The merger between Sprint and T-Mobile US has hit a new roadblock, as the attorney generals of New York and California, along with eight other state attorneys, filed a lawsuit to block the deal. They said prices will go up and competition down if the transaction goes through.
The Attorney General of New York, Letitia James, and of California, Xavier Becerra, filed a multi-state lawsuit to stop the merger, along with the attorney generals of Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin.
The states said that the merger, which would bring the number of major players on the US mobile market to three from four, will cause “irreparable harm to mobile subscribers” by cutting access to affordable and reliable mobile services, especially in lower-income and minority communities in urban areas across the country. “This is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent,” James said.
While T-Mobile and Sprint have made promises that their merger will provide faster speeds and increased capacity, the attorneys general’s investigation found that many of the claimed benefits were unverifiable and could only be delivered years into the future, if ever. By contrast, if the merger goes through, the combined company would immediately have the power and incentive to raise prices, while cutting quality, the AGs said in a statement.
Before filing the suit, the states said they gave significant consideration to T-Mobile US and Sprint’s claims of increased coverage in rural areas. They noted however that T-Mobile US has yet to provide plans to build any new cell sites in areas that would not otherwise be served by either of the companies. The states noted again that the US previously won the “race to LTE” because of competition and that it is this competition that will most push 5G and other innovations.
According to the attorney general of New York, the average US household spends about USD 1,100 per year on mobile services. Even a small price increase would, for many families, mean the suspension or cancellation of services. The merger could also harm thousands of independent mobile service dealers in New York and across the nation. The ten states are concerned that further consolidation at the carrier level would lead to a substantial loss of retail jobs, as well as lower pay for these workers in the near future.
The CWA union applauded the suit, which was filed under seal in US District Court for the Southern District of New York.
T-Mobile currently has more than 79 million subscribers, and is a majority-owned subsidiary of Deutsche Telekom. Sprint has over 54 million subscribers, and is a majority-owned subsidiary of SoftBank.
