A number of states have filed a lawsuit to block the proposed $26.5 billion merger of T-Mobile and Sprint.
The lawsuitm, filed in the United States District Court for the Southern District of New York, alleges that the merger of Sprint and T-Mobile would be anti-competitive and drive up costs for consumers.
“When it comes to corporate power, bigger isn’t always better,” said New York Attorney General Letitia James, in a statement. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country.”
T-Mobile and Sprint represent the third and fourth largest carriers in the country behind Verizon Wireless (which owns TechCrunch) and AT&T.
While prices for mobile services have fallen by 28 percent over the last decade, the attorneys general fear that greater consolidation would diminish customer competition.
Sprint and T-Mobile have not yet responded to a request for comment.
In the past, the two companies have argued that their combined networks would enable a faster and better rollout of 5G wireless services — the new high-speed networks that every mobile operator are touting as the next big technological advancement.
Indeed, the U.S. and China are currently in a bit of a race for dominance in 5G connectivity. The competition is at the heart of trade disputes and the blacklisting of China’s telecom and technology giant Huawei within the U.S.
Critics contend that the merger would create another mobile behemoth whose prices could prove to be less competitive — and unfair trade-off for increased connectivity in the eyes of lawmakers.
There’s another reason why plaintiffs are hoping to halt the merger in its tracks and that’s the impact it could have on employment.
The consolidation of Sprint and T-Mobile would undoubtedly shutter hundreds of retail locations and slash service and repair jobs around the country — a primary source of employment for hundreds of Americans.
“CWA applauds the Attorneys General and especially General Letitia James’ leadership in taking decisive action today to prevent T-Mobile and Sprint from gaining anti-competitive power at the expense of workers, customers, and communities,” added Chris Shelton, president of the Communications Workers of America (CWA), in a statement. “Reducing the number of national wireless carriers from four to three would mean higher prices for consumers, job loss for retail wireless workers, and downward pressure on all wireless workers’ wages. The states’ action today is a welcome development for American workers and consumers, and a reminder that regulators must take labor market concerns seriously when evaluating mergers.”
T-Mobile, a subsidiary of the German telecommunications company, Deutsche Telekom, currently has more than 79 million subscribers, while the SoftBank Group-owned Sprint Corp. currently has more than 54 million subscribers.