On Wednesday, executives from Sprint and T-mobile faced questions from members of the House Energy and Commerce committee about their planned $26 billion merger. The #3 and #4 cell carriers say they need to join forces to compete against the two top dogs, Dallas-based AT&T and Verizon.
Democrats in Congress often object to large mergers like this one, because they fear that consolidation will mean job cuts, less competition and higher prices for consumers. But the politics are not quite as predictable in this case.
David McCabe is a technology reporter for Axios and he’s been following these hearings and the proposed merger.
“[Congress] doesn’t decide on a merger,” McCabe says. “They don’t have a role in the formal approval process…. That goes to DOJ, to the [Federal] Communications Commission, and to state regulators. But Congress can air their concerns and add more scrutiny to a deal.”
McCabe says Democrats, newly in power in Congress, aren’t united on the merits of the telecom merger. Some Democrats have taken a pro-business stance, supporting the merger, while new, progressive lawmakers are skeptical.
“The politics are kind of interesting,” he says. “Obviously, the congressional committee they appeared before yesterday were new House Democrats. Certainly the election has rejiggered the level of scrutiny they’re gonna get on Capitol Hill.”
T-Mobile and Sprint know that final approval of their plan rests with the administration, so they’ve tuned their message to that audience.
“On the other hand, they’ve aimed the pitch with [the] pro-business, ‘America first’ policies of the administration,” McCabe says.
The companies have described the merger as a way to beat China and other countries to build out 5G networks.
Last week, Sprint sued AT&T over AT&T’s 5G E offering, claiming that AT&T is engaging in false advertising, because their 5G network has not yet been deployed.
“This is reflective of how desperately the carriers want to be the first to get to 5G. They want to tell their customers they have 5G, even though 4G is pretty good,” McCabe says.
The House Judiciary Committee plans a hearing on the Sprint/T-Mobile merger. State regulators, the FCC and Department of Justice have the final say.
Written by Brooke Reaves.