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tv   T- Mobile Sprint Executives Testify on Merger  CSPAN  February 13, 2019 10:00am-1:14pm EST

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cable television companies. and today we continue to bring you unfiltered coverage of congress. the white house, the supreme court, and public policy events in washington, d.c. and around the country. c-span is brought to you by your cable or satellite provider. we're live on capitol hill this morning where executives from t-mobile and sprint will testify about a proepds merger between their two wireless companies. the proposed deal would join the third appear fourth largest u.s. mobile carriers into a single company. live coverage from the house energy and commerce subcommittee on technology and communication here on c-span3. well, good morning. before we get started, i want to
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express my condolences to congresswoman deb by dingell on the loss of her husband john. john was a dear friend and mentor to me and many members of in committee. his passion for oversight, accountability, legislative process and his lifetime of public service is an example to all of us. his passing is a great loss to our nation, to congress, and this committee which he loved so much. john, may you rest in peace. the chair will now recognize himself for five minutes. welcome to the subcommittee on communication and technology's hearing on protecting consumers and competition and examination of the t-mobile-sprint merger. this hearing is noteworthy because the last time a merger hearing was had before the subcommittee was almost nine years ago. and in that time there have been
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numerous mergers within in subcommittee's jurisdictions that have gone without a hearing. i believe it's the duty of this subcommittee to allow our members to publicly discuss and debate the merits of these transactions and to question the relevant stake holders. the merger before us today is between two of our country's national wireless providers, t-mobile and sprint. these companies have acted as disrupters, competitors and low-cost options in the wireless marketplace. t-mobile's uncarrier strategy has ended anti-consumer practices such as data caps, restrictive contracts and much more. they have also worked hard to build a robust national network that by some accounts is the fastest in the nation. for its part, sprint has been a leader in roaming agreements for rural providers and wholesale access for prefade paid and life line providers. sprint has worked hard to bring
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its networks to within 1% of verizon in terms of network rely ability. or so the commercials say so. consumers have also benefitted from sprint positioning itself as the best value. they are offering a plan right now where new zmers can get a year of free service when they switch from another dear your which sounds amazing. however, this hearing isn't about the benefits that both your companies brought to the market. it's about the extraordinary impact that your combined company could have on the public and the marketplace if in merger goes through. we will hear today from the communication workers of america, from the rural wireless association and public knowledge. any claim that this merger will have negative impacts on low-income consumers, rural providers and jobs in the wireless industry. cwa's testimony suggests that this merger will result in up to
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30,000 job losses in the industry and a reduction in industry pay by as much as $3,000 per employee. the rural broad band association's testimony argues that rural consumers will pay more. they claim that sprint charges 20 times less than t-mobile or other national carriers for roaming agreements. these allow commerce of rural carriers who build tier their own networks in the rural communities to use their phones throughout the country. what guarantees do rural providers have that they won't face increased costs if t-mobile doesn't adopt sprint's practices. and public knowledge's testimony, states that consumer prices will go up due to the reduction in the number of national carriers from four to three. they argue that the merger would hit low-income consumers the hardest because the number of carriers offering wholesale access would drop from three to two. sprint, at&t and t-mobile sell
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access to their networks to prepaid and life line providers who then sell that service under their own brands. what remedy do these carriers or customers have if the new t-mobile decides it wants to get out of the wholesale business or drastically raise rates? to that end the fcc found in in re communications marketplace report that the wireless market concentration was currently at 3,100 hhiphhi measures how competitive a market is with the higher number meaning it's less competitive. the justice department's horizontalle merger guidelines state that a market with an hhi above 2,500 is highly concentrated. so we really aren't starting from a great spot. an increase of 200 points would raise significant concerns about competition. this merger is expected to result in a market power increase of 280 points for the post paid market and 2014 points
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for the prepaid market. that would take the prepaid market from where it is right now at 2467, which is just under the doj threshold to 4481, a level that raises red flags. these kinds of numbers have historically resulted in higher prices for consumers, less competition and less innovation. now, i appreciate both executive's statement that they believe that this merger will benefit consumers and result in lower prices. and their commitments to an accelerated deployment of 5g and the promises of expanded rural broad band. these are national object he was important to me and members of this committee. however i have seen a lot of mergers this this industry and others. and it's hard to think of one where consolidation didn't result in people losing their jobs, pricing going up and innovation being stifled. i look forward to hearing from
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the testimony from our two telephone companies that wish to merge and the other panelists. with that i yield to the ranking member mr. latta for five minutes. >> thank you, mr. chairman. if i could just take a point of personal privilege also to express my deepest sympathies to our friend and colleague deb by dingell on the loss of chairman dingell. and the chairman loved this committee. this room is named after him. i had the privilege of getting to know him in my days not only being on in committee but when i first got to congress. again, he loved this committee. he loved this house. but most of all he loved his district, the state of michigan and all he did for it. with that, i wish the dingells my deepest sympathies on the loss of the chairman. and again mr. chairman thank you very much for convening our panel of witnesses today and to our witnesses thanks very much for being here. we appreciate your time. i look forward to hearing your
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expertise and different perspectives as we discuss the future of the telecommunications marketplace and learn more about the proposed merger of t-mobile and sprint. with any talk of merger comes a long list of potential benefits and draw bax. this is no different. i understand the ceoss from t-mobile and sprint who are with us today that there are many pro consumer outcomes possible it the percentager is profound. these benefits range from providing mobile broad band to millions of unserved and underserved americans living in rural areas to helping the united states win the global competitiveness race to 5g. but i also understand from witnesses representing groups here today that the combined company could pose harm to consumer. some of the potential drawbacks include the possibility to eliminate jobs or increase the price consumers pay for access to wireless service. our role in this committee is not to weigh the merits of the arguments and determine if this merge is in the public interests. congress gave that role to the fcc who with the doj performs a
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traditional anti-trust assessment on the merger and these agencies will ultimately determine if it's profound. our role on the subcommittee is provide policies to advance the telecommunications market expanding access to broad band to all americans. one way to do this especially for rural america and many areas in my district is to build fiechg networks. and areas where the broad band is not currently deployed. 5g networks can help connect americans to high-speed internet for the first time in the areas where it's available. 5g networks provide a competitive alternative. this proposed merger will reportedly promote the object he was and i look forward to hearing more about the ways the companies plan on that. but i'm interested in hearing from all of our witnesses today. in will be an enlightening discussion. the final decision about whether it's this proposed merger on the two companies is in the public interest is up to the fcc. again i look forward to hearing from all witnesses today and your testimony and the responses
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to our questions. and mr. chairman, i appreciate the hearing today and i yield back the balance of my time. >> the gentleman yields back. the chair now recognizes mr. pallone chairman of the full committee for five minutes for his opening statement. >> thank you, chairman doyle. today is our first hearing since the loss of our chairman john dingell it's fitting this room is named the john dingell room. after all over 28 years as the top democrat on this committee and 60 yeerps in the house he fought to ensure the committee maintained broad jurisdiction, had deliberative debates followed regular order, conducted robust oversight and produced legislation in the public from. and in keeping with john's tradition today we focus our microscope on the proposed merger of two of the four large nationwide wireless phone carries t-mobile and sprint. collectively the companies directly employ more than 8 oh thousand and serve more than 130 million examiners they are no stranger to merge he were
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discussions in 2010 a struggling t-mobile was almost purchased by at&t but blocked by the obama kmrgs. and t-mobile and sprint teamed to merge but abandoned after competition concerns were raised now once more the parties seek approval to merge. the hearing marks the first time in eight years the committee met to evaluate the consequences of a merger. for too long the house and this committee paid little attention to that responsibility. but now we resume the practice of reviewing major acquisitions so so we can fulfill our obls for the people to determine how this proposed consolidation will affect consumerers workers public safety and network resiliency, competition and future innovation. for the last 8 years major industry consolidation occurred without significant oversight. and the consequence he is of that have been borne by consumers and hard working americans. in the past we have seen mergers jack up consumer prices, cut away meaningful choices and
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outsource undercut and eviscerate good paying jobs. we have seen merger conditions that weren't met or enforced. we have seen the public interests in all forms undermined. and that's why we must look carefully at these issues before a merger is approved. in this case, the frks is currently being reviewed by the fcc as well as the department of justice. as part of our oversight responsibility we must make sure that the fcc is carefully reviewing the facts and keeping consumer's best interests in mind when deciding. and i know we are going to have many hard questions today because the facts surrounding this merger are so much in dispute. for example, mr. legere says that new t-mobile won't raise consumer prices but others say his company's filings acknowledge consumers could see price hikes. some argue by up to 15% with the merger being particularly hard on the poorest consumers. how can we be sure that consumers who can least afford to pay more are not harmed in t-mobile filed a letter committing not to raise price
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was the fcc putting aside whether that's sufficient there is a question as to whether the trump fcc would be willing to impose any conditions in a merger order. mr. legere says that the merger of t-mobile and sprint will be a net job creator on day one. but the communication workers of america say we should expect pennsylvania loss of 30,000 jobs. the truth will have long-term implications for american families crass the country. and mr. legere says that new t-mobile will kret a world class 5g network but opponents say that both t-mobile and sprint superhave committed to sprints vefrts. 5g kbloimt is important and valuable to consumers in the economy. and whether the merger expedites 5g rollout merits consideration. and mr. legere also says that the merger of t-mobile and sprint will help new t-mobile compete with at&t and verizon all while new entrants and cable companies begin to kpet in wireless. the smaller carriers worry the merger might snuff for you to
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new players that rely on wholesale access to t-mobile and sprint networks. to thissent we must understand not only how the mernler affects the current wireless marketplace but also the marketplace of the future. and finally mr. legere says that the merger of t-mobile and sprint will help new t-mobile build ou robust rural broad band while others argue that new t-mobile will shut down 25,000 cell towers cross the country. i'd like to understand whether this is accurate and whether it has a negative affect on the resiliency of the wireless network during disasters. mr. chairman there are conflicting opinions on the impact of the merger which is why this hearing is so important. and i hope that members will get the straight answers here today and i yoeld back. >> the gentleman yields back. the chair recognize mrs. walden ranking member of the full committee for five minutes. >> thank you, mr. chairman as you have said -- i know we all have the dingell family in our thoughts and prayers on this difficult week. john ding formal taught us all how to be legislators.
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pennsylvania legend in many respects. and nobody zit everybody's attempt has ever been able to do the yes or no questioning as effectively as mr. dingell did. we've tried to emulate that. he is -- he is missed will never be forgotten. and i'm glad we're all honors his life, his work, his service in remembering deb by in our prayers. mr. chairman, i'd like to echo my colleague's warm welcome to all witnesses today and thank you all for making the time to come share thoughts with the subcommittee. we generally avoided hearings focused on specific transactions in an effort to allow the regulators actually responsible for assessing them to do their work. as much as possible. free from intense political influence. it's been my hope that experts at the fcc and department of justice mo as we speak are reviewing this transaction and its potential impact on public interests and competition will continue their analysis without untwo political pressure. now, in a district like mine which would stretch pr from the
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atlantic to ohio it's a district that gives new meaning to the word rural. we have coverage gaps that engulf huge areas of the map in places with as few as one person for every square mile. for americans in some areas who have been awaiting the promise of broad band for far too long with the connective educationalle and economic empowerment it brings any news on this front is great news for celebration. so we have been appreciative of t-mobile's rapid build out efforts in central oregon. as a result of the newly akwoird 600 megahertz licenses this work last year to keep the repack on track with the a additional $1 baier broughters moving expenses more and more districts are realizing the benefits of ground breaking a incentive auction that we made possible through the action of in committee. the hope is finally becoming a reality in many of our areas of the country. i think it's well worth noting t-mobile peace efforts so far in delivering on its promises and in some cases ahead of schedule. turning to the particular
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transaction at issue today, experts including some of our witnesses are paying painting very different pictures of the potential affects inform proposed merger. going forward we do want to see consumers paying less and getting more data. we want to see more choices and we want to see intensified competition in the wireless and in home broad bantd markets. we want to see faster rural development and better service. and we need america to lead in the global race on 5g deployment. reaping economic benefits and trrmtive services force all americans. as we consider the testimony of witnesses we need to to take a holistic view instead of focusing on a particular metric like those who insist that government must intervene to preserve four nationwide wireless operators at all costs. we have to consider scale and operational efficiency in the equation and the rapidly changing characteristics of wireless marketplace, especially the versions of functionality with non-traditional competitors such as global and satellite
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operators. with almost 50% of digital video nowed consumed on smartphones wireless services not what it once was with the advent of 5g the capabilities are evolving as an exponential rate. it's important for us as lerpgts to adjust our expectations to this new reality and resist the cull for artificial market constraints that may not make any sense in a 5g world. i look forward to the witnesses today and their perspectives and each of the issues. and i want us to be the world's fastest and best 5g ecosystem. secure affordable accessible to every american. with that i yield the balance of my time to the gentleman from missouri mr. long. >> i'd like to take a personal privilege maybe stop the clock for me for a second if we could on john dingell. two plane loads loaded up yesterday at andrews to attend john's funeral. and in dear born. and we circled detroit for about an hour after an hour here and
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told we had five minutes of fuel left or we'd go to pittsburgh and refuel and go become and miss the funeral. so i know that anna eshoo was on the flight. mr. withholden who yielded to me who was chairman and now ranking member. chairman upton who was committee nc and had his office across from john for years he and john louis who a legend in his own time were supposed to polk speak at the funeral and speaker pelosi happened on top ob the same polite or plane with them at 30,000 feet john louis led us in a tribute and with had our own service for john dingell at 30,000 feet yesterday. and it was quite moving. chairman upton spoke. spaerk pelosi. john led us in prayer and spoke. it was a pretty moving tribute. so we did what we did to get to big john's funeral. i was born in 1955. john dingell was sworn in
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congress in 195 a. he followed his father, his wife deb by of course follows him today. doing an excellent job. and thoughts and prayers go out to deb by and the family. with that i'll start my minute that greg wreeld yield yielded to me. today's hearing gives us the opportunity to hear about how the american public can benefit from the proposed merger of t-mobile and sprint. the u.s. telecommunications market has changed dramatically recently. in order to foster innovation and growth in sfree it's important we ensure there is fair and competitive marketplace. i'm excited to hear how the third appear fourth largest wire carry ys in the united states plan to combine the resources to deliver a more rebust broad band network for consumers driving innovation and investment and better compete with the top two wireless providers. investments in next generation broad band new yorks are important to reach unserved communities like mine in southwest missouri and help close the digital divided. i look forward to hearing from
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witnesses on how the new t-mobile drive for innovation will help close that digital divide. benefit the u.s. economy to provide consumers with more choices at lower cost. and i'd like to submit for the record two documents and op-ed from the more times written are from by the head of the farm bureau demonstrating support for the merge earn and a letter in support of the merger from the fcc from myself and several colleagues i yield back. >> without objection mr. chairman i yield back i want to say we have another subcommittee going on on important health issues upstairs. some of us have to go up and back but thank you for being here. >> i thank the ranking member. >> tharm chairman would like to remind that pursuant to rules all members written opening statement shalling be made part of the record. i'd like to introduce the witnesses for today. first well have mr. marcelo claure. executive chairman of sprint. next mr. john legere chief executive officer and president
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of t-mobile u.s. next fl chris shelton president of the communication workers of america. then we have cari bennet, general counsel of rural wireless association. mr. doug brake, doug brake, thank you, doug. director of broad band and spectrum policy for the information technology and innovation foundation. and last but not least, mr. phillip berenbroick senior counsel with public knowledge. i want to thank all the witnesses for joining us. we look forward to your testimony. at this time the chair will recognize each witness for five minutes to provide their opening statement but before we begin i want to explain our lighting system. and in front of you of the witnesses is a series of lights. the light will initially be grown at the start of your opening statement. the light will turn yellow when you have one minute remaining. and please wrap up your testimony at that point. the light turns red when your time has expired.
