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Sprint-T-Mobile Merger Gains FCC Approval

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With a straight vote across party lines, the Federal Communications Commission (FCC) has approved the $26 billion merger between Sprint and T-Mobile, one of the last hurdles before the deal becomes final.

FCC chairman Ajit Pai and two other Republican commissioners voted for approval. None released a statement.

On Twitter, however, Commissioner Brendan Carr said voting for this transaction means “99% of Americans will get 5G on an accelerated basis,” and that “allowing Americans to benefit from a strong third competitor will mean faster speeds, more capacity, and better coverage.”

The merger previously was approved by the U.S. Department of Justice, but still faces a lawsuit from 17 attorneys general from New York to California that claims the deal will harm competition, limiting access to affordable wireless service.

Commissioners Jessica Rosenworcel and Geoffrey Starks voted against it. In her statement, Rosenworcel said, “We’ve all seen what happens when markets become more concentrated after a merger like this one.”

“In the airline industry, it brought us baggage fees and smaller seats,” she said. “In the pharmaceutical industry, it led to a handful of drug companies raising the prices of lifesaving medications. There’s no reason to think this time will be different. Overwhelming evidence demonstrates that the T-Mobile-Sprint merger will reduce competition, raise prices, lower quality and slow innovation.”

Keep up with the latest channel-impacting mergers and acquisitions in our M&A roundup.

Also, the remedies that are supposed to save consumers from the problems with this merger “do little more than camouflage its harm,” Rosenworcel said.

“With 5G on the horizon, our dependence on wireless connectivity is bound to grow,” she said. “It’s not the time to count on ineffective deployment commitments, higher prices and less vigorous competition to help the benefit of this new technology reach us all.”

In his statement, Starks said the approval came despite the FCC’s ongoing investigation of Sprint for “what appears to be the largest unlawful collection of universal service funds in FCC history.” Last month, the FCC learned that Sprint claimed monthly subsidies for serving about 885,000 Lifeline subscribers even though those subscribers were not using the service.

The FCC launched an investigation and said Sprint’s actions would be a violation of a key rule – the “non-usage” rule – designed to prevent waste, fraud and abuse in the Lifeline program.

“But instead of waiting until we have all the facts, we haphazardly push forward and hope for the best,” Starks said. “The rush to judgment here is exemplified by the fact that it was only in response to questions from my office that the draft was amended at the last minute to explicitly preserve liability for these and any other potential violations.”

The Communications Workers of America (CWA), which has been fighting the proposed merger from day one, said the merger “remains deeply harmful to consumers and workers.

“The merger will result in the loss of as many as 30,000 jobs and downward pressure on wireless workers’ wages,” it said. “The companies’ unsubstantiated pledges and commitments are unenforceable and filled with loopholes. And through the divestiture deal with Dish, T-Mobile is creating its largest customer, not a true competitor in the marketplace.”

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