The Justice Department gave a green light on Friday to the $26 billion merger of T-Mobile and Sprint, in a decision critics say will lead to higher prices for wireless customers — while raising questions about the Trump administration's commitment to antitrust enforcement.
The DOJ's approval came with a caveat that could head off that criticism: The two companies agreed to make a separate deal with the satellite television company DISH that will allow the creation of another viable competitor in the wireless market.
But DISH's halting strategy in deploying its existing wireless spectrum has already raised doubts about its ability to compete with industry giants Verizon, AT&T and the combined forces of T-Mobile and Sprint.The DOJ said Friday that it secured backing for its settlement from attorneys general in five states: Nebraska, Kansas, Ohio, Oklahoma and South Dakota. But the merger continues to face resistance from a group of 14 Democratic state AGs, who have sued to block the T-Mobile-Sprint deal, arguing that it would reduce competition and wireless service options for consumers. The DISH side deal could blunt their argument.
In allowing T-Mobile to proceed with the acquisition, Justice Department antitrust chief Makan Delrahim is breaking with a precedent set by the Obama administration, which resisted tie-ups among the nation’s biggest wireless companies.
Delrahim had previously opposed another telecom-related deal, going to court in an unsuccessful attempt to kill AT&T's $85 billion deal for Time Warner after President Donald Trump publicly opposed the deal — though the DOJ insisted the administration's stance was not motivated by the president's dislike of Time Warner-owned CNN.
The antitrust chief has more recently recently announced a sweeping antitrust review of the major tech companies, who are facing a host accusations of squelching competitors, enabling election interference and stifling conservative speech.The decision on T-Mobile and Sprint came after weeks of DOJ pressure on the companies to give up enough assets to seed a new major carrier. In the end, Delrahim secured enough new concessions to side with his fellow Trump nominee, Federal Communications Commission Chairman Ajit Pai, who said in May he would recommend approval of the deal after securing commitments from the companies to expand rural broadband and 5G networks and spin off Boost Mobile. Delrahim's blessing follows reports that DOJ staff at one point wanted to block the deal.
Some opponents of the deal questioned Delrahim's decision to let it go ahead.
"To me, it’s a complete puzzle because this one was an easier one to block, and he had the states already there," said former FCC official Gigi Sohn, who opposed the merger. "I think what it says about him is ultimately he’s a political actor, and there’s some sort of political wind that’s pushing him to do this."
The federal approval is a big win for T-Mobile CEO John Legere, who has argued for more than a year that the deal will help the Trump administration win the race against China to super-fast 5G wireless. Despite Legere's earlier history of trading insults with Trump, he repeatedly stayed at the Trump International Hotel in Washington during the regulatory review of the Sprint merger.
During the review process, T-Mobile stocked up its lobbying operation with Delrahim’s former law firm, Brownstein Hyatt Farber Schreck, as well as Turnberry Solutions, a lobby shop whose founders hail from Trump's election campaign. The company also received advice from Trump veterans Reince Priebus and Corey Lewandowski.
The merger in December cleared two national security reviews, a necessary hurdle for the deal since T-Mobile is owned by German company Deutsche Telekom and Sprint's parent SoftBank is based in Japan.
Under the terms of the agreement, DISH will buy two of Sprint's prepaid wireless businesses, Boost Mobile and Virgin Mobile, as well as 400 retail stores and a swath of airwaves to be used in building a nationwide network.
The agreement includes a seven-year deal that lets DISH use T-Mobile's network to immediately begin offering wireless service, with the expectation that it will build its own standalone 5G network by 2023.
But the choice of DISH as the newly anointed competitor is bound to raise eyebrows in the industry, given that the company has spent years stockpiling airwaves without delivering on promises to use them to provide wireless service.
And the 2023 deadline DISH faces in fact represents the company buying time: The FCC warned DISH last summer that it could lose some of its spectrum licenses if it failed to start building a wireless network by March 2020. The new build-out deadline amounts to an extension, though it also means DISH has to deliver a full-service wireless broadband network instead of a more limited "Internet of Things" network it had previously sought to build in order to keep its airwaves.
Article originally published on POLITICO Magazine