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Yesterday, Federal Communications Commission Chairman Ajit Pai circulated a draft order to approve the Sprint/T-Mobile merger. The move follows the Department of Justice’s approval of the deal, pending the divestiture of prepaid brands and customers, as well as several side agreements designed to accelerate Dish Network’s entry into the wireless market.
If approved by the FCC, the merger would leave consumers only three facilities-based competitors with only the potential of a fourth in the future. Sixteen state attorneys general, led by New York Attorney General Letitia James, California Attorney General Xavier Becerra, and Texas Attorney General Ken Paxton rejected the FCC’s reasoning and recently filed a multi-state lawsuit to block the merger. The states’ lawsuit will now proceed in the Southern District of New York, and is scheduled for trial in December.
The following can be attributed to Phillip Berenbroick, Policy Director at Public Knowledge:
"The FCC's decision to circulate an order approving the T-Mobile/Sprint transaction is premature. The T-Mobile/Sprint merger, along with divestitures to Dish and modifications to Dish's spectrum buildout requirements, would dramatically restructure the wireless industry. In total, consumers bear significant risk that the resulting market will be significantly less competitive than the existing marketplace with Sprint as a standalone provider with more than 50 million retail subscribers, and Dish as a potential new market entrant.
“Further, there is substantial execution and enforcement risk that the competition envisioned by the FCC and the DOJ will fail to materialize, leaving consumers with only three nationwide wireless providers to choose from. As the DOJ made clear in its legal filings, the combination of T-Mobile and Sprint and reduction of competition in the wireless market from four to three nationwide providers would substantially lessen competition, in violation of the Clayton Act, and likely lead to higher prices for consumers, reduced levels of network investment and innovation, and lower quality wireless service.
"These are key issues to the Commission's evaluation of the transaction and require public input. The FCC should pause its consideration of the order and release a Public Notice seeking comment on the new deal structure. The states Attorneys General who have sued to block the deal have not been persuaded that the remedies proposed by the FCC and the DOJ will avert harm to consumers and competition, and they should continue their litigation to block the merger.”