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mr. claure, you are recognized for five minutes. [ inaudible ] >> before we begin, i want to pay my respect to chairman dingell, his longstanding service to this country. it's an honor to be here today. i'm grateful for the opportunity to speak with you. i would like to take the opportunity to explain why sprint's proposed merger with t-mobile will be great for the american consumers, will be great for sprint employees and will be great for our country. i'm going it into details in a moment process. before i do so i want to tell you a lit little about mo he i'm a immigrant i emfwrated from bolivia had little money, went to small university in poverties and received a interpretation. second an entrepreneur. after i graduated college i founded a company called bright star. i started selling phones out of my car. and i gradually grew bright star
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in the largest mobile phone distribution and supply chain services company in the world. we worked hard and grew over $10 billion in sales and thousands of employees. and i'm proud we made bright star the largest hispanic owned business in the history of our country. in the 2014 i sold it is to softbank. immediately after i became sprint ceo. at that time sprint a kansas company was near financial distress. in 2013 the company lost $5 billion and in the previous ten years sprint lost over $25 billion. and we had approximately $31 billion in debt. a great company with tens of thousand of jobs across the u.s. was at risk. beginning in 2014 we undertook a massive painful transformation of company. we worked hard the same way we did our bright star ground up. we reduced expenses close to $6 billion through cost reductions gee layoff and unwanted transfers of jobs overseas. we didn't want to but had to. today sprint is no longer in
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financial dire straits but we face significant challenges. despite our success, we are unable to fix our main challenge. the quality of our network. we could not fix our network because of our poor financial condition and our lack of low band spectrum. because of our network quality, sprint still struggles to attract lots of new skpers and many customers that require at a the faster pace. commerce are not willing to sacrifice quality. today, the u.s. wireless market has become a duo oply. verizon and at&t have close to 70% market share and control 93% of the carb flow generated from the industry. as a result it's hard to invest and compete at the same level. today we're a technology inflect shun point. over the next few years 5g is coming. a new standard of connectivity. it's going to completely change the way we connect and live our life. but if sprint doesn't have the resources to build a 5g network
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to provide the necessary competition against the at&t and verizon duo oply. we estimate we need close to $25 billion just to offer 5g in our limited coverage area. and because we don't generate any cash flow we would have to raise more debt and to pay for that debt we have to increase prices tos american consumer. the only company that can build the world's best 5g network is a combination of sprint and t-mobile and can only do this if this merger is approved. as a combined company we are committed to invest nearly $40 billion over the next three years to build the word's best fiefrg network with nationwide coverage. how can we do this together? it's simple. it's the marriage of two necessary and complementary 5g pieces. sprint has high capacity spectrum. which we have akwoird over many years. t-mobile has broad national spectrum it's capacity plus coverage. today we can build the world's most advanced covering every corner in america in urban swsh,
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suburban and rural areas we can't take lightly that we need to lead in fiefrg. china made it a priority to win the 5g race. they're investing billions. when a country has the best network with the latest technology it brings massive economic stimulus, explosives job growth, and a new wave of entrepreneurs. america is a land of innovators and disrupters. let's keep it this way. my story validates this. letting another country take the leadership away from the u.s. will cause irreparable damage. this is the opportunity of a loift. in addition, yes we are committed to lower prices. when we merger two companies we will create eight times the network capacity that we have on our own. we'll have to beat at&t and versusen on price to fill the capacity. this makes financial sense. it's good business and most importantly it's our commitment. lastly, it's true that most mergers do not create jobs. in merger is the opposite. s in a growth story. in new company will create new jobs. blue collar, white collar jobs
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jobs in urban suburban and rural america. we need skilled network engineerings enterprise cell teams and jobs at a we bring back if from overseas and new sales reps for the stores opening. i can't thank you enough for loug me to speaked to. i'm grateful to the country and as american entrepreneur i hope you will approve in merger. i look forward to answering questions. >> thank you very much. the chair now recognizes mr. legere for five minutes. >> thank you, chairman doyle, ranking member latta and other members of the subcommittee for inviting marcelo and me and rest of the panel before i begin my remarks let me offer condolences to congressman dingell a towering figure in the mouse and a lettered on this committee. i appreciate the opportunity to tell you about the tremendous benefits of the proposed t-mobile sprint merger and the progress we're making towards making it a reality. so first what will this merger deliver? is it will deliver a
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supercharged uncarrier which can ensure u.s. leadership in 5g. increased competition and create american jobs. first and foremost, the new t-mobile will make smur america wins the gloelk 5g race. this is so important because 5g will unlock new capabilities that will fuel innovation and job creation well beyond anything we have seen so far. 5g will completely transform the way americans live, work, travel and play. 5g means realtime navigation, downloading a movie in seconds. instant language translation and much more. nearly every business in america will be able to use 5g to revolutionize how they create and deliver goods and services. best of all, with this transaction the benefits of 5g won't just float a big cities. combine splint and t-mobile will produce a faster be deeper better network nas nationwide. benefitting consumers and businesses everywhere, including
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rural america, neither company could achieve in on its own. second, new t-mobile will have the capital, the scale and the network to supercharge competition, unleashing significant benefits for consumers including keeping prices low. the combined company will continue the t-mobile tradition of disrupting the wireless space. and we will disrupt in home broad band with new wireless broad band options freeing millions from the strangle hold of big cable. budget conscious customers have the most to gain because they consume the most data. they have the most to gain when data costs less. it will be a huge leap across the digital divide. our opponents are wrong when they claim that the merger will lead to higher prices. in fact, the opposite is true. consumers will win with lower pri pr prices. and better services how the costs drop sharply and the
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network capacity expands tremendously. i'm so confident that the merger will lower prices we're willing to put money where our mouths is np last we committed in writing to repentingers that we will make plans available at the same or lower prices for three years. third, this merger will be a tremendous jobs creator at new t-mobile and across our country. our merger will be jobs positive from day one and going forward. the buildout of our 5g network, investment in new customer care centers, expansion to new businesses like video distribution, broad band and enterprise service means thousands more jobs than the two stand alone companies needed. in the first year we will have thousands more employees than stand alone companies combined. by 2024 when we have 11,000 more kbaes. our critics are wrong about the impact on jobs. i've looked at their arguments. and supposed analysis. and they do not make sense. they ignore the facts.
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they don't account for any areas jobs grow, like network integraten. they said we would cut 10,000 jobs when motor psc merge. we expanded by thousands jobs. let me say this to every t-mobile and sprint employee working in a store today. each of you will be offered a jb with the new t-mobile. our opponents lobbed false amgss at the transaction lah huawei and zte into the networks. let me be clear there is no huawei or zte in equipment in our network. there never will be not ever. many have already recognized the tremendous benefits of in merger. krifious and team telecom completed the national security review and approved the transaction. 16 of 19 plates completed reviews and found the
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transaction to be in the public interest and nearly 200 organizations companies officials and community leaders publicly support the transaction. i'm particular lip horned if a congressman he shall oop congresswoman long have signed bipartisan letters of support. to shows touting us i would say this we had the unkerrier my management team and i believe on delivering on promises and we know if don't we lose the credibility and trust of our customers and employees. i can promise to you the new t-mobile team will deliver for consumers, american workers, and for our country. thank you and i look forward to answering your questions. >> thank you, mr. legere. the chair now recognizes mr. shelton for five minutes. >> chairman doyle, ranking member latta, chairman pennsylvania lone -- microphone on? sorry. >> and point it towards your face a little bit so we can. >> chairman doyle, ranking member lat tai.
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chairman pallone. ranking member walden and members of the committee let me office the condolences on the passing of chairman dingell. i'm chris shelton the president of the communications workers of america. we represent 700,000 employees in telecommunications and other industries, including more than 45,000 in which areless. let's tell it lake it is. in merger would kill american jobs and raise prices on american consumers to enrich two foreign companies, deutsche telekom from germany and softbank from japan. our analysis shows 30,000 americans would lose jobs. more than 25,000 of those jobs would be in realtime stores across the country. some owned directly by sprint and t-mobile. others owned by independent retailers. the other job cuts would be in headquarters. sprint and t-mobile compete with each other for the same type of customers.
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often low income households which is why their stores are located near each other peace, sometimes right across the street. you'll see in newark, new jersey, how close the stores are together. you can see from the maps how sprint and t-mobile stores tend to be right next to each other. s in especially true for the prepaid brands, boost and metro pcs which tend to be concentrated in lower income areas. so if the companies merge why would they keep two neighbors stores open? chances are they won't. rather than the merger will mean pink slips for 30,000 wireless workers across the country. you heard the ceo of t-mobile say that they will add jobs. pardon my language, but that's just bull. without binding an enforceable commitments -- i mean commitments with no loopholes. such promised attention are
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cheap sales and talk and easily brekeen. first t-mobile doesn't differentiate between contractors and short term temporary hires or long-term employees. upgrading towers is usually done by temporary contractors not full-time employees. second mr. legere talks about call centers. but both companies have a long history of offshores call center jobs. moving them to the philippines, mexico, and other non-u.s. locations. third, t-mobile mass a track record of buying companies and then cutting jobs. after it acquired iowa wireless in 2018, it closed all i-wireless call centers and more than 90% of the retail locations. it cloakssed every store in iow. finally trusting sprint and t-mobile with american jobs is
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like trusting a vampire at a blood bank. these are two of the worst companies in the united states when it comes to labor law and the treatment of workers. in recent years, t-mobile has been charged with more labor law violations per worker than even wal-mart. violence include surveillance of employees and prohibiting workers from talking to each other about internal workplace investigations. even regarding sexual harassment complaints. and what about the people lucky enough to stay employed? the merger would drive down wages for all wireless retail market workers, in some cases by as much as $3,000 per year. fewer firms competing for skilled labor means that each firm will pay its workers less. employers compete for the skilled labor with wages and benefits. take away competition, and the
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remaining companies can throttle down employee compensation while jacking up prices on consumers. both are symptoms of the same disease pb too much market concentration. if sprint and t-mobile had not fought the workers who want add union perhaps the employment and wage impact would not as bad but they did and it is. to sum up 30,000 fewer jobs lower wages by as much as $3,000 per year pb disproportionate harm to low income communities, higher prices for all consumers. all to help a state owned german companien a a japanese billionaire make more money. members of the committee, that is not in the public interest. it's economic treason. thank you and i look forward to answering your questions. >> thank you, mr. shelton. miss bennet you are recognized for five minutes. please make sure the micron is on and pull the microphone told. >> chairman doyle, pallone
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abranking members walden and latta. and members of the subcommittee. my feet don't touch the ground either just so you know i'm cari bennet with the rural wireless association. i want to express my condolences to all of up for chairman dingell may his memory be a blessing. thank you for this opportunity to testify today to discuss the impact that the proposed t-mobile sprint merger will have on rural america. rwa opposes in mergerer. we have heard proms from t-mobile over the years that have not been met. we have no reason to believe gnats t-mobile will follow through on their new promises if they are allowed to reduce competition. in short, this merger is bad for competition. it's bad for consumers, especially in rural areas who will experience fewer choices, price increases and substandard service. it should be denied. t-mobile has a poor track record in rural america.
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let's face it. t-mobile is making a lot of promises about how they will expand coverage in rural america and kprof stfs for the americans but they have a long track record of doing the opposite. we have no reason to believe that will change if the mermger is approved. in fact we think it will get worse. i'm going to run through three examples of t-mobile behavior that have my members concerned. roaming. roaming arrangements are important to rural americans. roaming keeps urban, suburban and rural americans connected. sprint has historically worked with rural carriers to ensure rural americans have robust mobile wireless service. t-mobile has not according to our members rp t-mobile's roaming rates are 20 times high are than sprints. and t-mobile existing roaming agreements are one sided they will enter into uni lateral roaming arrangements under which a rural carrier subscriber can roam and t-mobile network with
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no possibility of t-mobile remaining on the rural carrier network. t-mobile determined it's better for its own customers to do without coverage in rural areas rather than pay the rural carry your for network access. in means that in those areas t-mobile's customers cannot be reached and are basically off the grid. all because t-mobile chooses to restrict access. do we really want a new t-mobile's 100 million plus subscribers which would be more than one third of the market share to be unable to access rural carriers network's across the country? next. rural call completion. less than a year ago the fcc found that t-mobile failed to correct ongoing problems with delivery of calls to rural consumers. in fact, t-mobile admittedly inserted false ring tones into the calls so that the caller believed the call was ringing on the other end when it went. aside from blatantly breaking the law t-mobile's actions
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severely behind indianaered rural consumer from running business the communicating critical information to family and friends and reaching emergency service personnel. in callous behavior in an effort to save money underscores the fact that t-mobile treatment of rural americans is not in the public interest and harms rural telephone companies who would have received payments for terminating the calls. we believe that t-mobile destructive behavior will continue perhaps even more aggressively once the rival sprint is eliminated. last, false -- false brewed band mapping claims. our members have serious concerns about t-mobile's broad band maps. submitted in the fcc mobility fund proceeding. that fund was created to provide $4.5 billion to mobile carriers over the next ten years to help connect rural americans who lacked quality wireless braund are broad band service to make sure they know where the money is needed the fcc asked the wireless carriers to submit maps indicating where each carrier
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offers four g coverage. according to testing done by members when t-mobile submitted data the company vastly overstated its rural coverage to make the reach seem bigger than it was. when rural carriy years went to test the claims, 95.8% of the test showed speeds below the threshold demanded by the fcc or no 4 g broad band at all. in many places where t-mobile certified coverage cell sites hadn't been put in provision. if left unrectified carriers will be denied funds causing a loss of service to rural consumers revelle attention on the funding to keck. the fcc is currently reviewing this issue but before the fcc can make a public interest determination this proposed merger, it in must first find that t-mobile mab honest in its dealings with the fcc. our members drive tests restrainingly suggest otherwise. the fcc should nod approve a merger if the unsfld enforcement
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procedure is pending. i thank you for your time and look forward to ens aing questions. >> thank you very much. mr. brake your you're recognized. >> thank you chairman doyle, ranking member latta and members of the subcommittee thank you for inviting me to share the are you have you the the information technology foundation on the pending merger. first let me briefly echo the condolences to the dingell family. he was a real legend and will be missed by all of us and all the members as well as his twitter followers everywhere. with that i tif restrainingly beliefs a combination of sprint and t-mobile why bring a better future for american businesses and consumers compared to one which peach company attempted to continue alen in my written testimony i spler several reasons to support this merger. in the opening remarks i would like to focus on three key issues. first, in merger provides an accelerated transition to robust 5g. second, more competitors is not always better. or put another way there is
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nothing special about the number four. and lastly, i'd like to discuss the right way to define the market when thinking about the transition. first, and perhaps most importantly, 5g. the key point here is that a kboind firm would have the spectrum assets and financial strength to deploy robust 5g network with broader coverage and significantly more capacity compared to what either company could provide aren. not all 5g is the same. around the world carrier are in the process of exploring business middles deploy pilots and incrementally replacing old equipment with new 5g gear. the initial explore forecoverings are different in kind, however, from the 5g network the parties envision. the combination of t-mobile peace low band, wide coverage 600 megahertz spectrum and the sprints high capacity 2.5 gigahertz spectrum would make for a high performance nationwide next generation network that would help proposal u.s. leadership and economic
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competitiveness not just in 5g itself but in the applications that an advanced network enables. this is incredibly important because fiefgt is anticipated to being more than just faster more responsive phones. the technology is designed to be adaptive to a wide variety of use cases hopefully driving significant productivity gains through the kpee. the capacity for from a knew 5g network would effectively increase the supply of wireless services, again, more than the two companies could provide separately. we should expect this increased splay to maintain downward pressure on prices, including in the wholesale and prepaid market segments. second will be, let's talk about competition. you'll hear some of my friends who you heard my friends on the panel argue gnat government must preserve four carriers for competition. but competition is a means not an end unto itself. of course, any market can have too few competitors but can can it can have too many resulting in waste flt do you mean indication of resources.
