the top line

The T-Mobile/Sprint Merger Remedy Makes No Sense

Photo: Chip Somodevilla/Getty Images

Twice in the last decade, federal regulators have rejected attempts by T-Mobile to merge with other wireless carriers. Now, as the company makes a third attempt under a more merger-friendly administration, one of the key arguments for the merger is that we’re headed for a world with only three major wireless carriers — whether the merger is approved or not. Sprint’s fourth-place position is supposed to make it too weak to compete effectively; a Sprint merged with T-Mobile is supposed to be better poised to implement 5G wireless technology and compete effectively with Verizon and AT&T.

This merger proposal has been met with support at the Republican-controlled FCC, while receiving wariness from career staff at the DOJ’s antitrust division and hostility from a group of state attorneys general who are suing in an effort to block the deal even if the Trump administration approves it. The idea that a reduction in the number of competitors in this industry is actually pro-consumer has been a somewhat tough sell.

In an effort to make the deal more palatable to those state attorneys general and the courts, DOJ has sought concessions from the merging companies, and a major one is expected to be a requirement that the companies sell assets including spectrum to Dish Network so that Dish can start a fourth major national-wireless carrier. Dish would also acquire Sprint’s Boost Mobile unit, giving it a book of existing customers, and it would get to use T-Mobile’s network to serve those customers for a few years as it set about building its own.

Here’s what makes no sense about this: If the parts of Sprint and T-Mobile are sufficient to build two viable national-wireless carriers, and if four national-wireless carriers is better for consumers than three, then why would Sprint and T-Mobile be allowed to merge? If this remedy can work, then how could the initial rationale for the merger be correct?

Either Dish is doomed to fail, in which case this concession won’t lead to a four-carrier landscape. Or Dish can succeed, in which case Sprint ought to be a viable concern, either on its own or as an acquisition target for a non-wireless-carrier company like Dish. It’s easy to see how this merger benefits T-Mobile and especially Sprint shareholders, but it’s harder to see the public benefit.

The T-Mobile/Sprint Merger Remedy Makes No Sense