When we served as attorneys general in Massachusetts and Washington state, respectively, we reviewed numerous high-profile transactions in the media and telecommunications sectors, carefully weighing their implications for consumers in an objective, non-partisan fashion.
Those responsible for protecting market competition must be vigilant about mergers that threaten to increase concentrations of market power. It was that commitment that led us both to oppose AT&T’s attempted merger with T-Mobile in 2011.
{mosads}But a lot has changed since 2011, including the state of competition in the converging wireless, cable and media industries.
In today’s dynamic market for broadband internet — where the advent of 5G technology promises to transform and expand consumer options — scale is critical to competition. The proposed merger of T-Mobile and Sprint is a case in point.
The reason why we support this merger — and, in fact, why we joined the T-Mobile advisory team — is that it will create substantial consumer benefits by giving the combined company the spectrum, assets and scale to more effectively challenge larger players.
With its “Un-carrier” approach, T-Mobile has disrupted the wireless market with unlimited data plans, the end of multi-year service contracts and other innovations that have driven industry-wide change for the benefit of consumers.
In a marketplace that is evolving with new large-scale players, combining with Sprint will allow T-Mobile to compete against Verizon, AT&T, Comcast and others, even as they continue to expand into new lines of business.
In short, the merger will enable T-Mobile to continue the Un-carrier’s pro-competitive, pro-consumer initiatives on an even larger scale.
As the companies have detailed in the public interest statement they filed with the Federal Communications Commission (FCC), consumers will benefit by getting more data for less, and those living on the other side of the digital divide, especially in rural America, will see some of the greatest service improvements.
These improvements stem from T-Mobile’s commitment to invest nearly $40 billion in the development of a nationwide 5G network and services. By 2024, the company projects the New T-Mobile network will have three times more 5G capacity than what the two companies combined could achieve on their own.
Moreover, although some investment in 5G infrastructure is already underway, this large infusion of capital will speed 5G deployment, not least by upping the ante for Verizon and AT&T.
Simply put, more capacity means lower prices. All of the combined company’s customers — including those on prepaid plans — will be served by the same network and will benefit from this huge increase in capacity.
To make its new network cost-effective, New T-Mobile will have to seek out new customers in untapped or underserved rural and urban markets. How will it acquire those customers? By dropping prices. And since prices are established at the national level, customers should see better performance for less money no matter where they live.
The merger will also allow New T-Mobile to enter new markets ripe for disruption, such as in-home broadband, where it will force cable companies to respond and potentially reduce costs for cable consumers across the board.
In addition, by 2024, 90 percent of Americans will have access to broadband speeds in excess of 100 megabits per second on New T-Mobile’s network, making it easier for more of them to “cut the cord” once and for all.
The combination of T-Mobile and Sprint will help to bring communities across the U.S. into the digital future. With smart agriculture monitoring technology, for example, a farmer in rural Tennessee could see higher crop yields. Families with a sick child in the mountains of Pennsylvania will have faster access to telemedicine.
Students in underserved parts of Florida will be able to complete and submit their homework on a reliable internet connection. And the combined company’s commitment to open 600 new stores and up to five new customer experience centers in the U.S. promises better service for small-town and rural America.
{mossecondads}The synergies that typically make mergers attractive to investors often mean job cuts, but that’s not the case here. The synergies described above require New T-Mobile to hire more employees to build its new network, provide customer care and support new or expanded services such as in-home broadband, video, enterprise and the “internet of things.”
As a result, the merger will create thousands of additional American jobs in the first year alone and thousands more thereafter.
The potential benefits of the T-Mobile-Sprint merger will be widespread and particularly valuable for underserved Americans, who often rely on wireless data service for internet access.
The combined company will bring 5G to more Americans sooner while creating a more robust challenger to Verizon, AT&T and other competitors. It is truly a different merger for a new era.
Martha Coakley served as the Democratic attorney general for Massachusetts from 2007 to 2015 and currently serves as a partner at Foley Hoag LLP, a Boston-based law firm. Rob McKenna served as the Republican attorney general for the state of Washington from 2005 to 2013 and as president of the National Association of Attorneys General from 2011 to 2012. Coakley and McKenna are advisors to T-Mobile.