A Stand-Alone T-Mobile Isn't an Option for the Future. So What’s Best for Consumers and Workers?

[Commentary] A stand-alone T-Mobile is not an option for the future. German parent company Deutsche Telekom had announced that it was seeking a deal and had considered a speculative offer, Sprint and AT&T for the sale.

T-Mobile did not have the cash or spectrum to invest in a next-generation, 4G LTE wireless network. And without a 4G network, there could be no future for T-Mobile, its customers and employees. AT&T and T-Mobile use the same technology. Combining T-Mobile and AT&T spectrum turns two two-lane roads into a four lane superhighway. AT&T is willing to put up $8 billion in extra investment. And AT&T, a financially healthy company, will pay for the transaction in equity and internal cash flows. In contrast, a merged Sprint/T-Mobile is simply unable to use T-Mobile’s assets to best advantage of U.S. consumers. Sprint still has not integrated its 2005 Nextel purchase, and it uses a different wireless technology than T-Mobile. Sprint’s “BB minus” non-investment grade bond rating would have increased the cost of capital that Sprint would have had to borrow for the T-Mobile purchase and network investment.

So the question that regulators must consider as they weigh the AT&T/T-Mobile transaction is not “how can we preserve the current wireless market structure?” but “will the consumer benefits from this transaction outweigh any potential reduction in competition?” In other words, will the combined spectrum and financial efficiencies of AT&T/T-Mobile enable it to build out its wireless infrastructure to more places, more quickly than would have happened without the merger? And will sufficient competition and regulatory oversight promote innovation and protect consumers? The answer is yes.

[Kohl is Communications Workers of America senior director for legislation and policy.]