Sprint/T-Mobile Merger Trial Ends

A group of states filed a joint suit to prevent the T-Mobile and Sprint merger in July. New York and California Attorney Generals led the suit to block the $25.5 billion merger. Several states, including Colorado, Texas, and Nevada left the lawsuit after settlements with the companies helped to ease concerns and help the states. Most settlements included early 5G implementation in the state and stable prices; others have also included promises of new jobs in the state. Both the Department of Justice and the Federal Communications Commission approved of the merger, and in December the intervened in the suit on behalf of the corporations and filed a Statement of Interest against the states, stating that they have to prove blocking the merger is reasonable and beneficial to consumers.

The multi-state coalition feared the merger would raise prices; hurting lower-income Americans. However, T-Mobile and Sprint argued that the newly merged company would be able to compete better with the bigger providers, Verizon and AT&T.

Glenn Pomerantz, an attorney representing the states, noted that the proposed merger would reduce the number of major cell network providers to 3. “If this merger goes forward, they’re at risk for paying billions of dollars more every single year for those services,” Reuters reported.

David Gelfand, an attorney for T-Mobile, stated that the “merger would offer cost savings, which would trickle down to lower prices for consumers.”

Meanwhile, New York Attorney General Letitia James said the merger would be “bad for the economy, bad for consumers, bad overall for the industry” and it would “stifle innovation,” She added, “It would reduce the quality of service for millions of Americans across the country. That’s why I’m confident we will win.”

As part of the DoJ and FCC’s approval, Sprint will divest its prepaid service and some wireless spectrum to Dish Network, a satellite provider hoping to move into the cellular carrier market. Dish could become the replacement fourth carrier. However, the states argued that “Dish was ill-equipped to become a competitive fourth wireless carrier…Dish lacks experience, scale and brand recognition in wireless.” It will take time for Dish to establish wireless customers and aggressively compete with the other companies.

The states stated that after the merger, the three wireless carriers will each have about 30 percent of the market and since their shares are almost equal, they will be likely to raise prices. The states also stated that they believe the merger will reduce the companies’ incentive to create consumer-friendly service programs.

T-Mobile/Sprint stated that the merger would “create a new, world class network with lower costs and better service for consumers… the merger holds tremendous promise to revolutionize the industry.” The companies also noted that without the merger they may be unable to compete effectively. The companies stated that “by combining their physical networks, they can provide better service, roll out 5G more quickly and keep prices for consumers low…the combined network will have more than twice the capacity by 2024 than if the companies remained separate.” Additionally, Dish and any others that enter the market will create an incentive for consumer-friendly programs or initiatives.

The trial began on December 9; each side gave closing statements on January 15. It was held at the New York Southern District Court before Judge Victor Marrero, who has not yet made a decision, but said he would decide “as quickly as possible.” The states have not commented if they intend to appeal if the merger is approved by the judge.