House Democrats on Wednesday pressed executives for T-Mobile and Sprint about their proposed $26 billion merger for the two wireless carriers, raising concerns about the impact on workers and consumers.
In the hearing before a House Energy and Commerce subcommittee, T-Mobile CEO John Legere and Sprint executive chairman Marcelo Claure tried to convince Democrats of the benefits of the deal, which would combine two of the country’s four largest wireless operators. But lawmakers were skeptical of their pitch.
{mosads}“I appreciate both executives’ statements that they believe that this merger will benefit consumers and result in lower prices — and their commitments to an accelerated deployment of 5G and promises of expanded rural broadband,” said Rep. Mike Doyle (D-Pa.), who chairs the Energy and Commerce Subcommittee on Communications and Technology.
“However, I’ve seen a lot of mergers in this industry and others, and it’s hard to think of one where consolidation didn’t result in people losing their jobs, prices going up and innovation being stifled,“ Doyle continued.
The two companies are hoping to sell regulators on the deal with commitments to use the combination to build a competitive 5G network and by vowing not to raise prices on customers for the first three years. But Democrats, consumer advocates and labor groups have railed against the prospect of losing one of the country’s four national wireless providers.
When asked by Doyle what was different about this merger, Legere argued that the “complementary nature” of the two networks will help expand access and lower prices.
“This is a unique merger where the outcome of this merger will be a significant increase in supply in the form of eight times the capacity that our network will make available,” Legere said.
The deal has become a political target for many Democrats.
On Tuesday, eight Democratic or independent senators — six of whom have either entered the race or are considering running for president in 2020 — sent letters to regulators urging them to block the deal.
“This merger will turn the clock back, returning Americans to the dark days of heavily consolidated markets and less competition, with all of the resulting harms,” the senators wrote to the Federal Communications Commission (FCC) and the Department of Justice (DOJ).
Legere and Claure sought to push back against predictions that their combined company will be a job-killer.
Chris Shelton, president of the labor group Communications Workers of America, told the committee that he expects the deal will result in a loss of 30,000 jobs.
“Trusting Sprint and T-Mobile with American jobs is like trusting a vampire at a blood bank,” Shelton said.
But Legere promised that the merger will be “jobs positive,” with 3,600 new workers in the year after the deal closes and 11,000 more over the next six years.
Last week, he told the FCC that the combined company, which will be called “New T-Mobile,” would not raise rate plans for customers for the first three years.
Critics say that promise is not enough, and some observers speculated that the move could be a sign that the regulators reviewing the deal have raised concerns that it could lead to consumers paying higher prices.
“The notion that they are getting pushback – from somewhere – about pricing in a three-player market can’t be shocking,” telecom analyst Craig Moffett wrote in a note to investors last week. “But it can’t be seen as good news for the deal’s prospects.”
Lawmakers do not get to approve the deal, but it must still pass muster before the DOJ and FCC.
The deal has already passed some regulatory hurdles. In December, a government review board, the Committee on Foreign Investment in the U.S., approved the plan after the companies agreed to scale back business dealings with Chinese firm Huawei, seen as a national security threat by U.S. intelligence.
In recent weeks, Sprint and T-Mobile have also been ramping up their efforts to secure approval.
In addition to promising price freezes, the companies have also touted their commitment to building out the 5G network, a priority for the Trump administration, which is worried about losing ground to China.
And the merger has been buoyed by the support of some prominent Democrats, including former FCC Commissioner Mignon Clyburn, who is advising on the merger.
Clyburn was seen as a prominent consumer advocate during her tenure on the FCC.
Earlier this month, she touted the merger’s promise of expanding broadband access.
“Affordable broadband access for me is a critical priority, particularly for those Americans who are underserved or who currently have no viable options at this time,” Clyburn told The Hill.
Those efforts underscore the high political stakes for the deal which comes at a time of increased scrutiny on tech and telecom companies.
For T-Mobile and Sprint, the final push for approval is the end of a long effort. The companies first floated a merger in 2014 during the Obama administration. Regulators at that time discouraged the companies from going forward.
Trump regulators have provided little insight into their review of the deal, which T-Mobile and Sprint hope to finalize this spring.
Updated at 4:07 p.m.