FCC chairman skeptical over Sprint/T-Mobile merger

President Obama Expected To Nominate Rep. Mel Watt For Director Of The Federal Housing Finance Agency

Last week it was revealed that the Department of Justice was highly skeptical of a deal between SoftBank and Deutsche Telekom that would see a merger of Tmo and Sprint. This week, the FCC’s chairman has added his voice to the argument, and is in agreement with the DoJ.

Yesterday, SoftBank and Sprint’s CEOs (Son and Hesse) met with Tom Wheeler, chairman of the FCC. During the meeting, Wheeler expressed his concerns over the deal.

As reported by Reuters:

Wheeler said he would keep an open mind about the potential transaction, according to the official, and generally echoed comments made last week by antitrust chief William Baer, who gave long odds to a regulatory approval of mergers between any two of the top four wireless phone companies.

Sprint has been trying to convince U.S. regulators that the prospect of more U.S. mobile industry consolidation should not be dismissed without a fair review, according to a person familiar with the situation.

This was likely only one of a few topics of discussion between SoftBank, Sprint and the FCC yesterday and shouldn’t be taken as a guarantee that the deal won’t go through. That said, with the DoJ and FCC both being concerned about the effects of a merger, it’s clear that any attempt to join Sprint and T-Mobile has some major stumbling blocks ahead.

Sprint and SoftBank will likely continue to argue that the effect on the market place can only be good for the consumer. Whereas the DoJ’s instant response is the usual: We want 4 major carriers, not 3.

Via: Reuters

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  • h_f_m

    Can’t wait to hear what John Legere has to say about this…

    • philyew

      I predict nothing more than the neutral comments he has already made i.e. it will be good for TM either way.

      His effective employers, majority shareholders Deutsche Telekom, are clearly entertaining Softbank’s approaches, and they wouldn’t tolerate him talking down a deal if that’s not what they want to communicate.

      • Adrayven

        You’re likely right.. though clearly, if Sprint is in control with Dan Hesse, it’s goodbye Uncarrier, hello contracts and high prices! I only see this as a WIN for T-Mobile customers if John Legere stays in power.

        • philyew

          It’s not going to be the man at the helm who will determine the operating philosophy. That will be the decision of the owners, Softbank.

          If they wanted to be the Uncarrier, they would be steering Sprint in that direction now, instead of feebly responding to TM’s initiatives when they feel they have to.

          There is nothing about the prospective ownership of TM by Softbank which translates to a pro-consumer situation. Even if they decided to offer the job to Legere, it would be a smoke-screen to persuade current TM customers in the short term that things aren’t going to turn out as badly as they will eventually.

        • vrm

          I see no reason why he would lower ARPs after incurring more debt. I agree with some here that he is buying tmobile to eliminate competition and ensure sprint’s survival. He might relegate tmobile to the dustbin, for all we know,

      • xmiro

        to be fair he has been trash talking sprint a little bit on twitter

        • philyew

          I only spotted one shot in over a week, comparing Denver’s points total with the number of people signing up for Sprint’s Framily program.

          Not really anything that could be interpreted as an attitude towards a potential takeover by Softbank.

  • S. Ali

    Sprint needs to get their head out of the ass. If you want to compete then drop the contract BS and start offering competitive plans. Even ATT wisened up and started offering lower rates. Instead of spending 50B buying TMO, why not spend 5B and get your network ready in 3 months instead of 3-years. Strategically, USCellular and C-Sprire would be better purchases. Purchasing TMO would make it a 2-carrier game because T-Sprint would have to spend the next 5 years trying to figure out how to integrate (See: Nextel).

    • xmiro

      they just dropped the contract…. Framily plans are what they’re pushing

      • S. Ali

        Nah, they still have traditional contract plans (My Way, All In Plans). Framily plans is just a non-contract option (they want ME to do THEIR job recruiting customers!).

    • SouthernBlackNerd

      Integration would not be a problem. CDMA and GSM are both merging into LTE. Sprint only needs their voice CDMA network for the long term, which each channel is only 2.5Mhz total. CDMA data channel is redundant with LTE being the better technology for data in terms of speed and capacity.

      Getting USCC and CSpire would be a million times smarter. Sure they would not have the subscriber number of T/Vz, but they could gain those subscribers over time, plus they would be very close to T/Vz in terms of coverage with those two. They already have roaming agreements(3G and LTE) and their network supports 1900Mhz and 850Mhz spectrum.

