    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

     PROTECTING CONSUMERS AND COMPETITION: AN EXAMINATION OF THE T-MOBILE
                               AND SPRINT MERGER

    =======================================================================

                                    HEARING

                                   BEFORE THE

                 SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               FEBRUARY 13, 2019

                                   __________

                                Serial No. 116-5

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Printed for the use of the Committee on Energy and Commerce

                       govinfo.gov/committee/house-energy
                            energycommerce.house.gov

                              ______

                    U.S. GOVERNMENT PUBLISHING OFFICE
    35-688 PDF               WASHINGTON : 2020

                        COMMITTEE ON ENERGY AND COMMERCE

                         FRANK PALLONE, Jr., New Jersey
                                     Chairman
    BOBBY L. RUSH, Illinois              GREG WALDEN, Oregon
    ANNA G. ESHOO, California              Ranking Member
    ELIOT L. ENGEL, New York             FRED UPTON, Michigan
    DIANA DeGETTE, Colorado              JOHN SHIMKUS, Illinois
    MIKE DOYLE, Pennsylvania             MICHAEL C. BURGESS, Texas
    JAN SCHAKOWSKY, Illinois             STEVE SCALISE, Louisiana
    G. K. BUTTERFIELD, North Carolina    ROBERT E. LATTA, Ohio
    DORIS O. MATSUI, California          CATHY McMORRIS RODGERS, Washington
    KATHY CASTOR, Florida                BRETT GUTHRIE, Kentucky
    JOHN P. SARBANES, Maryland           PETE OLSON, Texas
    JERRY McNERNEY, California           DAVID B. McKINLEY, West Virginia
    PETER WELCH, Vermont                 ADAM KINZINGER, Illinois
    BEN RAY LUJAN, New Mexico            H. MORGAN GRIFFITH, Virginia
    PAUL TONKO, New York                 GUS M. BILIRAKIS, Florida
    YVETTE D. CLARKE, New York, Vice     BILL JOHNSON, Ohio
        Chair                            BILLY LONG, Missouri
    DAVID LOEBSACK, Iowa                 LARRY BUCSHON, Indiana
    KURT SCHRADER, Oregon                BILL FLORES, Texas
    JOSEPH P. KENNEDY III,               SUSAN W. BROOKS, Indiana
        Massachusetts                    MARKWAYNE MULLIN, Oklahoma
    TONY CARDENAS, California            RICHARD HUDSON, North Carolina
    RAUL RUIZ, California                TIM WALBERG, Michigan
    SCOTT H. PETERS, California          EARL L. ``BUDDY'' CARTER, Georgia
    DEBBIE DINGELL, Michigan             JEFF DUNCAN, South Carolina
    MARC A. VEASEY, Texas                GREG GIANFORTE, Montana
    ANN M. KUSTER, New Hampshire
    ROBIN L. KELLY, Illinois
    NANETTE DIAZ BARRAGAN, California
    A. DONALD McEACHIN, Virginia
    LISA BLUNT ROCHESTER, Delaware
    DARREN SOTO, Florida
    TOM O'HALLERAN, Arizona
                                     ------

                               Professional Staff

                       JEFFREY C. CARROLL, Staff Director
                    TIFFANY GUARASCIO, Deputy Staff Director
                    MIKE BLOOMQUIST, Minority Staff Director
                 Subcommittee on Communications and Technology

                            MIKE DOYLE, Pennsylvania
                                     Chairman
    JERRY McNERNEY, California           ROBERT E. LATTA, Ohio
    YVETTE D. CLARKE, New York             Ranking Member
    DAVID LOEBSACK, Iowa                 JOHN SHIMKUS, Illinois
    MARC A. VEASEY, Texas                STEVE SCALISE, Louisiana
    A. DONALD McEACHIN, Virginia         PETE OLSON, Texas
    DARREN SOTO, Florida                 ADAM KINZINGER, Illinois
    TOM O'HALLERAN, Arizona              GUS M. BILIRAKIS, Florida
    ANNA G. ESHOO, California            BILL JOHNSON, Ohio
    DIANA DeGETTE, Colorado              BILLY LONG, Missouri
    G. K. BUTTERFIELD, North Carolina    BILL FLORES, Texas
    DORIS O. MATSUI, California, Vice    SUSAN W. BROOKS, Indiana
        Chair                            TIM WALBERG, Michigan
    PETER WELCH, Vermont                 GREG GIANFORTE, Montana
    BEN RAY LUJAN, New Mexico            GREG WALDEN, Oregon (ex officio)
    KURT SCHRADER, Oregon
    TONY CARDENAS, California
    DEBBIE DINGELL, Michigan
    FRANK PALLONE, Jr., New Jersey (ex
        officio)
                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Mike Doyle, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................     2
        Prepared statement...........................................     3
    Hon. Robert E. Latta, a Representative in Congress from the State
      of Ohio, opening statement.....................................     4
        Prepared statement...........................................     5
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     6
        Prepared statement...........................................     8
    Hon. Greg Walden, a Representative in Congress from the State of
      Oregon, opening statement......................................     9
        Prepared statement...........................................    10

                                   Witnesses

    Marcelo Claure, Executive Chairman, Sprint Corporation...........    12
        Prepared statement...........................................    15
        Answers to submitted questions...............................   237
    John Legere, Chief Executive Officer, T-Mobile US................    28
        Prepared statement...........................................    30
        Answers to submitted questions...............................   239
    Chris Shelton, President, Communications Workers of America......    52
        Prepared statement...........................................    54
        Answers to submitted questions...............................   253
    Carri Bennet, General Counsel, Rural Wireless Association, Inc...    63
        Prepared statement...........................................    65
        Answers to submitted questions...............................   260
    Doug Brake, Director of Broadband and Spectrum Policy,
      Information Technology and Innovation Foundation...............    78
        Prepared statement...........................................    80
    Phillip Berenbroick, Senior Policy Counsel, Public Knowledge.....    93
        Prepared statement...........................................    95
        Answers to submitted questions...............................   266

                               Submitted Material

    Letter from Andrea Rice, Missouri Farm Bureau, to Marlene H.
      Dortch, Secretary, Federal Communications Commission, submitted
      by Mr. Long....................................................   151
    Report of the Public Safety and Homeland Security Bureau, Federal
      Communications Commission, ``2017 Atlantic Hurricane Season
      Impact on Communications,'' August 2018, submitted by Mr.
      Pallone \1\
    Letter of February 4, 2019, from John Legere to Ajit Pai,
      Chairman, Federal Communications Commission, submitted by Mr.
      McNerney.......................................................   154
    Ex parte filing of February 4, 2019, by DLA Piper to Marlene H.
      Dortch, Federal Communications Commission, submitted by Mr.
      McNerney.......................................................   155
    Letter of September 17, 2018, from Greg Ellis, Vice President,
      Environment and Energy Policy, Indiana Chamber of Commerce, to
      Marlene H. Dortch, Secretary, Federal Communications
      Commission, submitted by Mrs. Brooks...........................   159

    ----------

    \1\ The report has been retained in committee files and also is
    available at https://docs.house.gov/meetings/IF/IF16/20190213/108895/
    HHRG-116-IF16-20190213-SD007.pdf.
    Article of October 25, 2018, ``Why 5G is out of reach for more
      people than you think'' by Shara Tibken, CNET, submitted by Mr.
      Lujan..........................................................   160
    Report of the Vermont Department of Public Service, ``Mobile
      Wireless in Vermont,'' January 15, 2019, submitted by Mr. Welch   169
    Map, 4G LTE coverage in Vermont, submitted by Mr. Welch..........   179
    Article of January 24, 2019, ``VT officials suspected cellphone
      coverage maps were too good to be true. They were right.,'' by
      April McCullum, Burlington Free Press, submitted by Mr. Welch..   180
    Maps, ``Distribution of Sprint and T-Mobile's postpaid and
      prepaid stores'' in Newark, NJ; Pittsburgh, PA; Toledo, OH; and
      Portland, OR, submitted by Mr. Doyle...........................   183
    Article of February 11, 2019, ``T-Mobile's Compelling Case For
      Driving Innovation and Competition,'' by Henry Waxman and Billy
      Tauzin, Morning Consult, submitted by Mr. Doyle................   187
    Statement of Consumer Reports by George P. Slover, Senior Policy
      Counsel, February 13, 2019, submitted by Mr. Doyle.............   189
    Blog post of February 12, 2019, ``Why INCOMPAS is Opposing the
      Merger Between T-Mobile and Sprint,'' by Chip Pickering,
      INCOMPAS, submitted by Mr. Doyle...............................   198
    Report of the Democracy Reform Task Force, ``The Republican
      Culture of Corruption,'' by Mr. Sarbanes, Chair, September 18,
      2018, submitted by Mr. Doyle \2\
    Report of the Office of Inspections, Office of Inspector General,
      General Services Administration, ``Evaluation of GSA's
      Management and Administration of the Old Post Office Building
      Lease,'' January 16, 2019, submitted by Mr. Doyle \3\
    Letter of February 12, 2019, from Mr. Cardenas, et al., to John
      Legere, Chief Executive Officer, T-Mobile US, Inc., and Michel
      Combes, Chief Executive Officer and President, Sprint Corp.,
      submitted by Mr. Doyle.........................................   202
    Letter from the National Diversity Coalition to Mr. Pallone, et
      al., submitted by Mr. Doyle....................................   208
    Letter of February 12, 2019, from Matthew Kandrach, President,
      and Gerard Scimeca, Vice President, Consumer Action for a
      Strong Economy, to Mr. Pallone, et al., submitted by Mr. Doyle.   213
    Statement of J. Kenneth Blackwell, February 12, 2019, submitted
      by Mr. Doyle...................................................   215
    Letter of February 12, 2019, from Colin A. Hanna, President, Let
      Freedom Ring, to Mr. Pallone, et al., submitted by Mr. Doyle...   217
    Letter of February 12, 2019, from Beau Brunson, Senior Policy
      Advisor, Consumers' Research, to Mr. Pallone, et al., submitted
      by Mr. Doyle...................................................   219
    Letter of February 12, 2019, from Richard M. Manning, President,
      Americans for Limited Government, to Mr. Pallone, et al.,
      submitted by Mr. Doyle.........................................   227
    Letter of February 13, 2019, from Grover G. Norquist, President,
      Americans for Tax Reform, to Mr. Doyle and Mr. Latta, submitted
      by Mr. Doyle...................................................   229
    Letter of January 25, 2019, from Ms. Eshoo, et al., to Ajit Pai,
      Chairman, Federal Communications Commission, and Makan
      Delrahim, Assistant Attorney General, Antitrust Division,
      Department of Justice, submitted by Mr. Long...................   231
    Letter of February 13, 2019, from Grover G. Norquist, President,
      Americans for Tax Reform, et al., to Mr. Doyle and Mr. Latta,
      submitted by Mr. Doyle.........................................   234

    ----------

    \2\ The report has been retained in committee files and also is
    available at https://docs.house.gov/meetings/IF/IF16/20190213/108895/
    HHRG-116-IF16-20190213-SD012.pdf.
    \3\ The report has been retained in committee files and also is
    available at https://docs.house.gov/meetings/IF/IF16/20190213/108895/
    HHRG-116-IF16-20190213-SD013.pdf.

