While the U.S. Federal Communications Commission (FCC) appears likely to approve the proposed merger of third- and fourth-place wireless carriers T-Mobile and Sprint, the Department of Justice is reportedly still leaning against approval due to unresolved antitrust concerns, Bloomberg reports. As it has potential impacts on both telecommunications and broader consumer competition, the $26.5 billion merger requires sign-offs from both federal agencies, and even their approval wouldn’t foreclose the prospect of state-level opposition.
Earlier today, FCC Chairman Ajit Pai signaled his support for the deal after over a year of fact-finding and public comments, noting that the commission had secured the carriers’ agreement to quickly make 5G services available to nearly all U.S. customers — 97% of the population within three years — with multi-billion-dollar penalties for shortcomings. But as Bloomberg notes, Justice Department antitrust head Makan Delrahim could still oppose the deal if he finds that the merger would hurt competition in the wireless sector and raise consumer prices. The agency reportedly feels that the carriers’ promises to the FCC haven’t gone far enough to resolve those concerns.
In addition to making coverage commitments, T-Mobile and Sprint have committed to divesting prepaid carrier Boost Mobile to win regulatory approval, and to holding current service prices constant for a period of three years — a pledge that is generally understood to require that the carriers’ 5G prices remain the same as their 4G prices. However, opponents of the deal have suggested that the carriers could merely introduce new services at higher prices, and that the reduction from four to three carriers will inevitably lead to price increases in poorly served areas.
Though reports regarding Justice Department and carrier talks have previously indicated staff lawyer-level opposition to the deal and highlighted potential hurdles to winning approval, T-Mobile and Sprint officials have previously said that characterizations of the discussions were inaccurate. They have also underscored their plans to move beyond the traditional cellular industry by challenging cable broadband and television providers, creating new competition. Assuming today’s report is correct, the carriers could agree to additional pricing and/or divestment terms to satisfy the agency’s antitrust and competition concerns, enabling the merger to move forward.