LOS ANGELES (Variety) – The proposed merger of telco giants Sprint and is getting some significant push-back: On Tuesday, 10 states including California, New York and the District of Columbia, sued to prevent the merger from going forward. The lawsuit alleges that the merger will reduce competition, leading to higher prices and less access for consumers.
T-Mobile didn’t immediately respond to a request for comment.
“This is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent,” said New York attorney general Letitia James in a statement Tuesday. “Although T-Mobile and may be promising faster, better, and cheaper service with this merger, the evidence weighs against it,” said California attorney general Xavier Becerra.
Sprint and T-Mobile first announced their merger plans in April of 2018 . The deal has since gotten the backing of FCC Chairman Ajit Pai following a commitment to spin off Sprint’s Boost Mobile prepaid carrier as well as to accelerate the build-out of 5G infrastructure. The latter commitment would ensure that 85% of rural Americans would have access to T-Mobile’s 5G network within three years, and 90% within six years.
In their lawsuit, the ten states allege that these commitments were hard to verify, and didn’t address their core concerns of price increases for low-income consumers.
“Currently, the average U.S. household spends approximately $1,100 annually on cellphone services,” the state attorneys wrote in a joint media release. “For many families, especially those with lower incomes, even a small price increase can result in suspension or cancellation of cellphone service.”
The lawsuit, which was filed in the United States District Court for the Southern District of New York, Sprint and T-Mobile as well as T-Mobile’s corporate parent Deutsche Telekom and Sprint majority owner Softbank as defendants. In addition to California, New York and D.C., the lawsuit was also joined by Colorado, Connecticut, Maryland, Mississippi, Virginia and Wisconsin.