As Trial Begins, Evidence Shows Sprint, T-Mobile Know Merger Will Raise Prices

from the history-keeps-repeating-itself dept

With the DOJ (run by former Verizon lawyer William Barr) and the FCC (run by former Verizon lawyer Ajit Pai) eager to rubber stamp Sprint's $26 billion, competition-eroding merger with T-Mobile, a lawsuit from a bipartisan coalition of states is now all that stands in the way in the deal.

That lawsuit began Monday, with state AGs making it very clear that every meaningful economic metric indicates the deal will erode competition, raise rates, and result in thousands of layoffs as redundant employees are inevitably eliminated. While Sprint and T-Mobile (and the army of consultants, lobbyists, think tankers, and government officials paid to love them) insist the deal will be wonderful for America, financially independent economists paint a decidedly different picture. One in which ongoing consolidation in the space only drives up wireless data pricing for American consumers who already pay some of the highest prices in the world for what's routinely ranked as mediocre service (whether we're talking about speeds or overall video quality).

But underneath the deal's marketing veneer, industry giants know very well the reduction in competition will let them charge higher rates. You'll notice that AT&T and Verizon haven't lifted a finger to thwart the deal, suggesting they're perfectly fine with its impact (something that wouldn't be happening if they actually thought the end result would be a more competitive sector). And at the trial this week, AG lawyers highlighted that Sprint executive emails make it perfectly clear they know the deal will raise rates:

"Roger Sole, Sprint’s chief marketing officer, said in a text message in 2017 to Marcelo Claure, the carrier’s chief executive officer at the time, that the deal could mean an increase of $5 a month in average revenue per subscriber. Industry leaders AT&T and Verizon Communications would also benefit with fewer players in the market, he said. “And they DO NOT pay anything for this,” Sole wrote to Claure. “The benefit of a consolidated market.”

The goal of the deal is less competition, providing a green light for even higher prices, which is effectively the same outcome we've seen from every major telecom union over the last 30 years. Three decades of data also makes it abundantly clear that pre-merger promises are worthless. But if the state AGs lose this case, the federal government is going to ignore that data -- and history -- and rubber stamp the deal anyway. You know, just because.

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Filed Under: competition, consumer harms, merger, mobile, prices, wireless

Companies: at&t, sprint, t-mobile, verizon