Amerger withwas firmly rebuffed by antitrust officials in Washington four years ago. Winning them over this time won’t be easy, even with a new administration in power.
The deal would combine two of the four biggest wireless carriers in the U.S., setting the stage for an in-depth investigation by the Justice Department into whether the tie-up would harm competition in the industry. In 2014, when the department’s antitrust division last looked at the deal, the answer was:.
“I find it hard, given the history, to see the DOJ not challenge it,” said, a former deputy assistant attorney general with the antitrust division. “It’s basically a four to three in the wireless industry. Even if they argue there are 10 players, they are still the top four.”
Sprint and T-Mobile have complementary wireless spectrum that may be a strategic advantage as the companies build a 5G network. T-Mobile controls a large portfolio of lower-band airwaves that can travel long distances and pass through walls and windows. Sprint has the largest U.S. holding of higher-band, 2.5-gigahertz spectrum that can handle more data capacity but over limited distances.
“The companies will argue that only together will they be able to make the requisite investments in 5G, and there’s probably a fair amount of truth to that,” Moffett said.
Sprint is controlled by Tokyo-basedand T-Mobile is owned by Germany’s, which will have the biggest stake in the combined entity. Foreign ownership of the combined company could expose the proposed merger to scrutiny by a secretive national security panel that reviews acquisitions of U.S. businesses by foreign investors.
In addition to the Justice Department, the deal will need approval from the Federal Communications Commission. During the Obama administration, both agencies took the position that competition could be harmed if the number of national carriers went down to three from four. President Donald Trump’s new FCC chairman, Ajit Pai, has said he remainsabout the number of major players in the U.S. mobile market. That stance appears to leave the Justice Department as the major hurdle.
The merger is already drawing criticism from those who say the tie-up risks undermining competition that has been fueled by having four carriers in the market. Senator Amy Klobuchar, a Minnesota Democrat who serves on the Judiciary Committee’s antitrust panel, said in a statement she’s concerned that further consolidation will threaten consumer benefits.
“Competition among the four largest cell-phone carriers has led to lower prices, better service and more innovation,” she said in a statement.
, a fellow at the Georgetown Law Institute for Technology Law & Policy, called the companies “feisty competitors” to Verizon and AT&T. “Consumers will be the losers if T-Mobile and Sprint are allowed to merge,” she said. “This combination will not only result in less choice for consumers, it will provide greater incentive for the three remaining companies to act in concert.”
In a preview of their pitch to Washington, Sprint and T-Mobile are pointing to widening competition from cable companies likeand., which have deals that let them resell wireless service using Verizon’s network in their respective territories. They’ve alsoa partnership to build the underlying technology for their mobile-phone offerings.
“In reality, this industry is no longer just four wireless companies,” Sprint Chief Executive Officer Marcelo Claure said in alaying out the benefits of the deal. “It’s not the Big Four anymore, it’s the Big Seven or Eight.”
That’s overstating the degree of competition coming from cable companies and other wireless resellers, said Andrew Jay Schwartzman, an attorney at Georgetown University Law Center’s. Another hurdle for Sprint and T-Mobile is the view inside the Justice Department that consumers have benefited from four major players in the wireless market, which was made possible thanks to the government’s successfulof AT&T’s deal to buy T-Mobile in 2011, Schwartzman said.
Still, now might be their best shot at approval.
“This is certainly a deal they’d want to do in a Republican administration and preferably with a Republican Congress,” Schwartzman said. “That created a huge imperative to do it now.”
— With assistance by Nabila Ahmed, Scott Moritz, and Todd Shields