Consumer Reports warns of higher costs, reduced quality for wireless phone service
NEW YORK, NY — A federal district court ruled today against the antitrust action by 13 states and the District of Columbia to stop the merger of T-Mobile and Sprint.
Consumer Reports said the merger will combine two giant nationwide wireless phone service carriers into one, leaving consumers with only three giant carriers to choose from and reducing the incentives of the three remaining carriers to compete by offering more affordable, higher quality, and more innovative service.
Consumer Reports has been raising strong concerns that the merger would harm competition, and harm consumers and others in the wireless marketplace who depend on that competition.
“We commend the states for their perseverance and determination in challenging this anti-consumer combination,” said George Slover, senior policy counsel at Consumer Reports. “From the moment this merger was announced, it was clear that it went against what is needed to give consumers the benefits of competition. This merger should never have made it out of the corporate boardroom. Unfortunately, despite all the states’ efforts, and the strong case they presented, the court could not be convinced.”
The U.S. Department of Justice had opposed a similar merger in the past, when AT&T sought to merge with T-Mobile in 2011. However, DOJ gave T-Mobile and Sprint a green light in 2019, based on a side deal that DOJ helped engineer to set up satellite TV company DISH to become a new fourth nationwide mobile phone carrier to replace the loss of Sprint.
Slover said DISH is an unproven newcomer, with no mobile phone network, and no experience providing mobile phone service. It will have to build both essentially from scratch, he said.
“Sprint is an established carrier, with a track record of determination and success in spurring competition that benefits consumers,” said Slover. “After this merger, even under the best of very uncertain circumstances, DISH won’t fill the gap left by Sprint’s exit for years, if ever.”
The states share full federal antitrust enforcement authority with DOJ and the Federal Trade Commission. The state challenge was filed in June 2019, before DOJ announced it was settling with T-Mobile and Sprint.
“Going from four established nationwide wireless networks to only three — with the possibility that we might someday, eventually, get some version of a fourth network added back into the mix — will be extremely damaging to competition. It will degrade the choices available to consumers, the options for network access, and the incentives to create better and more innovative service,” Slover said.
“Only time will tell if DISH can ever grow into a strong competitive alternative for consumers. We are highly skeptical that T-Mobile will follow through on its promises to give Sprint a helping hand, promises that run fundamentally counter to T-Mobile’s basic business DNA. This is a high-risk gamble in a critically important marketplace,” Slover said.
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Contact: David Butler, dbutler@consumer.org
Consumer Reports is an independent, nonprofit membership organization that works side by side with consumers to create a fairer, safer, and healthier world. For more than 80 years, CR has provided evidence-based product testing and ratings, rigorous research, hard-hitting investigative journalism, public education, and steadfast policy action on behalf of consumers’ interests. Unconstrained by advertising or other commercial influences, CR has exposed landmark public health and safety issues and strives to be a catalyst for pro-consumer changes in the marketplace. From championing responsible auto safety standards, to winning food and water protections, to enhancing healthcare quality, to fighting back against predatory lenders in the financial markets, Consumer Reports has always been on the front lines, raising the voices of consumers.