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i want to stress that again. more competitors is not always better. s in especially true drive given the economics of communication networks which feature tremendously high fixed up-front costs to serve a given geographic area. these infrastructure costs allow for virg rouse competition with relatively few competitors compared compared to other industries. we should want infrastructure companies to compete at sufficient scale. a combined company could do more with less allowing the new firm to drive greater value throughout the business ultimately passing a significant sthar on to consumers in the form of lower price, a higher quality network or innovative new offerings. a market of three healthy relatively equal size companies that continue to invest and innovate is far, far better nan a lop sided market with two firms considerably stronger than the others. there is no reason to preserve four for four's sake. lastly, it's important to not define the market fo narrowly
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and acknowledge the dynamic forces changing competition. 5g is accelerating what is an already -- what are already rapidly differentiating business models in wireless services. basic connectivivety is increasingly commodity fieed and wireless companies are looking to new revenue sources to recoup large ongoing investments. niece new revenue opportunities include internet of things services, connected vehicles and drones, over the top video services, advertising, and perhaps most notably fixed wireless broad band to the home which is in turn prompting cable providers to explore wireless entry. these new business models with value added services built on top of businessic connectivity are likely to keep downward pressure on price for the traditional bundles of voice, text and data whether there are three or more facilities operators. because this merger will accelerate flourishing u.s. 5g future, improves the market structure with three strong firms with sufficient scale to
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vigorously compete and comes at a time of rapidly changing business models we believe it's in the public interest and hope it's quickly approved. thank you and i look forward to your questions. >> thank you. mr. berenbroick you're recognized for five minutes. >> thank you, mr. chairman. ranking member latta, members of the subcommittee. and i want to associate myself and public knowledge with the statements of the pannell and the members of the subcommittee honors chairman dingell's life and his service. thank you for inviting me to appear today. and thank you for shining a light on the harms of the proposed sprint/t-mobile merger today's hearing will show the merger is a bad deal for consumers, for competition and for america's wireless future. the evidence clearly shows that this transaction does not serve the public interest and is unlawful under the anti-trust laws. as you consider this deal ask yourself what will it mean for
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each of your constituents who rely daily on smartphones? the answer is clear. they will ultimately pay higher prices and have fewer choices for wireless service. since announcing the intention to merge in april 2018 the companies have failed to show that the merger would not violate competition laws, they have failed to show that merger would affirmatively serve the public interest as required for fcc approval and other public interest benefits would be offset by the merger -- would offset the merger's competition. the evidence sprint and t-mobile have presented to the fcc and the department of justice shows three national players would result in higher prices for consumers. you don't have to take my word for it. the economic analysis submitted by the companies admits as much. recent promises that the merged company will not raise prices in the near term underscore the
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obvious. post-merger the marketplace will not be competitive enough to discipline the three remaining national carriers when they raise prices. the proposed transaction will eliminate competition and inflict harm on low-income, prepaid and rural consumers who can't afford to pay more and lead to lost jobs and lower wages for the workers that remain. it will eliminate avenues for competitors and finally the deal will harm small and rural wireless providers and their subscribers who rely on competitive choices for roaming and wholesale. remember under the fcc's public interest analysis the company's burden is not merely to show that there is a lack of public interest harmed. they must demonstrate specific pluck interest benefits that would directly flow from the transaction. the fcc is charged with affirmatively promoting competition, not merely maintaining or protecting the existing level of competition.
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the companies have not shown that this merger would increase competition or benefit the public interest. the commission's public interest standard is rooted in the text of the communications act and the commission is charged with ensure the availability of advanced telecommunications to all americans and quality services are provided at just, reasonable and affordable rates and would frustrate all of these fundamental rules. for nearly a year, sprint and t-mobile have attempted to overcome the overwhelming yet predictable harms to the public interest, consumers and competition, to distract from the damage this merger would inflict on wireless competition the companies insist that this merger is about competing with cable companies. don't buy it. we've heard this before. this is exactly the same song at&t and t-mobile sang when they tried to merge in 2011. policymakers rejected these arguments then and these claims are similarly hollow and
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misleading. collapsed under public scrutiny and the company's engineering models have come under substantial attack and undermine the case the companies are making here today. the doj, the fcc and this subcommittee must follow the objective evidence they collect, rather than relying on unverifiable and unenforceable commitments made by the companies that evidence includes prior public statements by the companies themselves, prior fcc and doj evaluations of four to three wireless mergers, international wireless market compare sons, all of this evidence clearly shows that merger will jet competition in the wireless market, lead to higher prices for every wireless consumer. further the evidence undermines the speculative and unverifiable benefits the companies continue to allege and have done so here today. to be clear, this merger is not necessary to build 5g networkings and will not increase investments in 5g. the companies are already competing to deploy robust 5g
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networks. this will continue preserving the documented benefits of vigorous competition and will not lead to new deployments in rural areas or close the digital divide. thank you for your invitation to appear here today and i look forward to answering your questions. >> thank you. with the conclusion of witness testimony, we're now going to move to member questions. each member will have five minutes to ask questions of our witnesses. let me say to my colleagues that i love you all dearly, and it pains me greatly to bring the gavel down when with you've exceeded your five minutes, but the kindness that i showed last week resulted in many people going much, much over their five-minute time so if you're near the very end and ask a question and it takes more than five minutes for the answer we'll certainly let that happen but after five minutes, please no more questions or i'm going to have to enforce it with the gavel. i'll try to set an example by yielding myself five minutes and staying within the time.
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so mr. legere, i'm going to ask you and mr. brook the same question but a different way and hold you each to 45 seconds because i only have five minutes. tell me, mr. legere, why you think this merger is different than other mergers in the past in highly concentrated areas? tell me why you think this isn't going to result in some of the things we've seen in other mergers where it did raise prices and it didn't bring competition? what's different about this? >> thank you, mr. chairman. in general, the issue with mergers is that industries consolidate supply goes down, prices go up and jobs are eliminated. this is a unique merger where the outcome of this merger will be a significant increase in supply in the form of eight times the capacity that our network will make available. it will bring in 87% decline in the price per gig of data and jobs will go up. this is dramatically different.
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it's unique. it's advent of 5g. the complimentary nature of these networks increases supply significantly which will decrease prices. that's quite different. >> thank you. that was within the 45 seconds. i appreciate it. so mr. barron, tell me why you think this merger will be the same as any other merger? >> thank you for the question. so this merger is remarkably similar to at&t/t-mobile. that merger was rejected by doj and the fcc in 2010. that deal would have led to doj and the fcc found higher prices, less competition to discipline the marketplace, less competition would mean less innovation and service plans, less robust networks, lower customer service quality, less incentives to invest and deploy. those things are all true here. but in some instances this merger is worse. we're actually eliminating both of the smaller maverick competitors that challenge and discipline the behavior of the two larger companies in the marketplace. there are also increasing harms
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to the prepaid market, low-income consumers, lifeline marketplace and then lastly, the roaming and marketplace those harms are exacerbated here between to at&t and t-mobile. >> mr. sheldon f a sprint employee is working at a retail store and they lose their job because they are working across the street from a t-mobile store, is the claim being made that that employee will get another retail job in that area? or do you think rather it's potentially these jobs will be displaced and it best replaced by different types of jobs in different communities? >> [ inaudible ]. >> will you put your mic on? >> first of all it may not be a sprint employee that loses their job. that's kind of the problem with the numbers here. most of the -- >> pull your mic towards you. >> most of the stores are independent contractors who are -- who don't have sprint
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employees. i don't see how even a sprint employee say in pittsburgh would lose their job in pittsburgh because of consolidation of stores and end up in pittsburgh. they might end up in nebraska if mr. legere keeps his word and offers that employee a job, but i didn't see how they're going to, because of the concentration of stores, after this company merges if it merged they will have twice the number of stores that at&t or verizon has now. stores are going to be closed no matter what happens. >> thank you. mr. baron, what precedent is set by allowing competitors to achieve an evolutionary step in technology? what happens then for 6 g or 7 g and how does the government view similar claims for 3g and 4g? >> congressman that's a good question. so as you'll recall in
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at&t/t-mobile, the -- one of the claims the companies made was that they couldn't deploy 4g lte coverage to the entirety of their network footprints to the rest of the country if they didn't merge. the government evaluated the evidence that was before it and they rejected that and found that was not credible, they found that competition was likely to lead to deployment, not consolidation. the same is true here and so essentially if you buy into the argument that we need to allow these companies to merge for 5g -- by the way that is directly contrary to the statements they've made to wall street and investors even recently, you know, it essentially sets the precedent that whenever there's a need for these companies to invest in new infrastructure to deploy 6g and 7g the gates are open to additional consolidation. not fewer. >> i see i have seven seconds left and i'm going to yield it back to set a good example for
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the rest of my colleagues. i will now yield to the ranking member. >> thank you, mr. chairman. and thank you very much for yielding. mr. brook, if i can start my questioning with you. my district is a microcosm of the country going from toledo to suburban neighborhoods to small communities and sparsely rural counties. the state of new york is also well known for being split between rural and urban communities. what lessons can the committee draw from the new york public safety commission's approval of this merger last week in terms of benefits on both for the rural and urban communities? >> sure. yes, thank you for the question. yes, the new york public service commission, i think the main takeaway is that this public service commission took a hard look at this merger, determined that it was in the public interest and allowed it to go forward with minimal conditions, conditions related to jobs. it saw it was benefiting the state long term.
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as far as your question regarding both urban and rural areas, i think the most important point, again, is this combination of complimentary spectrum assets. you have the low band 600 megahertz spectrum that provides great come verage to a wider ar but limited in the capacity it can offer, compared to the 2.5 gigahertz spectrum assets that sprint has ready to deploy for 5g which has a greater capacity. with the two of those combined you get a much better network in terms of both coverage that can help provide maybe not the greatest capacity but wider areas in rural areas, provide 5g, about but in urban areas you get a much greater capacity with a 2.5 gigahertzes to see a more robust 5g network than either company could provide on its own or greater than the two individual companies combined if you want to put it that way.
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i would note however, the jurisdiction of states is somewhat different than the review at doj and the fcc. if i may, if there's time, one of the main issues that is unique to the state level jurisdiction is that of jobs. with any merger there are going to be jobs created and jobs destroyed, right. that's inevitable. the companies say, you know, they will be a job creator from day one and apparently the new york public service commission was content with that assertion in addition to some commitments and i believe a call center being built in new york. but this is a somewhat unpopular point, particularly with politicians, but wireless services, this is not a jobs program. right. again, perhaps an unpopular point but if the companies combined, not even specifically this merger, but any companies, can provide a greater output,
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more capacity, greater services, with fewer inputs including labor, that is the definition of productivity. that is the -- what drives economic growth in this country and should be a good thing. i recognize that's not a popular opinion especially among politicians, but productivity growth is an important component for this. >> thank you. miss bennett, would you like to comment on new york? would you like to comment? sni . >> i was just going to point out that the review by the new york public service commission is not looking at -- it's not looking at the jobs issue, it's not looking at the overall merger. that's regulated to the doj and to the fcc and they do not have jurisdiction over that. i do want to hop back to a point though that mr. legere made about 87% decline in prices per gig. lived to see some of that passed through on the roaming rates because right now roaming rates
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are about ten times to 15 times higher than the retail rates they offer their own customers. in a whole sale environment the carriers are charging more than the retail environment. the cost is lower if they can pass on retail rates that are lower than the wholesale rates. sorry. not your question but wanted to go back to that for a minute. >> can i jump if for one second. i apologize. >> i'm sorry. i'm almost out of time here. mr. legere, if i could -- i have about 38 seconds left. would you like to comment? >> i would like to comment. i appreciate the comparison. yes, the new york public commission is one of 16 states that has approved a merger and their review looked at all of the same issues, what it's going to mean for the state from a standpoint of 5g, medium speeds of 450 mega bits, promise of 5g while having prices decline and having jobs go up, this was reviewed in total and all the
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benefits we preach about this merger, new york saw and we committed with them to the things that are appropriate for them and the promise of it is similar to the reviews that are taking place with the fcc or doj. >> thank you very much, mr. chairman. i yield back. >> thank you. the chair recognizes mr. pallone the full committee chairman for five minutes to ask questions. >> thank you. it's no secret that unions are under attack, corporations have sought to limit the power of unions which are fighting to make sure workers are fairly treated and get a livable wage and what we're seeing is a growing disparity between the people at the top and hard working people like those in new jersey, the folks who haven't seen a dime of the huge corporate profits and the trump tax giveaways. news reports highlighted the average tax refund will be 8.4% less this year. so much for the gop tax reform. the merger of t-mobile and sprint could wipe out 30,000
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jobs, 25,000 in retail and 5,000 corporate. at the same time t-mobile has announced it will be opening five new customer experience centers if the merger is approved, which will create up to 5600 jobs by 2021. i wanted to ask mr. legere about that. in 2012 t-mobile shut down seven call centers and allegedly sent the jobs overseas. now you say we will have new customer centers. anything in the law or legally enforceable protections to ensure the new center jobs are actually created and if those jobs are created, is there anything in the law or any legally enforceable protections to ensure that they wouldn't be outsourced in a few years to somewhere else? >> thank you, congressman. the couple things i would like to insert, i'm very proud of my tenure being the ceo since the end of 2012. i would point out that the employees badge carrying t-mobile employees since that time have gone up 250%.
