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U.S. District Court Clears Sprint, T-Mobile for Merger. Will This Speed 5G Networks?

SAN FRANCISCO, CA - APRIL 24:  The T-Mobile logo is displayed outside of a T-Mobile store on April 24, 2017 in San Francisco, California. T-Mobile will report first quarter earnings today after the closing bell.  (Photo by Justin Sullivan/Getty Images)
By Joseph Fawbush, Esq. on February 12, 2020 1:30 PM

Two of four national wireless carriers are cleared to merge after U.S. District Court Judge Victor Marrerro determined that the merger does not violate the Clayton Act. The Department of Justice and the FCC approved the merger in July of 2019, but states' attorneys general argued that the merger would raise prices and substantially lessen competition among wireless carriers. The two companies, meanwhile, argued that Sprint did not have a viable path forward as its own entity and that the merger would help T-Mobile and a new entrant, DISH network, implement their own 5G networks.

Judge Marrerro agreed with the two wireless carriers, writing in a 170-page decision that the merger would not substantially lessen competition. Judge Marrerro highlighted T-Mobile's role as a company that already challenged Verizon and AT&T to improve service and prices, and noted Sprint still has $37 billion in debt and trouble improving its own network.

The “New" T-Mobile

If the merger goes through in April, as planned, T-Mobile will remain the third-largest wireless carrier behind Verizon and AT&T, although it will compare in size. As part of the merger, DISH Network Corp. agreed to buy assets and become a fourth wireless carrier. DISH has said it plans to release a 5G network by 2023. As part of the deal, DISH will take over Boost Mobile, Virgin Mobile and Sprint prepaid.

How Many 5G Networks Will There Be?

A primary argument put forth by the wireless carriers was that there would still be four wireless carriers in the market, counting DISH. DISH already has significant spectrum holdings, which it has sat on for the last several years. This led critics, including the plaintiffs, to question whether DISH really plans on building a network and competing with other carriers, or if it will eventually sell off its spectrum holdings.

The judicial standard for evaluating this kind of “new market entry" argument to an otherwise anti-competitive mergers is unclear. However, Judge Morrerro wrote that DISH is “undeniably well equipped" to enter the wireless carrier market, with spectrum holdings similar in size to Verizon, and that it meets what criteria there is for a new market entry. Judge Morrerro praised DISH network in his decision, calling them a “maverick" company.

T-Mobile's 5G Network

Currently, T-Mobile advertises as being the first nationwide 5G wireless carrier. However, its 5G is not the high-speed bandwidth dreamt of when thinking of self-driving cars and instant streaming video for everyone. T-Mobile could offer its low-band spectrum in 5G earlier than its competitors since its bandwidth travels farther and deeper than other wireless carriers, but its 5G speeds are only about 20% greater than its 4G offerings. AT&T and Verizon, meanwhile, are building high-band 5G networks, which travel far less distance but can be 100 times faster than current 4G LTE speeds.

Presumably, additional mid-band spectrum holdings will allow T-Mobile to increase speeds in the years to come and continue to compete with the other two communications giants in the field.

New York Attorney General Letitia James, a key plaintiff in the lawsuit, has said her office is “reviewing all options." It remains unclear if the states will appeal.

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