The Department of Justice approved the T-Mobile and Sprint merger Friday to create a new, fourth wireless carrier and sell Sprint-owned Dish Network.
What We Know:
- The Justice Department is expected to approve the merger this week. This approval from the Justice Department will close a 14-month review of the merger, though the Federal Communications Commission (FCC) approved the deal long before the Justice Department. Justice Department officials are focused solely on the antitrust effects of the deal and working to preserve the U.S. wireless market’s four-provider structure. This means the Justice Department worked primarily to prevent a monopoly of the wireless network market.
- After over a year of negotiations, the Justice Department finally approved the deal because of Dish’s ability to acquire Boost Mobile, Virgin Mobile, Sprint’s prepaid business and some Spectrum assets, making Dish a legitimate fourth network carrier to replace Sprint, which will be absorbed into T-Mobile.
- T-Mobile CEO John Legere officially announced the $28 billion merger in 2018 with a video of him and Sprint CEO Marcelo Claure, explaining they would submit an official application to the FCC.
- Last month T-Mobile and Sprint filed a public presentation of their merger to the FCC; FCC Chairman Ajit Pai and Commissioner Brendan Carr have since expressed support for the merger based on the promise of improved 5G network, commitment to “accelerated in-home broadband access to currently underserved communities” and increased competition in the wireless market.
- The merger will transfer the “building blocks for a network” to Dish in order to ensure this merger does not eliminate market competition. This would establish Dish as a part of the fourth network carrier through the merger in addition to the existing Verizon, AT&T and the new T-Mobile which includes Sprint. This wireless company will have 80 million U.S. customers, compared to the combined 200 million customers of AT&T and Verizon. The Wall Street Journal reported the settlement requires the support of a technology called eSIM which is embedded in cellphones and makes it easier to switch carriers.
- A group of attorney generals from 13 different states and the District of Columbia has filed a lawsuit to block the merger from creating a monopoly on the market, claiming it will decrease competition and drive up prices for consumers, potentially costing customers at least $4.5 billion per year.
- The reaction to the merger has been overwhelmingly bad over the weekend; Critics anticipate it will allow the previously cheaper carriers to increase their prices. Many suspect President Donald Trump will benefit in some way from the merger considering he has a close relationship with Sprint’s owner and T-Mobile has recently begun financially contributing to Trump’s hotels.
Let’s see if Dish can offset the growth of T-Mobile and provide a viable fourth network option to maintain market competition.