T-Mobile/Sprint merger will bring higher prices, small carriers tell FCC

T-Mobile USA's proposed acquisition of Sprint would harm competitors and consumers, particularly in rural America, lobby groups for small carriers say.

The Rural Wireless Association (RWA), NTCA–The Rural Broadband Association, and other groups filed petitions urging the Federal Communications Commission to block the T-Mobile/Sprint merger this week.

"Removing Sprint from the equation through further industry consolidation will result in less competition which will drive prices higher for consumers, and would be decidedly contrary to the public interest," the RWA said. The FCC is required to evaluate whether mergers benefit the public.

Rural providers often rely on Sprint for roaming, in part because "T-Mobile has not traditionally focused on rural consumers or markets," NTCA told the FCC.

T-Mobile and other nationwide providers (i.e. Verizon and AT&T) charge roaming prices that are "multiple times higher than what Sprint offers," NTCA wrote. T-Mobile also differs from Sprint by demanding "one-sided roaming arrangements," the group said:

NTCA's members report that they have reciprocal roaming agreements with Sprint that contain commercially reasonable rates and terms. This is a mutually beneficial relationship that permits Sprint subscribers to have coverage as they travel across rural areas and enables rural consumers' access to the Sprint network as they travel outside of their home network. These roaming agreements have thus enabled rural wireless providers to offer subscribers seamless, high-quality connectivity similar to what is offered to urban subscribers. However, NTCA's members report that the Applicants have provided no firm and clear commitment with respect to honoring and extending the arrangements that Sprint currently has with rural providers. In contrast to Sprint, NTCA members indicate that T-Mobile roaming agreements are more one-sided, permitting the subscribers of NTCA's members to roam on T-Mobile's network, but preventing T-Mobile's subscribers from roaming on the rural providers' networks.

Some small carriers also lease spectrum from Sprint, which is "especially important given the difficulty small providers have in obtaining spectrum at auction," NTCA wrote. "When combined with the roaming effects described above, the potential loss of or substantial modification to such agreements as a result of the transaction could undermine mobile service offerings in rural areas."

T-Mobile deceived customers

While T-Mobile has focused on building a better network in cities, the carrier has failed to offer strong coverage in rural areas and has deceived rural customers about the network limitations, NTCA wrote. The group pointed to T-Mobile's admission in April that it failed to complete phone calls in rural areas and used "false ring tones" that created the appearance that the calls were going through and no one was picking up.

"T-Mobile knowingly and intentionally caused its own customers to believe that their loved ones and businesses located in rural areas were not answering the phone, when in fact the calls were never delivered," NTCA wrote.

The Rural Wireless Association put forth similar concerns about roaming rates, writing:

Of the four nationwide carriers, Sprint is the only one that offers anything approximating commercially reasonable roaming rates, terms, and conditions to rural carriers. T-Mobile does not want rural carriers to have affordable access to its nationwide network. If a rural carrier had such access, the rural carrier could offer its rural customers not only robust rural coverage on its network but also affordable coverage when the rural customer leaves the rural carrier network (i.e., affordable nationwide service). When a rural carrier's customer regularly travels outside the rural area, the cost to support that rural customer accessing T-Mobile's network through a roaming agreement can be astronomical.

A group of rural operators in South Carolina said the merger should be denied unless T-Mobile and Sprint divest 2.5GHz spectrum holdings to local entities to prevent "an undue concentration of spectrum licenses in South Carolina."

Dish and Altice object to merger, too

Opposition isn't limited to small entities. Dish, a nationwide satellite TV operator that has been preparing to build a mobile network for years, also petitioned the FCC to deny the T-Mobile/Sprint merger.

"[T]his merger could adversely affect Dish's ability to enter the 5G mobile voice/broadband market," Dish wrote. "To offer a nationwide 5G service, Dish needs access to essential inputs, including radios, chipsets, devices, towers, crews, and backhaul. Among other things, New T-Mobile will likely be spending billions of dollars on radios, chipsets and devices, making it possible for it to use its new-found market power to customize radio solutions that would be less than ideal for Dish, or cause a delay in the Dish 5G solution."

Economic simulations suggest that a combined T-Mobile/Sprint "would likely increase prices" for consumers and allow AT&T and Verizon to do the same, Dish also wrote.

Altice, a cable operator that intends to resell Sprint wireless service beginning next year, told the FCC that it's concerned because T-Mobile has "made no tangible commitments regarding meaningful support for current [reseller] partners, including offering such partners the full nationwide network that the New T-Mobile will enjoy." T-Mobile has also made "hostile statements against [resellers], including cable operators entering the wireless market," Altice wrote.

T-Mobile and Sprint claim that they need to merge in order to build a strong 5G network. They also say their merger will "ensure US leadership in the race to 5G."

But AT&T told the FCC that "the US is already the world leader in 5G" and pointed out that T-Mobile and Sprint announced aggressive 5G plans even before agreeing to merge.