Fourteen Takeaways From the Sprint/T-Mobile Merger Hearings
Anyone looking for informed insights, compelling debate or combative fireworks from this week's House hearing on the proposed Sprint and T-Mobile merger walked away mostly empty-handed.
Instead, both supporters and opponents of the proposed transaction mostly rehashed arguments on whether Sprint and T-Mobile should merge, while lawmakers either asked irritatingly inane questions ("What's this 5G I keep hearing about?") or obviously rhetorical questions geared toward their respective political bases ("Won't this corporate mega-merger just make the rich richer?" for the progressives and "Won't this transaction result in more opportunities for businesses and economic growth?" for the conservatives). I'm paraphrasing here, but this really isn't too far from what was said.
Also, the answers to the above questions -- from both sides of the issue -- were equally dreary, rote and predictable.
My favorite line of questioning during the House Energy and Commerce Committee's hearing, which was repeated almost verbatim several times during the three-hour event, involved whether the combined company would improve coverage in rural areas. The exchange invariably involved a representative from a rural area complaining about how there are big dead spots in their district, to which T-Mobile's John Legere or Sprint's Marcelo Claure would immediately boast about how a merged company would be able to fix that, yessir. (The truth is that carriers generally only build coverage in locations where they can make money from it. If there are one or two people using a cell tower, there's no way to recoup the cost of building that tower.)
To be clear, there were a few noteworthy and vaguely interesting exchanges. For example, T-Mobile's John Legere scored a few points against one of his opponents, Chris Shelton of the Communications Workers of America union, by talking about the company's acquisition of MetroPCS and the job growth and services that created. On the other hand, Legere remained mostly tongue-tied during questions about what happens in European countries when the number of providers is reduced from four to three (Public Knowledges Phillip Berenbroick, an opponent of the deal, happily stepped in to point out that prices generally rise in those situations).
The result of the hearing -- the first of two; another in the House Judiciary Committee is scheduled for Thursday -- is that just about everyone walked away from the hearing having successfully scored some points while absorbing others. And none of it really mattered much anyway because the House -- and in fact, all of Congress -- doesn't have a direct say in whether the transaction is approved or not. That falls on the FCC and Department of Justice, which continue to review the transaction and haven't indicated which way they're leaning.
"We think the audience for the opposition (and therefore the companies as well) is not the DoJ staff, where economists are more persuasive, or the FCC, which is highly likely to simply follow the DoJ, but the states' attorneys general and the public," wrote the analysts of Wall Street firm New Street Research of the House hearings. The firm pointed out that a number of states' attorneys general may file suit against the merger if it is approved.
So what to take away from this particular episode of political theater? Not much, really. But below are some mostly random developments during the course of the past week or so -- separated into three categories -- that at least show that there is continued interest in the transaction, and that the ultimate outcome still isn't clear.
Good developments for proponents of the deal:
Good developments for opponents of the deal:
Developments that weren't necessarily good for either side:
If you're tuning in to tomorrow's hearing, plan to take shots every time you hear "race to 5G."