Four more States stand in the way of Sprint/T-Mobile merger

With each week that passes, it seems to be getting more and more difficult for Sprint and T-Mobile US. Now, four State Attorney Generals have attempted to block the move.

Officially, the 180-day stop-clock which the FCC gives itself to approve any industry transactions has hit 202, and that doesn’t include the ‘pause’ it gave itself. And while the FCC might be taking things at a leisurely pace, it seems the Attorney General Offices around the US are building up a head-of-steam.

Two weeks ago, New York Attorney General Letitia James launched her campaign against the merger, questioning the logic and evidence used to promote the promises of increased competition, a faster 5G rollout or cheaper tariffs across the country. And she seems to have stuck a chord with counterparts in numerous other states.

Initially, James had the support of nine states, but with Hawaii, Massachusetts, Minnesota, and Nevada adding themselves to the suit, the total number of states as plaintiffs is now fourteen.

“The merger of T-Mobile and Sprint would stifle competition, cut jobs, and harm vulnerable consumers from across the country, so unity among the states will be key in defending our citizens against this power-hungry corporate union,” James said.

“We welcome the support from these four additional states, which should serve as a reminder that, all throughout the nation, we have much to lose if we do not take action to protect our people from this megamerger.”

And while this might look bad enough for Sprint and T-Mobile executives, it could get a lot worse. Over the last couple of weeks, letters have been submitted from an additional six Attorney Generals, telling the FCC investigations have begun to check the legality of the merger. Those states yet to declare are Pennsylvania (letter submitted June 5), Arizona (June 5), Delaware (June 18), Nebraska (June 18), Indiana (June 20) and Texas (June 21).

What is worth noting is that there does seem to be somewhat of a political split in in terms of objections here. All of the 14 Attorney Generals who have joined the suit so far are sitting in the Democrat camp. Of the six who are currently conducting investigations, two more are Democrat (Delaware and Pennsylvania) while four sit in the opposing Republican party (Texas, Indiana, Nebraska and Arizona).

Massachusetts Attorney General Maura Healey is objecting on the grounds of reduced competition, Minnesota AG Keith Ellison is attempting to protect jobs and lower prices, Hawaii’s AG Clare Connors didn’t say anything, and Nevada AG Aaron Ford simply said nothing of genuine value.

The most common theme with these objections seems to be focused on the idea of competition. Although T-Mobile and Sprint argue there is a need for more competition in the market, the AGs don’t seem to think so, or at least this isn’t the way to go about it. T-Mobile CEO John Legere might condemn the ‘duopoly’ which has formed at the head of the telco rankings, however the numbers do not lie.

Coverage is increasing, ARPU is coming down and the US should have all four of the major MNOs in the 5G world before the vast majority of other nations around the world. Things could be better in this market of course, but the trends seem to be heading in the right direction. This is a point which has been raised by the AGs; if it isn’t broken, don’t try and fix it.

Unfortunately for Sprint and T-Mobile, the argument of decreasing the number of telcos to increase competition flies in the face of logic, especially when you are removing the two cheapest options from the market. Of course, telecommunications is a capital-intensive segment to operate in, scale is very important, as is access to more valuable spectrum. But, the general consensus in the telco world is more providers is a better approach not less.

There will of course be incredibly loud voices on both sides of the argument, but logic lies with the AGs here. This is not to say the FCC will agree, but overarching trends argue against the need for Sprint and T-Mobile to merge.

New York rages against T-Mobile/Sprint merger

Things are already looking dicey for the proposed merger between T-Mobile US and Sprint, and then New York’s Attorney General wades into the saga with scathing opinions.

“This is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent,” said Attorney General Letitia James.

Support for the merger is pretty rare nowadays, though James and California Attorney General Xavier Becerra have filed a multi-State lawsuit to add more fuel to the flames. In total, ten States have been included in the lawsuit, compounding the headaches induced by an already prolonged approval process.

The omens are not looking particularly positive for T-Mobile US and Sprint.

“When it comes to corporate power, bigger isn’t always better,” said James. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country.