      I think Sprint should take the skepticism of the FCC/DOJ as a No, because I think that is what the FCC/DOJ is trying to hint at Sprint without officially taking a stance, which probably would get them in trouble.

  • Bklynman

    I think it is time for us to start writing to our reps. in whatever states we are in.
    Also we should start fb page against this,Twitter account,whatever else we can think of in today social media,online petition with change.org Let me know I will start the ball rolling with this. If anyone has a better idea,then let’s do it.

    • Zacamandapio

      Hey. I went there today to try to bring the Z30 to T-Mo.
      But your suggestion is very good. Hopefully they do listen to the customers.

  • Hamster

    It all depends on what Softbank is willing to do or sacrifice to get the regulatory approval. The FCC and DoJ smile on certain things like promises of rural coverage, roaming agreements, and deals with third parties (like Dish) that help grow the market. Basically things that could help the public but just don’t make business sense for a company to do unless they need to in order to get something else.

    • philyew

      Understood, but it’s hard to conclude that they would see the destruction of an established #4 carrier being a valid step towards the development of its fledgling replacement. At best, that would be one step forward, three steps back.

      The market is already saturated, there is no lateral growth possible, just the shifting of market shares between the players. The only possible growth will come through the depth of services or expansion into overseas markets.

      In the end, the responsibility of the federal authorities is “the promotion and maintenance of competition in the American economy.” (DoJ Antitrust Divisional Manual). In pursuing that mission, it should not allow what is clearly anticompetitive change in pursuit of what might speculatively be considered comparable competition at a future date.

  • sushimane

    Yes keep with the game plan FCC and doj we want 4 not 3

  • Bearxor

    They need to really define “Major”. In my opinion, we only have two major carriers in the US, two minor, and two “super regional”.

    Although it’s about to be one “super regional”.

    Letting Sprint and TMobile merge would at least put them in the “major” category for me. But with each having less than half the subscribers of AT&T, I find it kind of hard to classify them as “major”. If they had 75% of the subscribers, then a case could be made.

    • philyew

      They have a concentration formula, the Herfindahl–Hirschman Index, which indicates whether prospective mergers are potentially anticompetitive. In this case, the shift in that index is approximately 5 times the level which would normally trigger federal concerns.

      Whatever epithet is used to describe the size of the largest carriers, Sprint and TM are “major” enough to register a significant threat to competition, if they were to combine.

      • Allen Enriquez

        I definitely agree! I didn’t like when Virgin Mobile, Boost Mobile, Nextel got eaten up by Sprint, I am so glad everyone here agrees to a certain point.

        • Allen Enriquez

          Something like this happened in Mexico were Cricket Wireless had Spectrum there, then the obvious came, long story short, Carlos Slim ate them up! Where are the regulations I say! Cricket made millions of pesos while it was active! Who in the right mind does that? Will I thought I should add this to the mix! Back to our story, I would find this idea of mind quite awesome if T-Mobile US “could” buy more stake in it’s self.

    • TechHog

      Based on the reactions of AT&T and Verizon to Uncarrier, you’re alone in that thinking. You don’t react like that to an entity which you don’t consider competition.

    • xmiro

      both AT&T and Verizon are responding to T-Mobile, even Sprint with that Framily plan. AT&T is responding the strongest by far, and it’s even gunning for Verizon in its latest ad and the 10GB shared data changes they just made. So T-mobile is definitely major carrier

    • bob90210

      You’re too hung up on the definition of major. The original article from Reuters did not even use the word major.

  • abolds4397

    We TMobile customers are in better shape running WITHOUT an attempted merger with Sprint! Four major carriers, not 3!

  • Aurizen

    if T-mobile is gonna benefit from this merger and John Legere is in control I’m fine with it… But that’s gonna be a Tough job to do since Sprint is in debt.

    • CantStopTheTMob

      T-Mobile is in debt too. They just added another $2Bil in order to get that spectrum from Verizon, so I think they are somewhere close to $7Bil-$8Bil in total.

      I don’t mind casting doubt on Sprint, but let’s make sure we know what our glass house looks like before we start picking up stones.

      • philyew

        I agree that the TM debt situation has to be factored in to the equation. However, rather than it being a shot at Sprint by the OP, I think the intention was to indicate that it will be difficult for the merged company to function as an Uncarrier.

        With or without Legere at the helm, the overall financial situation of Sprint and, as you rightly point out, TM will make it impossible for the merged entity to pursue the same disruptive policies.

  • UglyPete

    Wow. A lot has changed since i last visited here. I have to scroll through more ads than article to get to the comments. I can tell the priority here.

