Bellevue-based T-Mobile hauled into court over mega-merger
T-Mobile's pending $26 billion merger with Sprint could create another gigantic tech company in the Seattle area.
But 13 states and the District of Columbia are going to court next week to stop the deal, claiming it will harm low-income and minority customers, especially in urban areas.
Washington's own Democratic Attorney General Bob Ferguson has not joined the lawsuit against Bellevue-based T-Mobile US. (He declined a request to be interviewed for this story.)
That disappoints Mark Jenkins, who works at a T-Mobile call center in Bellingham.
Jenkins is a member of a group called T-Mobile Workers United. They estimate 30,000 people could lose their jobs with the merger, including hundreds here in Washington state.
For its part, T-Mobile has said the merger will create thousands of new jobs. T-Mobile company declined to be interviewed.
Critics of the merger also say it's a bad deal for some consumers, particularly those who rely on cheaper prepaid plans.
Nguyn Tran, who owns The Phone Guys in Seattle's University District, said he only sells prepaid plans, mostly to students.
“They come to me because we got better deals, plus we don't have credit checks,” Tran said.
University of Washington student Julia Atkins relies on a prepaid plan because it's cheaper, and she said any price hikes would hurt.
“I'm a freshman and I'm living off campus and it’s kind of expensive over here,” Atkins said.
Critics of the pending merger like economist Hal Singer, an anti-trust expert at Georgetown University, argue price hikes are likely coming for low-income consumers like Atkins if the merger goes through.
“You have two carriers who really focus on the prepaid segment - that's Sprint and T-Mobile, Singer said, “and so it's just basic economics that if you go from a duopoly to a monopoly prices are going to higher.”
There are currently four major carriers: Verizon, AT&T, T-Mobile, and Sprint. If the merger happens there would only be three. Sprint as an independent company goes away.
The merger will also spin off some prepaid cell business from Sprint to the Dish Network. Supporters of the merger argue that will constitute a fourth carrier. But critics, including Singer, are skeptical that Dish can or will make it work for low-income consumers.
Federal government regulators disagree. In early November the FCC approved the merger.
The Republican majority on the FCC said the merger will help “close the digital divide” and lead to better wireless service, especially in rural areas where T-Mobile promises to bring 5G. The merger was approved by a 3-2 party-line vote.
T-Mobile now faces one more hurdle: The lawsuit from the state attorneys general. All are Democrats, likely reflecting a growing anti-trust sentiment in the Democratic Party.
A number of presidential candidates have also criticized the merger, including Elizabeth Warren, who has made trust-busting a signature issue in her campaign.
The trial against the merger begins December 9 in the Southern District of New York. A final decision is expected by early March.