Partisan Politics Drive a Baseless Lawsuit Against Sprint/T-Mobile

Partisan Politics Drive a Baseless Lawsuit Against Sprint/T-Mobile
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New York Attorney General Letitia James seems to be a little confused. Make that a lot confused. James is currently spearheading a group of 15 state attorneys general suing to stop the merger between wireless carriers Sprint and T-Mobile. In explaining her actions to reporters, she said, “To be clear: The free market should be picking winners and losers, not the government, and not regulators." 

To that we say, “Amen.”

So, if Ms. James is such a strong adherent of the free market, why in the world would she be heading to court at the 11th hour with a lawsuit to stop a merger that was initiated, crafted, refined and affirmed entirely by the guiding principles and operating mechanisms of the free market?

It’s like pronouncing your unwavering support for healthy eating, and then joining forces with Krispy Kreme to attack the local farmers market.

As Ms. James should know, the free market is built on a foundation of fair and open economic competition, for producers and sellers to create the best product and empowering consumers to choose how and on what to spend their money. The desire for enterprises to innovate and transform themselves is the very dynamism of market freedom as is ensuring consumers have greater choice and get better service and products.

It’s not a difficult concept to grasp that this is precisely what’s at stake in the Sprint T-Mobile merger.

Currently, the U.S. wireless sector has two dominant carriers, Verizon with 155 million subscribers, and AT&T with 157 million subscribers. This mammoth duopoly has 70 percent market share of wireless networks, each itself bigger than Sprint and T-Mobile combined, which have 55 million and 83 million customers respectively.

At their current size, T-Mobile and Sprint have been relegated to serving limited and niche markets, while Verizon and AT&T alone have access to a nationwide customer base.

Having only 2 national carriers thwarts the opportunity for robust nationwide competition in wireless. The free market has a solution for this by filling the vacuum where true competition doesn’t exist – enter Sprint and T-Mobile.

Within this market, two smaller carriers realized they could create more competition and serve more customers by joining forces. The merged company, dubbed “New T-Mobile,” will still have a smaller customer base then both Verizon and AT&T, but can finally challenge the wireless duopoly now locked in place. By combining assets and resources, such as infrastructure, digital technology and bandwidth spectrum, and by sharing fixed costs, the new company can be a true and honest competitor on a national scale, which will give consumers more choices, at lower prices. It will further unleash greater competition that will spur other carriers to keep pace, leading to additional consumer benefits. The merger has numerous other pluses that are good for consumers and good for America; including helping our nation win the race to 5G, hiring more skilled workers and closing the rural digital divide.

This, Ms. James, is the free market in action.

In the 16 months since the merger was announced, it has been exhaustively vetted by dozens of state utility commissions, the Federal Communications Commission (FCC), the Department of Justice (DOJ), and been the subject of hearings on Capitol Hill. The merger has received the blessing of the DOJ after they asked for and received concessions to ensure that consumers won’t be in for any surprises. This includes both Sprint and T-Mobile agreeing to a “substantial divestiture package” to allow a fourth carrier in Dish Network Corp.This deal was the result of many months of painstaking negotiations to ensure that a major concern of merger opponents, namely a reduction in competition, was addressed.


And, this week the FCC formally recommended approval of the merger, with FCC Chairman Ajit Pai noting that “after one of the most exhaustive merger reviews in Commission history, the evidence conclusively demonstrates that this transaction will bring fast 5G wireless service to many more Americans and help close the digital divide in rural areas.”

Even with all of these commitments and concessions, the attorneys general have said thanks but no thanks. It is further proof that this lawsuit is a farce, a pretext to oppose President Trump and return to the regulatory overreach of the Obama era. The suit echoes every other lawsuit brought by activist attorneys general, overwhelmingly Democrats, in their ongoing efforts to oppose everything President Trump supports. So far this has included going to court to stop Trump policies on healthcare, immigration, energy, the environment, fuel standards, and on and on.

After more than a year, opponents of the merger have yet to articulate a reasonable or persuasive argument for why this merger should not go forward. They certainly can’t hang their hat on the free market, which is firmly on the side of approving New T-Mobile.

Gerard Scimeca is an attorney and vice president of CASE, Consumer Action for a Strong Economy, a free-market consumer advocacy organization.

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