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the employees of metro -- >> is your microphone on. >> yes. >> okay. >> little closer so we can hear you. >> i have had a 250% increase in employees badge carrying employees at t-mobile since the time i've been ceo. i would like to point out i'm very proud of the over 50 work place awards that the company has worked to attain including the hundred best -- >> mr. legere, could you address the call centers? if not i'm going to move on i don't have that much time. >> the call centers, 5600 jobs, including 2,000 additional making it 75 to 7600 jobs are a critical integrative part of our business plan, filing with the doj, our support documentation to the fcc and something i'm committed to. >> all right. i mean, mr. shelton, if i could ask you, does that comfort you, his response? what's your take on how this merger would affect wages? >> our belief is that it will have a downward effect on wages
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and we have a study from the economic policy institute and the roosevelt institute that like prices to up with less competition wages go down for labor. you have collective bargaining but t-mobile and sprint oppose collective bar beginning and if i may when t-mobile laid off those 3300 people, call center people in the past, they said that work did not go overseas. the labor department did an investigation and found out that it went to the philippines. so, you know, how do we take their word now? if you look not only has the workforce in the united states increased, but also the workforce in the philippines and lots of other countries has increased by leaps and bounds. >> all right. let me ask you -- ask mr. legere if i can one more question about resiliency of the nation's communications systems and public safety. my district was hurt probably
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more than any other district by super storm sandy and we've done a lot since then on a bipartisan basis to try to address resiliency for the communications systems. i see the fcc's 2017 atlantic hurricane season impact on communications report outlines a portion of the problem notice in 2017 the u.s. experienced 16 natural disasters with costs totalling $316 billion. i would like to enter that into the record if i could that report. >> without objection so ordered. >> my worry is that consolidation and network infrastructure could prioritize cost savings over resiliency. in the face of disasters. i noticed new york resiliency wasn't addressed. mr. legere, not much time, can you explain why you chose to leave this issue out of that public interest statement and whether you had discussions with the fcc regarding how this deal
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will affect new york resiliency and public safety? >> thank you for that important question, sir. i think the fcc's feedback on the increase in resiliency and the response to natural disasters in the last year or two by t-mobile has been industry leading and something that they're extremely proud of. resiliency of our noosetworks h been a critical priority and it is of the new t-mobile network. this infrastructure plan will significantly increase the resiliency of our network and its is part of the plan. >> thank you so much. >> gentleman yields back. the chair recognizes mr. walden the full committee ranking member for five minutes to ask questions. >> thank you, mr. chairman, before i start i want to thank you for your concern about these jobs. we had a hostile takeover at this committee and lost about half our staff and i'm just wondering this new spirit of protection of lost jobs, can we get those back? >> were they -- were they reassigned to a different
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neighborhood? >> yeah. you could say that. i want to thank our witnesses for being here. mr. barrenback, i know mr. brake talked in his testimony about the number four carriers. is there a magic to number four in terms of competition in this space? is there some magic to four versus five versus three versus eight? >> it's a good question. the key as the department of justice and fcc looked at this deal isn't whether there's a magic number of firms in the marketplace. do the players in the marketplace, does the structure of the marketplace promote lower prices, more investment, better choices for consumers? more deployment of broadband services? we believe frankly that when you take these two companies and you merge them together, you eliminate the mavericks, the companies that have been the driving competitive forces in the industry. to answer your question directly i don't believe there's a per se
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magic number. it's about market structure. this transaction has significant concerns. >> mr. brake, do you want to comment on that briefly? >> sure. i mean, as i mentioned, right, there's no real magic to the number four. it seems to be a lot of the folks pushing to preserve four seem to think that more is necessarily better. why not five, why not six, why not seven and the answer is clear because then you end up with all of this due plication of infrastructure that leads to a fragmentation of market, increases costs that have to be borne by consumers of the network, right. so the question is what's the optimal balance between competition that drives down prices, continues innovation, but doesn't see these duplication of resources, considering the limited cash flow and high debt of sprint there's a good indication that that number, that optimal number, is closer to three rather than four. >> all right. thank you both. appreciate your perspectives on that and want to turn to our other representatives here.
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talk to me, mr. claure and ledger, about roaming rates and what we should anticipate about data, data access and costs, going to go up, down? as you both know my district is pretty enormous and gives new definition to rural and remote. we're concerned about how these two would work. i don't know who wants to go first on that. please. thank you again for being here. >> thank you, congressman. one of the most important pillars of this merger is the increasing capacity. basically when you put these two networks together you're going to create eight times the capacity. to put things in perspective imagine if you had a stadium in which two-thirds of it is empty. pretty much you're going to be -- you're going to have an economic incentive to reduce prices and find different people to fill this capacity. this is why we made -- why we've been clear and we made a commitment to lower prices. traditionally most mergers you
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don't find companies that go and make a voluntary filing to the fcc like john and t-mobile did, that prices will remain the same or lower. it's a economy of capacity. we will have more capacity than ever before, eight times capacity, we have to fill it and that's going to be filled by the partners in the industry. >> all right mr. legere, do you want to address those two issues as well? >> thank you, sir. i would first say let's be clear. the wireless industry is a duopoly controlled by at&t and verizon who control over 80% of the profitability in 95% of the cash flow and after the merger, they will still have almost 70% market share. what we've done for six years at t-mobile as the uncarrier, the thesis of this transaction is to use this increase in supply capacity and decrease price to super charge the uncarrier, to bring competition. you will see users have an 87% decline in the price per gigabit
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of data, you will have an eight-fold increase. users will go from ten gigs to 80 gigs and that's just in wireless. we expect to take that competition also to the cable industry which is not only a duopoly, it's a monopoly, and most of america, 79%, have no more than one choice for high-speed broadband access and we plan on entering that market, having as many as 9.6 million customers serving 50% of the geography of the united states, and saving just in that part over $13 billion a year to people on their cable and in home broadband bills. >> i thank all the witnesses for their comments. i yield back. >> thank you. i recognize myself for five minutes but want to reiterate my colleagues and the panelists on recognizing the leadership that john dingell provided on a bipartisan way to get legislation done that was sustainable in the long run and hopefully we can continue in that tradition.
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many houses in my district live paycheck to paycheck, more than a quarter have an annual income of less than $35,000 a year. if these households are faced with even a couple more dollars each month, it could mean they no longer have access to wireless service. mr. legere, can you cite any recent example where a country went from four to three wireless carriers and prices did not increase? >> thank you very much for the question, sir. the types of customers that you describe, we are disproportionately serving both at t-mobile and at sprint and they disproportionately have benefited from what we've done. >> which is why we're worried about the merger reducing competition to that sector of the propplation. >> since we've akirds metro pcs the average price of a prepaid service to our customers have gone down 4% but data usage up
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12 fold. >> didn't answer my questions. any countries that went from four to three and did not have prices increase? >> i'm not a study in the countries around the world, sir. >> i understand. mr. barrenback, is it true that the three to four merger of t-mobile, in the netherlands led to skreesed prices? >> yes. between 10 to 17%. >> is it true when austria went from four to three wireless carriers the prices also increased? >> yes, sir. between 14 and 20%. what's particularly important in that market, is that one of the three remaining players is one of t-mobile's sister companies, t-mobile austria. >> wouldn't this merger have an even greater impact on lower income people who depend on prepaid services since we would be moving from three to four facility based prepaid
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providers? >> yes, sir. i believe it would. you know, in this marketplace, in the prepaid market, you tend to have only three players currently, t-mobile, sprint, who would merge, and at&t. t-mobile and sprint would have a dominant position in that marketplace and have the power and incentives to raise prices on those prepaid customers who frankly are likely to be lower income, mobile only, likely to be consumers of color. and frankly would have no other choices in the marketplace. prices would go up on them and they would have nowhere else to turn. >> thank you. mr. legere, i have a letter here from you to the chairman of the fcc dated february 4th of this year, in which you stated, i want to reiterate unequivocally that new t-mobile rates will not go up rather our merger will ensure that american consumers will pay less and get more. i'm going to submit this to the committee without objection. is it also correct on the same
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day you submitted a letter to counsel for t-mobile submitted an ex parte filing to the fcc that further articulated this commitment? >> yes, sir. >> i'm going to submit this to the committee without objection. mr. barronback i'm curious to take into your opinion on this commitment? >> well, thank you for the question. this is an important issue. so the history of these merger conditions behavioral merger conditions in concentrated markets is not a positive one. we saw this with conditions on comcast where it violated its merger conditions with regards to bloomberg. >> let me ask you specifically. if a small amount of data is at its t-mobile and sprint legacy plans, consumers could see an increase in the amount they pay for their plans, is that correct? >> yes, sir. under the letter that was filed last week, that appears to be the case. >> is it your opinion that under the proposed condition legacy, sprint and t-mobile fees could
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be hiked and there will be nothing to stop that? >> yes, sir. and even if those fees were hiked and even if those were covered by the commitment that t-mobile has said it has made how are consumers supposed to enforce that? are they supposed to come to the fcc which has foresworn rate regulation and ask it to step in and enforce this on t-mobile? >> yes or no, is it your opinion under the proposed condition, legacy, t-mobile and sprint sur charges could be hiked and nothing to stop that, yes or no, please? >> yes. >> could i respond to -- >> i'm going to -- just wrap up here. i hope that your promise to the people will get more for what they are paying holds true. my concern is that many people won't even be in a position to take advantage of that promise because they might not be able to scramble the extra cash they need sim ply put i'm worried about many of the constituents i have would be priced out.
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my time has expired and i yield to mr. shimkiss. >> you can respond to that. >> thank you very much. i, you know, with respect to my colleague continues to interpret what is taking place at the fcc through his interpretation of what the outcome is before their work is complete that i highly respect what's taking place. several things, i want to be clear, i have worked very hard to rid the lines between post paid and prepaid. such that -- >> let me ask -- i was going to have that question anyway. i'm old enough to know the uncola. we're using the term uncarrier. so describe un-carrier? >> un-carrier is a term i coined. it was the thesis and the genesis of who we were going to be. what it was, was we set out to fix a stupid, broken wireless, arrogant industry listening to customers and solving all the pain points and removing those
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barriers. >> like what? give me quick examples. >> we eliminated contracts, eliminated international data roaming, free music streaming, et cetera. >> let me follow up on the question, so if you enter as a more dominant competitor to at&t and verizon, wouldn't that un-carrier characteristic carry into that competitive marketplace? are you going to jettison that? >> my goal has been not just to differentiate pi differentiate myself by the changes but force at&t and verizon to change so that the wireless industry would adapt. i've been successful in changing the industry, but i'm not breaking through because i don't have the scale and the resourcing capability. the goal here is to super charge that un-carrier, force at&t and verizon to invest more in 5g, lower prices, broaden services, go deeper into in home broadband and i believe that is possible
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through this, through this merger. >> i appreciate that. mr. claure, what's going to happen if the merger gets approved? you do bring something beneficial to this debate, especially for the rural folks. greg walden represents rural america, i represent rural america, billy long. we got a lot of folks here that that's a concern. is there a way to carry that roaming debate that sprint trumpeted to this new merged company? >> hit your mic. >> thank you for your question. today's sprint has contracts with most of the rural carriers and have been very clear with john that the new t-mobile will plan to honor the contracts that sprint has signed. what is important for most of you who have people in the rural parts of the country, it's very simple, t-mobile did not have
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600 megahertz spectrum, so t-mobile built nationwide coverage. today they do. we are going to bring 5g to every corner of america and that's going to be a huge differentiator. you've seen the lack of competition that exists in rural america. >> mr. legere, i hope that would be part of the new corporate culture as far as if this is a successful merged company. i think my folks in the rural wir wireless would like to see that. >> when you take the topic of rural, two important components the rural customer right now who is not being served does not have choice, and the rural carrier. both of those players will be served greatly by this transaction. i clearly have honored that i will commit to honor all of the agreements that sprint has and i believe that we will be in a position to negotiate even better things for the rural players and i believe that in that partnership, we can be the rural players' partner to bring
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them to the 5g evolution and the winner will be rural customers. >> with my remaining time, one is remind my colleagues that this evening at 6:00 in the ray burn foyer the next generation 991 has their awards ceremony, especially if you're new on the committee an want to know, 911, telecommunications location, that's a good event to stop by and i want to encourage you to do that. mr. barronbrock, i'm sorry, in your comments and testimony you lauded the department of justice on their decision on the t-mobile/at&t merger. our point is you have the fcc and the department of justice making this ruling. do you trust the doj to make the ruling without as chairman walden said our ranking member
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walden said without political influence? >> thank you, congressman. yes. obviously that issue of political influence has come up with regards to merger reviews in the past. yes, i do trust the staff at the department of justice to fully review the evidence before them, the staff at the fcc to fully review the evidence and make those recommendations. >> thank you, mr. chairman. >> thank you. the chair recognizes the gentleman from iowa. >> thank you, mr. chair. i thank the chair and ranking member for having the hearing today and thank all of you for being here as well. it's been pretty enlightening. i think it's an important hearing. i'm happy to hear there has been a lot of focus on rural areas, both sides of the aisle. we represent many of us on this committee represents significant rural areas. i'm going to get to my first question. miss benefit, your testimony you state that t-mobile has and i, quote, determined that it is better for its business to do without any coverage in rural areas, unquote. as a representative of a rural
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district, not as big as some of them, but nonetheless pretty darn big, 12,000, 13,000 square miles, 24 counties, where coverage can be dismal or nonexistent, i get around my district all the time and experience this whenever i'm back, i find that particular assertion very worrying as you might imagine. can you clarify a little bit more on that point? >> certainly. i appreciate the question. our members who have built out the rural networks in their rural areas -- it's not everywhere to be clear. it's only in the areas that they serve -- >> you did mention iowa in your testimony? >> yes. what has happened is in negotiations with t-mobile, t-mobile elektsz not to -- they lack restrict, it's a technology you can put in place so that their customers don't have access to those rural carriers networks. they have roaming agreements because under the fcc rules they have to let the rural carriers customers roam on their network but not the reciprocal. so they choose not to do that.
