Sprint, America’s #3 wireless provider, is attempting to buy T-Mobile, the industry’s fourth-largest player. It’s unclear if regulators will approve the deal, but they’re certainly looking at it closely. Writing in The Hill, TF’s Jon Henke warns that because of the merger’s controversy, the FCC could require numerous conditions that could then spread to the rest of the industry, effectively regulating wireless companies without any of the transparency and deliberation real regulations would require. He writes:

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[Softbank CEO] Masayoshi Son has a difficult play to make here, given that FCC Chairman Tom Wheeler has said, “The mobile business is today, with four carriers, a competitive business, and it’s important it stay that way.” DISH’s recent acquisition of the H-Block could mean that another wireless network is on the way, though regulators might be unwilling to count their carriers before the networks have hatched, given that the same seemed true of Lightsquared in 2011. Nevertheless, the U.S. wireless market is a widely envied global leader in advanced wireless services precisely because regulators have largely allowed the market to function. It was, for example, the relatively unrestricted 2008 spectrum auction that led to the rapid U.S. development of 4G services.

That market-based approach is not written it stone, though. Sprint’s play is a potentially dangerous invitation to regulators. As Hesse said in 2011  “With the elimination of competition, we will ironically return to more government regulation…”

Hesse’s words did not fall on deaf ears.  As one knowledgeable observer said at the time, a wireless merger would give the FCC “the opportunity to establish terms and conditions which could become the Wireless Age equivalent to the Kingsbury Commitment” and the Communications Act does not “prohibit the FCC from imposing merger terms and spectrum auction rules that might seem to be regulation in another guise.” Merger conditions, he wrote “would not only establish rules for Ma Bell, but would then expand from the largest carrier to all others” in a kind of “regulatory contagion.”

That knowledgeable observer is now the Chairman of the FCC, Tom Wheeler.

Read the full article, and check out our other work on competition in the telecom market.

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