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T-Mobile and Sprint executives have persuaded DOJ’s Assistant Attorney General for the Antitrust Division, Makan Delrahim, to hear the argument that the two wireless carriers need to merge in order to help the US compete in the 5G race.
This has been T-Mobile and Sprint’s argument since announcing the merger last year. Essentially saying that the two carriers could create a 5G network by themselves, but it won’t be robust enough to compete with Verizon or AT&T. But together, they would be able to compete, and utilize Sprint’s 2.5GHz spectrum.
The fact that Delrahim is open to hearing the central argument from both company’s executives, means that it is a positive development for the merger. Despite being announced almost a year ago, the merger has not received the necessary approval from the Department of Justice nor the FCC. And now the Democrats are asking T-Mobile’s CEO, John Legere and Sprint’s Chairman and former CEO, Marcelo Claure to testify before Congress in regards to the merger.
What makes Delrahim’s openness to hear the argument about 5G so important, is the fact that the FCC will generally follow the Justice Department’s lead when it comes to mergers. So as long as it passes the Antitrust arm of the Justice Department, the merger will more than likely be approved.
Recently, President Trump and officials within the administration have been pushing for the US to be first in the world of 5G. It is worried that if it falls behind the likes of China that it could cost the US economy billions. There is also the security fears, in regards to Chinese companies like Huawei, who is heavily invested in 5G. The last thing the US wants is for a foreign country to build its 5G networks, especially one that it believes is being used by the Chinese government to spy on users.
Currently, Sprint and T-Mobile are at the bottom of the pack, when it comes to 5G networks in the US. Verizon and AT&T have already launched different forms of 5G networks in the US. Largely using millimeter wave or mmWave, which is not going to be feasible in the coming years, as the cost to cover the entire US with mmWave would be in the tens of billions. Both T-Mobile and Sprint are working on 5G, but have not officially rolled out their networks, since they don’t have any 5G capable devices on sale just yet – meaning that customers wouldn’t be able to connect to that network.
Executives at both T-Mobile and Sprint are still fairly certain that the merger will get approved, eventually. They have been spending plenty of time in DC lately, pleading their case to lawmakers. T-Mobile has also been touting that it will become an ISP with its 5G network. In fact, it already announced its first pilot program for its Internet service. Which is first going to be available in underserved parts of the country, on its 4G LTE with speeds of around 50Mbps for $50 per month.
If this merger does get approved, it would take the nationwide wireless carriers from four to three. Something that previous FCC and DOJ officials were not too keen on having happen. Lawmakers, particularly Democrats, want more competition in the wireless space, not less. Though, T-Mobile and Sprint are so far behind both AT&T and Verizon, that even as a combined company, they are still a distant third. However it would allow the New T-Mobile to compete better with the “duopoly” as Legere calls them.