Tuesday, February 19, 2019

Momentum Builds for New T-Mobile After New York Commission's Approval

On February 7, the New York Public Service Commission approved the proposed T-Mobile/Sprint merger. Its order noted the merging parties' "assert[ion] that the new T-Mobile will be able to build a larger, more robust [5G] network in a more timely fashion, than either of the two companies on their own." On the condition that the new T-Mobile maintains at least the same number of employees in New York State as both carriers have now, the New York Commission's order concluded the merger is in the public interest. While the propriety of the New York PSC or other state public utility commissions conditioning their approvals on maintaining specific employee levels or job commitments is questionable, at least the NYPSC completed its review in a timely fashion.

FierceWireless reported the proposed T-Mobile/Sprint merger now has received approval from 16 of the 19 purportedly required state public utility commissions (PUCs). Among those remaining, California's PUC has yet to reach a decision. Hopefully, California's PUC and the other remaining PUCs recognize that all or nearly all of the salient competition issues implicated by the T-Mobile/Sprint merger are within the jurisdiction of the FCC and the U.S. Department of Justice.

To its credit, New York's PSC recognized "issues related to wireless and [mobile virtual network operator] MVNO competition are the subject of the FCC and [U.S.] Department of Justice reviews and that those concerns are before those federal bodies." And, hopefully, all remaining state PUCs weighing in on the merger also will expeditiously complete their reviews. 

Free State Foundation President Randolph May and I analyzed potential benefits of the new T-Mobile in our Perspectives from FSF Scholars paper "T-Mobile/Sprint Merger Offers Public Interest Benefits: Likely Presents a Fast Track to 5G":
There is strong evidence that the merger, if approved, would benefit consumers and businesses by enabling faster mobile broadband speeds, higher data capacity, and reduced per-megabit prices. A combined T-Mobile/Sprint likely would have the resources needed to rapidly deploy a nationwide 5G network. And the combined company likely would be able to compete more effectively against current wireless market leaders AT&T and Verizon as well as other service providers in the broader multi-platform broadband market.  
We expanded on those insights in comments and reply comments submitted to the FCC in its pending merger review proceeding. Also, we explained the 5G-related benefits of the proposed T-Mobile/Sprint merger in an op-ed. It's our conclusion that the market's competitiveness makes it unlikely that the merger, if approved, would result in harmful price increases for consumers. Consider, for instance, market entry in 2017 and 2018 by Wi-Fi/hybrid mobile providers Comcast and Charter Communications, the ongoing race to deploy 5G by multiple providers, and metrics in the Communications Marketplace Competition Report(2018) indicating continuing price decreases – for mobile wireless average revenue per user (down 7%), wireless consumer price index (down 11%), and revenue per megabit (down 10% to 29%).

As Randolph May explained, T-Mobile and Sprint's commitments to maintain price stability for three years following the merger's closing would further alleviate any competitive pricing concerns. Additionally, FSF blog posts have addressed competition from MVNOs and explained why merger approval would benefit resellers and hybrid services. 

Remember that the T-Mobile/Sprint merger is already subject to separate reviews by two federal agencies. As I've pointed out before: "State reviews add yet another layer of multi-agency proceedings to the merger review process. The more agencies conducting reviews, the more likely such reviews are to delay the overall merger process and saddle merging parties with administrative and lost market opportunity costs." The progress to date that has resulted in 16 completed state PUC reviews is encouraging. California's PUC and the other PUCs that have yet to complete their review of the T-Mobile/Sprint merger should do so promptly.