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FCC Order Clearing T-Mobile’s Sprint Deal Includes Dissents

Todd Shields and Scott Moritz

(Bloomberg) -- The Federal Communications Commission formally blessed T-Mobile US Inc.’s proposed purchase of Sprint Corp., publishing the decision approved by commissioners in a closed-door vote last month.

The combination of the wireless carriers still needs to clear a court challenge brought by states. It was approved by the FCC on a 3-to-2 Republican-led vote on Oct. 16, but publication of the order was delayed.

“The transaction will help secure United States leadership in 5G, close the digital divide in rural America, and enhance competition in the broadband market,” FCC Chairman Ajit Pai said Tuesday in a statement.

The $26.5 billion deal won Justice Department approval in July as the carriers agreed to sell airwaves to Dish Network Corp. to create a new fourth wireless company and new competitor once Sprint is eliminated as a choice for consumers.

T-Mobile and Sprint have agreed not to close their deal until after a decision in a multistate lawsuit. A trial is set for early December.

Next Hurdle

The states say the combination of the third- and fourth-largest U.S. wireless providers will decrease competition and raise prices in a market that’s already concentrated. The deal’s backers say it will quickly bring advanced 5G networks and create a stronger rival to leaders AT&T Inc. and Verizon Communications Inc.

The FCC, in its order, rejected claims the deal would harm consumers.

“The transaction would not substantially lessen competition,” the FCC said in the order, in part because low-cost provider Boost Mobile will be divested to Dish, which also receives network access and retail stores to form a new competitor,

Two FCC Democrats voted against the merger, saying it’s bad for consumers.

“The most likely effect of this merger will be higher prices and fewer options for all Americans,” Commissioner Geoffrey Starks said in an emailed statement. “It will establish a market of three giant wireless carriers with every incentive to divide up the market, increase prices and compete only for the most lucrative customers.”

T-Mobile Chief Executive Officer John Legere -- who remade T-Mobile into a maverick competitor by eliminating annual contracts and offering unlimited data plans -- disputes that prices will go up. He insists that by buying Sprint he will be able to better compete against industry leaders Verizon and AT&T, all to the benefit of U.S. consumers.

Sprint and T-Mobile are within reach of completing a deal that they have flirted with for years. In 2014, top officials at the Justice Department and the FCC rebuffed an effort by the companies to combine. The carriers returned in 2018, hoping for a more favorable reception from appointees of the Trump administration.

Use or Lose

The approval also cancels Dish’s March 7 deadline to use some of its airwaves. Dish had started work on a narrowband network to satisfy the use-or-lose requirement, which could have forced the company to give up some of its airwave licenses.

As part of the deal, Dish is committed to cover at least 20% of the U.S. population with 5G broadband by June 14, 2022, and 70% of the population by 2023.

Dish faces an assortment of fines related to several bands of airwaves if it doesn’t meet its build-out commitments. The fine is capped at $1 billion.

(Updates Dish-related conditions three paragraphs from bottom.)

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net;Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Rob Golum

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