The Wall Street Journal on Democratic state Attorneys General suing to block T-Mobile’s merger with Sprint

Ten Democratic state Attorneys General on Tuesday sued to block T-Mobile’s merger with Sprint, and the timing was no coincidence. The Justice Department will soon make its decision on the merger, and Democrats, unions and big business are lining up to defeat it at the expense of America’s leadership in 5G telecom networks.

The State AGs say the merger “would eliminate Sprint as a competitor and reduce the number of (mobile network operators) with nationwide networks in the United States from four to three.” But a market of three strong wireless players would be more competitive than a de facto duopoly led by AT&T and Verizon. T-Mobile has 79 million customers while Sprint boasts 54 million compared to Verizon (118 million) and AT&T (94 million). The Big Two need a strong competitor, not two weaklings that may not survive for long.

More spectrum improves connectivity and boosts download speeds, which helps the two giants attract more customers. With more revenue, they can procure more spectrum at government auctions to improve their networks. AT&T also came into a sweet spectrum deal two years ago when the Commerce Department selected it to build a national emergency network for first-responders.

For years T-Mobile and Sprint have been slashing prices to compete with the Big Two. As the state AGs note, the average cost per megabyte of data declined by between 72% and 83% between 2013 and 2017. The problem is that all of the carriers have piled up debt that could retard their 5G build-out.

AT&T and Verizon have used much of their cash paying for content acquisitions rather than investing in 5G. AT&T has curbed price cuts to pay down $171 billion in debt from buying DirecTV and Time Warner. Verizon has $113 billion in debt and is writing off its misconceived Yahoo and AOL acquisitions that were supposed to help it compete with Google. ...

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