You don’t normally think of mergers as good for competition, but the proposed combining of T-Mobile and Sprint may not only help provide viable alternatives to the biggest wireless carriers, but may also better enable the U.S. to stay at the forefront of 5G technological development.
T-Mobile and Sprint, respectively the third and fourth largest wireless carriers in the country, filed a public interest statement with the Federal Communications Commission (FCC) on June 18, one of the steps required before a merger of their $26 billion in assets.
The combined company would have about 126 million customers, bringing it close to the numbers of Verizon (150 million) and AT&T (141 million). More importantly, it would allow those two companies to combine their spectrum to create what could be the most robust 5G network.
Sprint has plenty of mid-band spectrum, while T-Mobile’s spectrum is on the low end. Combine the two and you can create a 5G network with the potential to reach download speeds of more than 4 gigabits per second, writes Seth L. Cooper for Morning Consult.
“Importantly, it appears unlikely that T-Mobile and Sprint separately have spectrum and cell site resources needed to deploy 5G networks that keep up with market leaders AT&T and Verizon,” he wrote. “T-Mobile lacks mid-band spectrum while Sprint lacks low-band spectrum. Alone, each provider would have reduced 5G network capacities and Sprint’s coverage would be geographically limited. Also, both providers would need longer periods to transition existing spectrum resources from older-generation networks to 5G.”
With no merger, Sprint and T-Mobile risk falling farther behind the two market leaders because AT&T and Verizon have been reinvesting profits into infrastructure at a greater rate.
The Ericsson Mobility Reporter for June projects that the monthly data capacity for a combined Sprint/T-Mobile network would reach 20.3 exabytes by 2024. That extra capacity should put downward pressure on prices, which would benefit consumers.
The ability to build a “world-class nationwide 5G network” is one reason the FCC should approve the merger, Sprint and T-Mobile wrote in their public interest statement.
5G is expected to revolutionize “smart city” technology that could do everything from optimize bus routes to maximize street light efficiency. It should lead to autonomous cars and cutting-edge innovations in industries ranging from agriculture to manufacturing.
The companies say what they call the “New T-Mobile” would also help solve the rural broadband gap — the combined forces of the two will improve signal quality and increase network capacity. The statement says customers could see a 55 percent drop in cost per gigabyte and a 120 percent increase in cellular data supply. The companies have also pledged to spend $40 billion in infrastructure upgrades in the three years after the merger.
Cooper points out that FCC merger precedents, such as the 2016 Verizon/XO Order, have recognized the growth of 5G as an important policy consideration to benefit consumers.
“By rapidly deploying a robust nationwide 5G network that supports smart city, Internet of Things and other advanced capabilities, the T-Mobile/Sprint merger’s public benefits likely outweigh any potential anticompetitive concerns,” he wrote. “Indeed, FCC precedents such as its 2015 AT&T/DIRECTV Order recognize the benefits of new technologies and services enabled by mergers can outweigh the loss of a competitor.”
Earlier this year, the FCC set new rules to help 5G’s growth at the federal level. Commissioner Brendan Carr, who Chairman Ajit Pai tapped to lead the wireless effort, told The American Spectator in April that countries around the world are trying to beat the U.S. to the 5G punch after American dominated the previous race to 4G.
“They’re all moving very aggressively, both on a spectrum and infrastructure front to get the lead in 5G. I’ve been in touch with our regulatory counterparts in Europe and they’re looking at the exact same actions that we’re looking at — excluding small cells and streamlining the approach for large cells,” Carr said. “But we’re moving quickly in the U.S. and think that’s a great sign for our leadership.”
Therefore, it would behoove the FCC to act quickly to approve the Sprint/T-Mobile merger well within the 180-day shot clock allowed to the panel.
The Justice Department must then review the deal to check for antitrust violations. That department is now talking with smaller carriers to determine what effect a Sprint/T-Mobile merge could have on their businesses.
John Legere, the chief executive officer of T-Mobile, expects the merger to be allowed, given the consumer benefits.
“This isn’t a case of going from four to three wireless companies — there are now at least seven or eight big competitors in this converging market,” he said. “And in 5G, we’ll go from zero to one. Only the new T-Mobile will have the capacity to deliver real, nationwide 5G. We’re condiment that, once regulators see the compelling benefits, they’ll agree this is the right move at the right time for consumers and the country.”