     PROTECTING CONSUMERS AND COMPETITION: AN EXAMINATION OF THE T-MOBILE
                               AND SPRINT MERGER

                                  ----------

                          WEDNESDAY, FEBRUARY 13, 2019

                      House of Representatives,
         Subcommittee on Communications and Technology,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:00 a.m., in
    the John D. Dingell Room 2123, Rayburn House Office Building,
    Hon. Mike Doyle (chairman of the subcommittee) presiding.
        Members present: Representatives Doyle, McNerney, Clarke,
    Loebsack, Veasey, McEachin, Soto, O'Halleran, Eshoo, DeGette,
    Butterfield, Matsui, Welch, Lujan, Schrader, Cardenas, Pallone
    (ex officio), Latta (subcommittee ranking member), Shimkus,
    Scalise, Bilirakis, Johnson, Long, Flores, Brooks, Walberg, and
    Walden (ex officio).
        Staff present: Billy Benjamin, Systems Administrator;
    Jeffrey C. Carroll, Staff Director; Sharon Davis, Chief Clerk;
    Jennifer Epperson, FCC Detailee; Evan Gilbert, Press Assistant;
    Tiffany Guarascio, Deputy Staff Director; Alex Hoehn-Saric,
    Chief Counsel, Communications and Technology; Jerry Leverich,
    Counsel; Dan Miller, Policy Analyst; Joe Orlando, Staff
    Assistant; Tim Robinson, Chief Counsel; Chloe Rodriguez, Policy
    Analyst; Mike Bloomquist, Minority Staff Director; Robin
    Colwell, Minority Chief Counsel, Communications and Technology;
    Kristine Fargotstein, Minority Detailee, Communications and
    Technology; Margaret Tucker. Fogarty, Minority Staff Assistant;
    Stephen Keegan, Minority Intern, Communications and Technology;
    and Peter Kielty, Minority General Counsel.
        Mr. Doyle. Well, good morning. Before we get started, I
    want to express my condolences to Congresswoman Debbie Dingell
    on the loss of her husband, John. John was a dear friend and
    mentor to me and many members of this 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 5 minutes.

       OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN
             CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

        Welcome to the Subcommittee on Communication and
    Technology's hearing on ``Protecting Consumers and Competition:
    An Examination of the T-Mobile/Sprint Merger.'' This hearing is
    noteworthy because the last time a merger hearing was had
    before this subcommittee was almost 9 years ago. And in that
    time there have been numerous mergers within this
    subcommittee's jurisdiction that have gone without a hearing.
        I believe it is the duty of this subcommittee to allow our
    members to publicly discuss and debate the merits of these
    transactions and to question the relevant stakeholders. 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 anticonsumer
    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 prepaid and Lifeline
    providers. Sprint has worked hard to bring its networks to
    within one percent of Verizon's in terms of network
    reliability, or so their commercials say so.
        Consumers have also benefited from Sprint positioning
    itself as the best value. They are offering a plan right now
    where new customers can get a year of free service when they
    switch from another carrier, which sounds amazing. However,
    this hearing isn't about the benefits that both of your
    companies have brought to the market. It is about the
    extraordinary impact that your combined company could have on
    the public and the marketplace if this merger goes through.
        We will hear today from the Communication Workers of
    America, from the Rural Wireless Association, and Public
    Knowledge. They 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 30,000 job losses in the industry and a reduction in
    industry pay by as much as $3,000 per employee. The Rural
    Broadband 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 agreements allow customers of rural carriers
    who build their own networks in the most 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 access to their networks to
    prepaid and Lifeline providers who then sell that service under
    their own brands. What remedy do these carriers or their
    customers have if the New T-Mobile decides that it wants to get
    out of the wholesale business or drastically raise rates?
        To that end, the FCC found in their Communications
    Marketplace Report that the wireless market concentration was
    currently at 3,100 HHI. HHI measures how competitive a market
    is with a higher number meaning it is less competitive. The
    Justice Department's Horizontal 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 postpaid market and 2,014 points
    for the prepaid market. That would take the prepaid market from
    where it is right now at 2,467, which is just under DOJ's
    threshold, to 4,481, a level that raises lots of red flags.
    These kinds of numbers have historically resulted in higher
    prices for consumers, less competition, and less innovation.
        I appreciate both executives' 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 promises of expanded rural broadband. These are national
    objectives that are important to me and many members of this
    committee. However, I have seen a lot of mergers in this
    industry and others and it is hard to think of one where
    consolidation didn't result in people losing their jobs, prices
    going up, and innovation being stifled.
        I look forward to hearing from the testimony from our two
    telephone companies that wish to merge and from the other
    panelists.
        [The prepared statement of Mr. Doyle follows:]

                     Prepared statement of Hon. Mike Doyle

        Before we get started, I want to express my condolences to
    Congresswoman Dingell on the loss of her husband. John was a
    dear friend and mentor to me and many here. His passion for
    oversight, accountability, legislative progress, and his
    lifetime of public service is an example to us all. His passing
    is a great loss to our Nation, the Congress, and this committee
    which he loved so much.
        Welcome to the Subcommittee on Communication and
    Technology's hearing on Protecting Consumers and Competition,
    an Examination of the T-Mobile/Sprint Merger. This hearing is
    noteworthy because the last merger hearing before this
    subcommittee took place nearly 9 years ago. In that time, there
    have been numerous mergers within this subcommittee's
    jurisdiction that have gone without a hearing. I believe it is
    the duty of this subcommittee to allow our Members to publicly
    discuss and debate the merits of these transactions and to
    question the relevant stakeholders.
        The merger before us today is between two of our country's
    national wireless providers, T-Mobile and Sprint. These
    companies have acted as disruptors, competitors, and low-cost
    options in the wireless marketplace.
        T-Mobile's ``uncarrier'' strategy has ended anticonsumer
    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 pre-
    paid and Lifeline providers. Sprint has worked hard to bring
    its network to within one percent of Verizon's in terms of
    network reliability--or so their commercials tell me! Consumers
    have also benefited from Sprint positioning itself as the best
    value. They are offering a plan right now where new customers
    can get a year of free service when they switch from another
    carrier, which sounds amazing.
        However, this hearing isn't about the benefits that both of
    your companies have brought to the market. It is about the
    extraordinary impact that your combined company could have on
    the public and the marketplace if this merger goes through.
        We will hear today from the Communication Workers of
    America, the Rural Wireless Association, and Public Knowledge.
    They claim that this merger will have negative impacts on low-
    income consumers, rural providers, and jobs in the wireless
    industry.
        C-W-A's testimony suggests this merger will result in up to
    thirty thousand job losses in the industry--and a reduction in
    industry pay by as much as three thousand dollars per employee.
        The Rural Broadband Association's testimony argues that
    rural consumers will pay more. They claim that Sprint charges
    20 times less than T-Mobile or the other national carriers for
    roaming agreements. These agreements allow customers of rural
    carriers, who build their own networks in the most rural
    communities, to use their phones throughout the country. What
    guarantee's 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 4 to 3. They argue that the merger would
    hit low-income consumers the hardest because the number of
    carriers offering wholesale access will drop from 3 to 2.
        Sprint, AT&T, and T-Mobile each sell access to their
    networks to pre-paid and Lifeline providers, who then sell that
    service under their own brands. What remedy do these carriers,
    or their 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 their Communications
    Marketplace Report that wireless market concentration was
    currently at 3,100 H-H-I. H-H-I measures how competitive a
    market is--with a higher number indicating less competition.
    The Justice Department's horizontal merger guidelines state
    that a market with an H-H-I 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 postpaid market and 2,014 points
    for the pre-paid market. That would take the pre-paid market
    from where it is now at 2,467, which is just under the D-O-J's
    threshold, to 4,481--a level that raises lots of red flags.
    These kinds of numbers have historically resulted in higher
    prices for consumers, less competition, and less innovation.
        I appreciate both executives' statements that they believe
    that this merger will benefit consumers and result in lower
    prices--and their commitments to an accelerated deployment of
    5G and promises of expanded rural broadband. These are national
    objectives that are important to me and many members of this
    committee.
        However, I've seen a lot of mergers in this industry and
    others, and it's hard to think of one where consolidation
    didn't result in people losing their jobs, prices going up, and
    innovation being stifled.
        I look forward to hearing from the panel.

        Mr. Doyle. And with that I yield to the ranking member, Mr.
    Latta, for 5 minutes.

    OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF OHIO

        Mr. Latta. Well, thank you, Mr. Chairman. And if I could
    just take a point of personal privilege also to express my
    deepest sympathies to our friend and colleague Debbie Dingell
    on the loss of Chairman Dingell. And the chairman loved this
    committee. You know, this room is named after him.
        And I had the privilege of getting to know him in my days
    not only on this 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 that
    he did for it. So 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 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 drawbacks, and this one is no different. I
    understand from the CEOs of T-Mobile and Sprint, who are with
    us today, that there are many proconsumer outcomes possible if
    the merger is approved. These potential benefits range from
    providing mobile broadband 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 several of the witnesses
    representing groups here today that the combined company could
    pose some harm to consumers. Some of the potential drawbacks
    include the possibility to eliminate jobs or increase the price
    that consumers pay for access to wireless service.
        Our role in this committee is not to weigh the merits of
    these arguments and determine if this merger is in the public
    interest. Congress gave that role to the FCC, who along with
    the DOJ performs a more traditional antitrust assessment on the
    merger, and these two agencies will ultimately determine if the
    merger is going to be approved. Our role in this subcommittee
    is to provide policies that advance the telecommunications
    market, including expanding access to broadband to all
    Americans.
        One way to do this, especially for rural America and many
    areas in my district, is to build 5G networks. In areas where
    the broadband is not currently deployed, 5G networks can help
    connect Americans to high-speed internet for the very first
    time. And, in areas where broadband is already available, 5G
    networks provide a competitive alternative. This proposed
    merger reportedly will promote these objectives, and I look
    forward to hearing more about the ways in which companies plan
    on doing that.
        But I also am interested in hearing from all of our
    witnesses today. This will be an enlightening discussion. The
    final decision about whether this proposed merger of these two
    companies is in the public interest is up to the FCC. Again I
    look forward to hearing from all of our witnesses today and
    your testimony and your responses to our questions.
        And, Mr. Chairman, I appreciate the hearing today, and I
    yield back the balance of my time.
        [The prepared statement of Mr. Latta follows:]

                   Prepared statement of Hon. Robert E. Latta

        Good morning, and welcome to our panel of witnesses. Thank
    you for making the time to be here today. I look forward to
    hearing your 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 a merger comes a long list of potential
    benefits and drawbacks, and this one is no different. I
    understand from the CEOs of T-Mobile and Sprint, who are here
    with us today, that there are many proconsumer outcomes
    possible if the merger is approved. These potential benefits
    range from providing mobile broadband to millions of unserved
    or underserved Americans living in rural areas to helping the
    United States win the global competitiveness race to 5G. But, I
    also understand from several of the other witnesses
    representing groups here today that the combined company could
    pose some harm to consumers. Some of these potential drawbacks
    include the possibility to eliminate jobs or increase the price
    that consumers pay for access to wireless service.
        Our role on this subcommittee is not to weigh the merits of
    these arguments and determine if this merger is in the public
    interest. Congress gave that role to the FCC who, along with
    DOJ, performs a more traditional antitrust assessment on the
    merger, and these two agencies will ultimately determine if the
    merger is approved.
        Our role on this subcommittee is to promote policies that
    advance the telecommunications market, including expanding
    access to broadband to all Americans. One way to do this,
    especially for rural America and many areas in my district, is
    to build 5G networks. In areas where broadband is not currently
    deployed, 5G networks can help connect Americans to high-speed
    Internet for the first time. And, in areas where broadband is
    already available, 5G networks will provide a competitive
    alternative.
        This proposed merger reportedly will promote those
    objectives, and I look forward to hearing more about the ways
    in which the companies plan on doing that. But, I am also
    interested in learning about some of the potential unintended
    consequences of the merger. This will be an enlightening
    discussion, but that is all it will be. The final decision
    about whether this proposed merger of these two companies is in
    the public interest is up to the FCC.
        I look forward to hearing your testimony and responses to
    our questions.

