Wednesday marks the most public test to date of Washington’s appetite for the proposed $26 billion merger between T-Mobile and Sprint.
T-Mobile CEO John Legere and Sprint Executive Chairman Marcelo Claure are set to defend the deal before the House Energy and Commerce telecom panel (a separate House Judiciary antitrust panel hearing originally slated for Thursday has been postponed). According to prepared testimony, they’ll look to counter claims the merger will hurt competition and raise prices and will argue combining will allow them to better compete with wireless behemoths AT&T and Verizon.
Congress plays no formal role in the merger reviews underway at the FCC and Justice Department. But the hearing will allow lawmakers to signal to regulators and Americans at large just what they make of the deal, and to grill company leaders in a highly public setting.
Here, POLITICO takes a look at some questions lawmakers are likely to raise during the session.
How many wireless companies does America need?
Will Democrats still insist that a robust wireless market needs four nationwide carriers? Conventional wisdom has long held that Republicans are comfortable with three major carriers, while Democrats want four.
But some Democratic heavyweights including Rep. Anna Eshoo (D-Calif.), ex-House Energy and Commerce chair Henry Waxman and former FCC Commissioner Mignon Clyburn now say the drop from four to three may pose no great antitrust problem and could in fact enable T-Mobile and Sprint to better take on AT&T and Verizon (Waxman and Clyburn are now paid T-Mobile advisers, a sign of the company’s intense efforts to ingratiate itself to Washington).
“T-Mobile is the only one out there in the market that is really competing and competing hard,” Eshoo, the telecom panel’s former top Democrat, told POLITICO. “They come out with something, and others have no choice but to follow suit. No contracts, no this, no that — that is fabulous for consumers.”
Progressive Democrats still recoil. “The proposed merger would kill American jobs, reduce competition in the already highly concentrated wireless market, and raise prices for consumers,” wrote progressive freshman Democrat Rashida Tlaib of Michigan in a letter she’s circulating to colleagues to oppose the merger. Her frustrations are shared by other Democrats like Reps. Ro Khanna (D-Calif.) and Bonnie Watson Coleman (D-N.J.).
That spirit appears to be catching in the other chamber. A Tuesday letter urging regulators to block the deal was signed by nine senators including presidential aspirants Amy Klobuchar (D-Minn.), Sherrod Brown (D-Ohio), Kirsten Gillibrand (D-N.Y.), Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.) and Cory Booker (D-N.J.). The hearing will reveal whether those senators’ skepticism is broadly shared by the E&C Democrats.
What’s with those Trump Hotel stays?
Another sticky topic likely to come up: Why did top T-Mobile executives, including CEO John Legere, keep booking wildly expensive rooms at D.C.’s Trump International Hotel while seeking merger approval from the Trump administration?
Legere has said it’s simply a matter of convenience: Trump International is next door to DOJ’s Washington headquarters. Not all Democrats are convinced, particularly given the price tag of over $2,000 a room for Legere. In the midst of seeking merger approval, he and his fellow executives booked at least 52 nights at the hotel, the Washington Post reported this month.
“You can be sure I WILL be asking these questions when we discuss the T-Mobile merger in @HouseJudiciary,” tweeted Rep. Pramila Jayapal (D-Wash.), who recently teamed with Sen. Elizabeth Warren (D-Mass.) to press the carrier over these lodging choices.
In the meantime, the two testifying company leaders have been conspicuously implying they’ve found other accommodations for their latest swing through Washington. Legere (who also tweeted that he sent responses to the inquiring lawmakers’ offices and offered to meet with them in person) stressed his presence in multiple video messages over the last week in the Mandarin Oriental Hotel — itself a mere three-minute stroll from FCC headquarters. And Sprint’s Claure on Monday proudly posted a running photo featuring the St. Regis in the background.
How will the deal affect 5G?
T-Mobile and Sprint pitched the merger as being necessary for getting next-generation 5G services to people nationwide. T-Mobile plans to invest nearly $40 billion in three years to rapidly build out the network after the merger.
The combo is vital, according to their public interest filing at the FCC, because “neither T-Mobile nor Sprint can develop a robust, nationwide 5G network on a standalone basis.” The new network will be able to handle far more data and deliver 5G speeds at least four times faster than what the companies could achieve on their own by 2024, the companies told the FCC.
Critics say the companies’ existing plans to deploy 5G undermine that argument. T-Mobile plans to have nationwide 5G coverage next year while Sprint has said it’s preparing to launch its mobile 5G network in the first half of this year. In his prepared remarks, Legere says those standalone networks would be “not even close to comparable to the network New T-Mobile can and will build.”
House Judiciary Committee ranking member Doug Collins (R-Ga.), told POLITICO he wants to learn at his own panel’s now-delayed hearing “about how this merger would affect rural broadband and cellular access for places like Northeast Georgia.” E&C members are poised to be similarly curious about constituent impact.
What will the deal mean for consumer prices?
Ahead of the hearing, T-Mobile pledged that subscribers of both companies will get the same or better rates for at least three years following the merger. But opponents of the deal were quick to point to potential loopholes in the commitment. In its FCC filing, T-Mobile said the rate plans will remain the same until “better plans that offer a lower price or more data are made available.”
Satellite company Dish Network, which has urged regulators to block the deal, contends that leaves room for T-Mobile to replace cheaper legacy plans with more expensive ones as it makes network improvements.
Legere has argued there is “no loophole” to the commitment, and the company has said it’s willing to accept it as a formal, FCC-mandated condition for approving the merger. And he’s said becoming a stronger rival to AT&T and Verizon on network footprint and quality will help the combined entity wage a price war against those two titans.
Those claims are certain to be interrogated at the hearing. Reps. Frank Pallone (D-N.J.) and Mike Doyle (D-Pa.), who respectively chair E&C and the telecom subcommittee, named consumer costs one of the key issues that inspired the hearing when they announced the session last week.
Will jobs be lost?
The companies have sought to quell fears that merger “synergies” would lead to job losses, saying that the new company will have more U.S. employees than the prior standalone companies.
The combined company plans to open at least 600 new retail stores and five new call centers, with the call centers adding about 5,000 jobs.
But opponents are skeptical. The Communications Workers of America, in part citing precedent from layoffs and closures that followed T-Mobile’s 2018 acquisition of a regional Iowa provider, estimated the merger could kill as many as 30,000 jobs, primarily as a result of closing overlapping retail stores.
Legere disputes the CWA study in his prepared testimony, saying it “ignore[s] the facts” and “doesn’t account for any areas where jobs will grow — like in network integration or for new customer call centers.” Lawmakers are sure to scrutinize the claims from both sides.