T-Mobile and Sprint executives faced a grilling Wednesday on Capitol Hill as they defended their proposed merger from allegations that the deal will hurt competition, raise prices and harm economically struggling Americans.
The $26 billion deal, which would combine the nation’s third- and fourth-largest wireless carriers, would improve competition despite eliminating a competitor from the wireless market, said T-Mobile chief executive John Legere. He argued that the merger would make T-Mobile big enough to challenge not only AT&T and Verizon but also the “stranglehold” of high cable Internet prices.
Opponents of the deal charged that regulators did not find those same arguments credible in 2011 when T-Mobile and AT&T were seeking to merge and that lawmakers should not be persuaded by them now.
“Don’t buy it. We’ve heard this before,” Phillip Berenbroick, a policy attorney at the consumer group Public Knowledge, told the House Energy and Commerce Committee on Wednesday.
Sprint Executive Chairman Marcelo Claure argued that without the merger, his company would need to add billions to its existing debt to fund expansions of its network, which would probably lead to higher prices for Sprint customers.
The hearing marked the first opportunity for lawmakers to personally confront Legere over revelations that he and other T-Mobile executives have been frequent guests at President Trump’s hotel in Washington. But senior lawmakers on the panel shied away from the topic and focused their questioning on the merger’s impact on public safety, call center jobs and other direct effects of the deal.
Records obtained by The Washington Post have shown that T-Mobile executives booked at least 52 nights at the Trump International Hotel on Pennsylvania Avenue NW since announcing the deal with Sprint. Ethics watchdogs have questioned the practice, suggesting it is a quiet way of “currying favor” with the Trump administration.
For his part, Legere has said he hopes regulators charged with reviewing the merger — the Justice Department and the Federal Communications Commission — will make their decisions independent of his hotel choices.
The hearings come as high-profile Democrats have expressed rising skepticism over the power of large corporations. On Tuesday, eight Democratic senators sent letters to the FCC and the Justice Department urging them to block the T-Mobile deal.
“A T-Mobile-Sprint merger would produce unacceptably high levels of concentration in an already consolidated wireless industry,” wrote the group of Democratic senators, which included presidential hopefuls Cory Booker (N.J.), Amy Klobuchar (Minn.) and Elizabeth Warren (Mass.).
In his written testimony, Legere cited letters of support from Reps. Anna G. Eshoo (D-Calif.) and Billy Long (R-Mo.) and state officials including Utah Attorney General Sean Reyes (R).
Eshoo warned Wednesday that Sprint’s debt is already “unsustainable” and argued that the country would be worse off if the company eventually went out of business and left T-Mobile as a smaller-budget carrier without the resources to compete with AT&T and Verizon.
T-Mobile and Sprint have promised that a merger would create thousands of customer-service jobs nationwide and enable the companies to build a next-generation wireless data network rivaling AT&T and Verizon.
T-Mobile and Sprint have said that only by joining forces can the two companies mount an effective challenge to the larger wireless carriers. Although the deal would eliminate the nation’s fourth-largest wireless competitor, the tie-up would in fact benefit competition, Legere has argued.
Ahead of the hearings, some in Congress vowed to press T-Mobile and Sprint on those promised benefits, especially the proposed 5G, or fifth-generation, network.
“I plan to be particularly focused on this deal in the context of the race to 5G and beyond,” said Rep. Doris Matsui (D-Calif.), a member of the House Energy and Commerce Committee.
Each company is already investing separately in building out a 5G network. Sprint has said it plans to switch on its 5G network in the first half of this year.
Government experts have been examining the proposed deal for its possible effects on consumer prices, a key metric for determining whether it may be harmful to competition.
In recent filings to the FCC, T-Mobile pledged not to raise the price of its consumer cellphone plans for at least three years after the merger closed, an apparent concession aimed at easing potential regulatory concerns.
Opponents say the offer illustrated the reverse — that without the temporary price pledge, the deal would mean that consumer prices would surely go up. T-Mobile and Sprint acknowledged as much in their own economic studies submitted to the FCC, said Dish Network, a critic of the deal, in its regulatory filings.
Incompas, a telecommunications trade group co-founded by Sprint in 1981, came out against the deal Tuesday, saying T-Mobile’s price pledge does not extend to rates it charges other wireless carriers.
That means that once it eliminated Sprint as an alternative, T-Mobile would have more power to raise prices on smaller competitors that depend on T-Mobile’s network, said Incompas chief executive Chip Pickering.
Other lawmakers vowed to keep an open mind ahead of the hearings.
“While I have not made up my mind about the merger, it would certainly result in a remarkable amount of consolidation in an already very consolidated industry,” said Rep. Mike Doyle (D-Pa.), who chairs the House Energy subcommittee on communications and technology.
Tony Romm contributed to this report.