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Public Knowledge President Gene Kimmelman will testify before the U.S. Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights Wednesday, June 27 at 2:30 p.m. His testimony in the hearing on “Game of Phones: Examining the Competitive Impact of the T-Mobile/Sprint Transaction” will argue that both Sprint and T-Mobile have aggressively competed with each other since the government rejected the proposed AT&T/T-Mobile merger in 2011.
The following may be attributed to Public Knowledge President Gene Kimmelman:
“This competition has brought tens of billions of dollars in cost reductions to consumers, eliminated long-term contracts, and separated the purchase of a phone from a wireless plan -- the last thing consumers need is a merger that ends these enormous consumer benefits.
“For the second time in a decade the Department of Justice (DOJ) and Federal Communications Commission (FCC) are asked to bless a transaction that would reduce the number of national wireless carriers from four to three. Based on what we know, they should come to the same conclusion this time as they did with the AT&T/T-Mobile deal, and find that this deal also would harm consumers and should be stopped.
“Sprint and T-Mobile have put forward a particular vision for the future of the wireless industry where combining their networks, spectrum, and customer bases will lead to a better future. But different consumers have different priorities. Competition, not consolidation, is the best way to achieve the best mix of coverage, next-generation technologies, and affordable plans. There are many different combinations of spectrum, coverage, and network upgrades that carriers can deploy to provide what consumers want. What the companies leave out of their pitch is that the combined companies would acquire enough market power to inflate prices and harm competition.
“When the Department of Justice sued to stop the proposed merger of AT&T and T-Mobile, it argued that ‘unless this acquisition is enjoined, customers of mobile wireless telecommunications services likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest than would exist absent the merger.’ An FCC staff report similarly found that ‘the proposed transaction would likely lead to a substantial lessening of competition under the Clayton Act. A transaction that violates the Clayton Act would not be in the public interest.’ These findings are all the more important given the importance of wireless technology.
“Since that time consumers have reaped the benefits of four-carrier competition, and T-Mobile’s increased focus competing in the marketplace for customers, rather than through mergers. The lesson is clear: companies will compete vigorously when they have the incentive to do so. This means that a market must be sufficiently competitive. It also means that the companies must be under no illusion that they can simply buy their way into success through anticompetitive deals.
“The likely loss of competition that would result from this deal is obvious. Its benefits are substantially less so. Giving T-Mobile and Sprint the benefit of the doubt, even if they have shown that they can combine their assets to build a next-generation network, they have not shown that cost-savings would be passed along to consumers, that price-sensitive consumers will not be left behind, and that the public, rather than the companies themselves, will be the real winners from this deal. Nor have they ruled out alternative paths to 5G that would not carry such a competition tradeoff. In a market that suffers from endemic competition problems, policymakers should be skeptical of claims that somehow few competitors will truly deliver more competition.”
You may view the testimony here.