        Mr. Doyle. The gentleman yields back. The Chair now
    recognizes Mr. Pallone, chairman of the full committee, for 5
    minutes for his opening statement.

    OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Pallone. Thank you, Chairman Doyle. Today is our first
    hearing since the loss of our chairman, John Dingell. It is
    fitting that this room is named the John Dingell Room. After
    all, over 28 years as the top Democrat on this committee and
    over his nearly 60 years in the House, he fought to ensure the
    committee maintained its broad jurisdiction, had deliberative
    debates, followed regular order, conducted robust oversight,
    and produced legislation in the public interest.
        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 carriers, T-Mobile and Sprint.
    Collectively, these companies directly employ more than 80,000
    people and serve more than 130 million customers.
        These companies are no stranger to merger discussions. In
    2011, a struggling T-Mobile was almost purchased by AT&T but
    was blocked by the Obama administration, and T-Mobile
    nevertheless went on to flourish. T-Mobile and Sprint attempted
    to merge 2 years later, but abandoned the deal after
    competition concerns were raised by regulators. Now once more
    the parties are seeking approval to merge.
        This hearing marks the first time in 8 years that the
    committee has 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 we can fulfill our obligation
    for the people to determine how this proposed consolidation
    will affect consumers, workers, public safety and network
    resiliency, competition, and future innovation.
        For the last 8 years, major industry consolidation occurred
    without significant oversight, and the consequences of that
    have been borne by consumers and hardworking Americans. In the
    past we have seen mergers jack up consumer prices, cut away
    meaningful choices, and outsource, undercut, and eviscerate
    good-paying jobs.
        We have seen previous merger conditions that weren't met or
    weren't enforced. We have seen the public interest in all its
    forms undermined, and that is why we must look carefully at
    these issues before a merger is approved. In this case, the
    transaction 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 consumers' best interests in
    mind when deciding the fate of the merger.
        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 percent, 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 by the merger? T-Mobile filed the
    letter committing not to raise prices with the FCC. Putting
    aside whether that is sufficient, there is a serious 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 Communications Workers
    of America say we should expect the loss of 30,000 jobs. The
    truth will have long-term implications for American families
    across the country. And Mr. Legere says that New T-Mobile will
    create a world-class 5G network, but opponents say that both T-
    Mobile and Sprint have committed to investors to deploying 5G
    networks as separate and independent companies. 5G deployment
    is important, obviously, and valuable to consumers and 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 compete in
    wireless. But smaller carriers worry the merger might snuff out
    existing and new competitive players that rely on wholesale
    access to T-Mobile and Sprint's networks. To this end, we must
    understand not only how the merger 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 out robust rural
    broadband, while others argue that New T-Mobile will shut down
    25,000 cell towers across the country. And I would like to
    understand whether this is accurate and whether it will have a
    negative effect on the resiliency of the wireless network
    during disasters.
        So, Mr. Chairman, there are a lot of conflicting opinions
    on the impact of this merger which is why this hearing is so
    important and I hope that Members will get the straight answers
    here today. And I yield back.
        [The prepared statement of Mr. Pallone follows:]

                 Prepared statement of Hon. Frank Pallone, Jr.

        Today is our first hearing since the loss of our chairman,
    John Dingell. It is fitting that this room is named the John D.
    Dingell Room. After all, over 28 years as the top Democrat on
    this committee and over his nearly 60 years in this House, he
    fought to ensure the committee maintained its broad
    jurisdiction, had deliberative debates, followed regular order,
    conducted robust oversight and produced legislation in the
    public interest. We will all have an opportunity to remember
    and pay tribute to our chairman this Friday morning at a
    special committee meeting.
        In keeping with his tradition, today, we focus our
    microscope on the proposed merger of two of the four large,
    nationwide wireless phone carriers: T-Mobile and Sprint.
    Collectively, these companies directly employ more than 80,000
    people, and serve more than 130 million customers.
        These companies are no stranger to merger discussions. In
    2011, a struggling T-Mobile was almost purchased by AT&T, but
    was blocked by the Obama administration, and T-Mobile
    nevertheless went on to flourish.
        T-Mobile and Sprint attempted to merge 2 years later but
    abandoned the deal after competition concerns were raised by
    regulators. Now, once more, the parties are seeking approval to
    merge.
        This hearing marks the first time in 8 years that the
    committee has met to evaluate the consequences of any merger.
        For too long, this House and this committee shirked that
    responsibility. But now, we resume the practice of reviewing
    major acquisitions, so we can fulfill our obligation for the
    people to determine how this proposed consolidation will affect
    consumers, workers, public safety and network resiliency,
    competition, and future innovation.
        For the last 8 years major industry consolidation occurred
    without any oversight, and the consequences of that negligence
    have been borne by consumers and hardworking Americans. In the
    past, we've seen mergers jack up consumer prices, cut away
    meaningful choices, and outsource, undercut, and eviscerate
    good paying jobs.
        We've seen previous merger conditions that weren't met or
    weren't enforced. We've seen the public interest, in all of its
    forms, undermined, and that is why we must look carefully at
    these issues before a merger is approved.
        In this case, the transaction is currently being reviewed
    by the Federal Communications Commission (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 consumers' best interests in mind when deciding the
    fate of the merger.
        I know we're going to have many hard questions today,
    because the facts surrounding this merger are so 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 percent-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 by the merger? T-Mobile filed a letter
    committing not to raise prices with the FCC. Putting aside
    whether that is sufficient, there is a serious 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 Communications Workers
    of America say we should expect a loss of 30,000 jobs. The
    truth will have long term implications for American families
    across the country.
        Mr. Legere says that New T-Mobile will create a world-class
    5G network, but opponents say that both T-Mobile and Sprint
    have committed to investors to deploying 5G Networks as
    separate, and independent, companies. 5G deployment is
    important and valuable to consumers and the economy and whether
    the merger expedites 5G roll-out merits consideration.
        Mr. Legere 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 compete in wireless. But
    smaller carriers worry the merger might snuff out existing and
    new competitive players that rely on wholesale access to T-
    Mobile and Sprint's networks. To this end, we must understand
    not only how the merger affects the current wireless
    marketplace but also the marketplace of the future.
        And Mr. Legere says that the merger of T-Mobile and Sprint
    will help New T-Mobile buildout robust, rural broadband, while
    others argue New-T-Mobile will shutdown 25,000 cell towers
    across the country. I would like to understand whether this is
    accurate and whether it will have a negative effect on the
    resiliency of the wireless network during disasters.
        There are a lot of conflicting opinions on the impact of
    this merger--which makes this hearing so important. I hope that
    Members will get the straight answers here today.
        I yield back.

        Mr. Doyle. The gentleman yields back. The Chair now
    recognizes Mr. Walden, ranking member of the full committee,
    for 5 minutes for his opening statement.

      OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF OREGON

        Mr. Walden. Thank you, Mr. Chairman. And as you all have
    said, I know we all have the Dingell family in our thoughts and
    our prayers on this difficult week. John Dingell taught us all
    how to be legislators. He was a legend in many respects, and
    nobody, despite everybody's attempt, has ever been able to do
    the yes-or-no questioning as effectively as Mr. Dingell did. We
    have all tried to emulate that.
        And so he is missed. He will never be forgotten. And I am
    glad we are all honoring his life, his work, his service, and
    remembering Debbie in our prayers.
        Mr. Chairman, I would like to echo my colleagues' warm
    welcome to all of our witnesses today and to thank you all for
    making the time to come share your thoughts with the
    subcommittee. We have generally avoided hearings focused on
    specific transactions in an effort to allow the regulators who
    are actually responsible for assessing them to do their work as
    much as possible free from intense political influence. It has
    been my hope that experts at the FCC and the Department of
    Justice who as we speak are reviewing this transaction and its
    potential impact on public interest and competition will
    continue their analysis without undue political pressure.
        Now in a district like mine which would stretch from the
    Atlantic to Ohio, it is a district that gives new meaning to
    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 of these areas who have been
    awaiting the promise of broadband for far too long with the
    connectivity, educational, 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 and as a result of its newly acquired
    600 megahertz licenses. With this committee's bipartisan work
    last year to keep the repack on track with an additional
    billion dollars for reimbursement of broadcasters' moving
    expenses, more and more districts are realizing the benefits of
    groundbreaking incentive auction that we made possible through
    the action of this committee.
        The hope is finally becoming reality in many of our areas
    of the country and I think it is well worth noting T-Mobile's
    efforts so far in delivering on its promises and in some cases
    ahead of schedule.
        Turning to the particular transaction at issues today,
    experts including some of our witnesses are painting some very
    different pictures of the potential effects of this 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
    broadband markets. We want to see faster rural development and
    we want to see better service. And we need America to lead in
    the global race on 5G deployment, reaping economic benefits and
    transformative services for all Americans.
        As we consider the testimony of our witnesses, we need to
    take a holistic view. Instead of focusing on a particular
    metric like those who insist the Government must intervene to
    preserve four nationwide wireless operators at all costs, we
    have to consider scale and operational efficiencies in that
    equation and the rapidly changing characteristics of the
    wireless marketplace, especially the convergence of
    functionality with nontraditional competitors such as global
    and satellite operators.
        With almost 50 percent of digital video now consumed on
    smart phones, wireless service is not what it once was. And
    with the advent of 5G, the capabilities are evolving at an
    exponential rate. So it is important for us as legislators to
    adjust our expectations to this new reality and resist the call
    for artificial market constraints that may not make any sense
    in a 5G world.
        I look forward to the witnesses today and their
    perspectives on each of these issues and I want us to be the
    world's fastest and best 5G ecosystem, secure, affordable and
    accessible to every American.
        [The prepared statement of Mr. Walden follows:]

