T-Mobile Merger and the 5G Revolution
|Topics:||Corporations, Securities & Antitrust • Telecommunications & Electronic Media|
|Sponsors:||Telecommunications & Electronic Media Practice Group|
This week, John Kneuer wrote an interesting piece on the value of the proposed merger between T-Mobile-Sprint. The article is available below.
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Published First in Real Clear Markets
The New T-Mobile Won't Thwart the 5G Revolution, It Will Start It
What's one app you couldn't live without? We all have our favorites, but chances are our treasured apps all have one thing in common—they wouldn't work without the 4G connectivity that is credited with the rise of internet-enabled mobile applications.
Now let's take the same question to another level: What is the technology that the economy can't live without? For the past 20 years, the comparative advantage of the U.S. economy has been our ability to deploy and take advantage of high-speed broadband networks. Broadband connectivity has spread new capabilities and productivity gains across virtually every industry; from transportation to healthcare to manufacturing, broadband made America more innovative and competitive, added trillions of dollars to our economy, and produced millions of jobs.
Just as broadband has been the productivity driver for the last 20 years, 5G will become the indispensable technology that drives the future competitiveness of our entire economy. This isn't hyperbole. Our trading partners, as well as our competitors like China, recognize the transformative power of this technology and are racing to establish 5G leadership. The stakes couldn't be higher.
5G will transform U.S. businesses far beyond telecom, from transportation to healthcare to manufacturing. With a reliable high-speed connection, more data can be exchanged in real time. 5G is engineered to transmit data at 10 gigabits per second—a speed unthinkable in the 4G world—bringing new services, as well as competition and efficiencies, to existing industries. 5G will allow cars to communicate with one another to reduce traffic and harmful carbon dioxide emissions, help doctors reach patients in remote rural locations through telemedicine, and allow manufacturers to monitor and adjust processes and outputs.
Even the agricultural industry stands to benefit from 5G. Smart farming technologies will help farmers better monitor and analyze their production. Technologies like crop sensors that monitor environmental conditions and devices that track the health and maturity of livestock will increase efficiency and ultimately increase farmers' bottom lines. By some estimates, 5G development and deployment could bring up to $500 billion in economic growth and three million new jobs to the U.S.
If our global competitors have access to these networks and we don't, America will be at a competitive disadvantage. Not only will economic growth and productivity suffer, but also ultimately companies could be forced to consider relocating to countries with more advanced networks. But the inverse is also true—if America leads in 5G, our country will be the most attractive place in the world to do business, bringing both jobs and innovation to the economy.
So, what's the best way to ensure American leadership in 5G? Simply put, we must promote policies and incentives that will maximize private sector investment. In this context, the proposed merger of T-Mobile and Sprint creates massive efficiencies that will incentivize rapid 5G deployment by the merging companies while also forcing a competitive response. Deployment of a nationwide 5G network will require significant and sustained investment, as well as a sufficient portfolio of low-, mid-, and high-band spectrum. Today, no single company has all these resources at hand to rapidly scale up America's 5G capacity across the country, but together T-Mobile and Sprint could. Regulators should consider this as they evaluate the proposed merger.
The value of the T-Mobile-Sprint merger, for American businesses and consumers, is based on unlocking vastly improved network performance through the combination of highly complementary spectrum assets, paving the way for faster 5G deployment.
The merging companies have also committed to invest nearly $40 billion in the new business and its nationwide 5G network for all—a network that will have enormous capacity to offer faster, better, and cheaper service than what either company could offer alone. Faced with this challenge, competitors will have no choice but to ramp up their own investment. The result will be an explosion of capacity across the industry, which will incentivize competitors to reduce prices to win or keep customers.
Today, the best way to rapidly make 5G a reality is to allow the new T-Mobile to become a catalyst for technological change. The merger is expected to benefit America by enabling a faster nationwide 5G network, creating jobs, and igniting competition that will be good for consumers. If regulators ignore these benefits, we could inadvertently stifle the next must-have, can't-live-without product of the future.
John Kneuer is the former Administrator for the National Telecommunications and Information Administration under President George W. Bush. Kneuer currently serves as a consultant to T-Mobile and is a member of the Federalist Society's Telecommunications & Electronic Media Practice Group Executive Committee.