Had these officials simply dropped their litigation, it would have certainly been cause for some praise. However, each of these politicians struck settlement agreements involving various jobs, infrastructure, and price commitments from the new T-Mobile in their respective states. While that may sound pro-consumer, this kind of political interference in the marketplace rarely benefits anyone but the politician responsible.
Political rent extraction and economic central planning of the kinds found in these settlement agreements lead to inefficient allocation of resources, ultimately harming consumers. Instead of allowing markets and price signals to decide where the new T-Mobile’s investments would reap the highest return, a sign of the greatest value creation for consumers, the company will now have to meet arbitrary targets in a handful of states simply because of the political ambitions of their respective attorneys general.
Is this really the way to run an economy?
The concessions in each of these agreements amount to de facto taxes on the new T-Mobile. Like any taxes imposed on corporations, the cost will simply be passed on to consumers in other states and then, eventually, to the residents of Texas, Nevada, Mississippi, and Colorado when their price agreements expire. In addition, consumers using other wireless service providers are harmed by these settlements because they reduce ability of T-Mobile to adapt and apply competitive pressure on their rivals. Instead of focusing all resources on providing a better product than AT&T and Verizon, T-Mobile must, for example, now guarantee it employs a minimum of 450 people at a call center in Las Vegas.
The nakedly political nature of actions of these attorneys general is evidenced by T-Mobile and Sprint’s previous price and infrastructure commitments. Prior to the settlement agreements with the four states, T-Mobile had already committed to offering the same or lower prices for three years. Further, in terms of infrastructure deployment, T-Mobile committed to deploying “a next-generation 5G network that covers 97% of the U.S. within three years of the merger, and 99% within six years. This 5G network would include rural areas, with 85% of rural Americans covered within three years and 90% covered within six years alongside a pledge to guarantee 90% of Americans access to mobile broadband at speeds of at least 100 Mbps and 99% access to speeds of at least 50 Mbps.”
This infrastructure commitment actually goes beyond any of the four settlement agreements in terms of 5G network coverage and timeframe. Thus, the only real concessions extracted from T-Mobile are longer-term price controls and various job guarantees—tailor-made political talking points for these attorneys general.
Lawful economic activity, such as mergers and acquisitions, shouldn’t be held up for the purpose of political résumé padding. Central planning and rent seeking via litigation is still central planning and rent seeking, carrying all the same inefficiencies as through legislation or regulation. The role of an attorney general is to protect consumers. Obstructing a nationwide merger for state-specific talking points and marginal concessions is purely self service by public servants.