Sprint and T-Mobile Merger Hits Another Roadblock as FCC Chairman Warns Against Consolidation
The proposed Sprint and T-Mobile merger seems to have hit another roadblock in the government as Federal Communications Commission (FCC) Chairman Tom Wheeler has apparently expressed concern about any further consolidation in the U.S. wireless industry.
Wheeler conveyed his skepticism during a meeting with Sprint board members Monday, adding the FCC to government agencies against the nation's third and fourth largest carriers combining forces. According to The Wall Street Journal, Wheeler and the FCC are wary of there being less national competition within the wireless networks -- a situation that could lead to higher costs in the end for consumers.
"I'm not unduly surprised by the FCC chairman's skepticism. I feel it's a rather typical reaction," a person close to SoftBank, the owner of Sprint, said in a Reuters report.
The remarks come not too longer after the U.S. Justice Deparment's antitrust division also relayed that it is not convinced by the argument that a combined Sprint and T-Mobile network would be better able to compete with nation's largest wireless networks, Verizon and AT&T. Sprint is currently third largest carrier in the United States, while T-Mobile is the fourth.
"If the government wants us to have a competitive environment, you are going to make sure that the duopoly doesn't use their prowess to crush the little guys and have this sub-1 GHz spectrum be moved all to them," said T-Mobile CEO John Legere in an interview on television show Bloomberg West. Legere, who was initially vocal about his skepticism concerning a merger with Sprint, has recently changed his tune regarding the deal.
"We're all going to need better scale and capability. The question starts to be: How do you take the maverick and supercharge it? We either need more spectrum and capability, a lot more investment, or we need consolidation."
T-Mobile currently ranks as the cheapest overall national wireless carrier, according to a Cowen and Company study, with an average monthly cost of $120. A Sprint and T-Mobile merger has government officials fearful that costs will rise with only three, rather than four, national carriers.
Sprint has reportedly received assurances from banks that it should be able to finance the deal. The main obstacle now is convincing government agencies like the FCC and the Justice Department's antitrust division. Approval by both agencies is necessary for the deal to go through.
This isn't the first time that another major carrier has attempted to join up with T-Mobile. AT&T tried back in 2011, before antitrust officials struck down the deal, stating that T-Mobile has been a "self-described 'challenger brand,' that historically has been a value provider."
What do you think? Would having only three, instead of four, major national wireless carriers in the United States lead to higher costs? Or would a Sprint and T-Mobile merger allow the new carrier to better compete with Verizon and AT&T, passing on the benefits to consumers? Let us know in the comments section below.
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