    • bob90210

      If you want to go to the comments section directly, click on the comments link.

    • redman12

      Have you ever heard of adblock.. You should try it.

      • UglyPete

        On my phone?

        • bob90210

          yes. addons mozilla org/en-US/android/addon/adblock-plus/

    • Cam Bunton

      Most of the ads at the bottom of the post come through Disqus.

  • landmarkcm

    Yes just what I want to read too. We don’t want Sprint involved & especially not Hesse running things.

  • landmarkcm

    Yes just what I want to read too. We don’t want Sprint involved & especially not Hesse running things.

  • Don’t Do It!!!

    Hell. No. Not good for the consumer. DON’T ALLOW IT!!! Less choice, worse service, higher prices. Let T-Mobile continue to shake up the industry, add more LTE, buy more spectrum, and make it alone. Let Sprint continue to sink or swim on their own with sparky or spanky.

    • FluX

      I like your username :D!

  • WhOcRES

    YAWWWNNNNNNN…… THEY BOTH SUCK! THEY CAN BOTH GO DOWN FOR ALL I CARE,

    • FluX

      Ladies and gentlemen, welcome to Trollfest.

    • Bklynman

      MrTroll,why are you here in the 1stplace? Why don’t you go back to the death star blog or big red blog,where u can tell everyone how happy you are paying over $100-200 amonth for service for one line,besides who cares what you think anyway.

  • KlausWillSeeYouNow

    *Curtain closes for intermission*

    Ladies and gentlemen, after a short break, we bring you: DISH Network!

    • FluX

      Hmm do you still think Dish is working to get T-Mobile? I haven’t seen news since long ago!

      • KlausWillSeeYouNow

        Yes sir, they’re biding their time. They have spectrum they’ll need to surrender if they fail to act.

        • sushimane

          YouR all about T-Mobile and dish network having all the information about it. I know dish has the money and spectrum does it work with T-Mobile frequency and stuff? I’m curious not trying to a be ass or anything

        • KlausWillSeeYouNow

          Well, they have spectrum but it’s more of a cash thing, bundle thing, and long-term vision benefit. :-)

          Both companies are innovators and employ the best technologies. Also, Dish is the uncarrier of their industry – they have a history of shaking things up.

        • sushimane

          OK so dish has money I know thats important. How about spectrum would it work with T-Mobile?

        • KlausWillSeeYouNow

          I don’t know if they have 700MHz, but at this point all spectrum is valuable, even as an asset. Truthfully, I know more about the administrative side than the spectrum side, so if you’d like to know exactly how it would integrate, I’m not your guy. Sorry :-(

          Maybe someone else knows more about that.

        • sushimane

          Well at least I know the reason why u would rather see T-Mobile and dish they the un carrier them going on which is good.

        • KlausWillSeeYouNow

          I believe so. I really like them both. I think they’d be great together.

  • ccnet005

    Great, now that they’ve stopped this dumb idea, maybe the FCC will re-visit net neutrality.

  • Chris

    Everyone seems to think Softbank=Sprint. I don’t think this is the case. I think Softbank is the one interested and Sprint happens to be involved because they can comment on the US market.

    If it’s Softbank who is to say what they will do with T-Mobile? Sprint and T-Mobile could continue to operate independently with the benefit of the same owner. Meaning T-Mobile could be given the unused Sprint spectrum to continue to build out their network. Softbank may not want to fold T-Mobile into Sprint. They may want to fold Sprint into T-Mobile.

    I’m not arguing whether it’s good to bad for the industry. I’m just saying everyone is assuming “Sprint” is buying T-Mobile and not Softbank. Softbank could have a whole bunch of plans that we currently know nothing about that involve dissolving Sprint slowly and keeping T-Mobile. Hell, they could even keep both for the long haul and keep Sprint for the MVNOs and push T-Mobile as the big carrier.

    • sushimane

      Your kinda missing the point doj and the FCC would rather have 4 national carrier not 3. If you look into countries all around the world there are basically 3 carrier in each country. when it become that less competitive for customers and could be higher rate plans. And what’s the point on carrying out two different names I don’t think Softbank would want to pay DT royalty to use the name.

    • vrm

      there is a reason softbank bought sprint when they had every chance to approach tmobile first. We do not know what that reason is but the reason for buying tmo is very clear- tmo is hurting them. IMO, they will do to tmo what sprint did to nextel- suck it dry and spit it out.

