There were plenty of warnings about the possible negative effects of the proposed merger of T-Mobile and Sprint on rates, rural coverage and jobs during the House Telecom subcommittee hearing, “Protecting Consumers and Competition: An Examination of the T-Mobile/Sprint Merger.” But T-Mobile CEO John Legere, not surprisingly, held his own.
Chris Shelton, president, Communications Workers of America (CWA), said the merger would “kill American jobs, lower wages, and raise prices.”
CWA estimated that the merger will eliminate an estimated 30,000 jobs, 25,500 of which would be in retail stores. The Roosevelt Institute and the Economic Policy Institute predicted a decline in annual earnings between $520 and $3,276 for workers, according to Phillip Berenbroick, senior policy council, Public Knowledge.
Shelton noted that T-Mobile’s 2018 acquisition of iWireless, a regional carrier in Iowa, led to the closure of more than 72 percent of iWireless corporate stores, more than 93 percent of authorized dealer stores and the call centers in Des Moines and Cedar Rapids, Iowa.
Shelton predicted harm would come to employees of the carriers not even involved in the merger. “When you decrease competition for labor, wages go down. That is what will happen throughout the wireless industry at all the wireless carriers if the merger takes place,” he said.
The merger will harm rural carriers by removing a nationwide roaming option, according to Carri Bonnet, general counsel, Rural Wireless Association. She also called Legere’s pledge to freeze prices for three years “cold comfort.”
Legere repeated with relish his mantra that competition will increase, and the number of jobs will rise, saying he would add 600 new retail stores and five new customer experience centers.
“The capacity and scale and the power of the network that this merger will give us will really let me take it to the [AT&T and Verizon] and bring competition in a way that it has not been seen before,” Legere said. “I’m salivating to take it to the cable carriers, as well. This is about creating scale and capacity to super-charge the uncarrier to bring the duopolists kicking and screaming to what they should be doing in 5G.”
The New T-Mobile will need 3,600 additional employees in its first year and more than 11,000 more employees by 2024 than the standalone companies, Legere said.
“This merger will be a tremendous jobs creator at New T-Mobile and across the country,” Legere said. “Our merger will be jobs positive from day one – and going forward. The build-out of our 5G network, investment in new customer care centers, and expansion into new businesses like video distribution, broadband, and enterprise services means thousands more jobs than the two standalone companies would have needed.”
Legere denied claims that synergies from the merger would come from job losses, saying that “a significant amount of the synergy” would come through the decommissioning of 35,000 cell sites. “Together, we will have 110,000 macro nodes. We will pick 75,000 of them, build 10,000 more and the decommissioning of 35,000 cell sites,” he said.
Marcelo Claure, executive chairman, Sprint, said, considering that his company lost $25 billion during the last decade and currently has $40 billion in total debt, the merger is necessary for Sprint to continue to be competitive.
The post-merger T-Mobile will continue to be innovative, because its share of the market will continue to be small compared with AT&T and Verizon.
California Representative Anna Eshoo, who has signed a letter in support of the merger, asserted that the four-carrier market is not currently competitive, because AT&T and Verizon control roughly two thirds of the market and have had the same market share for the last 15 or so years. Creating a strong third carrier could change that, she said.
“This is hardly a dynamic, competitive market. For all intents and purposes, we have a duopoly. Americans pay some of the highest prices for wireless services in the developed world, have the least choice, especially in the rural areas,” she said.
Both companies are missing ingredients to become serious competitors in the market, according to Eshoo.
“T-Mobile has a strong record as competitor. I think we can all agree to that, but it lacks critical mid-band spectrum to compete,” she said. “That is where Sprint comes in. Spectrum is gold and Sprint has it. But Sprint has a $40 billion debt and cannot make the investment needed to compete with AT&T and Verizon.”
Doug Brake, director of broadband and spectrum policy, Information Technology and Innovation Foundation, spoke in favor of the merger, taking issue with those that want to preserve the four-carrier marketplace.
“The four-to-three lens ignores the rapidly differentiating business models in and adjacent to wireless services,” Brake said. “Raw connectivity is increasing commodified and wireless companies are looking to new revenue streams.”
The U.S. House of Representatives passed H.R. 6032, the State of Modern Application, Research, and Trends (SMART) of IoT Act, last week, which would direct the Secretary of Commerce to conduct a study on the state of the internet-connected device industry, projected to have a $11.1 trillion global economic impact by the year 2025.
This bill now goes to the Senate with one week left before it adjourns for the year.
Congressman Bob Latta (R-Bowling Green), the author of the SMART IoT Act, and Congressman Peter Welch (D-VT) launched an IoT Working Group in the 114th Congress to discuss policy implications of the Internet of Things and challenges and opportunities that exist to the implementation and security of this technology.
“The Internet of Things is already changing the way we live, the way we farm, the way we manufacture goods, the way we receive health care, and the way we get around,” said Latta. “With a potential impact in the trillions of dollars, we need to look at the policies, opportunities, and challenges that IoT presents. The SMART IoT Act is the result of bipartisan work with my colleague, Congressman Peter Welch, to help find who is doing what at the federal level when it comes to IoT, and it’s a critical step to future IoT policy efforts.”
With microchips, sensors and wireless communications, almost any object can share, exchange and analyze data to gather insights to solved problems or enable capabilities to benefit consumers and businesses by improving productivity, efficiency, said Latta speaking in favor of the act before Congress.
“Whether we are talking about advancements to the automobiles that will improve roadway safety and save lives or smart city applications that will improve the lives of residents, one thing is clear; we have the chance to benefit from a more connected world,” Latta said.
By 2025 the total economic impact of IoT is projected to reach $11.1 trillion, which $2.5 trillion in the healthcare sector, $2.3 billion in infrastructure, $100 billion in agriculture and $50 billion in vehicle use.
“Because of the vast benefits of IoT we are seeing significant economic impacts across a number of industries,” Latta said. “But to realize these benefits we must ensure the government does not get in the way. Throughout numerous meetings over the years we heard from many stakeholders what became clear it is difficult to know who was doing what both in the federal government and in the private sector. A lack of collaboration and dialogue presents the problem of creating unnecessary barriers to innovation and common-sense policy.”
The Smart IoT Act directs the Department of Commerce to create a record of IoT involvement at the federal level to aid in industry regulation.
“This is what will help promote interagency discussions and avoid conflicting or duplicative obligations or regulations that may slow innovation and progress,” Latta said. “At the industry level, this will help innovators and businesses know how entities are developing, using and promoting use of IoT solutions.
The compendium will also highlight industry-based efforts to self-regulate and provide all stakeholders with a resource to facilitate communication and information sharing.
“The Smart IoT is a critical first step to future IoT policy efforts. It provides important information that will foster federal collaboration and streamline private industry efforts,”
Latta said. “We have an obligation to do what we can to promote American competitiveness and technological advancements that benefits Americans in an environment where other countries trying to overtake the United States in technological innovation.”