Sprint and T-Mobile announced concessions to their proposed $26 billion deal on Monday, prompting promises of approval from two FCC commissioners.
The two telecoms still have another federal regulatory hurdle to clear, as the U.S. Justice Department still has to weigh in. But Joe Madden, principal analyst with Mobile Experts, said the FCC's move towards approval is a sign that the path is clear for the companies to merge.
"I think this is a really great sign that the political winds are pointing towards the merger, not away from the merger," Madden said. "After the FCC review of compeition and so on, they're seeing that this will be the best way for the American public to get a nationwide 5G network."
With just 12 days left on the FCC’s time clock, Sprint, the No. 4 telecom, and T-Mobile, No. 3, announced the changes to the proposed deal, including:
- Sprint will sell off one of its pre-paid services, Boost Mobile.
- Dubbed the New T-Mobile, the company will build a 5G network within three years that will cover three-fourths of the U.S. population with mid-band spectrum and 97 percent of the U.S. with low-band spectrum. This will result in “almost two-thirds of Americans receiving download speeds in excess of 100 Mbps,” the company said.
- The merged company will increase its 5G broadband coverage to rural and in-home users.
The companies have long touted the deal, announced more than a year ago, as a way to build out a 5G network and have promised not to increase costs to customers. Sprint officials have said that if the deal doesn’t go through, it may not survive.
The 4Compeition Coalition, which includes telecom competitors, rural providers and public interest groups, said the new conditions to the deal won't protect consumers.
"They do nothing to alleviate the reduction in choice for hundreds of millions of wireless users," the coalition said in a statement. "They do nothing to ameliorate the anticompetitive effects that come from eliminating the industry’s most active wholesale competitor, harms that would befall rural Americans in particular. And they do nothing to patch the obvious loopholes in T-Mobile’s pricing pledge."
The concessions appeased two of the five members of the FCC.
“Two of the FCC’s top priorities are closing the digital divide in rural America and advancing U.S. leadership in 5G, the next generation of wireless connectivity,” said FCC Chairman Ajit Pai. “The commitments made today by T-Mobile and Sprint would substantially advance each of these critical objectives.”
In a written statement, FCC Commissioner Brendan Carr announced his support for the deal, saying it will increase competition and accelerate the buildout of fast 5G connections.
“The proposed transaction will strengthen competition in the U.S. wireless market and provide mobile and in-home broadband access to communities that demand better coverage and more choices,” Carr said.
Critics have said the merger would create a duopoly and has many of the same harmful characteristics of the proposed AT&T-T-Mobile merger in 2011. That proposal was pulled by AT&T when it faced a difficult road with federal regulators during the Obama Administration.
The Rural Wireless Association issued a statement saying it was extremely disappointed in the two FCC commissioners' statements, saying they ignored evidence that it will harm rural customers.
"Allowing T-Mobile to acquire Sprint, and thus reduce the number of nationwide facilities-based wireless competitors from four to three, will result in higher prices for consumers and the reduced ability of consumers travelling through rural areas to access mobile wireless service," the statement said.
Editor's note: This story was updated at 3:21 p.m. with a statement from the Rural Wireless Association.
Peggy Lowe is the Marketplace hub reporter in Kansas City. She's on Twitter at @peggyllowe.
