Sprint Corp. and T-Mobile USA Inc., which only weeks ago were arguing that the government should increase competition in the wireless market by allocating new airwaves to smaller companies like them, are switching sides and looking to join the giants through a merger.
Sprint’s plan to buy T-Mobile for $32 billion is aimed at making the combined company a more formidable competitor to giants Verizon Communications Inc. and AT&T Inc., which together claim 68 percent of U.S. wireless subscribers, respectively. The purchase of T-Mobile would almost double Sprint’s market share to about 30 percent.
Just last month, T-Mobile and Sprint succeeded in convincing the Federal Communications Commission to ensure that smaller wireless companies had a shot a buying valuable new wireless airwaves by limiting how much Verizon and AT&T can buy at an auction next year.
Now the rules that Sprint and T-Mobile fought for may come back to hurt them. Adding T-Mobile’s spectrum holdings with Sprint’s may put the combined company over the limit that bars it from bidding on the reserved portion of spectrum, which comprises prime frequencies that can travel long distances and penetrate buildings. The Center for Public Integrity reported on the high stakes of the spectrum auction in March.
The Sprint purchase of T-Mobile “certainly would impact the combined company's ability to bid,” Matt Wood, policy director at Free Press, an advocacy group in Washington, D.C., that supports the spectrum limits, said in an email.
Jeff Silva, an independent telecommunications analyst in Washington, D.C., agreed that the merger could make Sprint too big to bid on the reserved frequencies.
“That means they won’t get as much spectrum,” he said.
Copyright 2014 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.