Despite FCC approval of Sprint-T-Mobile merger, other roadblocks remain

Though the FCC has approved the massive Sprint-T-Mobile merger, hurdles still remain.
Image: Cody DeBos / The Burn-In

Last week, The Federal Communications Commission (FCC) voted to allow the $26.5 billion merger between telecommunication giants Sprint and T-Mobile. The two corporations won the approval of the U.S. Department of Justice (DOJ) in July. However, the consolidation of America’s telecom sector still faces `a crucial legal hurdle.

Split Decision

Although the FCC ultimately approved the Sprint-T-Mobile merger, the agency made a split decision along partisan lines. According to The Verge, the body’s Republican commissioners, including Chairman Ajit Pai, okayed the proposed acquisition. In May, Pai indicated that he would support the transaction provided that both corporations agreed to expedite the nation’s 5G rollout.

T-Mobile CEO John Legere said that his company’s purchase of Sprint will allow for the deployment of 5G across 95 percent of the country in three years.

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Despite the chairman’s enthusiasm, the FCC’s Democratic commissioners had concerns about the consolidation. Jessica Rosenworcel expressed her dissent in an Atlantic article, arguing that the merger would result in higher prices for consumers. She also made the case that the deal would result in thousands of lost jobs across the country.

Meanwhile, Democratic commissioner Geoffrey Starks wanted the FCC’s vote on the merger delayed until an ongoing investigation into Sprint’s business practices concluded. In September, the agency launched a probe into the carrier’s acceptance of millions of dollars to provide low-cost phone services for low-income consumers. Sprint collected subsidies for 885,000 subscribers that canceled their service.

Nevertheless, the FCC has now cleared the way for the multibillion-dollar telecom merger to occur. However, a group of state attorneys general is still standing in the way of the transaction.

State Level Objections

Right after the DOJ approved T-Mobile’s acquisition of Sprint, attorneys general from 13 states and the District of Columbia filed a joint lawsuit to stop the deal. The group believes that the merger will harm U.S. consumers via decreased competition and subsequent price increases. The attorneys general allege that with only three major wireless carriers, monthly cellular service bills will gradually increase and competition will stagnate.

Moreover, the officials also distrust Sprint and T-Mobile’s plan to establish Dish Network as a new fourth major carrier. As part of its merger agreement, Sprint pledged to sell Boost and Virgin Mobile to Dish for $5 billion. Moreover, T-Mobile committed to giving the pay-TV company 200,000 cellular base stations and hundreds of retail locations.

The state attorneys general contend that Sprint and T-Mobile’s efforts will not be enough to establish Dish as a serious competitor. Notably, the two telecom firms vowed not to proceed with the merger until the lawsuit had been settled. However, the consortium’s once united front is slowly crumbling.

Earlier this month, Mississippi Attorney General Jim Hood dropped out of the lawsuit. The official abandoned the case after the two companies agreed to provide 5G coverage to 62 percent of his state’s residents. The merged brand also pledged to offer low-cost monthly wireless plans for at least five years.

Furthermore, on Monday, the Colorado State Attorneys Office exited the multistate lawsuit. The agency made the decision after Dish agreed to expand its Littleton, Colorado headquarters by an expected 2,000 employees. Moreover, the corporation promised that the state would be one of the first with a 5G network.

The remaining 12 state attorneys general will face Sprint and T-Mobile in court on December 9.