US Federal Communications Commission (FCC) chief Ajit Pai threw his support behind a proposed merger between T-Mobile US and Sprint, citing commitments the pair made to expand rural coverage and address competitive concerns as decisive factors.
“I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it. This is a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans. We should seize this opportunity,” he said in a statement.
Pai added he intends to present the other members of the FCC with a draft order to that effect in the coming weeks.
The announcement came as T-Mobile US and Sprint revealed plans to sell the latter’s Boost Mobile prepaid unit after critics of the deal raised concerns about how it would impact competition in the segment.
As part of the divestiture plan, the combined operator would offer Boost Mobile’s buyer a discounted wholesale arrangement with a minimum six-year term, subject to approval by the FCC.
On a call with journalists, senior FCC officials said the plan was designed to address concerns about the merger’s impact on competition in the low-cost wireless segment, and give Boost Mobile the ability and incentive to continue to compete against T-Mobile.
In a filing with the FCC, Sprint and T-Mobile reiterated a series of additional three- and six-year commitments including plans to build a nationwide 5G network; expand rural coverage; compete in the home broadband market; honour current MVNO agreements (including a Sprint deal with Altice); and maintain current mobile pricing for consumers for three years.
They also outlined a verification and enforcement process to ensure those promises are kept, agreeing to pay penalties of up to $2.4 billion per year for missed deadlines.
Pai said the latter will “create a powerful incentive for the companies to meet their commitments on time”.
If the merger goes ahead, the combined company’s forthcoming 5G network must cover 75 per cent of the US population and 55 per cent of the country’s rural population with mid-band spectrum within three years of the deal closing.
Those figures must reach 88 per cent and 67 per cent, respectively, within six years.
Evaluation of the operator’s performance against those and other coverage benchmarks will be conducted through drive testing, which will be funded by T-Mobile and overseen by an independent third party.
The agreed conditions do not require any spectrum divestitures, nor do they explicitly address the issue of job creation or loss. However, senior FCC officials said they expect the 5G commitments to increase network construction and tower jobs.
While FCC backing would be a major step towards closing the merger, approval from the Department of Justice is also needed.