“That’s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”

T-Mobile US and Sprint are promising a cheaper and faster service, as well as a challenge to the dominance of AT&T and Verizon, but this isn’t enough to convince the legal heavyweights. It’s the same argument which is evident throughout the world of mergers and acquisitions; four to three does not encourage optimism.

Perhaps the most damning argument against the merger is market trends over the last decade. According to the US Labor Department, the average cost of mobile service has fallen by roughly 28% over the last decade, while mobile data consumption has grown rapidly. T-Mobile US and Sprint might argue a merger is better in the long-run for competition, but there is an old saying; if it isn’t broken, don’t fix it.

With four telcos competing for valuable post-paid subscriptions, the consumer does appear to be winning. Tariffs are expensive in the US, though they are becoming cheaper. Another interesting aspect to the lawsuit points to some skulduggery from the duo.

The Attorneys General’s investigation into the merger found that many of the claimed benefits were unverifiable and could only be delivered years into the future, if ever. Specifically, the AG’s are referring to the lightening speeds promised and the ease at which the duo believes a 5G network can be rolled out nationwide. This isn’t necessarily stating it is not possible, just that the claim is not supported by evidence.

For a decision which is likely going to be based on evidence provided, this is a very simple, but powerful argument for blocking the merger.

T-Mobile/Sprint merger might be heading towards a ‘no’ – report

The merger approval process is heading towards the business-end of proceedings, and the omens are not looking particularly healthy for T-Mobile US and Sprint.

The longer the process takes to complete, the more of a feeling there is the transaction might be denied. As it stands, the FCC has seemingly lit the green light, though it does not appear the Department of Justice (DoJ) is on the same page.

According to reports from Bloomberg, the DoJ is considering additional concessions which would force T-Mobile US and Sprint to create a fourth national MNO to preserve competition. How this would be achieved is not detailed, but it is difficult to see how the duo would be happy with this outcome.

If reports turn out to be true, the concessions bar might be set too high for the parties to be comfortable. This is of course assuming the DoJ is happy with the plans laid out by T-Mobile US and Sprint to satisfy the alleged concession.

The long-standing justification for this merger is to create a more competitive alternative to AT&T and Verizon. To do this, T-Mobile US and Sprint executives have argued combining the network and spectrum assets is imperative. This is where the details of how a fourth nationwide player are needed.

A fair assumption would be the DoJ would insist T-Mobile US and Sprint would spin-off some of their assets to create this fourth alternative. Considering the vast investment which would have to be made, both monetary and time, to establish another MNO from the ground up, it is realistically the only option.

However, spinning-off network and spectrum assets to create a fourth nationwide MNO would most likely weaken the position of the newly combined business. Surely this would undermine the initial justification for the merger? If the merged business does not have access to all the current assets of the pair, would it still be in the same league as AT&T and Verizon?

Critics of the deal are already suspicious of the claims the merged business would be able to satisfy the coverage obligations of the FCC, 97% 5G coverage within three years with no price increases, and what would they say if the DoJ forces the pair to release assets?

These reports also compound theories about the different approaches from the FCC and the DoJ. It would appear the two approving agencies are offering different opinions on a merger for the first time. This can perhaps be explained by the objectives of the agencies.

For the FCC, it does appear improving mobile coverage and quality of experience is the main objective, while the DoJ is focused on preserving competition and choice for the consumer. While there might be some common ground between the two objectives, there is also room for opposing opinions.

For T-Mobile US and Sprint, the situation is not looking the healthiest. Accepting these reported concessions might be difficult if the pair are to remain true to their stated objectives, and that is of course assuming the DoJ accept the response on how they will meet the obligations.

It’s all starting to look a little messy for T-Mobile US and Sprint, and we are starting to get stronger feelings no will be the answer at the end of this prolonged saga.

DoJ doesn’t share FCC enthusiasm for T-Mobile/Sprint – report

The FCC might have a skip in its step after securing concessions from T-Mobile US and Sprint ahead of the proposed merger, but the Department of Justice is not convinced.

Following the approval from FCC Chairman Ajir Pai, and the vote of support from Commissioner Brendan Carr, Sprint share price rose almost 19%. The long-awaited merger to create a genuine challenger to AT&T and Verizon on a national scale looked to be heading in the right direction, only for the DoJ to be the fly in the ointment.

