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T-Mobile/Sprint Merger Settlement Fiercely Criticized by Activists, and Dish Network’s Charlie Ergen is ‘Insulted’

Emily McPhie

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WASHINGTON, July 31, 2019 — The Justice Department’s recently announced settlement on the T-Mobile/Sprint merger has drawn widespread criticism, even though the agreement maintains four nationwide carriers by drawing Dish Network into the marketplace.

Dish has fiercely defended its ability to quickly emerge as a strong fourth competitor in the wireless market. The company plans to have a 5G broadband network reaching 70 percent of the country’s population by June 2023.

When the deal was first announced late last week, Dish Chairman Charlie Ergen pointed to the company’s past success in entering the pay-TV industry as a direct competitor to entrenched cable corporations.

“As we enter the wireless business, we will again serve customers by disrupting incumbents and their legacy networks, this time with the nation's first standalone 5G broadband network," Ergen said.

In a press call on Friday, representatives from several non-profit groups opposed to the merger urged state attorneys general to continue their suit against it in spite of the DOJ settlement and likely approval from the Federal Communications Commission.

“Rather than simply rejecting the deal, the Department of Justice has proposed a risky bet on creating a new facilities-based competitor,” said Philip Berenbroick, senior policy counsel for Public Knowledge. “This creates significant potential risk that consumers will be left with a substantially less competitive marketplace with higher prices, lower service quality, and less innovation.”

The behavioral conditions included in the settlement are at high risk of being ineffective, gamed, or unenforced, Berenbroick continued, adding that Sprint today is far stronger than any other fourth competitor in the foreseeable future.

“Based on what we know now, blocking the transaction remains the best way to preserve competition and prevent consumer harm,” concluded Berenbroick. “In the meantime, the FTC should put this new proposed transaction out for public scrutiny and comment.”

However, Dish Network challenged that assertion. In a second quarter earnings call on Monday night, Ergen said that he was insulted by people questioning the credibility of Dish as a competitor.

“This project is certainly challenging, but we have so much more infrastructure in place and we know what we're up against,” he said. “It's not our first rodeo and I think we will be a competitive threat in this business.”

Job loss fears, noncompliance history, and failures to meet buildout requirments

The merger is estimated to kill 30,000 jobs, according to Debbie Goldman, telecommunications policy director for the Communications Workers of America.

The divestiture of nine million prepaid customers does not replace the competitive loss of Sprint, which has 33 million postpaid subscribers and 12 million wholesale subscribers, said Goldman. Far from creating a new competitor, the deal gives T-Mobile its new biggest customer, since Dish will likely remain dependent on T-Mobile’s spectrum.

She said Dish has a long history of noncompliance with federal rules, including past failures to meet promised buildout requirements, and the company has never built or operated a wireless network.

“The DOJ has caved to political pressure and chosen to ignore the record evidence of the harm to consumers,” said Carri Bennet, general counsel to the Rural Wireless Association.

Calling the conditions “drastically insufficient” and the penalties “woefully inadequate,” Bennet warned that Dish would not be able to compete as a viable fourth nationwide network.

The proposed settlement will “degrade the choices available to consumers, degrade the options for network actions, and degrade the incentives to create better and more innovative service,” said George Slover, senior policy counsel for Consumer Reports.

Slover pointed out that the loss of Sprint means more than just the increased market concentration, since the network has historically made reaching rural areas and underserved communities a priority.

The Dish scheme is “needlessly convoluted” and “half-baked,” said Joshua Stager, senior counsel at New America’s Open Technology Institute, in a press release.

The remedy will require years of monitoring to ensure ongoing compliance, Stager continued, claiming that “no one who has followed merger enforcement over the past decade can seriously believe this will work.”

(Photo by Alonzo, used with permission.)

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