                     Prepared statement of Hon. Greg Walden

        I'd like to echo my colleagues' warm welcome to all the
    witnesses here today and thank you all for making the time to
    come share your thoughts with the subcommittee today. We have
    generally avoided hearings focused on any specific transaction
    in an effort to allow the regulators who are responsible for
    assessing them to do their work, as much as possible, free from
    intense political influence. It is my hope the experts at the
    FCC and DOJ--who as we speak are reviewing this transaction,
    and its potential impact on the public interest and
    competition--will continue their analysis in this vein.
        In a district like mine that gives new meaning to the word
    ``rural,'' coverage gaps engulf huge areas of the map, in
    places with as few as one person for every square mile. For
    Americans in some of these areas, who have been awaiting the
    promise of broadband for far too long, with the connectivity,
    educational and economic empowerment it brings, any news on
    this front is cause for great celebration.
        So we have been appreciative of T-Mobile's rapid build out
    efforts in Central Oregon as a result of its newly acquired 600
    MHz licenses. With this committee's bipartisan work last year
    to keep the repack on track with an additional $1 billion for
    reimbursement of broadcasters' moving expenses, more and more
    districts are realizing the benefits of the groundbreaking
    incentive auction that we made possible. The hope is finally
    becoming a reality in these areas. And I think it's well worth
    noting T-Mobile's efforts so far in delivering on its promises,
    in some cases ahead of schedule.
        Turning to the particular transaction at issue today,
    experts including some of our witnesses here are painting some
    very different pictures of its potential effects. Going
    forward, we want to see consumers paying less for more data. We
    want to see more choices and intensified competition in the
    wireless and in-home broadband markets. We want to see faster
    rural deployment and better service. And we need America to
    lead in the global race to 5G, reaping economic benefits and
    transformative services for all Americans.
        As we consider the testimony of these witnesses, we need to
    take a holistic view, instead of focusing on a particular
    metric--like those who insist that the Government must
    intervene to preserve four nationwide wireless operators at all
    costs. We have to consider scale and operational efficiencies
    in that equation, and the rapidly changing characteristics of
    the wireless marketplace, especially the convergence of
    functionality with nontraditional competitors such as cable and
    satellite operators. With almost 50 percent of digital video
    now consumed on smartphones, wireless service is not what it
    once was, and with the advent of 5G the capabilities are
    evolving at an exponential pace. So it's important for
    legislators to adjust our expectations to this reality and
    resist the call for artificial market constraints that may not
    make any sense in a 5G world.
        I look forward to hearing the perspectives of each of our
    witnesses as we consider the current state of the marketplace
    overall and how best to reach the objective so important to us
    all--the world's fastest and best 5G ecosystem, secure,
    affordable, and accessible to every American.

        Mr. Walden. With that I would yield the balance of my time
    to the gentleman from Missouri, Mr. Long.
        Mr. Long. Thank you. I would like to take a point of
    personal privilege here for just a minute too, maybe stop the
    clock for me for a second if we could, on John Dingell.
        Two planeloads of us loaded up yesterday morning out at
    Andrews to attend John's funeral in Dearborn, and we circled
    Detroit for about an hour, after an hour delay here, and were
    told we had 5 minutes of fuel left or we could go to Pittsburgh
    and refuel and go back and we would miss the funeral.
        So I know that Anna Eshoo was on that flight; Mr. Walden
    that just yielded to me, he was chairman and now ranking member
    of the committee; Chairman Upton, who was Committee E&C and had
    his office across from John for years. He and John Lewis, who
    is a legend in his own time, were supposed to speak at the
    funeral, and Speaker Pelosi happened to be on the same flight,
    or I happened to be on the same plane with them.
        So at 30,000 feet, John Lewis led us in a tribute and we
    had our own service for John Dingell at 30,000 feet yesterday,
    and it was quite moving. Chairman Upton spoke, Speaker Pelosi,
    John led us in prayer and spoke, and 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 into Congress in
    1955. He followed his father. His wife, Debbie, of course
    follows him today. She is doing an excellent job, and thoughts
    and prayers go out to Debbie and the family.
        With that, I will start my minute that Greg 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 in recent years. In order to foster
    innovation and growth in any industry it is important that we
    ensure that there is a fair and competitive marketplace.
        I am excited to hear how the third- and fourth-largest wire
    carriers in the United States plan to combine their spectrum
    resources to deliver a more robust, nationwide, wireless
    broadband network for consumers, drive innovation and
    investment, and better compete with the top two wireless
    providers.
        Investments in next generation broadband networks are
    important to reach unserved communities like mine in Southwest
    Missouri and help close the digital divide. I look forward to
    hearing from our 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 would like to submit for the record two documents: an
    op-ed from the Missouri Times written by the head of the
    Missouri Farm Bureau demonstrating support for the merger in
    Missouri, and also a letter in support of the merger to the FCC
    from myself and several of my colleagues. And with that I yield
    back.
        Mr. Doyle. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Walden. And, Mr. Chairman, I will yield back, but I
    just want to say for the record we have another subcommittee
    going on in important health issues upstairs, so some of us
    will have to go up and back.
        But, again, thank you for being here.
        Mr. Doyle. I thank the ranking member.
        The Chair would like to remind Members that, pursuant to
    committee rules, all Members' written opening statements shall
    be made part of the record.
        I would now like to introduce our witnesses for today's
    hearing. First, we will have Mr. Marcelo Claure, executive
    chairman of Sprint Corporation; next, Mr. John Legere, chief
    executive officer and president of T-Mobile US; next, Mr. Chris
    Shelton, president of the Communications Workers of America;
    then we will have Ms. Carri Bennet, general counsel of the
    Rural Wireless Association; Mr. Doug Brake, director of
    Broadband and Spectrum Policy for the Information Technology
    and Innovation Foundation; and last but not least, Mr. Phillip
    Berenbroick, senior policy counsel with Public Knowledge.
        I want to thank all the witnesses for joining us today. We
    look forward to your testimony. At this time, the Chair will
    recognize each witness for 5 minutes to provide their opening
    statement, but before we begin I want to explain our lighting
    system. In front of you, of the witnesses, is a series of
    lights. The light will initially be green at the start of your
    opening statement. The light will turn yellow when you have 1
    minute remaining, and please wrap up your testimony at that
    point. The light turns red when your time has expired.
        Mr. Claure, you are now recognized for 5 minutes.

       STATEMENTS OF MARCELO CLAURE, EXECUTIVE CHAIRMAN, SPRINT
    CORPORATION; JOHN LEGERE, CHIEF EXECUTIVE OFFICER, T-MOBILE US;
     CHRIS SHELTON, PRESIDENT, COMMUNICATIONS WORKERS OF AMERICA;
      CARRI BENNET, GENERAL COUNSEL, RURAL WIRELESS ASSOCIATION,
     INC.; DOUG BRAKE, DIRECTOR OF BROADBAND AND SPECTRUM POLICY,
     INFORMATION TECHNOLOGY AND INNOVATION FOUNDATION; AND PHILLIP
          BERENBROICK, SENIOR POLICY COUNSEL, PUBLIC KNOWLEDGE

                      STATEMENT OF MARCELO CLAURE

        Mr. Claure. Before we begin, I want to pay my respect to
    Chairman Dingell and his longstanding service to his country.
        It is an honor to be here today and I am 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 will go into details in a moment, but before I do so I
    want to tell you a little about me. First, I am an immigrant. I
    immigrated to the United States as a young man from Bolivia. I
    had very little money. I went to small university in Boston and
    I received a priceless education.
        Second, I am an entrepreneur. After I graduated college I
    founded a company called Brightstar. I started selling phones
    out of my car and I gradually grew Brightstar into the largest
    mobile phone distribution and supply chain services company in
    the world. We worked very hard and grew over $10 billion in
    sales and thousands of employees. I am most proud that we made
    Brightstar the largest Hispanic-owned business in the history
    of our country.
        In 2014, I sold Brightstar to Softbank, immediately after
    that I became Sprint's CEO. At that time, Sprint, a Kansas
    company, was near financial distress. In 2013, the company lost
    $5 billion and in the previous 10 years Sprint lost over $25
    billion and we had approximately $31 billion in debt. A great
    company with tens of thousands of jobs across the U.S. was at
    risk.
        Beginning in 2014, we undertook a massive and painful
    transformation of the company. We worked hard the same way we
    did at Brightstar, from the ground up. We reduced our expenses
    close to $6 billion through cost reductions, employee layoffs,
    and some unwanted transfer to jobs overseas. We didn't want to,
    but we had to.
        Today, Sprint is no longer in financial dire straits, but
    we face some significant challenges. Despite our success we
    were 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 customers, and many customers that we are acquiring
    leave at a faster pace than our competitors. Customers today
    are not willing to sacrifice quality.
        Today, the U.S. wireless market has become a duopoly.
    Verizon and AT&T have close to 70 percent market share and they
    control 93 percent of the cash flow generated from the
    industry. As a result, it is very hard to invest and compete at
    the same level. Today, we are at a technological inflection
    point. Over the next few years 5G is coming, a new standard of
    connectivity. It is going to completely change the way we
    connect and the way we live our lives.
        But Sprint doesn't have the resources to build a 5G network
    to provide the necessary competition against the AT&T and
    Verizon duopoly. We estimate that we will need close to 20 to
    25 billion dollars 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 would have
    to increase our prices to the American consumer.
        The only company that can build the world's best 5G network
    is a combination of Sprint and T-Mobile and we can only do this
    if this merger is approved. As a combined company, we are
    committed to invest nearly $40 billion over the next 3 years to
    build the world's best 5G network with nationwide coverage. How
    can we do this together? It is simple. It is the marriage of
    two necessary and complementary 5G pieces.
        Sprint has high capacity spectrum which have acquired over
    many years. T-Mobile has brought national coverage spectrum. It
    is capacity plus coverage. Today, we can build the world's most
    advanced, covering every corner in America in urban, suburban,
    and rural areas. We cannot take lightly that America needs to
    lead the world in 5G. China has made it a priority to win the
    5G race. They are investing billions.
        When a country has the best network with the latest
    technology it brings massive economic stimulus, explosive 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 cost irreparable damage. This is an
    opportunity for a lifetime.
        In addition, yes, we are committed to lower prices. When we
    merger two companies we will create eight times the network
    capacity that we would have on our own. We will have to beat
    AT&T and Verizon on price to fill this capacity. This makes
    financial sense, it is good business, and most importantly it
    is our commitment.
        Lastly, it is true that most mergers do not create jobs.
    This merger is the opposite. This is a growth story. This new
    company will create new jobs, blue-collar, white-collar jobs,
    jobs in urban, suburban, and rural America. We will need
    skilled network engineers, construction crews, enterprise sales
    teams, call center jobs that we are going to bring back from
    overseas, and new sales reps for the new stores that will be
    opening.
        I can't thank you enough for allowing me to speak today. As
    I mentioned, I am grateful to this country, and as an American
    entrepreneur I hope you will approve this merger. I look
    forward to answering your questions.
        [The prepared statement of Mr. Claure follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Doyle. Thank you very much.
        The Chair now recognizes Mr. Legere for 5 minutes.

