Tuesday, 21 May 2019 09:16

FCC chair voices support for T-Mobile-Sprint merger

FCC chair voices support for T-Mobile-Sprint merger Pixabay

The merger between T-Mobile and Sprint, the third and fourth biggest wireless carriers in the US, has moved a step closer with the chairman of the Federal Communications Commission, Ajit Pai, officially giving his support to the deal.

In December, the proposed US$26 billion merger gained national security clearance after both Deutsche Telekom, the majority owner of T-Mobile, and Sprint's majority owner, Japanese firm SoftBank, agreed to exclude Chinese telecommunications giant Huawei as a supplier.

But approval still needs to come from the full FCC and the Justice Department. Thus, it would not be surprising to see additional terms, apart from those already agreed, imposed as a pre-requisite for going ahead, according to Bill Menezes, senior principal analyst for Sourcing, Procurement & Vendor Management at research firm Gartner.

Both companies have offered what appear to be concessions as they attempt to finalise the arrangements, but Menezes saw nothing unusual in this.

"It's not unusual for two large corporations to offer concessions in order to address concerns about merging in a very consolidated market," he told iTWire in response to queries. "The concessions Sprint and T-Mobile have offered are relatively minor and it's questionable how heavily they even would be policed or enforced by the US Government."

FCC commissioner Brendan Carr said in a statement on Monday that he supported the merger "because Americans across the country will see more competition and an accelerated buildout of fast, 5G services".

He was speaking after T-Mobile made specific commitments to build out 5G and next-generation wireless services to rural America in a filing. Menezes was somewhat sceptical about this, saying: "For example, there is and ongoing dispute between T-Mobile and rural carriers over how widely T-Mobile offers 4G coverage in rural areas, so offering coverage guarantees for 5G in those areas falls into the 'believe it when you see it' category."

T-Mobile and Sprint announced their proposed merger in April last year. Since then, the FCC has been provided with a huge amount of feedback from parties who have an interest in the transaction.

Said Menezes: "The same goes for the offer to divest Sprint's pre-paid service business, Boost Mobile. The merged companies would still retain several other large pre-paid service businesses such as T-Mobile's MetroPCS, and likely would continue receiving revenue from Boost's new owner, which would likely continue using the Sprint network infrastructure to provide service.

"So it appears that the companies would be offloading the marketing, customer acquisition and support costs of Boost Mobile while retaining a wholesale revenue stream from it."

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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