FCC Chairman Ajit Pai voiced support today for the planned T-Mobile Sprint merger, now that the merger partners have agreed to a range of merger conditions. Among the proposed T-Mobile Sprint merger conditions are a three-year price freeze, mobile and fixed 5G build-out commitments, a commitment to divest Sprint’s Boost prepaid unit and a commitment to honor Sprint’s existing wholesale deal with cable company Altice.
Additionally, the merger partners would agree to pay substantial fines that could run into billions of dollars if they do not meet their commitments.
“This is a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans,” said Pai in a statement. “We should seize this opportunity.”
Pai pledged to give the other FCC commissioners a draft order incorporating the proposed T-Mobile Sprint merger conditions in “the coming weeks.” All five commissioners would then need to vote whether to approve the order.
T-Mobile Sprint Merger Conditions
The mobile and fixed 5G build-out commitments that T-Mobile and Sprint said they are prepared to meet are more ambitious in comparison with what the companies suggested last year shortly after merger plans were announced. As a T-Mobile filing explains, the new commitments include:
- Cover 97% of the U.S. population with mobile 5G on low-band spectrum and 75% of the population with 5G on mid-band spectrum within three years
- Cover 99% of the U.S. population with low-band mobile 5G within six years and 88% with mid-band 5G within that time frame
- Cover 85% of rural America with mobile 5G on low-band spectrum in three years and 90% in six years
- Cover 90% of the U.S. population with mobile 100 Mbps service and 99% with 50 Mbps service within six years
- Offer fixed 5G service, dubbed New T-Mobile Home Internet, to 9.6 million households within three years of closing, of which at least 2.6 million would be rural households, increasing to 28 million within six years, of which 5.6 million would be rural
- The fixed 5G service will offer minimum speeds of 25 Mbps downstream and 3 Mbps upstream, with average speeds above 100 Mbps downstream.
“Today’s commitments are about our shared goal to put the U.S. at the forefront of 5G innovation, driving massive economic growth, helping bridge the Digital Divide, creating more competition and… giving consumers and businesses more for less,” said T-Mobile CEO John Legere in a blog post.
MVNOs, Price Freeze
The merged company’s mobile network would be so extensive that it would “create an incentive for the combined company to lower wholesale prices to MVNOs [mobile virtual network operators] in order to ensure that the new network capacity is not wasted by sitting idle,” T-Mobile wrote in its filing with the FCC that lays out the proposed T-Mobile Sprint merger conditions. Accordingly, the merged company would honor Sprint’s existing MVNO agreement with Altice.
Regarding the three-year price freeze, Legere said the merged company, referred to as the New T-Mobile, “will deliver the same or better rate plans at the same or better prices for three years.”
The agreement to sell Sprint’s Boost Mobile unit if the merger is approved was spurred by concerns expressed by certain stakeholders, Legere said. Those stakeholders argued that the merged company would have such a large share of the prepaid market that competition in that market would be hindered.