Mobile and Sprint pitch FCC on the merits of their merger

Joanna Estrada
June 21, 2018

On June 18, 2018, T-Mobile and Sprint submitted their requests with the Federal Communications Commission (FCC) for approval to merge their companies together to form a stronger, more nimble company called New T-Mobile.

The two companies must secure the FCC's blessing before completing the megamerger, since both companies hold spectrum licenses overseen by the agency.

T-Mobile is asking the FCC to OK its parent company, Netherlands-based Deutsche Telecom, to become the owner of the combined T-Mobile and Sprint.

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"Sprint has had some one-off video partnerships, largely focused on combining its wireless services with video content, but these have not driven meaningful share for Sprint or shifted customer perception of the company's offerings", T-Mobile said. They are the third and fourth largest carriers in the USA and together would pull their resources to stay on level footing with AT&T and Verizon.

According to the documents found by BRG, Layer3 is having to pay between 20 and 30 percent more in fees than their larger rivals. Their 5G wireless services would compete with phone companies' broadband in rural areas.

In the near term, the customer and retail scale created by the transaction will enable New T-Mobile to more rapidly expand the current Layer3 model than possible without the transaction. If achieved, this would make New T-Mobile the fourth largest home ISP in the country, the filing states. T-Mobile CEO John Legere, who would lead a combined company, said they plan to commit $40 billion to 5G technologies in their first three years - "the years that will determine if American companies and talent lead or follow in the 5G era". In the short run, it will likely be an over-the-top streaming service that will look exactly like DirecTV Now, Sling, or YouTube TV, probably with a "skinny" option, and some significant discounts for T-Mobile customers. T-Mobile and Sprint are thought to have waited until the DoJ case against the AT&T and Time Warner merger was decided before going ahead with their regulatory filing.

"This proposed merger is necessary to accomplish a goal critical to enhancing consumer welfare in this country: the rapid and widespread deployment of 5G networks in a market structure that spurs rivals to invest in a huge increase in capacity, and, correspondingly, to drop tremendously the price of data per gigabyte", the document reads.

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