Dish, Altice, C Spire lead opposition to Sprint/T-Mobile merger

Dish Network, Frontier, Windstream, Altice, C Spire, the Communications Workers of America (CWA) and others are beginning to file their opposition to the proposed merger of Sprint and T-Mobile. On the other side of the argument are a growing number of voices, including rural wireless operator Viaero and the Free State Foundation, which are urging regulators to approve the transaction.

The initial filings are a key indication of the kind of battle that John Legere and the rest of the executives at Sprint and T-Mobile may face as they work to obtain approval from the FCC, Department of Justice and other regulators for a deal that would combine the nation's third and fourth largest wireless network operators.

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Perhaps the most high-profile entity standing against the merger between Sprint and T-Mobile is Charlie Ergen’s Dish Network—a company in the midst of spending billions of dollars to potentially build out its own nationwide 5G network in the coming years. “Economic analysis and empirical evidence demonstrate that, instead of enhancing competition, such consolidation is apt to thwart it,” Dish wrote in its FCC filing. “In seeking approval for this transaction, the Applicants must show that the proposed merger will not have anti-competitive effects, or that any such effects will be more than offset by the public benefits that it will produce. But, Sprint and T-Mobile have not yet met this burden, and much work needs to be done for them to carry it.”

In more than 250 pages, Dish leverages comments from a variety of economists in order to bolster its arguments against the proposed merger. Specifically, Dish said that T-Mobile and Sprint do not need to merge in order to be competitive in the 5G market. Dish said that Sprint and T-Mobile have not presented a sufficient argument that their merger will produce benefits to the public. Dish took issue with the basic view of the market presented by Sprint and T-Mobile—that the wireless industry is competitive—arguing instead that competition in the space is limited to a few players and and does not legitimately include the likes of cable companies, Google and other MVNOs. Dish also pointed out that the combined company would have spectrum holdings beyond what the FCC has recommended for nationwide wireless providers.

Importantly, Dish argued that a combined Sprint and T-Mobile would also inhibit the company’s entry into the wireless business. “Not only is DISH not a current or near-term competitor to the facilities-based carriers, but this merger could adversely affect DISH’s ability to enter the 5G mobile voice/broadband market. 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,” the company said.

And Dish said that T-Mobile would no longer be a competitive force in the wireless industry if it is allowed to merge with Sprint. “Merging with Sprint would largely eliminate the rationale for T-Mobile’s maverick behavior. Once it has obtained through the merger the higher market share that it has previously used competition to obtain, there would be little need for New T-Mobile to continue acting as a maverick. Indeed, with its larger customer base, it would be even more costly for New T-Mobile to be a maverick, because low prices would be more costly in terms of foregone lost profits on the larger customer base. It would instead be more rational for New T-Mobile to reap larger profits from those customers, rather than continue trying to gain market share.294 New T-Mobile would likely act to increase its margins, by among other methods, engaging in tacit collusion with AT&T and Verizon.”

Dish was not alone in its opposition. A small spectrum holder in Florida, Broadcast Data, also wrote that the combination of Sprint and T-Mobile would reduce competition in the wireless market. The cable industry's trade association, NCTA, also filed its opposition, as did Union Telephone Company, Free Press and the Rural Wireless Association.

Interestingly, two Sprint MVNOs filed arguments on the topic. Cable company Altice said that it has concerns that a combined Sprint and T-Mobile may not provide the kind of access that the company currently enjoys to Sprint’s network as a Sprint MVNO. “T-Mobile and the New T-Mobile have made no tangible commitments regarding meaningful support for current MVNO partners, including offering such partners the full nationwide network that the New T-Mobile will enjoy. The concerns of Altice are magnified in view of T-Mobile’s hostile statements against MVNOs, including cable operators entering the wireless market,” Altice wrote.  

And Sprint and T-Mobile MVNO Ting Mobile said that it did not have an opinion on the transaction but noted it too wanted to ensure sufficient access to the market for MVNOs.

Perhaps not surprisingly, rural Mississippi-based operator C Spire came out against the merger. “Two of the major potential harms of the Proposed Transaction are: (1) the rapid elimination of the Sprint CDMA network in a manner that will cause significant disruption to millions of wireless service consumers, particularly in rural America; and (2) the reduction of nationwide wireless providers from four to three that will make it more difficult for non-nationwide carriers to obtain wholesale agreements on reasonable terms and conditions, for both existing and newer technologies,” the operator wrote.

The CWA, a union that represents represents 700,000 workers across the United States, also voiced its opposition to the transaction, arguing that “the merger would result in the loss of more than 28,000 jobs across the United States and combine two companies with a long history of labor and employment law violations.”

And Frontier and Windstream, two wireline providers, jointly voiced concern about the merger, specifically pointing out that a combined Sprint and T-Mobile would own vast amounts of spectrum. The tone of the companies’ filing indicated that they may be looking for the FCC to require that Sprint and T-Mobile divest some spectrum as a condition on the merger—spectrum Frontier and Windstream may be interested in acquiring. “The commission should take a hard look at these spectrum holdings and require the companies to divest where there is a competitive concern—namely, where the joint companies would hold more than one-third of low- and mid-band spectrum and where the companies hold more than one-third of mmW spectrum,” the companies wrote.

Both AT&T and Charter said that they would not take a position on the merger, but instead sought to provide information on the topic via their respective filings. However, both companies’ filings painted the proposed merger in a largely negative light.

On the opposite side of the issue though were a the number of voices in support of the merger. For example, the Free State Foundation, a nonprofit think tank, said the merger “would greatly benefit consumers and enterprises by enabling faster mobile broadband speeds, higher data capacity, and reduced per-megabit prices.”

And Viaero, a regional wireless operator that offers service in the Midwest and roams onto T-Mobile's network, said that T-Mobile “has been a good roaming partner and has always negotiated reasonably for rates and spectrum. In short, the New T-Mobile promises to further improve our customers experience when they travel outside of our service footprint.”

Meantime, the attorneys general for both New York and California said that they are investigating the merger and asked for confidential documents in relation to that.

Article updated Aug. 28 with additional commentary.