In brief: On Tuesday, the Federal Communications Commission (FCC) announced that it would approve the $26.5 billion T-Mobile/Sprint merger. The contentious on-again-off-again talks and probes have been going on since at least 2017.
Earlier this year, the big dollar acquisition had the government split down the middle with the Department of Justice wanting to deny the deal and the FCC leaning to approve it. In July, the DoJ changed its stance and decided it would back down from its opposition.
Now the FCC has formally given the merger the green light. However, the agreement comes with some conditions that the joining must meet.
The Commission approved the deal believing that it would advance 5G deployment. The companies have said that they would have 5G service to 97 percent of its customers within the next three years. They additionally promised to bring 100Mbps or better to 90 percent of subscribers by the end of 2025.
The FCC said that these terms are acceptable, but that if the conditions are not met, the company will face over $2 billion in fines. The press release noted that the merger would not detrimentally affect market competition. However, not all the commissioners agreed. The vote to approve just three weeks ago was split down party lines.
“The parties also pledged that within six years, 90% of Americans would have access to mobile service with speeds of at least 100 Mbps and 99% of Americans would have access to speeds of at least 50 Mbps.”
“While I hope for the sake of consumers that I am wrong, I fear that we will one day look back at this decision and recognize it as a moment that forever changed the U.S. wireless industry, and not for the better,” said Democratic Commissioner Geoffrey Starks.
Commissioner Jessica Rosenworcel, also a Democrat, voiced similar concerns comparing the merger to those in the airline and pharmaceutical industries. She pointed to higher luggage fees and medication costs as examples of what can happen when you start consolidating an industry.
“There’s no reason to think the mobile-phone industry will be different,” Rosenworcel said.
Sentiments have not changed much since the October 16 vote, with one side of the Commission still opposed.
“While the parties promise their merger will accelerate the availability of some form of ‘5G’ for some Americans, history teaches us that the most likely effect of this merger will be higher prices and fewer options for all Americans,” Starks said in a statement Tuesday.
The acquisition is far from final, though. Pennsylvania Attorney General Josh Shapiro, along with 17 other attorneys general, filed a lawsuit challenging the deal. They believe the merger “would hurt competition, raise prices for cell service, result in a loss of retail jobs and lower wages for the employees who remain.”
We will have to see how that plays out in the courts.
Image credit: Reuters/Dado Ruvic