According to Bloomberg, the DoJ believes the concessions made by the pair do not go far enough. This is a move which breaks with tradition, generally the FCC and the DoJ sing from the same hymn sheet when it comes to acquisitions and mergers, though it appears antitrust investigators are still concerned over the threat to competition.

This is perhaps the nuance between the two departments. The DoJ, and various Attorney Generals throughout the US, are primarily concerned with competition, while the FCC rhetoric has been more focused on securing a more efficient and broader 5G rollout.

The concessions have taken the form of three commitments. Firstly, T-Mobile suggests 97% of the population could be covered by 5G within three years. Secondly, Sprint’s prepaid brand Boost would be sold to preserve competition. And finally, there would be no price increases while the 5G network is being deployed.

Of course, there is a very real risk to competition. Taking the number of national telcos from four down to three will mean less choice in the market. Less choice means less opportunity for disruption, even if the hatred from T-Mobile US CEO John Legere towards AT&T and Verizon is effectively teemed from his ears. There are too many examples through history of abuses when it comes to competition for some to be completely comfortable.

You also have to weigh up the current cost of mobile connectivity in the US. Although much has been done to help the consumer, ARPU is still notably more than in Europe, where competition is significantly higher. According to Moneysavingpro.com, the average postpaid contract in the US is as much as $80.25 compared to $30.06 in the UK. US consumers are already feeling the sharp end of the competition stick, and few would want to risk this difference to increase further.

The question is how much pain the consumer can tolerate in pursuit of leadership in the 5G race. Carr has spoken of his primary role at the FCC being focused on creating a leadership position for the US in the 5G era and part of this will depend on getting 5G in the hands of the consumer as quickly as possible. The sooner consumers have 5G, the sooner US firms can scale new services and products before assaulting the international markets. This is a playbook taken from the very successful 4G era.

With the US taking a leadership position in the 4G world, companies like Google, Amazon, Uber, AirBnB and Lyft thrived. These are companies which would have existed without the 4G euphoria, but success was compounded because of the connectivity gains. We are likely to see the same trend in the 5G world, with new products and services being designed for 5G connectivity. The question which remains is where they will call home.

This is the equation the FCC and the DoJ have to balance. The need to protect the consumer against the drive towards future economic success on the global stage. There is not going to be a perfect answer for this one, the US is gambling on the future success of the economy after all.

FCC Chairman convinced by T-Mobile/Sprint concessions

FCC Chairman Ajit Pai has publicly stated he believes the concessions made by T-Mobile US and Sprint are enough to ensure the merger would be in the public interest.

Over the course of the weekend, rumours emerged over concessions the pair would have to make to get the support of the FCC, though rarely are sources so spot on. The merged business will now have to commit to a nationwide 5G deployment within three years, sell Sprint’s prepaid brand and promise not to raise prices during the rollout years, if it wants the greenlight of the FCC.

What is worth noting is this is not a greenlight just yet. Pai has said yes, though he will need a majority vote from the Commissioners. Commissioner Brendan Carr has already pledged his support, and we suspect Michael O’Reilly will in the immediate future also. The Democrats might want to throw a spanner in the works, but this would be largely irrelevant with O’Reilly’s support.

“In light of the significant commitments made by T-Mobile and Sprint as well as the facts in the record to date, I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it,” Pai said in a statement.

“This is a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans. We should seize this opportunity.”

As you can imagine, T-Mobile US CEO John Legere certainly has something to say on the matter.

“Let me be clear,” Legere stated in a blog entry. “These aren’t just words, they’re verifiable, enforceable and specific commitments that bring to life how the New T-Mobile will deliver a world-leading nationwide 5G network – truly 5G for all, create more competition in broadband, and continue to give customers more choices, better value and better service.”

The first commitment made by T-Mobile US and Sprint is a nationwide 5G network. Considering Legere has been claiming his team would be the first to rollout a genuine 5G network for some time, it comes as little surprise the FCC will want to hold him accountable.

