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August 14, 2019

Ajit Pai formally recommends T-Mobile/Sprint merger approval

Ajit Pai has long signaled that he would approve a T-Mobile/Sprint merger, but today the FCC Chairman made it official. In spite of widespread opposition suggesting that the combining of the country’s third and fourth largest carriers would reduce competition in the marketplace, Pai takes the stance that such a move would actual promote competition.

“After one of the most exhaustive merger reviews in Commission history, the evidence conclusively demonstrates that this transaction will bring fast 5G wireless service to many more Americans and help close the digital divide in rural areas,” Pai said in a statement. “Moreover, with the conditions included in this draft Order, the merger will promote robust competition in mobile broadband, put critical mid-band spectrum to use, and bring new competition to the fixed broadband market. I thank our transaction team for the thorough and careful analysis reflected in this draft Order and hope that my colleagues will vote to approve it.”

Pai’s statement echoes that of many conservatives on the topic. While T-Mobile and Sprint are third and fourth place, respectively, AT&T and Verizon are significantly ahead in terms of subscriber bases. Pai and other have suggested that combining the two under the T-Mobile umbrella would help the carriers get a leg up when it comes to competing on a 5G roll out.

Consumers will directly benefit from improvements in network quality and coverage, which in turn will foster innovation in a wide variety of sectors and services (itself creating significant public interest benefits),” Pai’s team writes.Moreover, the transaction will help to close the digital divide by bringing robust 5G deep into rural areas, with enforceable conditions in the draft Order requiring coverage of at least 99% of Americans within six years.”

Last month, the proposed merger was given the go-ahead by the U.S. Department of Justice on the condition that Sprint sell its prepaid assets (including Boost) to Dish network. A growing number of states attorneys general, meanwhile, have opposed the merger. Oregon joined the lawsuit yesterday, bringing the total up to 15 states and the District of Columbia.

“If left unchallenged, the current plan will result in reduced access to affordable wireless service in Oregon — and higher prices,” Oregon AG Ellen Rosenblum said at the time. “Neither is acceptable.”

Pai noted earlier this year that he planned to approve the $26.5 billion deal, which would knock the country’s premium carriers down to three. No word yet on when the Commission will formally vote on the deal.

FCC commissioner Jessica Rosenworcel had a different take on things, noting, “The FCC’s draft order approving the largest wireless merger in history just landed in my inbox.  I believe we need more competition, not less. I am not convinced that removing a competitor will lead to better outcomes for consumers. But what I am convinced of is that before the FCC votes on this new deal negotiated by Washington, the public should have the opportunity to weigh in and comment. Too much here has been done behind closed doors.”

 


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