                        STATEMENT OF JOHN LEGERE

        Mr. Legere. Thank you, Chairman Doyle, Ranking Member
    Latta, and other members of the subcommittee for inviting
    Marcelo and me and the rest of the panel here today. Before I
    begin my remarks, let me offer condolences to Congresswoman
    Dingell on the loss of her husband, John Dingell, a towering
    figure in the House and a leader in this committee.
        I appreciate the opportunity to tell you about the
    tremendous benefits of the proposed T-Mobile/Sprint merger and
    the progress we are making towards making it a reality. So,
    first, what will this merger deliver? It will deliver a
    supercharged uncarrier which can ensure U.S. leadership in 5G,
    increase competition, and create American jobs.
        First and foremost, the New T-Mobile will make sure America
    wins the global 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 real-time 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 flow to big cities. Combining Sprint and T-Mobile will
    produce a faster, broader, deeper network that is truly
    nationwide. It will benefit consumers and businesses everywhere
    including rural America. Neither company could achieve this on
    its own.
        Second, New T-Mobile will have the capital, the scale, and
    the network to supercharge competition, unleashing significant
    benefits for consumers that includes keeping prices low. The
    combined company will continue the T-Mobile tradition of
    disrupting the wireless space and we will disrupt in-home
    broadband with new wireless broadband options freeing millions
    from the stranglehold 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 prices and better services. How?
    Our costs will drop sharply and our network capacity will
    expand tremendously. I am so confident that the merger will
    lower prices that we are willing to put our money where our
    mouth is. Last week we committed in writing to regulators that
    we will make available the same or better rate plans as those
    offered by T-Mobile or Sprint for the next 3 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 build-out of our
    5G network, investment in new customer care centers, and
    expansion into new businesses like video distribution,
    broadband, and enterprise services means thousands more jobs
    than the two standalone companies would have needed.
        In the first year we will have thousands more employees
    than the standalone companies combined. By 2024 we will have
    11,000 more employees. Our critics are wrong about the impact
    on jobs. I have looked at their arguments and supposed analyses
    and they do not make sense. They ignore the facts. They don't
    account for any areas where jobs will grow, like network
    integration or new customer call care centers.
        And by the way we have heard this story before. They said
    we would cut 10,000 jobs when T-Mobile merged with MetroPCS. In
    fact, we expanded jobs by thousands. Let me say this to every
    T-Mobile and Sprint employee working in one of our stores
    today, each of you will be offered a job with the New T-Mobile.
        Our opponents have also lobbed false allegations that this
    transaction will allow Huawei and ZTE into U.S. networks. Let
    me be clear. There is no Huawei or ZTE equipment in our network
    today and there never will be. Not today, not tomorrow, not
    ever.
        Many have already recognized the tremendous benefits of
    this merger. CFIUS and Team Telecom have completed the national
    security review and approved the transaction. Sixteen of 19
    States have completed their reviews and found the transaction
    to be in the public interest, and nearly 200 organizations,
    companies, government officials, and community leaders publicly
    support the transaction. I am particularly honored that
    Congresswoman Eshoo, Congressman Schrader, Congressman Long,
    and 10 other Members have signed a bipartisan letter of
    support.
        To those that doubt us, I would simply say this: We are the
    uncarrier. My management team and I believe on delivering on
    our promises and we know if we do not we will lose the
    credibility and the 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.
        [The prepared statement of Mr. Legere follows:]

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        Mr. Doyle. Thank you, Mr. Legere.
        The Chair now recognizes Mr. Shelton for 5 minutes.

                       STATEMENT OF CHRIS SHELTON

        Mr. Shelton. Chairman Doyle, Ranking Member Latta, Chairman
    Pallone, Ranking Member Walden, and members of the committee,
    first, let me offer CWA's condolences on the passing of
    Chairman Dingell to all of you and to his family.
        My name is Chris Shelton. I am the president of the
    Communications Workers of America. We represent 700,000
    employees in telecommunications and other industries including
    more than 45,000 in wireless.
        Let's tell it like it is. This 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 that 30,000 Americans would lose
    their jobs. More than 25,000 of those jobs would be in retail
    stores all 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, often low-income households, which is why
    their stores are located near each other's sometimes right
    across the street. You will 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. This is especially true
    for the prepaid brands, Boost and MetroPCS, which tend to be
    concentrated in lower income areas. So if the companies merge,
    why would they keep two neighboring stores open? Chances are,
    they won't. Rather, then 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 is just bull. Without binding and enforceable
    commitments, and I mean commitments that have no loopholes,
    such promises are just cheap sales and talk and are easily
    broken.
        First, T-Mobile doesn't differentiate between internal
    employees and contractors, short-term, temporary hires or long-
    term employees. Upgrading towers, for example, usually is done
    by temporary contractors not full-time employees. Second, Mr.
    Legere talks about call centers, but both companies have a long
    history of off shoring call center jobs, moving them to the
    Philippines, Mexico, and other non-U.S. locations.
        Third, T-Mobile has a track record of buying companies and
    then cutting jobs. After it acquired Iowa Wireless in 2018, it
    closed all Iowa Wireless call centers and more than 90 percent
    of its retail locations. It closed every single store in rural
    Iowa. Finally, trusting Sprint and T-Mobile with American jobs
    is 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 Walmart. Violations 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 that
    skilled labor with wages and benefits. Take away competition
    and the remaining companies can throttle down employees'
    compensation while jacking up prices on consumers. Both are
    symptoms of the same disease, too much market concentration.
        If Sprint and T-Mobile had not fought their workers who
    wanted a union perhaps the employment and wage impact would not
    be 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,
    disproportionate harm to low-income communities, higher prices
    for all consumers, all to help a state-owned German company and
    a Japanese billionaire make more money.
        Members of the committee, that is not in the public
    interest. It is economic treason. Thank you and I look forward
    to answering your questions.
        [The prepared statement of Mr. Shelton follows:]

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        Mr. Doyle. Thank you, Mr. Shelton.
        Ms. Bennet, you are now recognized for 5 minutes. Please
    make sure your microphone is on and pull the microphone towards
    you. Yes, thank you.

                       STATEMENT OF CARRI BENNET

        Ms. Bennet. Chairman Pallone and Doyle, Ranking Members
    Walden and Latta, and members of the subcommittee--my feet
    don't touch the ground either, just saying that.
        My name is Carri Bennet and I am with the Rural Wireless
    Association, and I first want to express my condolences to all
    of you all for your loss of 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 this merger. We have heard a lot
    of promises from T-Mobile over the years that have not been
    met, so we have no reason to believe that 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 is 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.
    Let's face it. T-Mobile is making a lot of promises about how
    they will expand coverage in rural America and improve service
    for these Americans, but they have a long track record of doing
    just the opposite and we have no reason to believe that this
    will change if the merger is approved. In fact, we think it
    will get a lot worse.
        I am going to run through three examples of T-Mobile's
    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. In fact, according to our members, T-Mobile's roaming
    rates are 20 times higher than Sprint's and T-Mobile's existing
    roaming agreements are one-sided.
        T-Mobile will frequently enter into unilateral roaming
    arrangements under which rural carrier subscribers can roam on
    T-Mobile's network with no possibility of T-Mobile subscribers
    roaming on the rural carrier's network. In such cases, T-Mobile
    has simply determined that it is better for its own customers
    to do without coverage in rural areas, rather than pay the
    rural carrier for network access.
        This 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 carrier's
    networks 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 ringtones into these calls so that
    the caller believed the call was ringing on the other end when
    it wasn't.
        Aside from blatantly breaking the law, T-Mobile's actions
    severely hindered rural consumers from running their
    businesses, communicating critical information to family and
    friends, and reaching emergency service personnel. This callous
    behavior in an effort to save money underscores the fact that
    T-Mobile's treatment of rural Americans is not in the public
    interest and harms rural telephone companies who would have
    received payments for terminating those calls. We believe that
    T-Mobile's destructive behavior will continue perhaps even more
    aggressively once its rival, Sprint, is eliminated.
        Last, false broadband mapping claims. Our members have
    serious concerns about T-Mobile's broadband maps submitted in
    the FCC's Mobility Fund proceeding. That Fund was created to
    provide $4.5 billion to mobile carriers over the next 10 years
    to help connect rural Americans who lack quality wireless
    broadband service. To make sure they know where the money is
    needed the most, the FCC asked wireless carriers to submit maps
    indicating where each carrier offers qualifying 4G broadband
    coverage.
        According to testing done by our members, when T-Mobile
    submitted its data the company vastly overstated its rural
    coverage to make its reach even seem bigger than it was. When
    rural carriers went to test T-Mobile's claims 95.8 percent of
    the tests showed speeds below the threshold demanded by the FCC
    or no 4G broadband service at all. In many of the places where
    T-Mobile certified it had coverage cell sites had not been even
    put into operation.
        If left unrectified, carriers will be denied funds causing
    a loss of service to rural consumers who rely on this funding
    to connect. The FCC is currently reviewing this issue. But
    before the FCC can make a public interest determination
    regarding this proposed merger, it must first find that T-
    Mobile has been honest in its dealings with the FCC. Our
    members' drive tests strongly suggest otherwise. The FCC should
    not approve a merger if an unresolved enforcement proceeding is
    pending.
        I thank you so much for your time and I look forward to
    answering your questions.
        [The prepared statement of Ms. Bennet follows:]

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        Mr. Doyle. Thank you very much.
        Mr. Brake, you are now recognized for 5 minutes.