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that's because they probably don't want to pay the roaming charges to the rural carriers. >> if t-mobile and sprint are combing services, can t-mobile make a structural commitment to use sprint's rural carrier service model? >> those are hard to enforce after the fact and to go back to the favorable agreements we have with sprint right now, those are expiring and we haven't been able to get any certainty from sprint about whether those would continue regardless of whether the merger has gone through. they've gone silent on us, and we have to wait until the merger is done or not done. >> my second question for mr. shelton, cwa released a report on the impact in iowa from t-mobile's acquisition of i wireless mentioned. one of the things that stuck out to me from this report was a dramatic decrease of t-mobile's retail footprint in iowa. can you expand a little further regarding t-mobile's acquisition
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of i wireless and how that reduced access in rural parts of my state and district? >> yes. when they bought the company in iowa, they closed down 90% of the stores and now for a consumer in iowa in a rural place in iowa, they have to drive 68 to 100 miles to get to the nearest t-mobile store in iowa. if you look at the company's plans their own plans say that 46 million rural customers will not be served by their 5g network. that does not bode well for iowa. >> actually, i know it's difficult in this political environment to demonstrate fairness but i'm going to do it in this case, mr. legere, and give you an opportunity to respond and make your case because to be frank, miss bennett's and mr. shelton's remarks leave me concerned about the potential negative outcomes
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in iowa. i know there are at least two sides to every story so want to give you a chance to respond to them and will t-mobile make structural commitments to rural constituents in my state who may stand to lose jobs, coverage and retail services? >> thank you very much. and the facts associated with what's happening with iowa wireless, i would be glad to submit after the hearing as well, but let's just be clear, there are 100 more employees than there were a year ago in iowa. there are 35 metro pcs, metro by t-mobile stores equalling the number of the stores there before and iowa wireless was a failing company stuck in 2 g and 3g and we provided the investment and spent $70 million so far upgrading to the 4g and now moving to 5g network. >> i am running out of time here. i want you to address the structural agreement issue going forward? >> i would be glad to look at ways to make that commitment and point out that part of our plan is to cover 96% of the 62
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million people in rural america with lte coverage and 84% of all of rural america with greater than 25 mega bits of in home broadband. >> and a group of politicians here we make promises quite a lot. i would like this to be in writing is what lived it to be and see you make that commitment. >> it will be in my business plan. >> thank you very much. ten seconds left and i would yield back my time. >> recognize my friend from ohio mr. johnson for five minutes. >> thank you, mr. chairman. i appreciate the panel being with us today. mr. legere, historically, sprint has been an effective partner with rural wireless providers, say that fast, allowing their customers to access sprint's voice and data network when roaming. i represent a very, very rural district in appalachia. miss bennett has testified that t-mobile has been unwilling to
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partner with rural providers or otherwise serve rural america. can you share what services the new t-mobile intends to provide in rural america and if there are any plans to partner with rural providers? i know we've alluded to some of this already but if you could do it for me i would appreciate it. >> yes, sir. thank you very much for the question. two things i would like to point out. one is historically, t-mobile has not had the where with all to provide full capabilities in rural america. we were a very densely urban company with no low band spectrum that covered rural america and we only recently have that. new t-mobile will have significantly more ability do that. secondly, sprint's not going away. this is a merger between t-mobile and sprint and all of the good of sprint will be part of the integrated t-mobile and we plan to carry those forward. i believe that in addition to providing broader services to
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rural customers, better lte coverage, in home broadband, i believe that we have a great abilitien to a partner with rural carriers and need their help with last mile access and capabilities and we can provide them with a pathway to 5g. i think it's the best partnership for both rural customers and rural carriers. >> all right. thank you for that. specifically, then, will the new t-mobile continue to make wholesale agreements available that are in line with those currently made by sprint or t-mobile? >> yes, sir. and all wholesale agreements are currently contract actual. we will honor those with the supply and capacity that the new t-mobile will have wholesale rates are only going to get better. in fact, carriers that have agreements with sprint and t-mobile will be able to choose the better of those and the alternative that suits them as well. >> thank you. mr. brake, miss bennett's testimony indicates that the new
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t-mobile would have zero incentive, quote, zero incentive to provide commercially reasonable roaming rates, terms and conditions, to rwa members. although there aren't -- although aren't there rules at the fcc in place to ensure that carriers do just that? and if they do not, there are enforcement mechanisms that the fcc can take? >> that's right. thank you for the question. the rural coverage is a multifaceted issue. the roaming issue is a narrow component of it. i just want to be very clear about the sort of dynamic here, right. the members of the rural wireless association enjoy favorable negotiations with sprint, mainly because they had a very small network focused on cities and did not have the rural coverage. i don't mean to disparage the
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members, there's nothing more american than trying to serve your community with wireless services but this is a wildly inefficient system to have a bunch of small, rural operators trying to negotiate with a small, limited coverage nationwide carrier is not an efficient way to do things. we should have companies operating at scale, building out coverage into rural areas as best they can. it's better to do that at scale than to hamstring providers to have individual, small companies in each pocket of rural america. >> thank you. >> i'm sorry, i just have to interject here. >> no. i'm -- i got to move on because i'm limited on my time. mr. legere indicated in his testimony in 2012 cwa claimed that t-mobile/metro pcs merger would destroy jobs when that generated 12,000 jobs. mr. shelton, why should we believe cwa claims that current
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merger will result in 30,000 job losses which incidentally exceeds sprint's entire employee head count? >> well, in the first instance, we were concerned about call center jobs because t-mobile had just shut down sevens u.s. call centers in the u.s. laying off 3300 people and sending the work to the philippines. metro pcs outsourced its entire call center operation. if t-mobile adopted metro pcs's outsourcing model 10,000 t-mobile call center worker jobs were at risk at the time. >> my time has expired. let me ask mr. legere, real quick if the chairman will indulge do you want to respond to that as well? >> i think what my colleague was attempting to explain why his estimates were wrong and it didn't take place. i would also just like to submit
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that the cwa predicted that at&t/t-mobile transaction that was disapproved would add 96,000 jobs. i know what my business plan is and i'm very clear jobs will be created. >> gentleman's time has expired. chair now recognizes the gentleman from virginia. >> thank you, mr. chairman. thank you for holding this hearing to help us better understand these complex issues. as for me, i'm particularly interested in how t-mobile/sprint merger will affect market for low-income consumers with poor credit. the services you provide are absolutely essential in vulnerable communities that end with reduced access this merger will have profoundly harmful effects. that is why i would like to talk about what this merger would mean for the prepaid market. now, mr. barronbrook, did i say that right? >> close enough, sir. >> thank you.
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your testimony you discussed the fefktsz this merger on these customers, the prepaid mobile market. can you expand upon what this merger means for the customer base in terms of choice and price? >> yes, sir. that's an important question. the prepaid market is, you know, right now it has about 97 million subscribers. i think that was the numbers at the end of 2017. you know, those nearly 100 million people are more likely to be people who are low-income, people who mobile is their only connection, they might not have a fixed broadband connection at home because it's too expensive and young people or persons of color who maybe have bad credit or no credit. this market drastically consolidates that marketplace. the hhi numbers that we talked about with the anti-trust review are even higher for the prepaid marketplace which means that the combined sprint and t-mobile in a duopoly market where only at&t is there is going to have the
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power and incentives to raise prices on those consumers. consumers are w.h.who are reliae mobile connection and nowhere else to go. >> mr. legere, you suggested that the prepaid market would benefit from the merger and made commitments to the fcc not to raise rates for three years and we've heard arguments that the spirit of those commitments may not bind you in practice. i assume you are making this commitment in good faith. business plans change. how can we be sure prices will not increase for lower income americans, for instance, could consumers take you to court? >> thank you very much, sir. this whole topic is one that's extremely important and what i have attempted to do and what t-mobile has been successful in doing is blurring the lines between what's called post paid and prepaid such it's almost a payment term. do you pay on the first of the month or last of the month so prepaid customers are not getting lesser capabilities or quality or data than previously.
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we're very proud that we are a large provider, second behind billionaire backed track phone in serving the prepaid market and that's important to us. our track record is our prepaid customers over last five years have had a 4% decline in price, 12 times increase in data and i've implemented plans by the way to allow prepaid customers to create their own credit by their payment history with t-mobile as opposed to their other forces and use that as a way if they choose to move to post-paid. i have a migration of about 150,000 customers a quarter going from prepaid to post-paid very proudly and that will continue. >> mr. barronbrook i would like to give you the last word with my remaining time. can you speak to mr. legere's comments that he just made? >> yeah. i guess i just didn't know if there was a commitment there or
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a promise. you know, i think what the committee and i think what the department of justice and fcc should be looking at with this marketplace is, are prices likely to go up? are the -- does the combined firm and the other players left in the prepaid market have the power and have the incentives to raise prices? when you constrict this marketplace down to two facility based providers, new t-mobile and at&t, that is clear and evident. a duopoly market will result in higher prices for the people in the prepaid market who can least afford to pay those higher prices. >> could i just emphasize the last point? i want to be very clear in any which way you would like to ask the question, prices will go down. unit cost prices will go down, absolute prices will go down and the pricing commitment i asserted on february 4th was not in response to a negative review
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process. it was an attempt to add another layer in addition to my business plan that says, if you are concerned whether there was any trickery let me be clear, the rate plans will stay in place and customers that pay x today will not pay more. and there is a very clear attempt that i made. >> mr. chairman, thank you, i yield back. >> thank you. chair recognizes the gentleman from missouri, mr. long. >> thank you, mr. chairman. mr. legere, in my district, t-mobile has a call center that employs nearly 1,000 employees. since it opened in 2006 it has shown continuous improvement in employee retention and performance. in 2006 and 2007 it was ranked number one by a magazine as the best place to work in springfield, missouri. can you talk about the new t-mobile commitment of at least 600 new retail stores, five new customer experience krenss and
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11,000 new employees on the ground and in rural areas and communities that need it the most, what effect will this merger have on jobs in my district? >> thank you, sir. i'm proud of the fact that a core component of the un-carrier and t-mobile was even changing the definition of what is a call center. away from ibr as in robotic responses and empowering those people like in springfield, missouri, to own personally customers called team of experts. what i'm doing with the merger is creating five new gigantic centers to deploy call of centers team of experts across what's going to happen with sprint. there will be five major centers with 5600 new employees. the existing centers will expand by 2,000 employees, meaning just in that area, 7600 jobs. of the increase in jobs at t-mobile, rural america will disproportionately benefit. there will be 600 new retail stores, 5,000 jobs, about 11,800
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of the people that will do the integration and network deployment will be heavily in rural america and so there will be 5,000 retail jobs, over 7600 customer care jobs and thousands of jobs on network integration heavily all in rural america. >> thank you. and mr. claure, should we be concerned these two companies once merge would hold a significant share of the prepaid market? >> even after the companies are combined, market share will only be 38%. the biggest beneficiaries will be those prepaid customers that are going to have the same access today to the great network that we're going to go build. we believe we've been very clear that everybody is going to benefit from the merger whether you're a prepaid or post paid. sprint has a long history of serving all prepaid customers all the way down to lifeline to our different brands we have boost and virgin and decided that we're basically going to keep all the brands so,
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therefore, we're going to continue to up the ante in the prepaid system. >> thank you. miss bennett, if you came down to branson, missouri, and went to the corner of commercial street and maine and on each corner there were different folks selling gala apples, apple company one, two, three, four, selling edible apples and one of those companies got to talking to the other one on a smoke break and said we can xwecombin and grow more apples at less money bring them to the market at a smaller fee, do you think combining the two companies would affect the price of apples on that corner? can you turn your mic and pull it up? >> since we're talking apples i don't think that would have an effect on the market because they're all the same. >> okay. >> but the difference here is we're talking wireless and we're talk about wireless in rural america where these companies
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have had an opportunity to build out to rural america and sprint chose a path of working with carriers. mr. break said that's a bad path to choose and eliminate the rural carriers. there is your nail on the head about the anti-trust concerns here. these two companies if combined together will have the new t-mobile with mr. legere sitting at the head who has not made one i owe to ta to build out to rural america. i don't know if mr. legere has been to rural america it's a hard road to hoe and a hard work -- >> four companies competing together regardless of the product that they're selling, if one of those combined with the other you think prices for their product would necessarily go up? >> if we're talking apples and they're all the same. >> i'm not saying we're talking apples. >> we're talking about selling the same product. >> i think they're motivated to put other companies out of business. other small companies. that's just what i -- >> you think prices would go up? >> i think prices will go up.
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>> what if one of those companies said this deal of selling whatever that service or product is, of equal value, maybe not apples whatever that is, what if they said this is not as much fun as it used to be, the competition knocked us out not making the profits for a shareholder we're going to go out of business. >> there's a lot of that -- >> do you think -- let me finish my question do you think that would also increase prices or would that lower prices? one of the four merchants went away? >> i think that others will step in and sell the apples. >> i yield back. thank you. >> thank you. the chair recognizes the gentleman from florida, mr. soto. >> thank you, mr. chairman. i think we all understand this complex decision which is why i thank all of you for being here today. we're dealing with various interests like workers and consumers, advancing technology like 5g and broadband, rates and
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competition and i think overall my broadest concern is will this merger create a synergy, will the ultimate proposed company be greater than the sum of its parts or will it not? mr. legere, first, you know, your company has a reputation of being a disrupter and that's a good thing. but it also draws concerns whether that would continue obviously. we applaud your promise to have no rate increases for three years and have each worker have an opportunity to work somewhere else in the company. would you also agree to have that as a condition of approval of the merger by the federal government? >> could you repeat the commitment, sir? >> there were commitments there would be no job losses and that rates wouldn't go up for three years and i was wondering if you all would be in agreement with that being a condition of approval of the merger?
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>> yeah. thank you very much, sir. all of my submissions of 24 million pages of documentation to the doj as well as all the work with the fcc makes it very clear that i'm committing to prices declining and jobs increasing and i'll make those commitments in any fashion that's necessary. if i could real quickly point out that i spend a significant time in my life in rural america as all of my employees around the country would -- >> thank you, mr. legere. i'm sorry, my time is limited but i appreciate that. mr. claure work you also agree that to these promises as a condition of approval of a merger by the federal government? >> mr. legere is going to be the ceo running the company, but what i can tell you is before agreeing to merge the companies we have had lengthy discussions in terms of how important it's going to be to increase the number of jobs and bring prices down. if we try to keep this extremely
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factually we're going to increase our capacity by eight times. there's no other way to do it bringing new customers than lowering prices. >> thank you mr. claure. i accept those as both shelton,o what the current wages right now are at -- at both sprint and at t-mobile versus other carriers and what your opinion is as far as how the merge he were would affect those wages? >> since we don't represent either sprint or t-mobile i don't exactly know what the wages are in either of the companies. but we -- i do know that when you decrease competition for labor wage rates are going down, no matter what you do. and the other problem that this merger would create is that by
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the companies' own admission there is $43 billion in synergies here. and to me synergy is a word that has a synonym called job cuts. and if there is $43 billion in job cuts, you know, you're going to decrease competition for labor -- or increase competition for labor and therefore wages are going down. and they're not only going down in t-mobile and sprint but going down in every wireless carrier in the country. >> sir could i provide facts to the discussion. >> i assume that you disagree with that. >> well. >> in the absence of facts i can tell you that average wages of retail kbe at t-mobile are approximately $50,000 a year. a customer care person makes about $46,000 a year. every employee receives stock grants every year as well. >> thank you, mr. legere. thank you for that that is important. >> the synergies are not in jobs. >> thank you for getting that on the record. i want to end with mr.