      This is about eliminating competition, NOT creating it. Much like at&t, softbank is lying when it claims it will make the world a better place ( better only for them).

    • philyew

      I’m certainly not interpreting this as Sprint buying TM. That isn’t the reason that I’ve drawn my conclusions about how things would proceed if Softbank owned the majority shareholding in both Sprint and TM.

      If the two companies continued to trade and compete under separate names, while under common majority ownership, there would be a conflict of interests which could be interpreted as acting against the interests of the prior entity and its shareholders i.e. Sprint. Softbank has a duty to Sprint which it could not fulfill without rationalizing the relationship between the two companies.

      As for folding Sprint into TM, since the brand and marks are owned by Deutsche Telekom and used in businesses overseas, they would have to be licensed for use by the new entity, with a strict geographic limitation of use in the USA. However, the US market is saturated, so any entity would have to consider the possibility of future overseas expansion (AT&T are doing it at the moment). Limiting your brand to the US-only, is not a good platform from which to build such ambitions.

      The bottom line, however, is that once Softbank control 30% of the market, with a substantial amount of debt to service from both the Sprint and TM businesses, there is absolutely no reason to think that they would continue operating whatever TM becomes as an “Uncarrier” business. From a consumer point-of-view, the only reason to care whether TM continues is that the current operating philosophy – Uncarrier – continues to disrupt and transform the industry.

      When that ends, as it surely would do under Softbank ownership, TM would be no more worthy of consumer support than Sprint, AT&T or Verizon.

  • Rich

    So let’s just hope this turns out like the AT&T buyout. I sure would like to see sprint give up a chunk of PCS spectrum and a cash settlement.

  • volvoV70guy

    Good. This nonsense needs to stop. If DT is so anxious to get out of the US market, they should cut their losses and allow T-Mobile USA to become completely independent, whatever the loss may be.

    • philyew

      Look, I oppose this deal as much as anyone, but be realistic. Deutsche Telekom have a fiduciary responsibility to their shareholders to dispose of assets in the most profitable way possible. They can’t pack up their tent and move on, regardless of their losses, if there is a deal on offer.

      At the moment they are limited in how they can withdraw from the US market and can only sell their complete shareholding to one buyer, at least until November, because they are contractually prevented from selling off their holdings piecemeal for 18 months from the merger completion date.

      Until another prospective buyer steps up, they are only able to talk to Softbank. Even if they weren’t really interested in doing a deal with Softbank, I’m sure they wouldn’t discourage it, as it’s likely to spur on activity from other interested parties.

      • mloudt

        Don’t say there just limited to talk to Softbank. They can talk to Dish and Vodaphone right now also. However, I think Dish was waiting to see what Softbank did. As for Vodaphone I don’t think people put them in the mix enough. Their shareholds and Verizon’s have just approved the buyout last week. FCC and DOJ has been approved it. So its projected in less than 3 weeks the buyout would have closed and Vodaphone will have $130 billion in stock and cash plus extra senior stock that was just reported from Verizon.

        My point is very simple Vodaphone said they will use some of that money for debt, network upgrades, and that they also wouldn’t disregard the idea of future acquisitions. At&t just held back on putting in a bid for Vodaphone in which they were interested in so that they could expand globally. At&t sees the Europe wireless industry as ripe for making money.

        I would rather Vodaphone buy DT’s stock over Softbank or Dish. Remember Vodaphone had to do whatever Verizon Communications said since they had majority stock in joint venture Verizon Wireless. We saw Vodaphone got tired of that and their about to get paid. Vodaphone would have the money to invest in T-mobile US unlike DT who has the money but will only invest the minimum needed to survive/run the company.

        Nobody wants a deal with Sprint so lets not put them in the conversation. As for Dish the spectrum they have is more complimentary with Sprint that is why they wanted to buy them because Dish and Sprint’s spectrum neighbor each other. Vodaphone gives you cash and the reassurance knowing that they have mobile experience. However, I wish DT would wait until 11-01-2014 which is when their 18 month contract ends and they can either sell all their stock or just sell some.

        • philyew

          That’s not what I meant. I’m just saying they can only talk to those entities that express an interest in buying TM, and right now that’s only Softbank.

  • http://twitter.com/tabascotx Mike Roberson

    Well,ive said it before. IF this is beneficial at all to T-Mobile, T-Mobile would’ve made the offer to buy Sprint and not the other way around. Tmobile just leaped ahead of Sprint,thats why they want it. THey had that info for a while now. They knew TMo was toasting them.