billion merger of T-Mobile and Sprint approaches its final hurdle today as the attorneys general of 13 states and the District of Columbia bring their arguments opposing the union to judge Victor Marrero in U.S. District Court in Manhattan.

“The states plan to argue the wireless industry is already too consolidated to further squeeze four main competitors -- Verizon, AT&T, T-Mobile and Sprint -- down to three. While both the Department of Justice and the Federal Communications Commission have already allowed Sprint and T-Mobile to merge, the states will argue those regulatory bodies erred in their decision to OK the deal,” Alex Sherman writes  for CNBC.

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“T-Mobile and Sprint provide cheaper alternatives to Verizon and AT&T, and T-Mobile has branded itself the ‘Un-carrier,’ one that has made consumer-friendly changes such as bringing back unlimited-data plans and shattering two-year service contracts. There are concerns that less competition would put an end to these types of changes, although T-Mobile says that won’t happen,” the AP’s Tali Arbel writes.

"The deal got the nod from both the Justice Department and the Federal Communications Commission, thanks to T-Mobile’s unusual commitment to create a brand-new mobile carrier in a deal with satellite-TV company Dish,” Arbel adds.

“Per its agreement with the DOJ, Dish will pay $5 billion for a combination of Sprint’s assets, including its Boost Mobile, Virgin Mobile and other prepaid phone businesses. T-Mobile, in turn, will make at least 20,000 cell sites and hundreds of retail stores available to the company. Dish will also be able to access T-Mobile’s network for seven years,” writes   CNBC’s Thomas Frank.

Government sources tell  the New York Post’s Josh Kosman that the coalition of attorneys general plans to attack Dish co-founder and chairman Charlie Ergen’s history of allegedly broken promises to the government.

“The AGs will claim the billionaire -- worth an estimated $10.5 billion, according to Forbes -- can’t be trusted to replace Sprint as the nation’s fourth-largest wireless carrier, sources said. They will claim he ‘never plays by the rules,’ a person with direct knowledge of the case told The Post,” Kosman writes.

T-Mobile and Sprint argue “that Verizon and AT&T, the No. 1 and No. 2 wireless carriers in the U.S., are far bigger than either of the two companies. A merger between Sprint and T-Mobile would create a stronger competitor that could offer lower prices and more innovative services, like 5G,” reports CNET's  Marguerite Reardon.

“The companies say the operational efficiencies and combined wireless spectrum portfolio they’d gain through a merger would let them build out their networks much faster and at much greater scale than if they operated separately. They say this will be especially beneficial as they expand their next generation 5G networks. Specifically, T-Mobile has promised the FCC that it will provide 5G service to 97% of the U.S. population within three years.”

It has been a long and grinding road to get to this point.

“T-Mobile and Sprint sat around a table in November 2017, when talks were said to have fallen apart due to an inability to agree on valuations. Before this, the two came close to merging in 2014, but the deal was cooled when concerns over antitrust were raised by President Barack Obama,” Christian de Looper recounts  for Digital Trends.

Then, in April, 2018, the alliance came to the agreement that hinges on the court case that begins today.

“Federal antitrust and telecom officials, appointed by President Trump, approved the deal earlier this year, believing they addressed the merger’s shortcomings,” write  Drew FitzGerald and Brent Kendall for The Wall Street Journal.

“Legal experts say it is unprecedented for the states to reject such a settlement and sue to block a merger of this size and national scope without the support or involvement of federal authorities.

“A victory for the carriers, which say the merger will allow them to offer better services, could arm other companies with new arguments for the benefits of consolidation. But a win for the coalition could give states newfound power in antitrust enforcement when they are also investigating U.S. tech giants,” FitzGerald and Kendall observe.

If you’re scoring at home, as Dodger broadcaster Vin Scully used to say, “the states, led by New York attorney general Letitia James and California attorney general Xavier Becerra, have the edge going into the trial, said Blair Levin, an analyst at New Street Research. He said they have the better argument: that the tie-up violates antitrust laws and that the proposed settlement -- setting up Dish to become a new wireless carrier -- doesn’t resolve the anticompetitive problems,” Bloomberg’s David McLaughlin and Scott Moritz write for the Los Angeles Times.

Play ball!

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