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berenbroick. there is a public interest analysis that's done by the fcc obviously we are here in oversight of the fcc. do you have any opinions how this would score, any predictions oh the fcc review of this potential merger? >> sure. and thank you for the question. so you know, as you know, the fcc's analysis is different from the department of justice's. they both look at competition harms, harms to consumer, anti-trust issues. the fcc also looks at issues like will americans continue. >> just -- if we could get to, how do you think it will score what's your predicten. >> i think this merger has many of the same harmful characteristics if not more than as the rejected at&t t-mobile merge ner 2011. >> thank you all for opinions. >> thank you, the gentleman's time expired. the chair recognizes the gentleman from texas. >> thank you pr kmarm and i appreciate the panel for joining us for today aerg ha. mr. legere would you repeat the kmemts you made about the use of
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huawei and zte technology in opening statements. >> yes, sir, there is no huawei or zte quipped in the network of t-mobile. there will not be any. we won't use any. in fact we have in a logisticous rice lake and frankly of the united states government. >> glad to hear that. i spent 30 years of my life in business before i did this. and 20 years of that was as c level person in companies. and a big part of my portfolio had to do with m and a. and i had to look at every transaction as if there were only two outcomes because really the truth either you merge or not. the acquisition is going to happen or not. we have had a lot of comments from the panel today about what happens if we do this. both some good some bad. but what happens if it doesn't happen? ? so will mr. legere if you'd spend a minute talking about the impact of texas mobile skpers kpees and stake holedners the
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merger doesn't happen. mr. claure next. mr. brake we're asking about wireless ecosystem at large if the merger doesn't happen. >> thank you i'll try to be brief and pass to mr. claure. i will not be able to in the united states will not be be able to enable the promise on building a world leading 5g network. what we will create in and sprint will create along with at&t verizon will be inferior to what's created in china and in south korea. that will lead to loss of jobs and economic impact in the country. i will not have the supply or the capacity to continue to supercharge the uncarrier. . . i'll be able to move forward but not in the fashion creating competition. i will have limited if no ability to expand into the in home braund band and broad comcast and charter the competition they need. >> mr. claure could you talk about sprint's -- the merger fails, the impact on sprint's customers employees and stake holders? >> great, thank you. one thing that's important to
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reiterate is today we live in the duo oply you were a businessman you no he if the at&t verizon control over 93% of the cash flow generated it's impossible to kbeet. impossible to invest. sprint ain't going in which. but what sprint is going to be is going to be a very different type of company. it is going to be one we can only invest in the traditional urban and suburban and we will bring a limited fiefgt. unfortunately, as you know, sprint doesn't generality any cash flow and if we got to build the network on our own we need to to spend 20 could to 20 billion dlards. we having to to the banks and bond markets and borrow that money. in order for us to pay the back the investment in fiefgt unfortunately sprint is no longer going to be able to be the price leader. praises will go up. i'm going to rerate one thing we deent talk nuch. 93% of the cash flow in the industry is generated by at&t verizon. that is exactly what is close to a monopoly or duo oply is in the
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country. >> thank you mr. claure. mr. brake if the merger fails what's the the impact on the wireless ecosystem writ large. >> of course a number of different impacts. but to my mind one of the most important impacts is you'll see asset much slower more gradual transition to a 5g network. one of the main -- main reasons to support the merger is the synergyistic spectrum that both t-mobile and sprint would combine. the low band spectrum and the mid-band spectrum bring together coverage as well as capacity. sprint with a limited cash flow is unlikely to be able to deploy you know 5g network at this scale. the that would be needed to get the coverage out of the mid-band spruk, limited proposition. and the fcc is trying to bring mid-band spectrum available to market. the t-mobile may have the resources to acquire but that's
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years down the road. and would take a much longer process. i could talk for a while about the positives of 5g and why nas so important. it's -- it's anticipated to be a very flexible adaptable network, right that isn't just about phones but it is about integrating with sbis and the broader economy writ large. it's i think a strong national interest to make an accelerated transition to 5g. this combination is the most obvious fastest way to get a good combination of spectrum to see a robust 5g network. >> thank you for your response. identifying gim back 15 seconds. >> my the chair recognizes miss eshoo from california for five minutes. >> thank you, mr. chairman. and i apologize to -- all of the witnesses for not being able to hear all of your testimony. but i did review it.
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we have another very important subcommittee that's meeting upstairs. and i chair that. and that's the reason i wasn't here. but i am now. i want to use my time to not to ask questions but to -- to make a statement. again, thank you for appearing, all of you. and for the testimony nam you have submitted. i have had the opportunity to meet with various stakeholders, speaking to them and listening to them both pro and conabout this merger and given a lot of thought to it. as i said i want to use this time to state my position. since i first joined this subcommittee in 1995, only five minutes ago, my work has been guided by two overarching priorities, to create and maintain healthy competition in our country and to protect
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consumers. capitalism doesn't work without competition. and when markets don't work consumers are the first to lose. competition is the life blood of our economy. it stimulates innovation. something that my district produces a great deal of. and it benefits consumers with more choices, lower prices and better service. today, the top two wireless carriers in america control approximately two thirds of the market. they had roughly the same market share five years ago. ten years ago and 15 years ago. so this is hardly a competitive dynamic market that we have. for all intents and purposes, we have a duo oply in the country. americans pay the highest prices more phone bill service in the developed world. fewer choices when it comes to providers. and the quality of service particularly in rural america leaves a great deal to be desired. both sprint and t-mobile
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challenged at&t and verizon in recent years. and they have fought tooth and nail to gain market share while adopting pro consumer policies that have forced real change in the astro. i heard the chairman's opening statement. and he detailed that i think very well. i admire and respect what they have been able to do. but both companies are missing a crucial ingredient to become heavyweight competitors in the market. t-mobile mass a strong track record as an aggressive competitor. that i think we can all stipulate to. but the company lacks critical mid-band spectrum to provide the network capacity it needs to compete more aggressively with the top two. and that's where sprint comes in. spectrum is gold, and sprint has it. but sprint has something else. they have a $40 billion debt
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that they are carrying. and they can't make the kind of investments that are necessary to build a network and compete with the top two carriers. sprint's debt i think is unsustainable. and i think it's difficult to stay afloat while carrying it. it really holds one back to say the least. now, imagine if they go out of business. if they go bankrupt. in outcome would clearly i think be worse for the market, for employees where to be consumers. and i can just picture the chairman of the fcc allowing spectrum to go to the du oply. that's not a pretty picture it's something we need to consider. some argued that consolidates the current market from four carriers to three will increase prices and marm consumers. i think this argument assumes that the new company will not
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compete to lure new customers away from its competitors. it just doesn't make sense. in reality i think the merger will increase the new company's network capacity eight fold. two t-mobile will have the resources and capacity to grow its subscriber base and to do so it will need to aggressively compete. why would someone boy and then sit on their oars and not try to attract new customers in so some have raised concerns that the merger will harm low-income consumers. the companies have sworn under oath and made commitments to continue participating in the life line program that i have fought hard for and will keep prices low in the prepaid market. so i have more in my statement, mr. chairman. but i think that each call center -- all call centers are
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going to be coming back to the united states. and new call centers are being added. that means more jobs. i know that one of the biggest rubs for my side of the aisle is that t-mobile is not union. my personal preference is i wish they were. but they're not but i think that competition and the protection of consumers is front and center in this, and that's why support the merger. i thank the chairman for his patience with my overuse of my time. thank you. >> as usual. i thank my friend the chair yields to ms. brooks. >> thank you mr. chairman and thank you for holding this important hearing. i along with my colleague who could not be here today for obvious reasons, deb by dingell -- and i just want to extend my sorrow to her and to
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her state and district and to those who served with chairman dingell. we formed a 5g caucus last congress. and congresswoman dingell and i have certainly been educated and believe there needs to be significant education in the country about the importance of 5g. and continuing to build on congresswoman eshoo's comments about the importance of competition i got the sense mr. brake and would like because you support this merger -- but before i ask you about 5g because i think you wanted to talk more about the importance of 5g. i asked unanimous consent to enter into the record a letter dated september 17 of 2018 from the indiana chamber of commerce, the vice president of environment and energy policy, greg ellis. indiana chamber of commerce snitted to the fcc a letter of
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support for this merger. i will say that indiana, specifically indianapolis and central indiana is the first site in the country to have the build out by at&t and verizon of 5g. so we are the only community in the country where nas happening right now. and i find it interesting and asking unanimous consent to submit the letter to the record that our chamber of commerce is asking for more competition. and they are asking that the fcc adopt the merger and approve the merger for the new t-mobile. mr. chairman. >> without objection, so ordered. >> thank you. mr. brake, on behalf of the information technology innovation foundation, can you please talk with us about the importance of 5g? we need to to do a better job of educating everybody about 5g and the importance of how 5g when we have rural communities still at 2 g, 3 g, 4 g we know there is a
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growing digital divide and how important it is we catch up with japan, korea, other parts of the globe right now beating us in 5g. can you very briefly talk about the importance of 5g? >> right thank you very much ms. brooks for the question and thank you for your leadership with the 5g caucus. we are in strong agreement it's an incredibly important issue. a lot to unpack with 5g i'll trial are troo to be brief. the fiefgt in the ka patience sense in the broadest sense is best understood simply by the specifics that technology defined by standard setting body, international standard setting body called 3 ggp this radio standard unlocks capabilities but it's defining harming is the flexibility, adapt ability, right. as i mentioned in opening statement this isn't just about faster downloads and more responsive interaction with phone. though it's that. and that's important. and it brings consumer benefit. but there are a number of ways
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in which the technology can be -- can adapt itself -- for example can radically simplify communications for iot defineses. if something only needs to wake up once a day to send a little few packets of information about the humidity on a farm or you know a water main leak or something it can do so while maintaining extremely long battery life. on the measured in the terms of years rather than days. so all this is to say that 5g poses a unique opportunity to much -- to see a much greater substitution of wireless services with the broader economy and has the opportunity to greatly increase productivity overly for businesses throughout america. that's why we want to see a quick transition to 5g in a way that's both broad and deep, right and that's where the specifics spectrum combination at play comes in. >> this is going to be revolutionary what the possibility of what 5g will bring. and so mr. legere, i think the
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concern that you have heard about is how will this new network -- how will the new t-mobile use -- you know, help the untapped markets, the underserved areas, the rural areas -- i represent both urban and suburban and rural areas. how can we make it ensure that you're going to get there and that it's more cost effective. >> thank you for this extremely important topic. and very importantly one of the reasons the nation is lagging in 5g deployment is that verizon and at&t have been stuck in providing millimeter wave in very small geographic areas for the promise of 5g to be true we need all spectrum bands across all of the facing. think about autonomous driving, something where 10 millisecond dras is attained. and you have autonomous driving cars how would it work if it's only in a small geographic area. t-mobile and sprint together are
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the only full broad and deep 5g capability nationwide spurring at&t and verizon to broaden views as well. >> thank you my time is up. i yield back. >> chair now recognizes the gentle woman from california, miss matsui. >> i apologize for not being here to hear for testimony tepp because i was in the health subcommittee also. i'm curious. this is a very important topic and very important for the future of our country. now i understand that sprint is in the process of deploying massive mimo radios to utilize the 2.5 gigahertz spruj spret and complete the first data transition miss on the radio this year i realize it's technical but leading to something. as you know band 41 was including in 3 gpp 5g radio specific in late 20162017 opinion of course oh the benefits are that they enable
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lte and 5g transmission simultaneously and software upgraded to the full 5g. in appears to offer a particularly promising path in the effort to deploy 5g. mr. claure, with sprint already deploying in radio technology is it necessary for the company to combine to deliver its next generation offering? >> thank you for your question. the important part when you build a 5g network is you want to be able to combine capacity which is what sprint has through massive mimo with coverage which is what sprint lax. it will be no good for sprint to offering just 5g in some specific neighborhood or some specific cities. with what in allow us to do when we merge is we are able to have -- the ultracapacity you mentioned combined with the sprint -- with t-mobile 600 megahertz spectrum that will give us the coverage. so it is necessary in order for the u.s. to lead in 5g which is quite necessary for our country, the combination of our kpp
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companies it's the only way we are going to be able to build 5g network that basically has capacity all over the u.s. >> what i get from that is that you're definitely going to mr. legere, adopt the deployment strategy and the new t-mobile will leverage the assets that the way that sprint has not by the existential. is that correct. >> very importantly -- and thank you for introducing four-by-four mim pochlt and carrier and 256 qualm, the main characteristics of what at&t is now falsely calling fiefrg e. put that in. what one of the big issues of deploy the brewed and deep network is the amount of sites. and between t-mobile and sprint we have an inadequate set of network macronodes. the biggest improvement here is together we have 110,000 macronodes and will be able to pick 75,000 of them build
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10,199at decommission of 35,000 sites is providing the significant synergy. when you take that many sites and get the extra spectrum per site and the spectral efficiency of 5g that's the magic that unloads the real promise of 5g. >> now, sprint acquired next jenn communications in 2005 bringing considerable amedt of bond 41 spectrum leases and significant groundwork put into ip based mobile braund band technology and with splint's clear wire acquisition the mobile broad bandit band technology selected by both companies to spectrum the spectrum four g for why max. however sprint began deploying the lte technology on the network in 2011. and the leap from third to fourth generation of mobile substantiate that y max was supposed to offer by utilizing sprint's 2.5 gigahertz spectrum assets was not fully realized.
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mr. claure and mr. legere, what lessons do you see as learned from the effort and how do those lessons inform your company's 5g strategies? >> thank you for the question. i think sprint chose the wrong technology. y max was not -- was not the right technology. and what makes this merger unique is we're both choosing the exact same technology for 5g. and base complementary spectrum assets is going to allow us to build the fastest -- we made bold statements. i believe we have a chance to build the world's best 5g network as simple as combining the two spectrums that we have. >> congresswoman, i could add with all the great work that t-mobile has done, i think it points out that when the generational shifts take place in wireless, whether it was 3 g to 4 g to fiefrg. with you will a the great work we have done a big enabler of our ability to deploy 5g happened to be the spectrum and the kashana came to t-mobile
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from the failed at&t merger as well as the acquisition of metro pcs and the ulgtsization of their capabilities. it does take the kind ever things that we're able to do in this merger to provide that complementary spectrum as well as the financing and the assets that we don't individually have. >> okay. thank you. and i aren't out of time. i yield back. >> i thank you the gentle lady. okay. let's see who is left there. mr. walberg. up for five minutes. >> i'm lacking around and don't see anybody else. it's a pretty good pick here. thank you, mr. chairman and thanks to the witnesses for being here representing plenty of rural area in my district. this is an important hearing for me especially as a new member to get up to speed maybe up 1 g for 2 g let alone 5g. but it's an incredibly important to my rural district areas that
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we not be left behind as carriers move to 5g but it's morp important that we get reliable which areless service to begin with in the process. so mr. legere, you've talked a lot about the jobs that the might result if your transaction were to be approved. both in your announcements of of the new retail stores and rural parts of the country where you hope to expand service but also to the new zmer experience centers. but taking a step back, as you would build out your new network, can you talk a bit more about the cascade of high-skilled jobs that may result, whether tower crews ee recking new macrocell sites or other countries by like agricultural and manufacturing that might be fueled by better connectivity. >> yes, thank you very much, sir for the question. i would point out that the rural
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america has been left behind already. it's that dwoi that we need to cure. i'm very proud of the fact that in the recent broadcast spectrum auction one of the first time that low bid spectrum was made available. t-mobile showed up and won the majority of spectrum and has been deploy 60,700 megahertz now to 301 million people in the united states. we're bridging that basic divide already. very importantly, ctia has shone that the advent of 5g will mean 3 million jobs in the united states. $275 billion worth of investment and half a trillion of economic benefits. so whether they are jobs associated with the impact of ulgtsization of new applications in fiefgt or the onslaught of the utleization in rural farming applications, et cetera, there is three million jobs at stake. and with the deployment of 5g rural america will benefit the
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most. >> that's important to understand, because it's rural america that's catching up. and too often left behind in the thought process that we don't need it. i'm looking forward to the first time i have broad band to my house. or cable. or anything. to my house. my agricultural industry is way beyond now what the capabilities they have available to them in many places. mr. claure -- mr. legere -- there's been a lot of discussion today about the spectrum bands that would help make new t-mobile competitive and better able to serve rural america. but sprint also has a network of wireless assets that would be just as critical for connecting the new network to the back bone and ending michiganers can get brewed bantd. can you talk about the wire line
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components while maybe not as exciting the a 5g, how will those position your company to expand wireless connectivity to enterprises, customers both small and large? >> so thank you for the question. and many thanks we don't talk enough on wire line. and wire line has been the back bone of the wireless networks. the plan would be us to continue to invest in our wire line network and to continue to be able to compete against verizon and at&t who are even more dominant wire players in the wire line and be able to do that through a different efficiencies that we are having in the merger. >> sir, i would just add, the enterprise business is controlled 90% by at&t and verizon. t-mobile and sprint have five and four percent market share. we are adding 1,100 jobs in the enterprise space and plan to double our market share of the enterprise business. the second part of the bblding up the network. it's a fiberer deployment in the
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back haul required to build our network has been advancing greatly. about 86% of our bbld out has been covered by that. knows are also good opportunities as well. >> thank you. there's been a dsh miss bennet can you describe how you plan to compete with the new t-mobile if the transaction were to be approved what would happen to your prices what would yorp subscribers choices look like? >> our member -- i haven't talk for so long i forgot to turn it on. >> i understand. it's been a while for me too. >> our members are concerned. we've been working with t-mobile -- a form of t-mobile before mr. legere joined back when we were trying to do 3 gp they brought in the carriers and we're going to work with us get us equipment discounts all kinds of things to be a great rural partner. it never came to be. it was a promise made to us that they broke. that was not on mr. legere's
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watch, prior to him. since he has been onboard we haven't seen them looking to work with us. so the concern is if t-mobile wants to come out and build out and over build the ruralieriers we are there to compete but for every cell site we have from t-mobile we have ten times the number of drel sites. we live andwork in the areas. i'm sorry you toent have service in your area. i wish one of my rural carriers was serving out there. i'm betting they don't. but if they it you would have a gigabyte of service. you'd have fiber. fiber in the back hall. wireless. 4 f and the proms of fiefgt coming we would do it if we were there. unfortunately we are not everywhere. i think what t-mobile fails to recognize is that it takes a lot of work to obliged out a rural wireless network. we build out to maybe only eight people use a cell site. correct me if i'm wrong they are doing that. >> thanks for the extra time. >> gentleman's time is expired.
