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Rural job creator – or competition killer? Proposed T-Mobile/Sprint merger examined

Santos Garcia, left, of the Central Labor Council, says the merging of national cell phone companies T-Mobile and Sprint is not good for consumers in the Central Valley. Garcia spoke outside Fresno City Hall before a public hearing held by the California Public Utilities Commission on Tuesday, Jan. 15, 2019.
Santos Garcia, left, of the Central Labor Council, says the merging of national cell phone companies T-Mobile and Sprint is not good for consumers in the Central Valley. Garcia spoke outside Fresno City Hall before a public hearing held by the California Public Utilities Commission on Tuesday, Jan. 15, 2019. The Fresno Bee

Fresno City Hall hosted on Tuesday evening one of three statewide hearings on how the potential merging of the third- and fourth-largest national cell phone carriers would impact the community.

The California Public Utilities Commission welcomed input from the public before a decision is made whether T-Mobile and Sprint will merge. Other hearings this week are in Los Angeles and San Diego.

Commissioner Clifford Rechtschaffen listened as some residents voiced excitement in job creation and rural access the deal could bring, while others objected, citing rising costs and narrower competition.

Several employees and managers of T-Mobile, Boost Mobile and MetroPCS spoke in support of the $26 billion merger.

Robert Silva, the mayor of Mendota, said the merger would create jobs in his rural town, and he is in full support of it. “One of the things we’re facing through the years is job creation,” he said of Mendota. “From what I understand, this will create job opportunities for people, especially out in western Fresno County, which is very rural.”

About two hours before the public hearing, several representatives of community organizations stood outside city hall in opposition. They all agreed that low-income consumers will suffer if the merger is approved.

Thomas Runnion, vice president of the Communication Workers of America in District 9, said whenever companies merge, the CWA looks at the impacts on consumers and workers.

“In both cases, this merger is not good for either of these entities,” he said. His organization says there will be a loss of 30,00 workers nationwide, with 3,300 in California and 73 in Fresno. Consumer costs will also increase 15.5 percent.

Samuel Molina of Mi Familia Vota said he is worried about the effects on the Latino community with rising costs. Sprint, T-Mobile, and their prepaid brands Boost and MetroPCS “are widely used by our community and communities of color. This will severely limit the Latino community’s access to internet.”

T-Mobile CEO John Legere announced the potential merger in a video in April 2018. He and Sprint CEO Marcelo Claure said the merger would create “robust competition and lower prices,” especially in rural America, where some residents only have the option of one cell phone provider.

The biggest advantage of merging the companies will be the ability to build a 5G network, which will run at speeds up to 100 times faster than 4G, according to the CEOs. Claure compared the jump from 4G to 5G to going from black and white to color TV.

The CEOs also promised to build hundreds of stores and hire thousands of people, especially in rural areas. “Only T-Mobile and Sprint can do this together,” Legere said.

The Public Advocates Office, an independent organization within the public utilities commission, recently issued its findings on the merger, citing harm to California residents. “The merger would remove incentives for the companies to compete with each other and to provide lower-cost plans than AT&T and Verizon,” the statement read.

In addition, the Public Advocates Office said it “debunked” the supposed benefits. Both companies intend to roll out 5G independently of each other, the statement says, and Sprint’s financial health is fine, despite what the company claims.

Runnion agreed that the companies’ claims are misleading.

“The capability of the company is not going to be increased because of T-Mobile and Sprint merging,” he said. “Where there is 5G ability, that is not going to change. And it is going to be in the metro area and not in the rural area, because of cost. It is concerning to all of us ... as the companies are stating things that we believe to be false.”

For now, the federal government shutdown has suspended the merger. The Federal Communications Commission paused its review until it regains funding.

Ashleigh Panoo: 559-441-6010, @AshleighPan

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