Over a three-year period, presumably starting when the greenlight is shown, the new 5G network will cover 97% of the population. 75% of the population will be covered with mid-band spectrum, while the full 97% will have low-band. This is a very traditional approach to rolling out a network, as it meets the demands of capacity and efficiency, though there is a sacrifice on speed.

Perhaps more importantly for the FCC, the plan also covers objectives to bridge the digital divide. 85% of the rural population will be connected during this period, increasing to 90% after six years. This is not to say all the farmers fields will be blanketed in 5G, though it does help provide an alternative for the complicated fixed broadband equation in the rural communities.

Moving onto the divestment, selling Sprint’s Boost prepaid brand seems to be enough to satisfy the competition cravings of Pai. What is worth noting is this will not be a complete break-away from the business as it will have to run on the T-Mobile US network. Unfortunately, MVNOs in the US are not as free to operate as those in Europe, as switching the supporting network would mean have to change out all the SIM cards.

This becomes complicated as you do not necessarily know who your customers are in a prepaid business model. The situation certainly encourages more competition, it will after all not be part of the T-Mobile US/Sprint family anymore, but it is far from a perfect scenario.

Finally, Legere has promised tariffs will not become more expensive during the deployment period, another worry for the FCC should the duo want to meet the ambitious objectives to compete with AT&T and Verizon. However, it does appear Legere is promising 5G tariffs will not include a premium either.

And now onto the other side of the aisle. Commissioner Jessica Rosenworcel has tweeted her opinions on the concessions and it appears she is not convinced.

“We’ve seen this kind of consolidation in airlines and with drug companies. It hasn’t worked out well for consumers. But now the @FCC wants to bless the same kind of consolidation for wireless carriers. I have serious doubts.”

Rosenworcel has also suggested the decision should be put out for public consultation. We suspect Pai will want to avoid this scenario, as it would be incredibly time-demanding; the Chairman will want the merger distraction off his desk as soon as possible.

Commissioner Geoffrey Starks is yet to make a comment, but DO NOT, I repeat, DO NOT go on his Twitter page if you haven’t watched the latest Game of Thrones episode.

We understand the Democrat and Republican Commissioners are going to be at each other’s throats over pretty much every decision, however trolling any innocent individual with a GoT spoiler is a low blow.

Starks and your correspondent are going to have some issues.

T-Mobile and Sprint ponder concessions to force through merger

T-Mobile US and Sprint are weighing up the sale of one of the pair’s prepaid brands in an attempt to woo decision makers into greenlighting the divisive merger.

Dating back to April 2018, you will be forgiven for forgetting this saga is still an-going debate in the US. With privacy scandals, the Huawei drama and BT’s dreadful logo stealing all the column inches, the debate over whether T-Mobile US and Sprint should be allowed to merge their operations has been relegated below the fold. But it is still a thing.

The countdown clock, the 180 days the FCC gives itself to approve mergers, spent a lot of time on pause, though the longer the process takes the more likely it appears the answer will be no. If the relevant authorities were looking at the information in front of them, an answer would surely have been given by now, but sceptics might assume the FCC is desperately searching for a reason to say no.

According to Bloomberg, the duo is prepared to make concessions to force through the deal. These concessions include the sale of one prepaid brand, a pledge to finish the rollout of a 5G network in three years and promises not to raise prices during this deployment.

In terms of the timeline, crunch day is fast approaching. The FCC 180-day review is set to come to a close at the end of June, though the deal also has to be signed-off by the Department of Justice. With decision time on the horizon, egos will have to be stroked and arguments set in stone.

The issue at the heart of this debate is focused on competition. Critics of the deal suggest consumers who are at the low-end of the tariffs scale will effectively be punished with higher prices in a market with only three providers. T-Mobile US and Sprint have suggested prices would be kept down in an attempt to compete with AT&T and Verizon, though more than paper-thin promises will be needed.

Selling off one of the prepaid brands would help to preserve competition in this segment, offering more choice for those consumers who do wish to, or cannot afford to, invest in postpaid contracts. It is believed Sprint’s Boost brand is the one facing the chop, with the Virgin Mobile and Metro brands to remain in the potentially merged operations.