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the chair recognize mrs. schrader. >> thank you, mr. chairman. i good hearing. i appreciate the hearing. mr. shelton doesn't seem like you're a fan of in merger going forward. and i guess i have a question. my understanding was that cwa was a big fan of the at&t t-mobile merger. which would have consolidated- consolidated the marketplace much more than what we are talking about here. so i was -- which was cwa in favor of one and not this particular merger? >> during that merger we in a written binding commitment for jobs and a winding promise not to interfere with our organizing at the new company. and that's why we were in favor. >> i understand that. that was to pret the union workers one could argue the consumers might have been terrible mri disadvantage with degree the consolidation. i put that out there. i appreciate the work you're doing very much on behalf of working men and women.
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i guess for mr. legere, you know, t-mobile has been especially since your tenure been very disruptive in a positive which. very innovative. you know coming up with new ideas for the marketplace. once you and sprint you know merge together, you become one of the big three. obviously there is not a lot of incentive to do that anymore. can't consumerer expect to see less innovation from t-mobile, the new t-mobile. >> thank you very much for the question. several pieces. in spite of how innovative we have been and the changes that we have been able to create, we've been unable to crack the share of the top two. they're fighting. we drag them kicking and screaming. but the capacity and the scale and the power of the network that this will give us will really let me take it to them. and bring competition in a way it hasn't been seen before. and i'm salivating to take it to the cable players as well.
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suffice it to say if in fact there was ever a fear that there would be a cozy side discussion of the apple vendors getting together, i'm pretty sure these folks wouldn't speak to me if i was the last person in the room. so that's what this is about is creating scale and capacity to supercharge this uncarrier. bring the country to the forefront of 5g and really drag these duo opalists kicking and screaming to what they need to to do for the consumer as well as the in-home broad band market and get the cable guys playing as well. >> miss bennet you talked about the dern about low income folks, the minister, people that ostensibly don't have as easy access to internet services, broad band. and you know the merger could be very detrimental to a lot of those folks that are -- rely on the largesse from sprint and
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t-mobile at this point in time. the question i have is which are you so concerned about that but the u.s. hispanic chamber of examiners, the black chamber of commerce. the national hispanic hispanic state legislators, national rural education for me puerto rico chamber of commerce all think this is a good thing. why the disparity? >> well, first of all, i've been focusing on the rural carrier presks and we have -- we do have low income folks in rural america that those carriers also serve. it's a different position. i can't speak to why they are for it. it seems odd to me i'll leave it at that. >> that's very fair. very fair. mr. legere, back to you, while the market share may be small, the a lot of the population in different areas seems to be concentrated in the sprint t-mobile arena. with the merger isn't this going to increase consolidation in the marketplace from a pure population standpoint? and how do you respond to that as a problem or not.
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>> well, first of all, the wireless business is a national market. our price something national. programs are national advertising is national. and the share concentration that we have will still, you know, be small compared to at&t and verizon, as well as the marketplace for what we are trying to do is broadening. and you need to look at what the cable players are doing, the in home broad band market et cetera. i think there is plenty of room. >> very good. i yelled back, mr. chairman. >> thank the gentleman. the chair recognizes mr. bilirakis. >> thank you, mr. chairman i appreciate it. and i want to thank the witnesses of course for being here today and testifying. mr. brake, toward the end of your written testimony you mention costs associated with switching providers and number portability. over the years we have all seen the commercials and the cell phone market comparing rates,
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statistics and did it services can you further detail the ease, if it's easy and costs of switching wireless providers and do you have any information related to frequency that customer switches providers whether in the prepaid or post paid market? >> sure. thank you for the question. right so switching costs have historically played an important role in competition in communications. i mean going far back beyond the advent of wireless wherefore wired telephone service number portability played an important role if you can't bring your phone number that all your friends know to a new network you have little incentive to change costs. there are a number of different cools tools making the switches costs lower and lower over time that makes it easy for consumers to change providers. i think an important one going forward is this advent of the
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so-called e-sim. electronic sim card that allows for consumers to change carriers and plays an important role in the -- in the -- the important future role in the mvno market when virtual providers can change the carrier that they -- their consumers use it has an important role in maintaining competition in the markets. >> thank you very much. mr. legere, based on what you have heard, in a post merger world, if one of your competitors offers a great deal to new subscribers, will new t-mobile be worried that it will lose users and feel pressured to offer a substantially similar deal to retain consumers in the marketplace. >> thank you very much for the question. i want to point out that t-mobile has been one of the main reasons that customers are able to switch amongst the first things that i did was separate
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the device and the rate plan so the customers would know which was which, eliminate all contracts. and then i instituted the payment called contract freedom where i would pay any costs that would be required if you wanted to leave your carry your. we have been a strong proponent of e-sim as well which allows skpers to move freely between them. i'm not afraid of any kind of a competition from the standpoint of creating the value that customers need to switch and with the capacity this this network brings and the scale and scope i'll haven't at unit costs it's highly likely i'll be the one creating offers that cause people to think twice. >> thank you. it sounds like there is decent competition within the marketplace. is that correct? i mean, you just said that so i'll assume that. is that right in. >> yes. >> all right. let's see, in closing, i'd like mr. walden i want acknowledge the process already in place for
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these types of mergers. the agency review process has been used successfully in the past to approve conditionally approve and deny mergers. like the sought after mergers before in i have full faith this the fcc and doj -- doj thoroughly review the facts to determine whether it is in the public interest of course, the merger. like the witnesses i await the decision and reasoning for that conclusion from all the information in the record. and i yoeld back, mr. chairman. thank you for holding this hearing. >> i thank the gentleman. the chair now recognizes ms. clarke. >> thank you very much, mr. chairman. i thank our ranking member and panelists for their testimony here today. speaking on behalf of my constituents in brooklyn, new york, they care about creating and keeping good paying jobs, particularly in new york city.
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however they have grown weiery and single of big corporations that seem to rake in money hand over fist while their hard working neighbors have to pinch pennies to make ends meet or to even afford the corporate offerings that we hear about and that sound so great for the consumer. if t-mobile and sprint merge there is going to be one less employer in this particular labor market. so mu question first is to mr. shelton. mr. shelton i'd like to know if at all how will one additional employer lost aircraft the ages even knows that don't work for the new t-mobile? >> as i've said before, when you decrease competition for labor wages go down. and that's what will happen and happen throughout the whole wireless industry if the merger
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takes place not only at t-mobile and sprint but also at verizon and at&t. and any other wireless carrier. >> now, what makes you say that? i mean currently you have a baseline of wages. and what will will -- what would less competition do in terms of particularly those in unionized shops impacting on their wages? i think it's important for the public to understand that. >> well, we believe that there will be a substantially less employees working at t-mobile sprint and therefore you'll be flooding the labor market with people who know the wireless industry and know how to do the job at the wireless industry -- at any wireless company process. the only one that we really have protections because of collective bargaining is at&t. so at verizon and texas mobile and sprint you'll have wages going down. >> okay.
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mr. legere, would you care to respond to those concerns? >> yes, thank you very much. and i would say that i've already made my commitments very clear to the state of new york associated with what employment would be and the jobs will be going up after this transaction. competition is clearly going to go up. and i would actually welcome greatly that you walk around brooklyn to the many stores and experiences. >> they're all in my neighborhood. i don't have to walk they're right there. >> i would say you are going to find a very happy, very well paid, highly compensated group of employees that are extremely excited about in merger and the future. >> well, let me ask another question. given that life line provides essential service including mobile broad band service, does the new t-mobile intend to continue sprint's existing commitments to life line and other contractual agreements that nef currently engaged in?
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>> yes and thank you very much for that opportunity to discuss this because it's been a question. very clearly we are supporting the life line agreements that sprint has. frankly, new t-mobile will have a capability that old t-mobile didn't. not only will we support the agreements but we'll be a better life line provider than we were before. >> very well. and then i'd like to get a sense from you post-merger, what would be -- what is the current and future racial and gender composition of your board of directors and executive management team? can we get that information. >> i'd be glad to. our employees are 62% diverse. but i'd be grad to provide. >> looking at the board and management as well as currently with sprint so we can see what this merger does in terms of inclusion and diversity at the leadership level.
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>> be glad to include that. >> very well. mr. chairman. >> congresswoman. >> can i jump in on the life lineup question. >> would you please, absolutely. >> you know you know as you know you've been a kmfrp of life line program it's the service that serves the most low income segment of the population that -- that absolutely needs that subsidy for basic connecty. sprint has been a great partner in the life line partner and you just heard mr. legere fail to make any commitments that new t-mobile in will participate in the life line program other than keeping sprint's current commitments in the life line program. there was no future commitment to life ryan. and most importantly, sprint is a -- is a wholesale provider to many of the wireless relevant resellers that participate in the life line program and serve 70% of the marketplace. there was no commitment to continue those relationships going forward as well. >> very well, my time is up but mr. legere my eyes are on. >> you my micron might have been off when i said we will honor all of the life line commitments
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we'll be a good provider going forward and we honor all of the who he will sale agreements that are in existence and look forward to extending those. >> yield back, mr. chairman. thank you. >> thank you. the chair ens recognizes mr. veasey. >> thank you, mr. chair. mr. legere, i wanted to ask you particularly about your economist. they told the fcc this mermger is in the public interests because consumers should be willing to pay more for a better product. and i want to know, what will low income consumerers be able to participate in the better product or forced endure he could tier service but they can't pay for the more expensive product? >> i appreciate the question. but i -- i don't recall any time i've ever made a statement that customers should pay more for a better product. my whole philosophy has been to pay less and get more. and that is the philosophy of the new t-mobile as well.
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>> if the -- if sprint becomes your partner on this -- on this merger and it goes through, one of the areas i would be interested in learning more about is if sprint is not willing to make the commitment right now to build out their broad band and all the capacity that they have in that, and expand upon that, why would they be willing to do it if there was a merge earn? if the investors that play a big part in t-mobile and sprint right now, many of them are the same investors. they have invested money and other adventures outside of the -- the cell phone product. >> yes. >> so i guess i'm trying to figure out what is it about the merger that makes them want to invest money moving forward? >> yeah, thank you. thank you very much. it's a good opportunity to clarify. and i won't speak for the pace at which sprint has invested. but i think mr. claure has been clear about the financial limitations that we're -- that
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were put upon them. this transaction itself provides the financing that both of us need to do this build out. and pinnicle to the whole thesis of this merger is an integrated network plan, you know, tens of millions of pages of documents and models that i have submitted to the doj as well as the fcc that show how at the time of merger moving forward we will fully integrate and build out the networks pan how the $43 billion-dollar worth of synergies 26 billion of which are coming from the network substitution will provide the financing for $40 billion worth of investment in the first three years in the 5g network. the transaction itself is not only the financing but it's the krerltant of the investment process it won't be sprint building out the new t-mobile will do the build out. >> if the investors money have the currently right now why are they not building out that capacity as we speak? >> no, again, be i think eve
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been clear that neither of us have the capital and the financing to do this 5g build out. we haves created a business plan and we have reviewed it with rating agents and we do have the ability to finance this through the new texas mobile company as well as the synergies that the deal provides. and i just want to the point out at some point synergies were referred to as job losses. they are not they are coming in the form of decommissions of siting things part of the network substitution. that's the funding mechanism for this the transaction. >> thank you, mr. chair. i yield back. >> i thank the gentleman. the chair recognizes the distinguished minimum or the whip mr. scalise. >> thank the gentleman. >> and second baseman. >> best second baseman in baseball. thank the gentlemen from burg the pirates are represented well with you and appreciate the opportunity to talk about this
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merger some of the things that could potentially be done to increase the ability for consumers to be able to experience 5g. you know, you look at the growth in the industry and just the -- what we're seeing in terms of more wireless usage, connectivity, the devices that are able to be connected. and of course you see trillions of megabytes of data being used by americans. and that number is increasing as people find out more uses. it creates more jobs. creates more opportunities. creates more efficiencies and improvements in people's quality of life. and i do think that's an important point to talk about as, you know as americans use so many more devices and rely on that increased amount of data that they're able to access. it does really improve their lives on a daily basis, just things that i know i'm able to do. you watch how it's able to allow people to do more things and in
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a more effective way. i know you've talked about the jobs. i think to me some of the things that the department of justice should be looking at is, you know if this merger goes through, would it help consumers? will it help lower costs? will it create more jobs? and i know you talked about some of that in your testimony, mr. legere, so you could talk about the ability for skurms to have more competition in -- and have access to lower costs for the increase the amount of data that they are using. >> thank you very much for the question. there's so much in what you said it's extremely important. including starting 5g, the promise of 5g is 100 times the speeds -- 100 times of number of devices that can go on networks, ten times the improvement in the response time or the delay that's created. our new t-mobile will provide 15 times the speed bef now up to 450 megabytes average speed
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across the u.s. and users will go from an average of 10 gigs of data usage to 80 while the unit price goes down 87% and the track record is there especially with -- with low income users who have had a price decline in ady proportion knit increase. and that's what this transaction with the doj heavily is about showing, the network modelling that will take this industry and significantly increase capacity and provide a pricing decline. and because that have network integration how that impacts consumers the offers they have and the utleization and that's what the transactional review has been about. >> the not only -- you can access 15 times the speed and lower costs, both of those i think are something attractive to consumers who shop around really good for all kind of products, but clearly data plans. you watch the commercials and the reason there are so many
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exertions is because there is a competition for the consumers because everybody knows how important it is to be connected now. you talked about an integrated network plan, what the two companies can do to combine the resources that you have. i think hopefully one day, not too long from now, that little circle that you see when you wait for something to download will become a relic that the smyth z might hold. you'll have to goingle what is that circumstance zblool sir that will happen as soon as you switch to t-mobile. >> i see you're already well branded. >> yeah. >> it's nice opportunity to give a plug for -- you know for your products. and again, competition is what made this industry great. when we look at what 5g can mean for consumers, because ultimately that's what wree we're trying to help make sure the consumers have a better experience. all this coming from private
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investment. and you know this isn't government spending billions of dollars to build out the networks it's companies like yours and other companies. we know all the other players in the space. but here we are talking about this. you know this potential merger. and how -- i know what you talked about is how you can make those synergies working work to provide an even faster experience and help you invest billions more to build that 5g network. let's talk now about the jobs side of it. i've heard numbers like 10,000 new jobs referenced. what kind of jobs are you talking about? i don't want to get in spectrum and other things but not enough to get to all of that maybe for the record later if you can let me know about the combined spectrum assets of the companies and how that would be good for innovation and opportunities. but on the jobs side if you could touch on that as my last question. >> i'd be glad to. we've talked a bit today about customer experience centers. 5,600 new jobs, 2,000 expanded
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jobs in that about 7,600 in the customer experience centers. those are good paying, 45, $50,000 wage jobs. it would be about 11,800 people involved in network integration and kploimt. appear 5,000 people in retail stores in rural america. and 11,000 jobs created over the period for the new businesses we're going if, internet of things, video, broad band, et cetera, businesses that we aren't in now. those are the key growths areas of new jobs. >> thanks mr. legere. appreciate the testimony. thanks for the discretion mr. chairman i yield back. >> i thank the gentleman. the chair yields to mr. luann. >> i appreciate the conversation today too many people where i live in a rural state my district is 47,000 square miles. takes eight and a half hours to drive across it.
