FCC Commissioners finished voting on the T-Mobile and Sprint transaction on Wednesday, which has been called the largest-ever wireless merger before the agency. It was expected to pass along 3-2 party lines, and that’s what happened. Democratic Commissioners Jessica Rosenworcel and Geoffrey Starks voted Wednesday to block the deal.
Their three Republican colleagues — including Chairman Ajit Pai and Commissioners Michael O’Rielly and Brendan Carr — had already cast votes approving the transaction, saying it’s in the public interest.
Yet, yesterday’s FCC vote is one more step in a long process for the merger, given a lawsuit to block the deal backed by 16 states and the District of Columbia is pending. A trial is set to begin December 9, in federal court in New York.
Analysts say observers should also watch the outcome of the Tunney Act review. While the Department of Justice already approved the transaction with conditions, this review is a separate process at the Department of Justice in federal court in Washington, D.C. The Tunney Act requires the federal government to file any proposal for a consent judgement of any antitrust matter within 60 days with the district court where the matter is presiding.
Rosenworcel explained why she voted against the merger. The resulting “higher prices and less competition will be bad for 5G,” she noted in an Op Ed in The Atlantic. “Network improvements that will bring us the next generation of wireless service, known as 5G, will proceed more slowly and yield fewer jobs without the fuel of competitive pressure,” she added.
Colleague FCC Commissioner Brendan Carr said the Op Ed ignores market realities and the disruptive new 5G competition we’re already seeing. “Voting for this transaction means that 99 percent of Americans will get 5G on an accelerated basis,” Carr added. “Voting against it means they won’t.”
Starks agrees with Rosenworcel that prices will go up as a result of the deal. “The expert staff of the Commission and the Justice Department have agreed that the merger between T-Mobile and Sprint, as originally submitted, would likely harm competition and raise prices. Rather than denying that merger, however, the majority has turned to the parties for paper-thin commitments that they contend will expand broadband access and the deployment of 5G,” he said in a statement.
Starks says the final transaction is so different from the one originally proposed that it should have been put out for public comment again, which didn’t happen. Failing to do so now, “raises legal issues” in his mind. Starks also said the conditions imposed on the “New T-Mobile” by the DOJ and the FCC were, “so loosely drafted that meaningful enforcement will be impossible.”
That’s a sentiment shared by the Attorneys General who are fighting to block the deal. They too, say prices will go up and the transaction is not in the public interest. One state, Mississippi, was previously part of the lawsuit but dropped out after cutting a deal for 5G with T-Mobile. Analysts say this agreement could potentially become a template for other states to abandon the lawsuit and jump aboard the “New T-Mobile” train.
But, they caution, it only matters if New York, which is leading the suit, changes course too. The states opposing the merger are: New York, California, Texas, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, Oregon, Pennsylvania, Virginia, Wisconsin, and the District of Columbia.
By Leslie Stimson, Inside Towers Washington Bureau Chief
October 17, 2019