Carmen Scurato Testifies Before Congress: The T-Mobile/Sprint Merger Would Harm Low-Income Families

WASHINGTON — What follows is the spoken testimony of Free Press Action Senior Policy Counsel Carmen Scurato, which will be delivered today before the House of Representatives Subcommittee on Antitrust, Commercial, and Administrative Law.

Scurato is testifying in opposition to the proposed T-Mobile/Sprint merger on the grounds that it would lead to job losses and fewer choices for wireless services while raising prices for low-income families and communities of color.

Scurato’s full written testimony is available here (PDF).

Regarding “The State of Competition in the Wireless Market: Examining the Impact of the Proposed Merger of T-Mobile and Sprint on Consumers, Workers, and the Internet”

Chairman Cicilline, Ranking Member Sensenbrenner, Chairman Nadler, Ranking Member Collins and subcommittee members, thank you for having me.

My name is Carmen Scurato and I am a senior policy counsel at Free Press, with 1.4 million members across all 50 states, the District of Columbia and Puerto Rico.

We strongly oppose this merger. Free Press’ extensive research shows the disproportionate harms it would cause to low-income communities and people of color, who are more likely to be on the wrong side of the digital divide, and more often rely on mobile phones as their only means of connecting to the internet.  

While my organization signed protective orders at the FCC to assess the merger applicants’ data and claims, I am not a signatory.

That means everything I say today is based on publicly available data. But let me be clear: No matter where we look, nothing about this deal’s benefits, all of which are speculative and unenforceable, offsets its immediate and permanent harms.

Sprint and T-Mobile (and their prepaid brands Boost, Virgin and Metro) are the dominant providers of mobile service for low-income people. More than 30 percent of Metro and Boost subscribers report yearly incomes of $25,000 or less.

Due to structural and systemic racism, people of color are disproportionately represented in these demographics. T-Mobile and Sprint customers are far more likely to be people of color than are AT&T’s and Verizon’s. 56 percent of T-Mobile’s subscribers in 2018 identified as people of color, as did 45 percent of Sprint’s.

The reason that members of these communities choose Sprint and T-Mobile is very clear: Their plans cost less. As our research confirms, these two carriers compete with one another vigorously. They are each other’s closest competitors.

They serve price-conscious customers that AT&T and Verizon are content and able to ignore. Both T-Mobile and Sprint have been “mavericks,” taking customers from each other and from the “big two” carriers as well, after the government rejected previously proposed horizontal mergers like this one.

My full testimony touches on T-Mobile’s inflated 5G efficiency claims, and exaggerated rumors of Sprint’s death used to justify the deal. But I’ll focus in my remaining time on three facts illustrating the harms to the most-impacted communities.

First, no matter how antitrust enforcers define the product markets, this deal would consolidate already highly concentrated markets. And it would eliminate choices for customers who want or need to pay less for essential communications services.

Our FCC filings document how T-Mobile’s and Sprint’s prepaid and postpaid brands compete, countering each other’s innovations and offers in ways that benefit price-conscious customers and exert some discipline on Verizon and AT&T as well.

T-Mobile and Sprint both offer lower-priced options than their larger rivals. Don’t believe the parties’ funny math suggesting that having fewer competitors somehow strengthens competition. This is a 4-to-3 merger nationally, and closer to 3-to-2 in the prepaid market. It would reduce choice for all lower-priced plans that don’t require customers to pass discriminatory credit checks or finance devices through the carrier.

Second, the merger would increase prices. In their filings, Sprint and T-Mobile don’t even hide the likelihood that prices would go up for their postpaid and prepaid customers alike. That’s right: Their own economic models say prices would go up.

T-Mobile’s price “pledge” is riddled with loopholes and does nothing to allay this concern. T-Mobile announced that legacy plans would continue “for three years . . . or until better plans that offer a lower price or more data are made available.”

This mockery of a promise is meaningless: Prices will stay the same . . . unless of course T-Mobile decides to raise them! Just as T-Mobile did with its initial attempts to hide this fact, the carrier gets to decide whether a more expensive plan is “better” for you, even if it offers more than many customers might want, need or be able to afford.

Third, this merger would mean massive consolidation in the wholesale wireless market. Reducing wholesale supply would raise costs passed along to the retail customers of all resellers.

Wholesale is used by carriers without their own networks — including most Lifeline carriers — to offer services at resale. Throughout my career I have been a strong defender of Lifeline because it helps the most vulnerable in society stay connected, providing just $9.25 a month to defray the high cost. 

Lifeline is dependent on a well-functioning wholesale market. Consolidation would further widen the quality gap between wireless Lifeline offerings and non-subsidized plans.

In sum, you should closely scrutinize the “too good to be true” claims made by these two companies. You also should consider the real-world impacts on communities that struggle with the high price of connectivity and often find themselves on the wrong side of the digital divide.

Thank you, and I look forward to your questions.