Back before T-Mobile merged with Sprint you might recall that academics, consumer groups, and beat reporters like myself warned that the deal would immediately result in less competition, higher prices, and a whole bunch of layoffs. Captured Trump regulators ignored those worries, but it didn’t take long before the deal’s critics were proven indisputably correct about, well, everything.
T-Mobile quickly got to work laying off thousands of employees. Analysis quickly indicated that the merger, which reduced the total number of major U.S. wireless providers from four to three, immediately put an end to wireless data price competition in the States. And T-Mobile’s pro-consumer “uncarrier” branding disappeared almost immediately.
Fast forward to this year, and T-Mobile is now trying to acquire U.S. Cellular for $4.4 billion, because if there’s anything U.S. telecom clearly needs, it’s even more consolidation. In recent meetings at the FCC, T-Mobile and U.S. Cellular executives are trying to claim that they have to merge because the U.S. wireless sector is just so damn competitive:
“Competitive intensity has ramped up in UScellular’s footprint, with both traditional wireless providers and cable wireless providers increasing their competitive presence. That intensity has, in turn, led to aggressive pricing and promotions—and further challenged UScellular’s subscriber numbers and financials.”
Contrary to what executives claim, their markets aren’t suddenly awash in new wireless competition. MVNOs (like Ryan Reynolds’ Mint Mobile) that do try to disrupt on price, inevitably get acquired too. And while cable companies do create some competition in wireless, they’re largely leasing backhaul and other structural assets from the major wireless carriers, who still get their cut.
Data also consistently shows that outside of Canada, the U.S. sees some of the highest prices for mobile data in the developed world, so the idea that U.S. Cellular is facing some incredible pressure to meaningfully compete on price in this country is an industry fiction.
“We face some fleeting competition so we have no choice to be swallowed up by a competitor” is a pretty steady refrain, despite endless promises of amazing benefits and synergies that never actually materialize. What happens is the remaining companies see even less incentive to compete on price than ever, which is, of course, the entire goal of the performance.
In this particular transaction, T-Mobile will acquire all of U.S. Cellular’s wireless customers and stores, and approximately 30 percent of spectrum assets. I’d assume the rest will be acquired down the road, or gobbled up by T-Mobile, AT&T, or Verizon later. While these deals do temporarily boost stock valuations and generate some lovely tax cuts, they’re actively harmful to the broader market, labor, and consumers.
But because Republicans and Democrats alike are both terrible on monopoly busting and the harms of corporate consolidation (though the latter is indisputably better than the former), I suspect this deal will be quietly approved. Likely with some argument that even more consolidation at the hands of captured U.S. regulators will somehow benefit America’s rural farmers.
Then, in a few years, when your wireless bill is even higher and the service quality and customer service remains in the toilet, policymakers, industry-backed think tankers, and the other folks responsible will stand around with a phony-confused look on their faces pretending to wonder precisely what might have gone wrong. Assuming they give any of it a second thought at all.