WASHINGTON D.C. — Yesterday, TechFreedom filed comments opposing petitions to deny the T-Mobile/Sprint merger and urging the FCC to both approve the transaction swiftly, as well as use this as an opportunity to clearly define its competition analysis.
“This merger probably would have happened years ago if the Obama-era FCC hadn’t been so fixated on keeping four national players in the market,” said TechFreedom President Berin Szóka. “Given Sprint’s steadily shrinking market share and T-Mobile’s modest gains, mostly at Sprint’s expense, there’s just no evidence for the idea that having two weak companies in lanes three and four is better for consumers than having a stronger third competitor. Just the opposite: Sprint and T-Mobile have lagged far behind AT&T and Verizon in deploying 4G networks: their combined investment has averaged just three-quarters of either AT&T or Verizon alone — a shortfall over seven years of $16.5-18.7 billion. New T-Mobile will be able to keep up far better. And it will have to: wireless carriers have already invested hundreds of billions in their networks, but it’ll take huge increases in overall investment to build out the network of small cells needed for next-generation 5G service. Analysts estimate that, by 2026, there will be five times as many 5G small cells as there are wireless towers today.”
In 2010, President Obama’s Department of Justice recognized that the number of players is not, in itself, important, telling the FCC:
We do not find it especially helpful to define some abstract notion of whether or not broadband markets are “competitive.” Such a dichotomy makes little sense in the presence of large economies of scale, which preclude having many small suppliers and thus often lead to oligopolistic market structures.
“It’s absurd to think that any regulator knows better than T-Mobile what the company needs to be a stronger competitor,” continued Szóka. “As a distant number three player, the company clearly has no market power today, so there’s no reason regulators should second-guess the company’s business decisions. Indeed, even if the merger is approved, Verizon’s market share will still be 27% larger than New T-Mobile’s, and AT&T’s market share, 13.8% larger. T-Mobile has long tried to lure customers from AT&T and Verizon with lower prices and innovative offerings, such as unlimited data plans. Consumers should expect the same aggressive marketing moves from New T-Mobile — but the combined company will be able to back up those claims with a far better network.”
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