Our Distinguished Fellow Gigi Sohn testified before the House Judiciary Committee on Tuesday in opposition to the proposed merger of T-Mobile and Sprint, which is currently undergoing regulatory review. In her remarks, Gigi raised significant concerns about the merger, including its impact on rural and low-income communities.
“T-Mobile and Sprint have promoted themselves as low-cost providers and currently offer the cheapest data plans of the 4 nationwide mobile wireless carriers”, she testified. “As such, T-Mobile and Sprint have competed vigorously with each other, to the benefit of the “value consumer” seeking better rates and service plans. Just as important, the competition between Sprint and T-Mobile has had a moderating effect on AT&T and Verizon, forcing them to respond with lower prices and more attractive service options. All of this competition has benefitted consumers.”
“The merging parties don’t dispute that prices will go up, but argue instead without proof that the improvements to the quality of their service, no matter how minimal, will be worth the significant extra cost. That is a dicey proposition for the value and low-income consumers that are most attracted to T-Mobile and Sprint because of their less expensive postpaid and their innovative prepaid service.'“
“These higher prices will have a disproportionate effect on customers of prepaid service, who tend to be low income customers and people of color.
Sohn’s testimony also countered the companies’ arguments that the merger is necessary for the U.S. to compete in the deployment of 5G, particularly in rural areas. She stated:
“T-Mobile’s owned LTE facilities currently serve 83.1% of the rural US population, while Sprint serves just 56.2%. So, adding Sprint to the New T-Mobile adds nothing to T-Mobile’s current rural coverage.
“Finally, and perhaps most important, the merging parties [also] understate the challenges and costs of bringing 5G connectivity to rural areas. In places where population density is low and the challenges of steep terrain and thick fauna are high, deployment is both a technological challenge and expensive and revenues are hard to come by. Moreover, the high speed “special access” lines needed to bring 5G connectivity to rural America are also expensive and largely in the control of 3 companies –AT&T, Verizon and Century Link. . . Policymakers should be extremely wary of any promise to bring 5G to significant parts rural America in the absence of significant subsidies any time soon, if ever.”