D.C. Memo: T-Mobile, UScellular Defend Deal Before FCC
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Merger: T-Mobile and UScellular are pushing back on critics who say their merger is anticompetitive because the two are direct rivals for 5G wireless subscribers. UScellular claims it needs to sell because it lacks national scale (it reaches just 10% of the U.S. population) and can't stay competitive with cable MVNOs that cut costs by migrating cellular traffic to their Wi-Fi networks. "UScellular is not a close competitor with T-Mobile and does not impact T-Mobile’s pricing or other competitive decision making," the two merger partners said in a Jan. 8 filing posted on the FCC's website two days later. “Cable wireless providers have acted as mavericks throughout UScellular’s footprint by leveraging their ability to bundle services, subsidize wireless offerings through margins on their traditional offerings, and offload more traffic onto their own Wi-Fi networks in order to aggressively price their wireless offerings and increase market share.” The filing redacted MVNO coverage in UScellular’s footprint (see image below). Deal critics – including Public Knowledge and the Computer and Communications Industry Association (CCIA) – failed to recognize that UScellular is too small to influence T-Mobile's national pricing plans. Critics made "no meaningful attempt to explain how a regional provider with approximately one percent of all wireless connections and a geographically limited footprint exerts competitive pressure on T-Mobile or any other mobile network operator (MNO) at the national level," T-Mobile and UScellular said. UScellular did not say it was a failing company, though it was pretty close to that. “Given this landscape, and these continued challenges, UScellular is unable to arrest its competitive decline and its challenges will continue,” the filing said.