                        STATEMENT OF DOUG BRAKE

        Mr. Brake. Thank you. Chairman Doyle, Ranking Member Latta,
    and members of the subcommittee thank you for inviting me to
    share the views of the Information Technology and Innovation
    Foundation, or ITIF, on the pending merger of T-Mobile and
    Sprint.
        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, ITIF strongly believes that a combination of
    Sprint and T-Mobile would bring about a better future for
    American businesses and consumers compared to one which each
    company attempted to continue alone. In my written testimony I
    explore several reasons to support this merger. In these
    opening remarks I would like to focus on three key issues.
    First, this merger provides an accelerated transition to robust
    5G. Second, more competitors is not always better. Or put
    another way, there is nothing special about the number 4. And,
    lastly, I would like to discuss the right way to define the
    market when thinking about this transition.
        First and perhaps most importantly, 5G. The key point here
    is that a combined firm would have both the spectrum assets and
    financial strength to deploy a robust 5G network with broader
    coverage and significantly more capacity compared to what
    either company could provide alone. Not all 5G is the same.
    Around the world, carriers are in the process of exploring
    business models, deploying pilots, and incrementally replacing
    old equipment with new 5G gear.
        These initial exploratory offerings are different in kind,
    however, from the 5G network the parties envision. The
    combination of T-Mobile's low band, wide coverage, 600
    megahertz spectrum and Sprint's high capacity, 2.5 gigahertz
    spectrum would make for a high performance, nationwide, next
    generation network that would help propel U.S. leadership and
    economic competitiveness not just in 5G itself, but in the
    applications that an advanced network enables.
        This is incredibly important because 5G 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
    throughout the economy.
        The capacity from a new 5G network would effectively
    increase the supply of wireless services, again more than the
    two companies could provide separately. We should expect this
    increased supply to maintain downward pressure on prices
    including in the wholesale and prepaid market segments.
        Second, let's talk about competition. You will hear some of
    my friends or you already heard some of my friends on the panel
    argue that the 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
    it can also have too many, resulting in wasteful duplication of
    resources.
        I want to stress that again, more competitors is not always
    better. This is especially true given the economics of
    communications networks which feature tremendously high, fixed,
    upfront costs to serve a given geographic area. These high,
    fixed infrastructure costs allow for vigorous competition with
    relatively few competitors 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 share on to consumers in the
    form of lower prices, 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 than a lopsided market with two firms considerably
    stronger than the others. There is no reason to preserve four
    for four's sake.
        Lastly, it is important to not define the market too
    narrowly and acknowledge the dynamic forces changing
    competition. 5G is accelerating what are already rapidly
    differentiating business models in wireless services. Basic
    connectivity is increasingly commodified and wireless companies
    are instead looking to new revenue sources to recoup their
    large, ongoing investments. These new revenue opportunities
    include Internet of Things services, connected vehicles and
    drones, over-the-top video services, advertising, and perhaps
    most notably, fixed wireless broadband 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 basic 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 vigorously compete, and comes at a time of
    rapidly changing business models, we believe it is in the
    public interest and hope it is quickly approved.
        Thank you and I look forward to your questions.
        [The prepared statement of Mr. Brake follows:]

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        Mr. Doyle. Thank you.
        Mr. Berenbroick, you are now recognized for 5 minutes.

                    STATEMENT OF PHILLIP BERENBROICK

        Mr. Berenbroick. Thank you, Mr. Chairman, Ranking Member
    Latta, and members of the subcommittee. And I want to associate
    myself and Public Knowledge with the statements of the panel
    and the members of the subcommittee honoring 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 that this proposed 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 service and is unlawful
    under the antitrust laws.
        As you consider this deal ask yourself, what will it mean
    for each of your constituents who rely daily on their smart
    phones? The answer is clear. They will ultimately pay higher
    prices and have fewer choices for wireless service. Since
    announcing their 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 the merger
    would affirmatively serve the public interest as required for
    FCC approval and they have failed to show that other public
    interest benefits would offset the merger's substantial
    reduction in competition.
        The evidence Sprint and T-Mobile have presented to the FCC
    and the Department of Justice shows that consolidating the
    wireless market down to three national players would result in
    substantially higher prices for consumers. And 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 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 choices for
    consumers. It will inflict significant harm on the low-income,
    prepaid, and rural consumers who can least afford to pay more.
    Additionally, the deal will lead to tens of thousands of lost
    jobs and lower wages for the workers that remain.
        The merger will eliminate avenues for new competitors to
    enter the wireless market, 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
    companies' burden is not merely to show that there is a lack of
    public interest harms, they must demonstrate specific public
    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. 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 ensuring the availability of advanced
    telecommunications to all Americans and that quality services
    are provided at just, reasonable, affordable rates and the
    merger would frustrate all of these fundamental roles.
        For nearly a year, Sprint and T-Mobile have attempted to
    overcome these 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 have heard this before. This is
    exactly the same song AT&T and T-Mobile sang when they tried to
    merge in 2011.
        Policymakers, the public, and enforcement agencies rejected
    these arguments then, and these claims are similarly hollow and
    misleading today. The merger benefits alleged by the companies
    have collapsed under public scrutiny and the companies'
    economic and engineering models have come under substantial
    attack and they actually 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 market mergers; international wireless market
    comparisons. All of this evidence clearly shows that the merger
    will gut competition in the wireless market, lead to
    dramatically 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
    networks. It will not increase investments in 5G. On their own
    the companies are already competing to deploy robust 5G
    networks. This will continue preserving the well-documented
    benefits of vigorous four-firm competition and it will not lead
    to new deployments in rural areas or help close the digital
    divide.
        Thank you for your invitation to appear here today and I
    look forward to answering your questions.
        [The prepared statement of Mr. Berenbroick follows:]