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i have better connective over the stitt of new mexico on an airplane than on the ground. i don't understand that. there is a promise now that 5g is going to answer this problem for people like me that live in rural america. and that's where my questioning concentrates. as mr. berenbroick did i pronounce that correct, sir. >> close enough, sir. >> pronounce it correctly. >> berenbroick. >> berenbroick notes in his testimony in gab are gap exists because low population density and high per consumer costs means rural areas have historically lacked the economy of scale needed to attract stropping investment from major karie ys. mr. legere you insist a merger will allow you to quote close the gaps in rural broad band access and increase outdoor wireless coverage to reach
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59.4 million rural residents or 95.8% of the estimated 62 million residents. mr. legere, first, yes or no, do you agree with fill's diagnosis of why rural kmoonts have been left behind. >> i apologize. i'm not sure what the diagnosis. >> the gap exists because low population density and high per consumer costs means rural areas have historically lacked the economies of scale needed to attract strong investment. >> i would submit that that is an analysis that had to be done by those that had the low band spectrum to cover the communities which was at&t and versusen at the time. right now that we have nationwide low band spectrum we're deploying quickly across all of rural america and it's our hope to cover every square inches. >> do you agree with phil's assessment. >> i guess. >> i'm going to say yes. >> second yes or no would you agree that the merger stated benefits to rural americans are
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an important aspect of whether it should be approved. >> yes. >> then help me quickly understand how this merger specifically incentivizes this proposed new t-mobile to better serve rural comments and when can my constituents expect to enjoy the wonders of 5g connectivity. >> thank you very much, sir. and yes the rural divide is extremely important for us. one of the things that's very clear in the output of the models associatewood the new t-mobile is the deployment of the 5g capability will have a penetration across the country where the 90% of every person in america will have great are 100 megabyte speed and capacity by 2024. and i can break that down by rural community and any different part of the country. >> so what i'll do is submit some questions for the record. here is the question that i have is that the t-mobile chief technology offers. nefle ray states in an article
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c-net, authored february 6th with mr. chairman i'd ask unanimous consent to submit to the record. >> without objection so ordered. >> what -- what he says is that we wouldn't go over 5g millimeter wave deployment in rural america. so help me understand what this comment means. will my constituents not enjoy the same speeds living in urban aen suburban communities. >> that's a very good point, sir. and i would point out that's probably more of a condemnation of on of the verizon and at&t deployment of 5g only in millimeter wave spectrum because the analysis would show that in order to use only minneapolis wave to make a nationwide coverage you would need a site every thousand yards which would cost $1.5 trillion. in order to deploy fiefrg nationwide you need millimeter wave mid-band and and low band across all frequencies to have full coverage. nobody could cover the united states with millimeter wave
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spectrum. what's likely to happen is millimeter wave will be used in some densely populated urn urban area and enhanced with mid-bond and low band five coverage to make a broad band nationwide. >> the concern we have is boept don't have rebust fiber nebraska many parts of rural america. that's where i point my question back to phil to give you a chance to respond i notice your testimony you discuss how 5g networks will meet back haul supportsed from fixed broad band networks. does anything about this merger address that need. >> congressman it's a perfect question. that's absolutely right. for 5g especially for 5g that we are talking about to get the bull fests of 5g that mr. brake mass walked us through, you essentially need fiber back haul to connect to it cell sites and towers. the companies doesn't bring the assets to the table. they need to lease the assets. which is not a merger specific necessity. they can lease the assets today. and t-mobile you know has gone on the marketplace and acquired
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600 megahertz spectrum. cudd os to them for winning at auction. they started to deploy it. they're making the case that their 5g deployment in rural america is based on that 600 megahertz spectrum. knows are assets they have. that's not a merger 600 meg hur. >> as a former regulator, details matter. when i'm told that rural america is going to get these assets and things don't add up, i have a lot more questions. there's some important aspects that we need some answers to associated with the commitments with mapping and looking at rural deployment. thank you, mr. chair. >> thank you very much, mr. chairman and thank you so much for bringing this important hearing before the public. mr. legere, i understand you've made commitments to continuing the lifeline program. you use the word i will honor, just a few minutes ago.
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t-mobile began withdrawing from the program in 2014 and no lojser provides lifeline services today. when it comes to safety and education, et cetera, what's your commitment to lifeline and how long do you intend to continue offering lifeline services should this merger go through? and when you say you will honor, are you talking about the person current ceo, legere or are you talking about the new t-mobile will commit to that in writing and make it real beyond your tenure? >> the person and the new t-mobile will put in writing and commit to honoring the lifeline agreements that sprint through assurance has. and i point out that t-mobile didn't withdraw from the life life market. we moved to being a wholesaler. the commitment is from the new t-mobile and very willing to put
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it into any form. >> i wouldn't want to mischaracterize your business practices. when you look at mr. claure, his sprint is more robustly involved in the lifeline program. what i would love to see is a future organization, the new t-mobile, as some people are calling it, to be more like sprint. so mr. claure, what would the new t-mobile have to do in order to adopt and expand on what you've been able to do with your company? >> thank you for the question. the new t-mobile has made a commitment and we've taken one step above what was required from us and that i make a voluntary filing to the fcc. that includes lifeline. nobody asked us to do that. we thought -- >> on that point, is the new t-mobile willing to do exactly what mr. claure described? >> let me add one quick thing, we always have to look at it
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will be a new t-mobile, but the new network we're going to build is going to have eight times the capacity that we have today. we have an economic incentive to bring as as many customers as we can. so, yes, we may commit. but we have an admissi >> my question to you about following suit with what sprint has done to actually file a commitment in writing is the t-mobile ready to do that? >> just clarification, sir, it was me who made the filing on behalf of the new t-mobile. and we're merging with sprint. sprint is not going away. all of the good characteristics and behaviors of sprint we're adopting in the new t-mobile. i will make the commitment.
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>> are you familiar with that submission in writing that they're referring to? >> yes. i am. >> is it what i seem to be describing or is it a little less nuanced than that? >> it's heavily caveated, sir. like many of the commitments that we've seen here today, i think congresswoman clark asked questions about lifeline too, and the commitments were to honor existing commitments. there were no commitments to honor participation in the lifeline program as the combined company going forward. ms. bennett has spoken about the high costs going up for roaming partners. that's a huge partner for lifeline subscribers who may see costs go up. those issues all do need to be explored. >> and another thing, mr. legere, i've heard a lot of wonderful things about you and
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how you've changed in a positive way t-mobile. i commend you for that. mr. claure, i followed your career as well apparently the p tennis shoe guy is going to stick around. and the hard shoe guy is going to remain on the board. but what i've found when it comes to lifeline specifically, i like the hard shoes guy and what she's been doing as ceo rather than the tennis shoes guy. what are we going to expect to see from the new t-mobile when it comes to really adhering to this opportunity when you very clearly pointed out the market share opportunity for the new t-mobile is going to be amazing especially when it comes to your positioning to be able to provide 5g which is the future of any provider. >> i can only reiterate the new
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t-mobile's commitment to lifeline and i will follow up in any form necessary after this hearing to make sure that commitment is clear. >> thank you, mr. chair. >> the chair recognizes mr. welsh. >> thank you for the hearing. i'm going to make a few comments that express what i consider to be major concerns about rural america. we do not have good coverage in vermont and the assertion that both gentleman is that this will be tremendous for rural america, i would like to believe that's true. but i have an apprehension that it won't necessarily occur. last february, congress passed and the president signed some bipartisan legislation that i worked on with david young improving rural call quality. and it turned out that shortly after that bill became law, t-mobile and sprint -- the fcc announced that t-mobile agreed
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to pay $40 million in a fine for violating fcc rules with a practice of faking ring tones. this is a big deal for us in vermont. farms during the christmas season depends on those calls, school relies on those. and in the settlement, t-mobile acknowledged it had injected false ring tones in hundreds of millions of calls. that's updatisetting to us. i'm struggling to see how this past gives me confidence about the future. so mr. legere, can you explain how t-mobile did fail to abide by the basic call quality standards in not connecting hundreds of millions of calls in rural america. but very briefly. >> the details associated with
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that settlement are far more complex and i'm not sure we could go into the process here. >> maybe offline we can do that. >> i'd be glad to do that. >> what you're admitting to was that actually had the system -- >> there was no admission to a willingness participation into any kind of -- >> that's -- you and i both know that's sort of the deal. but it happened. and then this brings me to my point about wireless coverage and i'm a little spept cal about the deployment promises in rural areas. mr. chairman, we've got a map of t-mobile coverage in vermont and it looks pretty good. it's pretty much the whole state. but the burling ton free press had something get into a car and travel the main roads for 6,000 miles and take signal coverage over six weeks this fall. it was only on the main roads
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and it was covering about 65% of the buildings in vermont. and its results contradict many of what the -- the assertions that are made by t-mobile and sprint. the data on t-mobile and sprint -- t-mobile covers part of the state. t-mobile has no service or spotty service in 62% in the areas. spribt has no service or spotty service in 50% of the areas. when i sit here and hear what i believe is your goal to serve rural america and bring 5g to rural america, in a lot of vermont, we have no "g" and these maps don't correspond to what the burling ton free press
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found. i'm a skeptic. when you use your maps, you're saying it's 96% coverage. these maps are bogus. they just don't work. are you going to redo your mapping so that what we're talking about is apples and apples and not apples and oranges, briefly. >> thank you. i'll take the answer. today sprint has very limited coverage and we rely mainly on at&t and verizon to be a roaming partner. so we're basically replicating what the maps of at&t and verizon -- >> they're no good. >> okay. >> these are no good. these are phony maps. >> the problem that we have today is a very serious problem. the two spectrum holders have been at&t and verizon and they have failed to serve rural america. the commitment we're making is to build a nationwide coverage because we got 600 mega hurts
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just a couple years ago and we're going to deploy it as fast as we can. >> if you were sitting where i am and getting calls who have a map that says they have fantastic service, and they can't get a dial tone. >> the commitments and the filings that we made, we have a strong commitment to cover rural america. >> mr. chairman, i would like to submit for the record these documents that i referred to. >> so ordered. >> i yield back. >> now we come to our final witness. you've got five minutes. >> thank you. i'm sorry i didn't make it on time today. i had a commitment the other side of town. i've sat here through this hearing and listened intently on issues about rural america and i have heard time and time again that they'll be treated differently from now on. that doesn't seem to be the
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case. they're still going to be at the low end of the pole. they're going to be down there with the lack of ability to compete, lam ck of ability to me sure the families of rural america have the access to medicine, and all of a sudden we're back to the same old thing. we're back to the cities and everybody else getting the higher amount of coverage than rural america. that's unacceptable. i have a map just like the gentleman from vermont had. and i travel my districts 58,000 square miles. half the time that map says i should be covered. half the time i'm not by anybody. and so there's a lot of work to do and what i've also heard today are semicommitments.
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we're looking into it. i've also heard it's about productivity. i understand productivity. i also understand the needs of the citizens of rural america and the needs of the citizens for everywhere to be competitive with the rest of the world. we understand that. but i really am concerned with the type of information i heard today. mr. legere, you've indicated very much that -- on the lifeline program that you're -- are you committed, are you going to ensure, are you going to guarantee that those programs will be completed and stay and how are you going to do that? what is the plan, the real plan
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of how -- and be as specific as you can. >> thank you very much. and i appreciate your patience. on lifeline it's very clear, sprint is a big provider of lifeline services and we will honor their commitments and move forward providing lifeline in the fashion that they do. and the 5g capabilities that we have will make us a better lifeline provider. >> i want to make sure that, their -- honor what they do? for how long? >> for as long as the contracts are available. >> how long are those contracts available for? >> those contracts will self-renew. as part of the merger, we've discussed that the new t-mobile will honor all of the commitments and will continue to be a fierce competitor in the lifeline. >> as long as the contracts go.
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it's not into the extended future. it's the contract life of that particular contract -- >> could we be clear -- >> i'm sorry. it's my time. >> i'm sorry, sir. >> as somebody that represents t tribl nations, i'm really concerned from what i've heard. and -- i'm going to try to get your names right, berenbroik -- never mind. what do you anticipate this merger's impact could be on the tribal lifeline program and do you accept the fcc and department of justice enforce any commitments made as part of an approval and anything that we talked about here if you have a
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comment on that? >> sure. thank you for the question. this is an important line of question and i'm glad the committee has gotten into this. as you know, tribal lands are some of the most underserved areas of the country. facility-based providers, oven provided wholesale service to resellers that support that area. one big concern is we're consolidating that wholesale marketplace under only three providers who have fewer incentives to provide low cost wholesale access. so what we think that means is the incentives in the marketplace will be to increase the costs that those resellers have to play for lifeline, driving up the costs in the lifeline marketplace, potentially driving some of those resellers that serve those
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communities that you care about, out of the market entirely, potentially leaving those consumers without any lifeline provider. >> thank you. >> can i make a final comment, with all the concerns about rural america, this transaction is the best path forward for this country to solve the issues of rural america. so i vehemently believe that's the best path forward. >> all time is expired. to enter the following documents into the record, a map from cwa of sprint and t-mobile's retail distribution, an op-ed, a statement for the record from consumer reports, a blog post from encompass, a report from the vermont department of public service, a map of t-mobile's u.s. wireless coverage, a report from the democracy reform task force, a report by gsa, inspector general, a letter from
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the representative, a letter from the national diversity coalition, a letter from case, a letter from let freedom ring, a letter from consumer's research, a letter from americans from tax reform. a letter to the fcc and doj for members of congress and last but not least a letter from coalition members. without objection, that is so ordered. >> i want to thank the witnesses for their participation in today's hearing and i want to remind members that pursuant to committee rules, they have ten business days to submit additional for the record to be answered by the witnesses who have appeared. i ask each witness to respond promptly to any such questions you may receive. at this time, the sub commit is adjourned.
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