T-Mobile/Sprint Now Merger Opposed By Texas Attorney General

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What was once 10 states opposed to the T-Mobile/Sprint merger has now turned to 15, as Texas Republican State Attorney General Ken Paxton joins the fight to block T-Mobile's newly approved Sprint acquisition. To add to the fight, the judge overseeing the case is allowing the states until December 9 to make their case against the merger, in contrast to the previous October 7 trial date.

This gives the states ample time to present their reasons behind why the merger shouldn't happen. The States filed lawsuits during the merger process while the DoJ was still moving T-Mobile and Sprint to make certain antitrust concessions before the merger would receive the department's blessing. Now, though, a Republican has joined the mix, whereas before, there were fourteen Democrats State Attorneys General with no Republican in sight.

The justification behind fifteen states filing lawsuits opposing the merger pertains to competition in the wireless industry. A common criticism of the merger all throughout the process has been whether or not T-Mobile and Sprint coming together as a third supercarrier is good for the industry. Outside of Sprint, there are no major carriers Sprint's size to replace the company. Now that the Department of Justice has signed off on the merger, all that's left in the wireless industry here in the US are smaller regional carriers like Boost Mobile, Virgin Mobile, and fifth-ranked US Cellular (who has been ranked just under Sprint for years now).

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The states filing lawsuits to block the merger are doing so because they fear that it will hinder competition. Since Sprint is the last of the major carriers and it is now acquired by T-Mobile, where does that leave smaller players? Additionally, Sprint has been the most generous wireless service provider of the Big Four, offering the most data for consumer bucks with its mid-band spectrum. Now that it's been acquired by T-Mobile, who is as guilty as Verizon in its high-priced data offerings, who'll replace Sprint and offer as much as Sprint contributed nationwide?

The DoJ has been pleased to bestow that honor upon satellite company DISH Network, but can DISH really fill the major void left by Sprint's acquisition? The States don't think so, arguing that the decision to give DISH the role as the fourth wireless provider in the US isn't sufficient for consumers. DISH has inherited 9 million subscribers from its acquisitions of Boost Mobile, Virgin Mobile, and Sprint Prepaid, but its subscriber base isn't nearly as large as that of T-Mobile and Sprint, who now have a combined 130 million+ subscribers.

While DISH inherits 400 Sprint employees and 7,500 retail outlets from Sprint (not to mention 20,000 cell sites) and the right to lease T-Mo spectrum, DISH doesn't have as much mid-band spectrum as Sprint had (though it did purchase some 800MHz spectrum for $3.6 million), nor does it have the high-band and low-band spectrum of, say, Verizon. And then, DISH will have to spend so many millions atop the $5 million it's already spent to roll out its own network. Sure, DISH millionnaire Charlie Ergen has the ability to financially foot the wireless carrier he has inherited, but will he?

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What the States want to see is a huge prepaid carrier that rivals postpaid carriers such as Verizon and AT&T so that customers are aware they have choices when it comes to wireless service. Few customers will so much as give DISH a second glance in wireless because first, DISH is a new player in this space; secondly, DISH doesn't have the resources to compete with Verizon or AT&T, and now, T-Mobile.

According to DISH's own announcement this week, it is now giving its Voice Remote Google branding, a sign that DISH and Google are soon to partner up for the sake of a fourth wireless carrier. T-Mobile was concerned about a telecommunications company sweeping up DISH during the merger process, which is why the deal date was delayed at one point. The last thing Magenta wants is a telecommunications company to sweep up the resources left behind that it would then use to bypass "the New T-Mobile," the combined name for T-Mo and Sprint.

Will these States be able to make a convincing case against the FCC and DoJ telecommunications gods? It remains to be seen, but perhaps "the dark horse's" (Google) entrance into the mix could give the States what it wants and keep the T-Mobile/Sprint merger intact.

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