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          Mr. Doyle. Thank you.
        With the conclusion of witness testimony we are now going
    to move to Member questions. Each Member will have 5 minutes to
    ask questions of our witnesses. And let me say to my colleagues
    that I love you all dearly and it pains me greatly to bring the
    gavel down when you have exceeded your 5 minutes. But the
    kindness that I showed last week resulted in many people going
    much, much over their 5-minute time.
        So if you are near the very end, then you ask the question
    and it takes more than 5 minutes for the answer, we will
    certainly let that happen. But after 5 minutes, please no more
    questions, or I am going to have to enforce it with the gavel.
    So, and I will try to set an example by yielding myself 5
    minutes and staying within the time.
        So, Mr. Legere, I am going to ask you and Mr. Berenbroick
    the same question but a different way, and I am going to hold
    you each to 45 seconds because I have only got 5 minutes.
        So 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 have seen in other mergers where it did raise
    prices and it didn't bring competition. What is different about
    this?
        Mr. Legere. Yes, 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 an 87 percent decline in the price per gig of
    data and jobs will go up. So this is dramatically different. It
    is unique. It is the advent of 5G. The complementary nature of
    these networks increases supply significantly which will
    decrease prices. That is quite different.
        Mr. Doyle. Thank you. And that was within the 45 seconds. I
    appreciate it.
        So, Mr. Berenbroick, tell me in the same amount of time why
    you think this merger is going to be the same as any other
    merger.
        Mr. Berenbroick. 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 2011. That deal would have led
    to, DOJ and the FCC found, higher prices, less competition to
    discipline the marketplace, less competition would also 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 actually worse. We are 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 to the prepaid market, low-
    income consumers, the Lifeline marketplace, and then lastly,
    the roaming and MVNO marketplace. Those harms are exacerbated
    here compared to AT&T/T-Mobile.
        Mr. Doyle. Thank you.
        Mr. Shelton, if 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 is potentially that these jobs will be
    displaced and at best replaced by different types of jobs in
    different communities?
        Mr. Shelton. First of all, it may not be a Sprint employee
    that loses their job, but that is kind of the problem with the
    numbers here. Most of the stores are independent contractors
    who don't have Sprint employees. But 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 don't see how
    they are going to because of the concentration of stores. After
    this company merges, if it merged, they would have twice the
    number of stores that either AT&T or Verizon has now. So stores
    are going to be closed no matter what happens.
        Mr. Doyle. Thank you.
        Mr. Berenbroick, what precedent is set by allowing
    competitors to merge to achieve an evolutionary step in
    technology? I mean, what happens then for 6G or 7G, and how did
    the Government view similar claims for 3G and 4G?
        Mr. Berenbroick. Yes, Congressman, that is a good question.
    So, as you will recall in AT&T/T-Mobile, 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, they rejected that. They found
    that that was not credible. They found that competition was
    likely to lead to deployment not consolidation. The same is
    true here.
        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 have made to Wall
    Street and investors even, you know, very recently--you know,
    it essentially sets the precedent that whenever there is a need
    for these companies to invest in new infrastructure to employ
    6G, 7G as you said, the gates are open to additional
    consolidation. Consumers need more competition for lower prices
    and better services, not fewer.
        Mr. Doyle. And I see I have 7 seconds left, and I am going
    to yield it back to set a good example for the rest of my
    colleagues. And I will now yield to the ranking member.
        Mr. Latta. Well, thank you, Mr. Chairman. And thank you
    very much for yielding.
        And, Mr. Brake, if I could start my questioning with you,
    my district is a microcosm of the country, going from Toledo to
    suburban neighborhoods all the way to small communities in
    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 Service Commission's approval of this merger last week
    in terms of benefits on both for the rural and urban
    communities?
        Mr. Brake. Sure, yes. I thank you for the question, Mr.
    Latta. 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,
    modest conditions related to jobs. It saw it was benefitting
    the State long term.
        As far as your question regarding both urban and rural
    areas, I think the most important point again is this
    combination of complementary spectrum assets. You have the low
    band 600 megahertz that provides great coverage to a wider area
    but is relatively 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 much greater capacity.
        So with the two of those combined you get a much better
    network in terms of both coverage that can help provide, you
    know, maybe not the greatest capacity but a wider area in rural
    areas to provide much of the service of 5G, but also in urban
    areas you get a much greater capacity with a 2.5 gigahertz to
    see a more robust 5G network again than either company could
    provide on its own or even greater than the two individual
    companies combined, if you want to put it that way.
        I would note, however, the jurisdiction of States is
    somewhat different than the review at the DOJ and the FCC. So
    if I may if there is time, one of the main issues that is
    unique to the State level jurisdiction is that of jobs. And so
    with any merger there are going to be jobs created and jobs
    destroyed, right. I mean that is inevitable. The companies say
    that, 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, and 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, more capacity, greater
    services with fewer inputs including labor that is the
    definition of productivity. That is what drives economic growth
    in this country and should be a good thing. I recognize that is
    not a popular opinion and especially among politicians, but
    productivity growth is an important component for this----
        Mr. Latta. Thank you.
        Ms. Bennet, would you like to comment on New York, right,
    would you like to comment?
        Ms. Bennet. Well, I was just going to point out that the
    review by the New York Public Service Commission is not looking
    at--it is only looking at the jobs issue. It is not looking at
    the overall merger. That is regulated to the DOJ and to the FCC
    and they do not have jurisdiction over that.
        I wanted to hop back to a point though that Mr. Legere made
    about 87 percent decline in prices per gig. I would like to see
    some of that pass through on the roaming rates because right
    now roaming rates are about 10 times to 15 times higher than
    the retail rates they offer their own customers.
        So essentially that means they made that in a wholesale
    environment, the carriers are charging more than the retail
    environment. So the cost is definitely lower if they can pass
    on retail rates that are lower than the wholesale rates. Sorry,
    not your question, but I just wanted to go back to that for a
    minute.
        Mr. Latta. Thank you.
        Mr. Berenbroick. Congressman, can I jump in for 1 second? I
    apologize.
        Mr. Latta. I am sorry. I am almost out of time here.
        Mr. Legere, if I could, I have about 38 seconds left if you
    would like to comment.
        Mr. Legere. Yes, I would like to comment. And I appreciate
    the comparison. Yes, the New York Public Service Commission is
    one of 16 States that has approved the merger and their review
    looked at all of the same issues, what it is going to mean for
    the State from the standpoint of 5G, median speeds of 450
    megabits, the promise of 5G while having prices decline, having
    jobs go up, this was reviewed in total and all of the benefits
    that 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 and the DOJ.
        Mr. Latta. Well, thank you very much.
        And, Mr. Chairman, I yield back.
        Mr. Doyle. Thank you.
        The Chair now recognizes Mr. Pallone, the full committee
    chairman, for 5 minutes to ask questions.
        Mr. Pallone. Thank you, Chairman Doyle. It is 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 are seeing
    is a growing disparity between the people at the top and the
    hardworking people like those in New Jersey, the folks who
    haven't seen a dime to the huge corporate profits in the Trump
    tax giveaways. And just this week, news reports highlighted
    that the average tax refund will be 8.4 percent less this year,
    so, so much for the GOP tax reform.
        Now the CWA has argued that the merger of T-Mobile and
    Sprint could wipe out as many as 30,000 jobs, about 25,000 in
    retail and about 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 5,600
    jobs by 2021. So I wanted to ask Mr. Legere about that.
        In 2012, T-Mobile shut down seven call centers and
    allegedly sent the jobs overseas. But now, you know, you are
    saying that we are going to have these new customer centers. Is
    there anything in the law or any legally enforceable
    protections to ensure that these 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?
        Mr. Legere. Thank you, Congressman. A couple things I would
    like to insert is--and I am very proud of my tenure of 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 percent. The employees of MetroPCS----
        Mr. Doyle. Mr. Legere, is your microphone on?
        Mr. Legere. Yes.
        Mr. Doyle. OK.
        Mr. Legere. OK, sorry about that.
        Mr. Doyle. Move that a little closer so we can hear you.
        Mr. Legere. But I have had a 250 percent increase in
    employees, badge-carrying employees at T-Mobile since the time
    I have been CEO. I would also like to point out that I am very
    proud of the over 50 workplace awards that the company has
    worked to attain, including the 100 Best Companies Award for--
    --
        Mr. Pallone. But, Mr. Legere, could you address the call
    centers? If not, I am just going to move on because I don't
    have that much time.
        Mr. Legere. Yes. The call centers, they have 5,600 jobs
    including 2,000 additional, making it 7,500 to 7,600 jobs are a
    critical integrated part of our business plan, our filing with
    the DOJ, our support documentation to the FCC, and it is
    something that I am completely committed to.
        Mr. Pallone. All right.
        I mean, Mr. Shelton, if I could ask you, does that comfort
    you, his response, or what is your take on how this merger
    would affect wages?
        Mr. Shelton. Our belief is that it will have a downward
    effect on wages. And we have a study from the Economic Policy
    Institute and the Roosevelt Institute that just like prices go
    up with less competition, wages go down with less competition
    for labor. The one exception is where you have collective
    bargaining, but T-Mobile and Sprint oppose collective
    bargaining.
        And if I may, when T-Mobile laid off those 3,300 people,
    call center people in the past, they said that the 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? And 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.
        Mr. Pallone. All right, let me 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 more than any other district by Superstorm Sandy and
    we have done a lot since then on a bipartisan basis to try to
    address resiliency for the communications systems.
        And I see that the FCC's 2017 Atlantic Hurricane Season
    Impact on Communications Report outlines a portion of the
    problem. It notes that in 2017 the U.S. experienced 16 natural
    disasters with costs totaling 360 billion. I would like Mr.
    Chairman to enter that into the record, if I could, that
    report.
        Mr. Doyle. Without objection, so ordered.\1\
    ---------------------------------------------------------------------------
        \1\ The information has been retained in committee files and also
    is available at https://docs.house.gov/meetings/IF/IF16/20190213/
    108895/HHRG-116-IF16-20190213-SD007.pdf.
    ---------------------------------------------------------------------------
        Mr. Pallone. But my worry is that consolidation of network
    infrastructure could prioritize cost savings over resiliency in
    the face of disasters. And I notice network resiliency wasn't
    addressed in your public interest statement at the FCC.
        So, Mr. Legere, there is 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 will affect network resiliency and
    public safety?
        Mr. Legere. 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 are
    extremely proud of. Resiliency of our networks has been a
    critical priority and it is a critical priority of the New T-
    Mobile's network. And, you know, this infrastructure plan will
    significantly increase the resiliency of our network and it is
    part of the plan.
        Mr. Pallone. All right, thank you so much.
        Mr. Doyle. The gentleman yields back. The Chair now
    recognizes Mr. Walden, the full committee ranking member, for 5
    minutes to ask questions.
        Mr. Walden. Thank you, Mr. Chairman. And before I start I
    want to thank you for your concern about these jobs. You know,
    we had a hostile takeover here at this committee and we lost
    about half our staff. And I am just wondering, in this new
    spirit of protection of lost jobs could we get those back?
        [Laughter.]
        Mr. Doyle. Yes. Were they reassigned to a different
    neighborhood?
        Mr. Walden. Yes, you could say that.
        I want to thank our witnesses for being here.
        Mr. Berenbroick, I know Mr. Brake talked in his testimony
    about the number 4 carriers. Is there a magic to number 4 in
    terms of competition in this space? Is there some magic to four
    versus five versus three versus eight?
        Mr. Berenbroick. You know, it is a good question. The key
    as the Department of Justice and the FCC look at this deal
    isn't whether there is a magic number of firms in the
    marketplace. It is do the players in the marketplace, does the
    structure of the marketplace promote lower prices, more
    investment, better choices for consumers, better--more
    deployment of broadband services? And 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.
        So to answer your question directly, I don't believe there
    is a per se magic number, it is about market structure.
        Mr. Walden. OK.
        Mr. Berenbroick. But this transaction has significant
    concerns.
        Mr. Walden. Mr. Brake, do you want to comment on that
    briefly?
        Mr. Brake. Sure. I mean as I mentioned, right, there is no
    real magic to the number 4, but it seems to be a lot of the
    folks pushing to preserve four seem to think that more is
    necessarily better, you know, why not five, why not six, why
    not seven? And the answer is clear. It is because then you end
    up with all of this duplication of infrastructure that leads to
    a fragmentation of market, increases costs that ultimately have
    to be borne by consumers of the network, right.
        And so the question is, what is the optimal balance
    between, you know, competition that drives down prices,
    continues innovation but doesn't see these duplication of
    resources? Considering the limited cash flow and the high debt
    of Sprint, there is a good indication that that number, that
    optimal number is closer to 3 rather than 4.
        Mr. Walden. All right. Thank you both. I appreciate your
    perspectives on that.
        I want to turn to our other representatives here. Talk to
    me, Mr. Claure and Mr. Legere, about roaming rates and what we
    should anticipate, consumers. And about data, both data access
    and costs going to go up, going to go down? As you both know,
    my district is pretty enormous and gives new definition to
    rural and remote, and we are concerned about how these two
    would work.
        And I don't know which among you wants to, between you
    wants to go first on that, but please, and thank you again for
    being here.
        Mr. Claure. Thank you, Congressman. One of the most
    important pillars of this merger is increasing capacity.
    Basically when you put these two networks together you are
    going to create eight times the capacity. So to put things in
    perspective, imagine if you had a stadium in which two thirds
    of it is empty. Pretty much you are going to be, you are going
    to have an economic incentive to basically reduce prices and
    find different people to fill this capacity.
        This is why we have been very clear and we made a
    commitment to lower prices. Traditionally, most mergers, you
    don't find companies that go and make a voluntary filing to the
