T-Mobile plan might result in rural outages and more price increases

T-Mobile's plan to purchase UScellular's spectrum assets and its retail and wireless operations is facing fresh opposition.

Some industry associations, advocacy groups, and a national labor union have requested the Federal Communications Commission (FCC) to block UScellular's acquisition by T-Mobile.

The Rural Wireless Association (RWA), EchoStar, the Communications Workers of America (CWA), Public Knowledge, New America’s Open Technology Institute, the Benton Institute for Broadband & Society, and the Computer & Communications Industry Association (CCIA) have allied to highlight the potential drawbacks of the deal.

T-Mobile and UScellular had previously argued that the proposed purchase would improve coverage in rural areas and boost competition. However, the alliance that has formed against the acquisition believes that it could be harmful on multiple levels.

Rural shutdowns

The coalition has warned that the sale of Uscellular operations could harm rural connectivity.

At the moment, rural areas where telecom companies might not have a financial incentive to operate receive telecommunications services at reasonable rates due to collaborations between UScellular and the Universal Service Fund (USF) program. After the acquisition, T-Mobile may not find it financially viable to continue providing service without subsidies and may shut down towers in rural areas as a result.

This could lead to a coverage vacuum in rural areas. Additionally, it would effectively waste taxpayer money that has already been invested in the construction and maintenance of 5G infrastructure in remote areas.

More post-merger rate increases

Pointing to the recent price hike by T-Mobile, the coalition says it's no coincidence that rates rose just as the five-year lock, agreed upon during's Sprint purchase, was lifted. The alliance believes something similar might happen after the approval of the UScellular acquisition by the FCC.

Diminished competition

The alliance also says that after the purchase, T-Mobile will gain significant spectrum licenses from UScellular. This will concentrate more spectrum into the hands of T-Mobile, AT&T, and Verizon.

T-Mobile's mid-band dominance

The Sprint merger contributed to T-Mobile's leadership in the mid-band spectrum and this is believed to have made it difficult for new players and regional carriers to make inroads into the market. The UScellular merger could make things worse and this could affect 5G availability in rural regions.

Impact on workers

T-Mobile closed around 30 percent of its retail stores after the Sprint merger, rendering 21,000 people jobless. Something similar could happen after the UScellular, particularly in places where the companies have overlapping operations.

Consumer entrapment

The coalition fears that T-Mobile could delay or restrict handset unlocking for UScellular customers, preventing them from switching to another provider after the merger. To eliminate this possibility, the alliance has urged the FCC to impose an unlocking requirement before approving the deal.

A concentrated market

The telecom market is already highly concentrated and any future mergers would make the dominant players even more powerful. UScellular’s withdrawal would also reduce competitive pressure on price.

UScellular is also a crucial roaming partner for smaller companies, which is why its exit would make things difficult for regional and rural operators.

The coalition requested the FCC to also keep in mind the recent spectrum sale to AT&T and Verizon and take a broader view of these transactions and their effect on the wireless market.

In related news, FCC chairman Brendan Carr has warned T-Mobile and other companies contemplating mergers to avoid Diversity, Equity, and Inclusion (DEI) discrimination if they want approval.