Peter Adderton, who sold Boost to Sprint in 2006, has previously stated he would invest in the divested brand. Adderton has been a critic of the T-Mobile/Sprint merger, though if there is a chance to make money entrepreneurs have a way of changing their tune.

Reports have been emerging over the last couple of weeks suggest regulators are still concerned over competition despite assurances made by executives. The Wall Street Journal suggests the deal would not go ahead with the proposed structure of the company, a claim which T-Mobile US CEO John Legere rejects, suggesting there is still some stroking to be done.

Although trying to figure out which way this deal will go is little more than guess work at the moment, there is a feeling it is not going the way T-Mobile and Sprint would want. Rumours are only rumours, but the familiarity of the reports is starting to add weight. It does sound like T-Mobile and Sprint will have to make some considerable concessions to get the greenlight.

T-Mobile/Sprint merger approval is still hanging in the balance

The US DoJ’s anti-trust chief has not made up his mind on the T-Mobile/Sprint merger case, saying the deal must meet key criteria.

Speaking on CNBC (see below) Makan Delrahim, Assistant Attorney General for the US Departments of Justice’s Antitrust Division, said he has not made up his mind yet. Although he refused to comment on if his staff resisted the deal, as was reported by the media, Delrahim did allude to more data being requested from the two parties.

Delrahim also dismissed the notion that there is any magical number of competitors to deliver optimal competition in a regulated market like telecom. Any proposed deal needs to deliver efficiency, but the efficiency needs to be both merger specific, that is the efficiency cannot be achieved through other means, and verifiable.

With regard to the effects of the merger on consumers, Delrahim listed two items, price effect and coordinated effect. The first is related to the potential price move up or down after the merger. The second refers to if the merged company has the incentive to continue to compete with the existing competitors on price, in this case AT&T and Verizon. 5G will also factor in the DoJ’s decision making consideration, Delrahim said. But, instead of being positioned as a counteract against China, in this interview Delrahim was treating 5G in the framework of service offer to consumers, and the merger’s impact on it.

When being asked on the timeline, Delrahim said there is no deadline on the DoJ side, except that the deal cannot be completed before a certain date. This timeline can be extended if more deliberation is needed.

On the FCC front, another hurdle that the two carriers need to overcome before they can become one, they continued to play the offensive. Last week representatives from the two companies, including John Legere, the CEO of T-Mobile, and Marcelo Claure, Executive Chairman of Sprint, called on the FCC commissioner Jessica Rosenworcel and her Legal Advisor. The team presented the updated merger case, including their pledge to deploy home broadband, drive down prices, deliver more benefits to prepaid customers, and create, instead of cutting, jobs.

FCC’s unofficial 180-day consultation period was reopened early this month, after being halted three times, and is now on day 147.

Makan Delrahim’s CNBC interview is here:

 

 

T-Mobile merger will help us defeat China – Sprint CTO

The propaganda assault to validate the T-Mobile US and Sprint merger shows no signs of slowing, and now Sprint is suggesting it will help the US defeat those pesky communists.

Fear is tried and tested strategy to accomplish one’s ambitions, and Sprint is stirring the xenophobic pot. Just as President Trump used fear to justify his wall, and UKIP roused curtain twitchers to abandon the European Union, Sprint CTO John Saw is leaning on the Chinese threat as a means to legitimise the proposed merger between his firm and T-Mobile US.

“We are proud that the 5G potential of our proposed merger with T-Mobile has already spurred progress in the US, but China remains the clear leader in the race to 5G with a number of critical advantages,” said Saw in a blog post. “Multiple independent reports show that without aggressive action, the US will not overcome China’s progress.”

Saw is not implying any threat directly, but the world has already been done for him. Such is the intensity of the anti-China sentiment over the last couple of months, the mere mention of the country will get patriotic and paranoid US citizens and politicians fidgety. China is the enemy, or so the rhetoric tells us, they can’t win the 5G race, that would be un-American.

Whether a merger between T-Mobile US and Sprint would bridge the chasm which has developed between the two nations is slightly contentious, though Saw does have some valid points when it comes to the readiness of the US in comparison to China.

