T-Mobile, Sprint deal at final major hurdle

T-Mobile, Sprint deal at final major hurdle
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The $26 billion T-Mobile–Sprint deal faces one last major hurdle as a group of state attorneys general look to block the telecommunications mega-merger in court.

The controversial deal — which would combine two of the country’s top national mobile carriers into one company valued at $146 billion — has already cleared a series of pivotal regulatory hurdles this month. 

The Department of Justice (DOJ) greenlighted the deal last week, and the Republicans on the Federal Communications Commission (FCC) signaled they are ready to sign off on the plan.

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Now, critics of the deal are turning their focus to the legal challenge from state attorneys general, saying it is the most significant hurdle the merger still has to clear.

“The state attorney general lawsuit has a lot of legal and factual merit,” Sen. Richard Blumenthal (D-Conn.), a former state attorney general who has been critical of the T-Mobile–Sprint deal, told The Hill.

“No one can predict what the outcome in courts is going to be, but they have a lot going for them,” he added. 

The group of 13 attorneys general, along with Washington, D.C., are moving forward with their litigation to block the merger, which they officially announced last month — even before the DOJ announced its decision on the deal.

The leads in the lawsuit, California Attorney General Xavier BecerraXavier BecerraMicrosoft to follow landmark California privacy law nationwide Hillicon Valley: California AG reveals Facebook investigation | McConnell criticizes Twitter's political ad ban | Lawmakers raise concerns over Google takeover of Fitbit | Dem pushes FCC to secure 5G networks California acknowledges Facebook investigation, asks court to order compliance MORE (D) and New York Attorney General Letitia James (D), have argued the deal would raise prices on consumers, particularly those from low-income communities of color, and harm competition by reducing the number of major mobile carriers in the U.S. from four to three. 

The attorneys general have not changed their tune following the DOJ decision. 

“We will continue to evaluate the details as they come in, but we remain concerned that this deal continues to be bad for consumers, bad for innovation and bad for workers,” James said on a call with reporters.

On Thursday, during a status hearing in New York, the states will ask to delay the trial to allow them more time to revise their case to account for the DOJ’s proposal.

The DOJ last Friday announced it had approved a merger that would require both T-Mobile and Sprint to spin off significant assets to Dish, a satellite television company that has been tapped to create a competing mobile network. 

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Under the deal with the DOJ, T-Mobile and Sprint are required to give Dish spectrum, Sprint’s prepaid business and other assets aimed at propping up Dish as a viable fourth competitor. The wide-ranging deal would allow Dish to use T-Mobile’s network during a seven-year transition period while Dish builds out its own network, among other trade-offs.

Critics have lashed out at Dish, pointing out that the company has never launched its own mobile network and previously violated promises it made to the government. 

“Dish is really not in a position to serve as a competitor,” James said.

George Slover, senior policy counsel with Consumer Reports, told The Hill that following the DOJ settlement will be a challenge for Dish.

“The difference now is that Dish is being touted as a replacement for Sprint,” Slover said. “But ... it has absolutely no experience, it has no network, it has no customers.”

“Even under the best scenario, Dish is going to be utterly dependent on the three networks,” he added, referring to the merged company, Verizon and AT&T.

Dish Chairman Charlie Egan has pushed back on the skeptics, comparing it to the period when the company entered the satellite market in 1995.

“As a new entrant, Dish encountered many skeptics who questioned our ability to succeed,” he said. “As we enter the wireless business, we will again serve customers by disrupting incumbents and their legacy networks, this time with the nation’s first 5G broadband network.”

Traditionally, the federal government and state attorneys general have been on the same page in antitrust enforcement, with the states endorsing the DOJ’s call on similar mergers.

But the political climate around the T-Mobile–Sprint deal is particularly fraught as the country — and the White House — have focused enormous attention and resources toward building out 5G networks, the next generation of wireless that promises superfast speeds.

Trump administration officials have framed the efforts to roll out 5G as a “race” with foreign competitors, most prominently China, even as experts say the technology is years away from mainstream availability. T-Mobile and Sprint have argued the merger will allow them to better roll out 5G networks, particularly in rural areas.

The head of the DOJ’s Antitrust Division, Makan Delrahim, in a briefing with reporters said the deal would mean “accelerating the 5G broadband buildout in the U.S. and importantly to many people in the rural parts of the country who may not have much competition for access to broadband internet.”

The T-Mobile–Sprint merger is not a done deal, critics emphasized to The Hill. The DOJ’s agreement with the companies still has to go through an approval process in the D.C. circuit court.

The FCC still has not released or voted on the order that would give the merger its official blessing, though senior FCC officials told reporters that its staff is working on updating the order to include Dish’s involvement.

And the California Public Utilities Commission, a little-known body that has not yet approved of the merger in the state, has not offered its final ruling.

For now, both sides in the fight are focusing on the court battle.

Debbie Goldman, the research and telecommunications policy director for the labor union Communications Workers of America, told The Hill there is little indication so far that the state attorneys general are going to back off their case even if they were eying consumer friendly concessions.

“Even if they want to settle, the way to settle is to continue the litigation,” Levin said.

James and Becerra have said they have not sat down with the DOJ yet. Delrahim told reporters that he would be open to filing a brief or offering documents to the court overseeing the litigation.

“It’s unfortunate that the agencies won’t be standing side by side,” Slover told The Hill. “Certainly there are resources that the DOJ would bring to bear and that the FCC would bring to bear if everybody was seeing eye to eye that the merger is going to be harmful and should be challenged.

“But in terms of the prospects, I don’t think there’s any reason to say that the state case can’t go forward.”