Will the Feds Let Sprint Buy T-Mobile? Should They?

Moneybox
A blog about business and economics.
Dec. 13 2013 4:46 PM

Will the Feds Let Sprint Buy T-Mobile? Should They?

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Getting bigger?

Photo by Justin Sullivan/Getty Images

The Wall Street Journal reports that Sprint is looking to put a bid together to buy T-Mobile, combining the nation's No. 3 and No. 4 wireless carriers into a new entity that would still only be in third place. But the last time someone tried to buy T-Mobile, regulators shot it down on competition grounds. So let's hope Sprint hires some smarter antitrust consultants than AT&T used before putting its bid together, because sources at the Federal Communications Commission told me the previous effort to buy T-Mobile wasn't even a close call.

From Sprint's viewpoint, the bid makes perfect sense. Or, rather, when Japanese carrier Softbank bought Sprint, that acquisition made no business sense and seemed to mostly be about the CEO's ego and drive for empire-building. So if the whole point of owning Sprint is egomaniacal empire-building, then why not build a bigger empire by buying T-Mobile if you can?

So here's the question facing regulators. When AT&T tried to buy T-Mobile, the FCC took the view that it was committed to avoiding a situation in which the biggest carriers became even more dominant. Then when T-Mobile successfully acquired MetroPCS, regulators took the view that T-Mobile getting bigger would make it a more formidable competitor to the "big two" carriers. So will the FCC and the Justice Department see this as similar to the MetroPCS deal—improving the competitive landscape by making the No. 3 contender stronger—or as weakening the competitive landscape by reducing the number of companies offering real nationwide mobile service to three? It looks to me like a very difficult question.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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