Executives from T-Mobile and Sprint faced yet another grilling from House Democrats in a hearing Tuesday on Capitol Hill.
This time CEO John Legere and Sprint Executive Chairman Marcelo Claure were testifying before a House Judiciary Subcommittee on antitrust to explain how theirwon’t result in higher prices for consumers and hurt American jobs. Legere was also pressed about the $195,000 his company has spent at President Donald Trump’s Washington DC hotel since the merger was announced last April.
The Washington Post reported in January that nine top executives at T-Mobile, including Legere, were listed as VIP guests at the hotel a day after the merger was announced. The post reported that in the 10 months following the announcement of the merger, executives stayed at the hotel a total of 52 times.
Rep. Hank Johnson, a Democrat from Georgia, asked Legere how he thought it looked to the American people that he began staying at the Trump hotel right after the merger was announced, given the fact that T-Mobile and Sprint need approval for their merger from the Federal Communications Commission and the US Justice Department.
“You understand the optics of that? What it looks like?” he asked. “It looks like what’s happening is that T-Mobile is trying to curry favor with the White House.”
Legere said he was a “longtime Trump hotel stayer.”
Rep. Pramila Jayapal, a Democrat from Washington, also said the situation looked suspicious, especially given that President Trump reportedly tried to “involve himself in the AT&T and Time Warner merger.”
“There is reason to look at this question of what happened at the Trump hotels,” she said. “We want to make sure that is not happening today.”
Republicans downplayed the issue. Rep Jim Sensenbrenner, from Wisconsin, said he was “embarrassed” by the questioning. Rep. Ken Buck, from Colorado, tried to make a joke of the issue.
“I had dinner at the Trump hotel three weeks ago,” he said. “I wonder if I have a conflict of interest?”
Other issues with the merger
Democrats on the committee also expressed skepticism over T-Mobile’s claims that after the merger, it will create thousands of jobs, cut prices, support the FCC’s Lifeline subsidy and deliver nationwide 5G service throughout the country.
The leading Democrat on the subcommittee, Rep. David Cicilline, of Rhode Island, said he was “deeply skeptical that consolidation is the path forward” when it comes to lowering prices and increasing competition.
In spite of this, the companies’ executives continued to defend their plan to combine the third- and fourth-largest wireless carriers in the US to take on rivals AT&T and Verizon. They argued that only by combining would they be able to compete aggressively in 5G against AT&T and Verizon, which together control more than 70 percent of the market.
But Rep. Jerrold Nadler of New York, who chairs the Judiciary Committee, was one of several Democrats who seemed unconvinced that reducing the number of players in the nationwide wireless market from four to three is a good idea.
“I am concerned about any merger that would significantly increase the concentration in a market that is already highly concentrated,” he said.
He added that following the merger, the company “may no longer have any market-based incentive to lower prices and to offer pro-consumer policies once it becomes as large as the other two carriers.”
Nadler said he was concerned that poor and minority customers would suffer the most from the negative consequences.
“Because the proposed transaction would also consolidate the market for these services, it may have disproportionately negative effects on low-income households,” he said.
Last month, House Democrats on the Energy and Commerce Committee alsoit will lower prices, not cut jobs and provide 5G service to rural areas as a result of the merger.
The FCC paused the clock on the merger last week, saying it needs time to review the company’s plans to provide fixed wireless broadband.
In a blog post following the hearing, Legere said he welcomed the exchange with lawmakers and that he is prepared to continue the fight for the “New T-Mobile.”
“We have spent a lot of time meeting with lawmakers, regulators and their staffs in Washington DC and around the country to share our plans to deliver a New T-Mobile that is good for consumers and the marketplace,” he said. “I welcomed today’s discussion because I believe in this merger. I believe in the New T-Mobile, and I know that it is a win-win for consumers in America.”