FCC approves T-Mobile-Sprint merger despite lawsuit, antitrust concerns

After today, the U.S. will only have three major mobile providers.

On Tuesday, the Federal Communications Commission (FCC) approved the T-Mobile-Sprint merger despite antitrust concerns and an ongoing multi-state lawsuit to block it.

The 3-2 vote giving the merger the ‘OK’ was along party lines, with both Democrats against it.

The FCC, or at least Chairman Ajit Pai and the two other Republican commissioners, say that the merger will enable the companies to close the digital divide between rural and urban areas and help deploy a 5G network.

T-Mobile and Sprint agreed to offer coverage to 97 percent of Americans with its 5G network within three years and 99 percent of Americans within six years of the close of the merger. The companies also committed to provide mobile broadband with speeds of at least 100 Mbps to 90 percent of Americans and speeds of at least 50 Mbps to 99 percent.

According to the FCC's approval, T-Mobile and Sprint can be fined over $2 billion if they fail to meet those guarantees.

“This transaction is in the public interest,” said FCC chairman Ajit Pai in a statement. “It would bring the benefits of the next generation of wireless technology to American consumers and advance American leadership in 5G. It would help millions in rural America benefit from high-speed 5G mobile broadband service. And it would promote competition.”

Previous attempts by the two telecommunication giants to merge had been blocked by regulators. This past July, President Trump’s DOJ approved the merger.

“The proposed transaction is exactly the type of merger that the Justice Department and the Commission have discouraged and rejected in the past: one that would harm competition and result in higher prices and poorer service, particularly for the most vulnerable consumers," wrote FCC Commissioner Geoffrey Starks, one of the two dissenting votes.

However, T-Mobile and Spring aren’t in the clear yet. More than a dozen state attorneys general previously filed the lawsuit attempting to block the merger.

“The proposed tie-up of T-Mobile and Sprint will reduce competition,” said FCC Commissioner Jessica Rosenworcel in her dissent. “This merger will combine two of the four nationwide competitors in the wireless industry in the United States. As a result, three companies will control 99 percent of the wireless market. By any metric, this transaction will raise prices, lower quality, and slow innovation, just as we start to deploy the next-generation of wireless technology.”

To make her case, Rosenworcel brings up how reduced competition among airlines brought about smaller seats and baggage fees regardless of savings. She also provides the pharmaceutical industry’s price gouging of lifesaving medicine as another example.

“We’ve all seen what happens when market concentration increases following a merger,” she writes. “There’s no reason to think the mobile-phone industry will be different.”