Trump’s DOJ seems annoyed about having to approve T-Mobile’s latest merger

The Department of Justice Antitrust Division issued an unusual statement yesterday about its decision to let T-Mobile complete an acquisition of US Cellular's wireless operations.

Assistant Attorney General Gail Slater of the Justice Department's Antitrust Division, a Trump nominee who was confirmed by the Senate in March, said in a 900-word statement that the deal and two related transactions "will consolidate yet more spectrum in the Big 3's oligopoly, which controls more than 80 percent of the mobile wireless spectrum in the country." She said the top three carriers—T-Mobile, AT&T, and Verizon—control more than 90 percent of the mobile subscriptions in the United States.

Despite that, the DOJ said it closed its investigation into the merger and will not ask a court for an injunction to prevent T-Mobile from buying US Cellular assets. US Cellular is being carved up among the three major wireless firms, as the regional carrier is selling spectrum licenses in separate deals with Verizon and AT&T for about $1 billion each. T-Mobile is paying $4.4 billion for about 30 percent of US Cellular's spectrum assets and its wireless operations.

The DOJ press release said it approved the T-Mobile deal because "the potential harm and offsetting benefits of the transaction do not warrant an enforcement action. US Cellular's inability to maintain its competitive position would result in declining value to its subscriber base, whereas the transaction offers them hope that they will be able to experience the benefits of a more robust cellular network."

The DOJ announcement did not mention that it came in the same week that T-Mobile cleared a major roadblock by agreeing to the Trump administration's demands to end its DEI (diversity, equity, and inclusion) policies. T-Mobile's decision resulted in the Federal Communications Commission approving its joint venture to acquire fiber provider Metronet and will likely smooth the way for the FCC to grant approval of T-Mobile's deal with US Cellular. (Update: the FCC announced approval of the T-Mobile/US Cellular deal late on Friday.)

DOJ approval “reads like a complaint”

The DOJ's unusual statement about the wireless industry oligopoly shows that the Justice Department staff and antitrust chief "clearly did not want to approve this," stated Harold Feld, senior VP of consumer advocacy group Public Knowledge. The press release "reads like a complaint," not an announcement of a merger approval, he added.

Daniel Hanley, senior legal analyst at the Open Markets Institute, said that "Slater could easily make a public comment or resign in protest. If she isn't allowed to do the job Congress entrusted her with, then she can leave with her principles intact." The Trump administration is failing to enforce antitrust laws "even when encountering a blatantly unlawful action that could result in a gov win," he wrote.

The cable industry, which has been competing for mobile customers, issued a statement in response to the DOJ's approval of T-Mobile's transaction. "While cable broadband providers are aggressively investing to deliver real mobile competition, cost savings, and other benefits to millions of wireless consumers, the Big 3 are continuing their desperate attempts to thwart this new competition through aggressive spectrum stockpiling strategies," cable lobby group NCTA said while urging policymakers to promote competition and fight excessive concentration of spectrum licenses.

Despite approving the T-Mobile deal, Slater said in her statement that the DOJ investigation "raised concerns about competition in the relevant markets for mobile wireless services and the availability of wireless spectrum needed to fuel competition and entry."

US Cellular competed against the big carriers "by building networks, pricing plans, and service offerings that its customers valued, and which for many years the Big 3 often did not offer," Slater said. "To the chagrin of its Big 3 competitors, US Cellular maintained a sizable customer base within its network footprint by virtue of its strong emphasis on transparency, integrity, and localized customer service. Accordingly, as part of its investigation, the Department considered the impact of the potential disappearance of the services offered to those customers of US Cellular—soon to become T-Mobile customers following the merger—that chose US Cellular over T-Mobile or its national competitors."

T-Mobile/Sprint deal left three major carriers

The US allowed T-Mobile to buy Sprint in 2020, during President Trump's first term, while imposing conditions that were meant to help Dish replace Sprint as the fourth major carrier. Slater's statement discussed how T-Mobile's purchase of Sprint left the market vulnerable to increased coordination among the three remaining carriers, with consumers harmed by higher prices and fewer choices.

With the latest wave of consolidation, it is "clear that we stand at a pivotal moment for the wireless industry," Slater said, adding:

The [T-Mobile/US Cellular] transaction comes near the tail end of a decades-long trend toward consolidation-by-acquisition that has now left most consumers with meaningful choices among just the 'Big 3' national carriers. Economists and historians, appropriately, will debate whether this trend ultimately redounded to the benefit of competition and consumers, but the stark facts of today merit our immediate attention: together, the Big 3 account for more than 90 percent of the roughly 335 million mobile subscriptions in the United States.

The Rural Wireless Association, which represents small carriers, said today that "the T-Mobile/Sprint merger was a bridge too far, and we have seen the consequences ever since—fewer choices, higher prices, and degraded service for rural consumers and all Americans traveling through rural areas. Now, with DOJ's blessing of the T-Mobile/US Cellular deal, we are continuing down a dangerous path."

US Cellular was struggling too much to survive, Slater indicated. The DOJ investigation "made clear that, due in part to its limited regional footprint and unique structural limitations, US Cellular simply could not keep up with the escalating cost of capital investments in technology required to compete vigorously in the relevant market."

Slater said that "[t]his would, in turn, lead to the slow degradation of its network quality. In contrast, T-Mobile has publicly committed that it will integrate the two networks in a way that provides US Cellular customers with faster data speeds, while T-Mobile customers will obtain broader coverage in rural areas."