A green light doesn’t mean so much when there’s also a traffic cop on the scene holding up a stop sign. Someone itching to move on may well find that he’s got to continue to wait. He could even be told that the road has been closed, and that he’ll thus need to find another route forward.
And so it is with T-Mobile’s plan to acquire rival cellular carrier Sprint. On Monday, the Federal Communications Commission signaled that it would now be willing to give the green light to the proposed $26 billion hook-up of the third- and fourth-largest cell companies. But soon thereafter, the Justice Department wisely said to hold the phone.
Though changes the two companies had made to their plans had been sufficient to win over a majority of members on the FCC, regulators at the Justice Department continued to have their concerns. Specifically, they said, the merger may never pass muster because it would decrease competition by reducing from four to three the number of national carriers. And if you think that will encourage innovation and help to cut prices, you are doing some economic theorizing that is way outside the box.
Historically, the two government agencies have moved together on such deals. In fact, they’ve not diverged on a major merger or acquisition in at least four decades. But they’ve got separate and distinct mandates, with antitrust regulators at Justice directed to focus on competition.
Looked at from that standpoint, having four carriers has been working, and working pretty well. We didn’t get here easily, and if we go from four to three, there’ll be no turning back.
T-Mobile US currently has a bit more than 80 million subscribers, while Sprint Corp. has roughly 55 million. The nation’s two largest cellular companies, AT&T Mobility and Verizon Wireless, each have slightly more than 150 million subscribers.
As things stand now, customers have options. Unhappy with one carrier’s offerings? Shop around for a deal that is more to your liking. Because of that fact, the companies can’t sit still, but instead need to compete, to innovate, to try to offer more than the other guy.
That’s why T-Mobile’s longstanding efforts to link up with another carrier have continued to face opposition from the feds, and why the Justice Department is right not to follow the FCC’s lead this time around.
This editorial originally appeared in The Republican of Springfield (Mass.) on May 22,
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