Many of the states that rallied against wireless provider T-Mobile’s takeover of Sprint, arguing it would drive up prices, say the conditions the Justice Department required to approve the merger don’t alleviate their concerns.
The nation’s third- and fourth-largest cellphone providers will have to sell Sprint’s prepaid services — which includes Boost Mobile and Virgin Mobile — to Dish Network, a Colorado-based satellite TV provider, the Justice Department said Friday, as well as shed some of their wireless spectrum holdings and retail sites.
The agreement gives a long-awaited green light to the $26.5 billion transaction, which was announced more than a year ago, but is likely to irk consumer advocates and some lawmakers. The deal follows a previous attempt blocked by the Obama administration.
“Today’s settlement will provide Dish with the assets and transitional services required to become a facilities-based mobile network operator that can provide a full range of mobile wireless services nationwide,” said Assistant Attorney General Makan Delrahim, who was joined by prosecutors from Nebraska, Kansas, Ohio, Oklahoma, and South Dakota.
More than a dozen others, including the attorneys general of California and New York, said the settlement doesn’t go far enough.
“Here in California and across our coalition of states, our concerns with this merger have been, are, and continue to be about the harms posed by over-consolidation and diminished market competition,” said California Attorney General Xavier Becerra. “A marketplace with fewer active competitors drives up costs, reduces consumer choice and thwarts innovation. We intend to be prepared to go to trial to fight for a fair, competitive, and equitable marketplace for consumers nationwide.”
Dish has never owned any kind of mobile wireless business, the attorneys general said, and has no experience building or operating a nationwide mobile wireless network. The likelihood that the deal will drive up prices by leaving just three companies dominating the U.S. telecommunications industry rather than four, prompted California, New York, seven other states, and the District of Columbia to file a federal suit in Manhattan earlier this year seeking to block it.
The transaction might cost Sprint and T-Mobile subscribers as much as $4.5 billion a year in price increases, California has said. Studies show that prices jumped 16% to 20% in countries where mobile networks shrank from four to three companies.
AT&T had a base of 156.7 million subscribers as of mid-2018, while Verizon had 116.3 million. T-Mobile came in third, with 72.6 million subscribers, while Sprint had 59.7 million.
The buyout previously won the support of Ajit Pai, chairman of the Federal Communications Commission. Unlike the Justice Department, which considers antitrust issues in merger reviews, the FCC also weighs potential consumer benefits.
Along with promising not to raise prices for three years after the deal is completed, the companies agreed to sell Boost Mobile, Pai said. Boost, a virtual-network operator that owns no transmission equipment of its own, leases capacity from companies that do, such as AT&T, and has a large base of prepaid customers.
The Justice Department’s requirements for the merger don’t eliminate its anti-competitive effects, said Chris Shelton, president of Communications Workers of America. Neither the Justice Department nor the FCC took seriously the potential loss of 30,000 jobs with the takeover, he added.
who argued the “The T-Mobile/Sprint merger remains harmful to workers and consumers – it is anti-competitive and will kill 30,000 jobs. The announced divestiture deal with DISH does not save these jobs and does not remedy the fundamental, anti-competitive nature of the merger.
Dish’s “lack of experience and capital means it is being set up to fail,” the union said in a statement. “It has never sold pre-paid wireless services like Boost. In short, Dish is an illusory buyer, not a real fourth competitor. Unfortunately, when Dish fails or sells out, the harm will already have been done.”
