Rural Americans Stand to Lose in Proposed T-Mobile/Sprint Merger

One of the central challenges facing our country today is the growing divide between rural and urban America. As many economists have noted, rural areas are increasingly lacking the opportunities for job creation and growth that are found in our big cities.

That gap is bad for our economy and society. Closing it will require a wide range of initiatives, investments and policies that promote ongoing, innovative public-partnerships like those that exist today with educational entities who lease their 2.5 GHz spectrum to Sprint in exchange for broadband service and equipment to serve students, low-income families, and anchor institutions in their communities. These are the unserved and underserved populations that are left behind in the digital economy.

Mobile broadband is the essential infrastructure component to ensure rural communities can participate in the modern economy. Unfortunately, the proposed Sprint/T-Mobile merger takes rural America in the wrong direction, threatening to reduce rural access to affordable, reliable, high-speed wireless data connections at a time when we need to be expanding it.

Not surprisingly, the merging parties are trying to tell a different story. They have claimed to regulators that the combined company will speed the roll out of wireless broadband to rural areas. But the facts don’t support the sales pitch.

The companies have claimed that spectrum belonging to Sprint (2.5 GHz for technically-inclined readers) would enable “New T-Mobile” to reach rural areas that it currently does not. But that argument flies in the face of physics. While Sprint’s spectrum serves an important role today in connecting rural communities, that is due to FCC’s rules that encourage rural deployment through partnerships between educational entities and commercial operators, not due to the properties of those frequencies themselves.

In fact, T-Mobile already holds a significant amount of spectrum, such as 600 MHz frequencies, that it could deploy in rural areas more easily than the frequencies it would gain access to by merging with Sprint. Therefore, there is no reason to expect that New T-Mobile will use mid-band spectrum, such as the 2.5 GHz band, to expand their coverage into rural communities where they haven’t already invested serving those same areas with other spectrum they hold that is better suited for rural deployment, like T-Mobile’s existing 600 MHz spectrum.

T-Mobile and Sprint have also tried to sell regulators on the idea that if the companies merge, they will be able to deploy next-generation 5G mobile service to rural areas. But here, too, their promises don’t align with the basic realities or the companies’ other promises.

To bring 5G service to rural areas, the companies would have to significantly build out their fiber-optic networks to connect towers and other facilities. These are massively capital-intensive projects that rural wireline companies have undertaken in their markets with the help of universal service funding.

While it would be heartening to believe that the combined company would really be willing to invest the required billions of dollars in bringing 5G to rural America, the fact is that T-Mobile has also promised Wall Street significant cost savings – and has never shown any interest in serving rural communities. It’s hard to see how the combined company would have the financial license to turn around and spend money to expand the necessary infrastructure in more sparsely populated parts of the country.

The real path to improved rural wireless broadband service depends on precisely the kind of competition that this merger would eliminate, or at least greatly reduce. Today, Sprint in particular is willing and able to act as a valuable partner to rural wireless providers around the country. These partnerships allow rural customers to access Sprint’s voice and data networks when roaming in urban areas and allow Sprint’s urban customers to access networks when roaming in rural areas.

Additionally, a large portion of Sprint’s 2.5 GHz spectrum comes from leases with educational entities, called Educational Broadband Service licensees, who hold the license for the only broadband spectrum reserved for educational purposes today. For rural schools and families that rely on internet service provided through an EBS licensee, many of whom never had affordable broadband options before, they stand to lose this critical access under a “New” T-Mobile.

These public-private partnerships are one of many tools needed to address rural American’s wireless broadband needs and are essential to allowing for reliable, affordable service. Sprint is incentivized to pursue these partnerships in part because it is a competitive strategy against companies like T-Mobile who don’t. If these two companies combine as the New T-Mobile, and America is left with an oligopoly of just three national wireless companies, that Sprint incentive goes away.

What’s worse: The future decision-makers of the combined company will come from T-Mobile, which has a long track-record of ill-treatment of rural communities. Historically, T-Mobile has generally declined to enter into the sorts of roaming partnerships that Sprint has embraced.

More egregiously, T-Mobile is facing credible accusations that it recently misled the FCC when it claimed to provide high-speed wireless service in areas where it did not, in an attempt to block access to public funds allocated to promote rural wireless service. Given that track record, it’s no wonder the rural wireless providers and the customers that depend on them are so deeply opposed to this merger.

According to federal law, the Federal Communications Commission can only approve of the merger of T-Mobile and Sprint if it is deemed to be in the public interest. There are strong arguments that this deal is against the interests of consumers nationwide, given the reduction in competition and the associated increase in prices for customers everywhere.

But for Americans who live in rural areas – people for whom the need for wireless broadband service is perhaps greater than most – this deal would be nothing short of disastrous. Upholding that standard demands a thumbs-down on this deal.

Katherine Messier is the founder and executive director of Mobile Beacon. Carri Bennet serves as general counsel for the Rural Wireless Association.

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