WASHINGTON (AP) U.S. regulators have approved T-Mobiles $26.5 billion takeover of rival Sprint, despite fears of higher prices and job cuts, in a deal that would leave just three major cellphone companies in the country.
Fridays approval from the Justice Department and five state attorneys general comes after Sprint and T-Mobile agreed to conditions that would set up satellite-TV provider Dish as a smaller rival to Verizon, AT&T and the combined T-Mobile-Sprint company. The Justice Departments antitrust chief, Makan Delrahim, said the conditions set up Dish as a disruptive force in wireless.
But attorneys general from other states and public-interest advocates say that Dish is hardly a replacement for Sprint as a stand-alone company and that the conditions fail to address the competitive harm the deal causes.
By signing off on this merger, the Justice Department has done nothing to remedy the short- and long-term harms the loss of an independent Sprint will create for U.S. wireless users, Free Press Research Director S. Derek Turner said.
A federal judge still must sign off on the approval, as it includes conditions for the new company. The Federal Communications Commission is also expected to give the takeover its blessing.
Dish is paying $5 billion for Sprints prepaid cellphone brands including Boost and Virgin Mobile some 9 million customers and some spectrum, or airwaves for wireless service, from the two companies. Dish will also be able to rent T-Mobiles network for seven years while it builds its own.
Dish on Friday promised the FCC that it would build a nationwide network using next-generation 5G technology by June 2023. But Dish is promising speeds that are only slightly higher than whats typical today, even though 5G promises the potential for blazing speeds.
The Trump administration has not been consistent in its approach to media and telecom mergers. While the government went to court to block AT&Ts acquisition of Time Warner and then lost, the Justice Department allowed Disney to buy much of 21st Century Fox, a direct competitor, with only minor asset sales to get the deal done. Mergers between direct competitors have historically had a higher bar to clear at the Justice Department.
Sprint and T-Mobile combined would now approach the size of Verizon and AT&T. The companies have argued that bulking up will mean a better next-generation 5G wireless network than they could make on their own.
Sprint and T-Mobile have argued for over a year that having one big company to challenge AT&T and Verizon, rather than two smaller companies, will be better for U.S. consumers.
The two companies tried to combine during the Obama administration but regulators rebuffed them. They resumed talks on combining once President Donald Trump took office, hoping for more industry-friendly regulators. The companies appealed to Trumps desire for the U.S. to win a global 5G race with China as this faster, more reliable wireless is rolled out and applications are built for it. They have been arguing their case for more than a year.
Meanwhile, the FCC agreed in May to back the deal after T-Mobile promised to build out rural broadband and 5G, sell its Boost prepaid brand and keep prices on hold for three years.
But public-interest advocates complained that the FCC conditions did not address the problems of the merger higher prices, less wireless competition and would be difficult for regulators to enforce.
Attorneys general from 13 states and the District of Columbia have filed a lawsuit to block the deal . They say the promised benefits, such as better networks in rural areas and faster service overall, cannot be verified. They also worry that eliminating a major wireless company will immediately harm consumers by reducing g competition and driving up prices for cellphone service.
They are not likely to be satisfied by Fridays settlement. None of the states involved in the suit were part of it. We have serious concerns that cobbling together this new fourth mobile player, with the government picking winners and losers, will not address the mergers harm to consumers, workers, and innovation, New York Attorney General Letitia James said in a statement.
