T-Mobile US Inc.’s takeover of Sprint Inc. would probably erode competition for wireless services and lead to higher prices for consumers, according to an antitrust expert hired by states that oppose the merger.
Carl Shapiro, an economics professor at the University of California at Berkeley, testified in a New York courtroom Wednesday that reducing the number of carriers could lead to a coordinated price increase of as much as $8.7 billion. If the deal is completed, T-Mobile alone could boost prices by $4.6 billion, he said.
While the deal was approved by federal regulators, several states including New York and California sued over antitrust concerns. They claim that combining the two biggest discounters among national carriers will erode pressure on market leaders AT&T Inc. and Verizon Communications Inc.
Prices have been the central theme of the trial .On Monday, the states presented a text from Sprint marketing chief Roger Sole to then-Chief Executive Officer Marcelo Claure saying the deal could mean an increase of $5 a month in average revenue per subscriber. The next day, Tim Hoettges, the chairman of Deutsche Telekom AG, which controls T-Mobile, testified that wireless customers will see lower prices, even though the states say the company’s internal analysis portrayed the deal as a way to reduce competition and raise prices.
To win approval of the merger, T-Mobile has pledged to freeze prices for three years, offer free wireless broadband access to 10 million underserved students and roll out a new $15-a-month data plan capped at 2 gigabytes.
In earlier testimony Wednesday, a Sprint executive said his company wouldn’t survive much longer without a proposed $26.5 billion takeover by T-Mobile because it lacks the resources to upgrade its networks and has generally weak business prospects.
Shapiro, the Berkeley economist, suggested Sprint’s prospects weren’t so bleak.
Under a plan approved U.S. regulators, Dish will buy assets from Sprint and T-Mobile to set up a new wireless carrier.