From a spectrum perspective, Saw claims no US telco has sufficient access to all three layers of spectrum (low, medium and high) for a genuine nationwide mobile 5G network, though Chinese telcos do. Some suggest China effectively gives spectrum away for free, as theoretically this encourages network rollout as there are more funds available. Sceptics will undermine this theory, though as Saw points out, China’s operators have large amounts of unencumbered 2.6 GHz, 3.5 GHz and 4.5 GHz spectrum for 5G.

Of course, should the merger be approved, the new T-Mobile company would be able to ride to the rescue, combining the spectrum holdings of the two organizations into a portfolio which can deliver nationwide 5G.

In terms of network densification, this is another area where the US is behind the Chinese, and a critical issue if 5G is to deliver the promised results. China currently has approximately 1.9 million sites, compared to 200,000 across the US, having built 350,000 over the last three years whereas the US has constructed 30,000 new sites.

Some might point to the difference in population the two countries, 327.2 million citizens in the US vs. 1.386 billion in China, though network density is certainly better in the far East. As it stands, the US has 4.7 cell sites per 10,000 people, while this number is 14.1 over in China. A merged T-Mobile business would have access to 3.3 sites per 10,000 POPs, compared to an average of 4.7 for Chinese telcos. This does not create parity, but according to Saw it is a better position.

Saw points towards regulatory difficulties in the US in slowing down progress being made. Merging two of the telcos would reduce the bottleneck, therefore allowing greater freedoms to the telco to roll out 5G infrastructure.

This also leads onto the investment case. A merged T-Mobile and Sprint business will be able to more efficiently invest a promised $40 billion to scale the network. China has been leaps and bounds ahead of the US when it comes to capital investment for years, this is no surprise.

While some of the statistics being put forward by Saw are interesting, there is nothing new being presented and we are sceptical a merged T-Mobile and Sprint business would counteract these points in any notably manner. It does seem to fit in quite well to the lobby mission to get the merger approved, though we hope people don’t get too distracted by the PR plug here.

Bringing China into the equation is an excellent move from Sprint. All the hard work of making China the bad guy has been done, and Sprint is exploiting this position perfectly. The telco is not over-egging the pudding, but enough of the arch-enemy has been mentioned to get people thinking.

Potential Presidential candidates line up to oppose T-Mobile/Sprint merger

Leading opponents of President Trump have signed a letter to the FCC condemning the proposed T-Mobile US and Sprint merger, suggesting the threat of regionalised monopolies and sky-high bills.

Signed by the likes of Massachusetts Senator Elizabeth Warren, New York Senator Kirsten Gillibrand and New Jersey Senator Cory Booker, all of whom are potential opponents of Trump in the 2020 race to the White House, the 19-page document offers a broad and deep range of reasons for the FCC to block the merger. Whether the Republican FCC Chairman Ajit Pai elects to read the letter is anybody’s guess, such is the state of US politics today.

“The two companies have proposed a four-to-three merger that is likely to raise prices for consumers, harm workers, reduce competition, exacerbate the digital divide and undermine innovation,” the letter states.

“Blocking this proposed combination is necessary to send a strong signal that our enforcement officials are vigorously protection Americans from harmful anticompetitive behaviour.”

Which way this decision will go is still very unclear, but the paperwork arguing against the merger is starting to stack up. These nine politicians are firmly standing in opposition of the transaction, while on the other side of the line, T-Mobile US and Sprint are struggling to muster support. It seems few people are pro-merger, though when has politics ever followed the glories of logic.

As many these transactions, the main crux of the argument seems to be focused around competition. The Senators not only fear there will be nefarious conversations behind closed doors to carve the US into regionalised monopolies between the three remaining players, but they also question this suggests the telcos don’t really care about poorer families and those who are living in the chasm of the digital divide.

One point which might strike a chord for those considering the proposed merger is the focus of the telcos on low- and medium-income families. The letter suggests the two parties has aggressively competed against each other for these demographics, while there is also evidence of a high diversion ratio between offerings. Combining the two would remove this market dynamic, as well as the driver to offer competitive tariffs for lower-income individuals.

