Opinion: Why the Government Should Stand Aside and Allow
T-Mobile
and Sprint to Merger
By Jessica Melugin and Ryan Radia, The Daily Caller,
October 3, 2018
On Sept. 11, the Federal Communications Commission (FCC) announced it needed more time to review the pending merger
of
T-Mobile
and Sprint. Meanwhile, the Department of Justice is examining the deals antitrust implications.
In the interest of consumers and competitiveness, the agencies should wrap up their inquiries quickly and let the nations third and
fourth largest mobile carriers merge.
Sprint and
T-Mobile
need to combine their resources to build
a more efficient company to stay competitive with the two leading US carriers, Verizon and AT&T. Indeed, the whole industry needs to innovate and grow as quickly as possible to win the race to 5G the fifth generation of mobile
connectivity as countries like China speed ahead of their American competition.
The bosses at
T-Mobile
and Sprint have skin in the game, specialized expertise, and every incentive to keep consumers happy. Thats more than you can say for those who seek to block the merger.
Antitrust interventionists who oppose the deal claim that consumers are automatically better off with four national carriers, rather than three
that would exist if
T-Mobile
and Sprint joined forces. But the mergers foes ignore the dynamic nature of the wireless marketplace.
If Sprint and
T-Mobile
are stopped from merging, will each company carry on just as they have in the
past? Probably not the more likely outcome is that one, or perhaps both, of the companies wont survive.
When Sprint and
T-Mobile
executives testified before the Senate Judiciary Committees antitrust panel in June 2018, Sprint Executive Chairman Marcelo Claure pointed out that his company didnt have the resources to
compete with Verizon and AT&T on its own. He isnt spinning the facts. Sprint is the most highly leveraged company traded on the S&P 500, saddled with debts of nearly $40B and rising.
By combining Sprints resources with
T-Mobile,
the new company could offer triple the 5G capacity
that each company could provide separately. Building a
top-notch
nationwide 5G network will take a combination of spectrum licenses, cell towers, and cash.
A merged Sprint and
T-Mobile
would check these three critical boxes. But if regulators stymie the
firms rational business decision to merge, benefits that would otherwise flow to consumers will go unrealized. Its impossible to know just which innovations never come to fruition when the government stops the marketplace from evolving
as it otherwise would.
The implications of the merger between
T-Mobile
and Sprint transcend the
domestic U.S. economy. If American companies arent allowed to scale up to meet the challenges of rolling out 5G networks, Chinese companies are more than happy to take the lead.
The Wall Street Journal recently reported that [c]ompanies with the largest and most reliable networks will have a head start in
developing the technologies enabled by faster speeds and that that the dominant equipment suppliers could give national intelligence agencies and militaries an advantage in spying on or disrupting rival countries networks.
The deals geopolitical implications alone make this dynamic sector too important to leave to meddling bureaucrats.
Progressive-era
thinking may be back in vogue these days, but ideas cultural popularity
doesnt erase their perils. Are we really expecting federal regulators to correctly comprehend, diagnose and correct for the infinite factors that go into something as complex as the 5G communications revolution?
5G will be up to 100 times faster than todays 4G networks, powering driverless cars, remote surgeries, smart appliances, virtual reality
applications and things we havent even imagined yet.
Even with the best of intentions, however, regulators could inadvertently
derail any progress made toward securing the future of 5G, doing more harm than good for consumers in the process. Examples of regulatory failure abound; the FCC itself has a long history of them it took just 40 years to get cell phones to
market!
The invisible hand of the marketplace, with all its price signals and nuances, innovates, coordinates, and corrects better than
teams of lawyers in clunky Washington bureaucracies.
Allowing Sprint and
T-Mobile
to merge is a
good first step in recognizing the wisdom of the marketplace and the folly of antitrust regulation. For the sake of consumers and our competitiveness, Washington should keep its hands off the future of 5G communications.