A divided Federal Communications Commission (FCC) on Tuesday, September 26, approved a report that found for the first time since 2009 there is “effective competition” in the wireless market, a finding that could help Sprint and T-Mobile US to merge.
Reuters reported last week that the wireless carriers are close to agreeing on tentative terms on a deal to merge, a major breakthrough in efforts to merge the third and fourth largest US wireless carriers.
The transaction would significantly consolidate the US telecommunications market and represent the first transformative US merger with significant antitrust risk since President Donald Trump’s inauguration.
FCC Chairman Ajit Pai said “most reasonable people see a fiercely competitive marketplace” citing intense price competition carriers. “This is strong, incontrovertible evidence,” he added.
The FCC approved the report by a 3-2 vote. A decade ago there were seven major US wireless carriers and today the largest four carriers led by Verizon Communications and AT&T control 98.8% of the US market, according to the FCC.
The FCC would need to approve any merger as would the Justice Department. In 2014, the FCC and Justice Department told the carriers they would not back a merger and the companies abandoned merger talks.
FCC Commissioner Jessica Rosenworcel referenced the potential looming merger.
“While this report celebrates the presence of four nationwide wireless providers, let’s be mindful that a transaction may soon be announced that seeks to combine two of these four,” Rosenworcel said.
“For my part, any transaction before us will require someone to explain how consumers will benefit, how prices will not rise, and how innovation will not dissipate in the face of so much more industry concentration.”
FCC Republican Commissioner Mike O’Rielly praised the report and noted intense wireless competition has led to price cuts, despite carriers investing US$200 billion in networks over the last six years.
Full Content: Washington Post