Another factor to consider here would be the impact on competitiveness of the wholesale market, and the subsequent ability for MVNOs to remain competitive, another option for low income individuals.

“The proposed merger would permit the new T-Mobile to steadily racket up wholesale prices on MVNOs and block them out of the market,” the letter claims.

While screwing the poor is often considered a political no-no irrelevant as to where you are in the world, Pai is seemingly not built from the same clay. A few months back, the FCC Chairman attempted to rid the ‘Lifeline’ initiative from the books, a programme which was designed to help poorer families and communities bridge the digital divide. This is one of the reasons the House Committee on Energy and Commerce has promised to exercise more oversight on the FCC, suggesting in a letter last week, some of Pai’s actions are not in the ‘public interest’.

Another damning point to the proposed merger is that is being sold on false pretences. The T-Mobile and Sprint management teams have together been promising a newly merged business would allow scale and efficiencies to effectively deliver 5G, though the Senators argue that these are two businesses which have deployment plans which would work on a standalone basis also.

This should not be surprising, as any good business will have created a standalone 5G strategy should the merger be blocked, this is just common sense, though the Senators argue the merger would not necessarily speed up deployment or create a challenge to the leading pair of AT&T and Verizon. Back in 2011, AT&T argued it should be allowed to acquire T-Mobile as there was no feasible way the company could compete in the 4G market but fast-forward a couple of years and look at the result. The T-Mobile success might count against it from a precedent perspective.

On the investment side of things, the argument for the merger also falls apart a little. The merged business has promised to spend $40 billion over the next three years (or three years after the green light) to make 5G a reality. However, both telcos have said they spent $10 billion in CAPEX across 2018 separately. Doing basic maths, the $40 billion of the combined business would not exceed the CAPEX of the standalone business. Economics of scale and a larger network footprint would of course impact this number, but it is a point well made by the Senators.

While we are sure there are Senators who genuinely object to this merger, it is tough to look past the fact so many of these signatories are potential Presidential candidates. For T-Mobile and Sprint, this could quickly evolve into a nightmare.

The positions have been perfectly pitched here. These are Senators who are protecting the interests of the poor, fighting to for the benefits of those in rural communities and of course, battling to make life better for families. These are all political hot buttons and excellent rhetoric to win the favour of potential voters in the run up to the next election. These are arguably the demographics which pushed Trump over the line in 2016.

T-Mobile and Sprint might now be caught between a rock and a hard place. With such politically motivated opposition and few friendlies fighting their case for the greenlight, the path forward is becoming increasingly bumpy.

Nerves jangle as Aussies delay TPG/Vodafone merger decision

The Australian regulator has pushed back the deadline for its decision on whether Vodafone Australia and TPG can move forward with the proposed £8.2 billion merger.

While this far from a definite sign the merger will be blocked by the watchdog, the longer the evaluation process goes on for, the stronger the feelings of apprehension will get. If the Aussies were happy with the plans to create a convergence player, they would have said so, but perhaps the regulator is just making sure it effectively does its due diligence.

The tie up between the pair is supposed to be an effort to capitalise on convergence bounties and reinvigorate the competitive edge of the business. That said, last month the Australian Competition and Consumer Commission (ACCC) weighed into the equation raising concerns a merger would de-incentivise the market to offer low-cost services.

According to Reuters, the ACCC has extended its own self-imposed deadline to evaluate the merger by two weeks to April 11. If the watchdog cannot build a case to deny the merger by that point it probably never will be able to, but you have to wonder whether the additional time is being used to validate its position of opposition.

All regulators are supposed to take a balanced and impartial position when assessing these transactions, though its negative opinion last month suggests the agency is looking for a reason to deny as opposed to evaluating what information is on the table. Giving itself an extra couple of weeks will only compound this theory in the mind of sceptics.

To be even handed though, the consolidation argument is perfectly logical and completely absurd depending on who you are. There are benefits and negatives on both sides of the equation, irrelevant as to how passionately supporters and detractors preach to you. For all the arguments and evidence which are presented, a bucket-full of salt will probably be required.