Senators Murphy, Blumenthal call for scrutiny of T-Mobile merger

Yesterday, Connecticut Senators Chris Murphy and Richard Blumenthal joined Massachusetts Senator Elizabeth Warren, Minnesota Senator Amy Klobuchar, Vermont Senator Bernie Sanders and New Jersey Senator Cory Booker, in writing a letter to the Department of Justice (DOJ) and Federal Communications Commission (FCC) requesting them to “closely scrutinize” T-Mobile’s proposed $4.4 billion purchase of UScellular.

“As an antitrust enforcer, the Department of Justice should challenge the deal if it substantially reduces competition,” reads the letter. “As the nation’s primary telecommunications regulator, the Federal Communications Commission should not approve the transfer of UScellular’s licenses to T-Mobile if it does not serve ‘the public interest, convenience, and necessity.'”

The proposed merger was first announced in May, and would see UScellular cede approximately 30% of its wireless spectrum to T-Mobile while also leasing space to T-Mobile on 2,100 or so of its 4,500 cell towers. The move, if approved, would be the third major acquisition made by T-Mobile in recent years, following its April acquisition of Ka’ena, Mint Mobile’s parent company, for $1.35 billion and its 2020 merger with Sprint in a deal worth $26 billion.

While T-Mobile has claimed in the past that it intends to use UScellular’s assets to increase its coverage in rural areas, Murphy, Blumenthal and the other Senators worry that the acquisition would further reduce competition in an already highly consolidated market. As it stands already, T-Mobile, AT&T, and Verizon already control approximately 99% of the cell industry’s market share, with UScellular representing the last 1% share not owned by the top three.

“If approved, T-Mobile’s proposed $4.4 billion acquisition of US Cellular would further deplete competition in the industry, combining the third and fourth largest wireless carriers and giving T-Mobile access to four million new customers,” read the letter. “Additional consolidation would have far-reaching effects, reducing choices for consumers, further concentrating wireless spectrum holdings, and potentially leading to higher prices and other harms for consumers across the country.”

The senators also argued that T-Mobile’s stated goal of expanding its rural coverage in and of itself would lead to further reduction in competition. UScellular primarily provides cell service to rural areas overlooked by the big three cell providers, so to allow T-Mobile to utilize UScellular’s towers in these locations would eliminate any possibility of the two competing head-to-head for rural cell customers’ service, argued the senators.

Additionally the letter claimed the impact of the 2020 Spring merger serves as an example of the harmful effects cell carrier consolidation can have on consumers, citing a 2022 class action suit filed against T-Mobile, which claimed that decreased competition caused billions in increased costs for AT&T and Verizon customers. It also highlighted T-Mobile’s subsequent layoffs of 7,000 employees in the wake of the Sprint merger in 2022, and additional 5,000 layoffs in 2023. This directly contradicted the 2018 testimony provided T-Mobile’s CEO at the time, John Legere, who promised the Senate Judiciary Committee’s Anti-Trust Subcommittee that the merger would create 11,000 jobs by 2024.

“U.S. wireless customers have long paid some of the highest prices in the world, and T-Mobile’s acquisition of Sprint eliminated a low-cost carrier from the market, reducing the competitive pressure on the remaining national wireless carriers to aggressively compete to lower their prices,” said the letter. “While mobile wireless plan prices across the globe have steadily fallen in recent years, the decline in U.S. prices slowed in the aftermath of the T-Mobile/Sprint merger, serving as a warning against increased consolidation in the wireless market.”

Ultimately, the letter urges the DOJ and FCC to ensure that the deal would be pertinent to the interests of the general public before approving it.

“We therefore urge DOJ to scrutinize this proposed deal and challenge it if it would substantially lessen competition, and we call on the FCC to carefully review the merger and not to permit the transfer of licenses if it would fail to affirmatively serve the public interest, convenience, and necessity,” concluded the letter.

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