T-Mobile and Sprint have finally announced their plans to merge, creating the third-largest carrier in the United States behind AT&T and Verizon if approved.
The deal winds down years-long flirtation between the two companies that never culminated in a deal, in part because of regulatory pushback on similar efforts to consolidate. Under the Obama administration, the Federal Communications Commission scuttled AT&T’s attempt to purchase T-Mobile in 2011, arguing it would lead to less competition and higher prices. Similar concerns also prevented Sprint and T-Mobile from forming a merger in 2014. As rumors of their consolidation surfaced, William J. Baer, then assistant attorney general for the antitrust division, said, “It’s going to be hard for someone to make a persuasive case that reducing four firms to three is actually going to improve competition for the benefit of American consumers.”
But now, Donald Trump is in the White House, and US concerns over tech rivalry from China are at the fore. As they await regulatory approval, the two companies’ top executives are alluding to those looming anxieties over 5G, the next iteration of wireless networking, and US tech dominance.
In a video announcing the planned merger, Sprint CEO Marcelo Claure nodded to its potential to create jobs (a common trope for businesses looking to gain Trump’s favor) and bolster US tech leadership, stating:
What happens in the first few years of a new technology is crucial. Look at 4G. The US led early with broad deployment. And that gave a generation of American innovators and entrepreneurs the opportunity to build services at scale. Analysts estimate that America’s 4G leadership added millions of jobs in this country and billions in US GDP. And in 5G, the stakes are even higher.”
T-Mobile CEO John Legere took it further, adding, “Global tech leadership in the next decade is at stake. And only the new T-Mobile will have the network and spectrum capacity to quickly create a broad and deep 5G network in the first few years of the 5G innovation cycle, the years that will determine if American firms lead or follow in the 5G digital economy.”
These are not-so-subtle hints at concerns from Washington that the US must not only lead in the development of 5G network infrastructure, but perhaps also intervene in the market in order to do so.
In March, the Committee on Foreign Investment in the United States, an inter-agency branch of the Treasury Department that vets cross-border acquisitions for national security, blocked a Singapore-based chipmaker’s attempt to purchase Qualcomm, arguing it “would leave an opening for China to expand its influence on the 5G standard-setting process.” Before that, in January a leaked memo from the White House surfaced arguing that the US should nationalize the construction of a 5G network lest the country risk remaining at a “permanent disadvantage to China in the information domain.”
It’s not clear what impact 5G will have over internet services and connectivity once it becomes widespread. Some say it will help popularize autonomous cars, virtual reality, and the internet-of-things and other technologies still in their infancy. Others say its potential impact is overstated, including companies that are at the forefront of developing it.
A report commissioned by CTIA, a trade association for the wireless communications industry, states that South Korea and China maintain a lead over the United States when it comes to readiness for rolling out 5G. The T-Mobile and Sprint merger may or may not expedite the US’s position, but its executives are pushing the right buttons to make their case for a regulatory green light.