FCC Approves T-Mobile and Sprint Merger with Conditions

The Federal Communications Commission (FCC) has issued a memorandum opinion and order, declaratory ruling, and order of proposed modification approving—with conditions—the transfer of control applications filed by T-Mobile and Sprint.

The FCC maintains that the transaction will help close the digital divide and advance United States leadership in 5G. T-Mobile and Sprint have committed within three years to deploy 5G service to cover 97 percent of the American people, and within six years to reach 99 percent of all Americans.  This commitment includes deploying 5G service to cover 85 percent of rural Americans within three years and 90 percent of rural Americans within six years.

The parties also pledged that within six years, 90 percent of Americans would have access to mobile service with speeds of at least 100 Mbps and 99 percent of Americans would have access to speeds of at least 50 Mbps.  This includes two-thirds of rural Americans having access to mobile service with speeds of at least 100 Mbps, and 90 percent of rural Americans having access to speeds of at least 50 Mbps.

The FCC conditioned its approval of the transaction on the parties fulfilling these commitments.  According to the FCC, compliance with these commitments will be verified by rigorous drive-testing, overseen by an independent third party and subject to oversight, to ensure that the service Americans receive will be what the parties have promised.  And in order to ensure that these commitments are met, the parties will be required to make payments that could reach over two billion dollars if they do not meet their commitments within six years.  Moreover, the parties will be required to make additional payments until they have fulfilled their commitments.

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The FCC also concluded that the transaction, as conditioned, would not harm competition. Specifically, the Commission found that the transaction would enhance competition in rural America and among quality-conscious consumers along with strengthening competition in the home broadband and enterprise markets.  Moreover, the Commission found that the parties’ divestiture of Boost Mobile, Sprint’s leading prepaid brand, would address the potential for reduced competition for price-conscious consumers in urban areas.

In connection with the merger, the FCC also proposed—subject to conditions—modifications to construction deadlines related to DISH licenses.  The proposed DISH construction deadline modifications would facilitate the implementation of certain measures in the Department of Justice’s consent decree in connection with the transaction that was announced in July, where DISH pledged to become a new entrant into the wireless industry, offering cutting-edge 5G service to over two-thirds of Americans within four years.