    FCC like John at T-Mobile did basically making a commitment
    that prices will remain the same or lower. It is a question of
    capacity. We are going to have more capacity than ever before,
    eight times capacity, so we have got to fill it and that is
    going to be filled by the different partners in the industry.
        Mr. Walden. All right.
        Mr. Legere, do you want to address those two issues as
    well?
        Mr. Legere. Yes. 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 percent of the profitability
    and 95 percent of the cash flow and after the merger they will
    still have almost 70 percent market share. What we have done
    for 6 years at T-Mobile as the uncarrier, the whole thesis of
    this transaction is to use this increase in supply, capacity,
    and decreased price to supercharge the uncarrier, to bring
    competition. You will see users have an 87 percent decline in
    the price per gigabit of data. You will have an eightfold
    increase. Users will go from ten gigs to eighty gigs and that
    is just in wireless.
        We expect to take that competition also to the cable
    industry which is not only a duopoly, it is a monopoly. And
    most of America, 79 percent, 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
    percent 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.
        Mr. Walden. All right. I thank all of our witnesses for
    your comments. My time has expired. I yield back.
        Mr. McNerney [presiding]. Thank you.
        I recognize myself for 5 minutes, but I first want to
    reiterate my colleagues and the panel 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.
        Many households 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.
        So, Mr. Legere, can you cite any recent example where a
    country went from four to three wireless carriers and prices
    did not increase?
        Mr. Legere. Thank you very much for the question, sir. And
    the types of customers that you describe we are
    disproportionately serving both at T-Mobile and at Sprint and
    they disproportionately have benefitted from what we have done
    because they are the highest----
        Mr. McNerney. Which is why we are worried about the merger
    reducing competition to those, to that sector of the
    population.
        Mr. Legere. Thank you, sir. Since we have acquired
    MetroPCS, the average price of a prepaid service to our
    customers has gone down four percent, but the data usage has
    gone up twelvefold.
        Mr. McNerney. But you really didn't answer my question. Any
    recent examples of countries that went from four to three and
    did not have prices increase?
        Mr. Legere. I am not a study in the countries around the
    world, sir.
        Mr. McNerney. I understand.
        Mr. Berenbroick, is it true that the three to four merger
    of T-Mobile Netherlands and Orange led to price increases in
    the Netherlands compared to other control countries?
        Mr. Berenbroick. Yes, Congressman, between 10 to 17 percent
    price increases.
        Mr. McNerney. Wow. And is it true that when Austria went
    from four to three wireless carriers the prices also increased?
        Mr. Berenbroick. Yes, sir, between 14 and 20 percent. And
    what is particularly important in that market is that one of
    the three remaining players is one of T-Mobile's sister
    companies, T-Mobile Austria.
        Mr. McNerney. 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 providers?
        Mr. Berenbroick. 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, you know, frankly, are
    likely to be lower income, likely to be mobile-only, likely to
    be consumers of color and, frankly, would have no other choices
    in the marketplace. So prices would go up on them and they
    would have nowhere else to turn.
        Mr. McNerney. 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.''
        And I am going to submit this to the committee, without
    objection.
        [The information appears at the conclusion of the hearing.]
        Mr. McNerney. Is it also correct that on the same day you
    submitted a letter, counsel for T-Mobile submitted an ex parte
    filing to the FCC, that further articulated this commitment?
        Mr. Legere. Yes, sir.
        Mr. McNerney. And I am going to submit this to the
    committee, without objection.
        [The information appears at the conclusion of the hearing.]
        Mr. McNerney. Mr. Berenbroick, I am curious to take into
    your opinion on this commitment.
        Mr. Berenbroick. Well, thank you for the question and 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.
        Mr. McNerney. Well, let me ask you specifically, if a small
    amount of data is added to T-Mobile and Sprint legacy plans
    consumers could see an increase in the amount they pay for
    their plans; is that correct?
        Mr. Berenbroick. Yes, sir. Under the letter that was filed
    last week that appears to be the case.
        Mr. McNerney. Is it your opinion that under the proposed
    condition legacy Sprint and T-Mobile fees could be hiked and
    there would be nothing to stop that?
        Mr. Berenbroick. 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, you know, come to the FCC
    which has forsworn rate regulation and ask it to step in and
    enforce this on T-Mobile? It just seems impractical and
    enforceable.
        Mr. McNerney. And yes or no, is it your opinion that under
    the proposed condition legacy Sprint and T-Mobile surcharges
    could be hiked and there would be nothing to stop that? Yes or
    no, please.
        Mr. Berenbroick. Yes.
        Mr. Legere. Sir, could I respond to some of----
        Mr. McNerney. Yes, I am going to just wrap up here. I hope
    that your promise that 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.
    Simply put, I am worried about many of the constituents that I
    have would be priced out.
        And my time has expired and I yield to Mr. Shimkus.
        Mr. Shimkus. Thank you, Mr. Chairman.
        Mr. Legere, you can respond to that.
        Mr. Legere. Yes. Thank you very much. And I, you know, with
    respect, my colleague continues to interpret what is taking
    place at the FCC through his interpretation of what the outcome
    is before their work is completed that I highly respect what is
    taking place. Several things, I want to be clear. I have worked
    very hard to rid the lines between postpaid and prepaid such
    that----
        Mr. Shimkus. Yes, let me ask because I was going to have
    that question anyway. I am old enough to know the Uncola. We
    are using the term ``the uncarrier,'' so describe
    ``uncarrier.''
        Mr. Legere. Yes. ``Uncarrier'' is a term that I coined. It
    was the thesis and the genesis of who we were going to be. And
    what it was, was we set out to fix a stupid, broken wireless,
    arrogant industry by listening to customers and solving all the
    pain points and removing those barriers.
        Mr. Shimkus. Like what? Give me some quick examples.
        Mr. Legere. We eliminated contracts, eliminated
    international data roaming, free, you know, free music
    streaming, et cetera. So things----
        Mr. Shimkus. So let me follow up on this question. So if
    you enter as a more dominant competitor to AT&T and Verizon,
    wouldn't that uncarrier characteristics carry into that
    competitive marketplace, or are you going to jettison that?
        Mr. Legere. Sir, my goal has been not just to differentiate
    myself by the changes but to force AT&T and Verizon to change,
    that the wireless industry would adapt. I have been successful
    in changing the industry, but I am not breaking through because
    I don't have the scale and the resource and capability. The
    goal here is to supercharge that uncarrier and force AT&T and
    Verizon to invest more in 5G, to lower prices, broaden
    services, go deeper into in-home broadband, and I believe that
    that is possible through this merger.
        Mr. Shimkus. Yes, and I appreciate that.
        And, Mr. Claure, kind of what is 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 have a
    lot of folks here that that is a concern. Is there a way to
    carry that roaming debate that Sprint trumpeted to this new
    merged company? Hit your mike.
        Mr. Claure. Thank you for your question. Today, Sprint has
    contracts with most of the rural carriers and those are
    contracts. And I 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
    part of the country, it is very simple. T-Mobile did not have
    600 megahertz spectrum so T-Mobile couldn't basically build a
    nationwide coverage. Today they do. They like the capacity they
    can buy with our spectrum.
        So we are going to bring 5G to every corner of America and
    that is going to be a huge differentiator. You have seen the
    lack of competition that exists today in rural America.
        Mr. Shimkus. So, Mr. Legere, I would hope that 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
    wireless would like to see that too.
        Mr. Legere. Yes, sir, a hundred percent. I would just like
    to point out that when you take the topic of rural there is two
    important components, the rural customer right now who is not
    being served, does not have choice, and the rural carrier. Both
    of those carriers will be served greatly by this transaction.
        I clearly have honored that I will, you know, 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 them to the 5G
    evolution and the winner will be the rural customer.
        Mr. Shimkus. Thank you, Mr. Legere.
        With my remaining time I want to try to get two things
    done. One is to remind my colleagues that this evening at 6:00
    in the Rayburn Foyer, the Next Generation 911 has their awards
    ceremony. Especially if you are new on the committee and want
    to know 911, telecommunications, location, that is a good event
    to stop by and I want to encourage you to do that.
        And, Mr. Berenbroick, I am sorry. In your comments in your
    testimony you lauded the Department of Justice on their
    decision on the T-Mobile--what was it--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
    Ranking Member Walden said, political influence?
        Mr. Berenbroick. 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 to make
    those recommendations.
        Mr. Shimkus. Thank you.
        Thank you, Mr. Chairman.
        Mr. Doyle. Thank you.
        The Chair now recognizes the gentleman from Iowa, Mr.
    Loebsack.
        Mr. Loebsack. Thank you, Mr. Chair. And I do thank the
    chair and the ranking member for having this hearing today and
    I want to thank all of you for being here as well. It has been
    pretty enlightening. I think it is an important hearing. I am
    happy to hear that there has been a lot of focus on rural
    areas. Both sides of the aisle, we represent, many of us on
    this committee represent significant rural areas.
        So I am going to get right to my first question.
        Ms. Bennet, 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 district--not as big as some of them
    but nonetheless pretty darn big, 12 to 13,000 square miles, 24
    counties--where coverage can often be dismal or nonexistent, I
    get around my district all the time. I experience this whenever
    I am back. I find that particular assertion very worrying, as
    you might imagine. Can you clarify a little bit more on that
    point?
        Ms. Bennet. Certainly and I appreciate the question. Our
    members who have built out the rural networks in their rural
    areas and it is not everywhere, to be clear it is only in the
    areas that they serve.
        Mr. Loebsack. And you did mention Iowa in your testimony?
        Ms. Bennet. Yes, yes. And what has happened is in
    negotiations with T-Mobile, T-Mobile elects not to--they lack-
    restrict. It is a technology that you can put in place so that
    their customers don't have access to those rural carriers'
    networks. So they have roaming agreements because under the
    FCC's rules they have to let the rural carriers' customers roam
    on their network but not the reciprocal. So that they choose
    not to do that and that is because they probably don't want to
    pay the roaming charges to the rural carriers.
        Mr. Loebsack. Well, if T-Mobile and Sprint are combining
    services can T-Mobile make a structural commitment to use
    Sprint's rural carrier service model?
        Ms. Bennet. Those are very hard to enforce after the fact.
    And to go back to the favorable agreements that 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 goes through. They
    just have been silent. They have gone silent on us and have
    told us that we have to wait until the merger is done----
        Mr. Loebsack. OK.
        Ms. Bennet [continuing]. Or not done.
        Mr. Loebsack. Thank you.
        My second question is for Mr. Shelton. CWA recently
    released a report on the impact in Iowa from T-Mobile's
    acquisition of iWireless which has been 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 of iWireless
    and how that reduced access in rural parts of my State and
    district?
        Mr. Shelton. Yes. When they bought the company in Iowa they
    closed down 90 percent of the stores. And now for a consumer in
    Iowa, in a rural place in Iowa, they have to drive 68 to a
    hundred miles to get to the nearest T-Mobile store in Iowa. And
    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.
    So that does not bode well for Iowa.
        And, actually, I know it is kind of difficult in this
    political environment to demonstrate fairness, but I am going
    to do it in this case, Mr. Legere. I am going to give you an
    opportunity to respond and make your case, because to be frank,
    Ms. Bennet's and Mr. Shelton's remarks leave me very concerned
    about the potential negative outcomes in Iowa. I know there are
    at least two sides to every story, so I want to give you a
    chance to respond to them. And in particular will T-Mobile make
    structural commitments to rural constituents in my State who
    may stand to lose jobs, coverage, or retail services?
        Mr. Legere. Yes, sir. Thank you very much. And the facts
    associated with what is happening with Iowa Wireless I would be
    glad to submit after the hearing as well. But let's just be
    clear. There are a hundred more employees than there were a
    year ago in Iowa. There are 35 MetroPCS, Metro by T-Mobile
    stores equaling the number of what the stores were there
    before. And Iowa Wireless was a failing company stuck in 2G and
    3G and we came in and provided the investment. We spent $70
    million so far upgrading to the 4G and now moving to 5G
    network.
        Mr. Loebsack. I am kind of running out of time here. I want
    you to address the structural agreement issue going forward.
        Mr. Legere. I would be glad to look at ways to make that
    commitment. And I would point out that part of our plan is to
    cover 96 percent of the 62 million people in rural America with
    LTE coverage and 84 percent of all of rural America with
    greater than 25 megabits of in-home broadband.
        Mr. Loebsack. And a group of politicians here, we make
    promises quite a lot. I would like this to be in writing. That
    is what I would like it to be. I would like to see you make
    that commitment, that structural commitment.
        Mr. Legere. Yes, sir. It will be in my business plan as
    well.
        Mr. Loebsack. To make sure we have that access here in
    Iowa. Thank you very much, Mr. Legere.
        And I have 10 seconds left. I am going to yield back my
    time, Mr. Chair.
        Mr. Doyle. Thank you.
        I now recognize my good friend from Ohio, Mr. Johnson, for
    5 minutes.
        Mr. Johnson. Well, thank you, Mr. Chairman. And 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.
    Ms. Bennet has testified that T-Mobile has been unwilling to
    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 have alluded to some of this
    already, but if you could do it for me I would appreciate it.
        Mr. Legere. Yes, sir. Thank you very much for the question.
    I have two things I would like to point out. One is,
    historically, T-Mobile has not had the wherewithal 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 to do that.
        Secondly, Sprint is 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. And I believe that in addition to providing broader
    services to rural customers, better LTE coverage, in-home
    broadband, I believe that we have a great ability to be a
    partner with rural carriers. We need their help with last-mile
    access with capabilities and I think we can provide them with a
    pathway to 5G. So I think it is the best partnership for both
    rural customers and rural carriers.
        Mr. Johnson. All right. Well, thank you for that. So
    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?
        Mr. Legere. Yes, sir. And all wholesale agreements are
    currently contractual. We will honor those. I believe with the
    supply and capacity that the New T-Mobile will have that
    wholesale rates are only going to get better. In fact, carriers
    that have agreements with both Sprint and T-Mobile will be able
    to choose the better of those and the alternative that suits
    them as well.
        Mr. Johnson. OK. Well, thank you.
        Mr. Brake, Ms. Bennet's testimony indicates that the New T-
    Mobile would have zero incentive, quote, zero incentive to
    provide commercially reasonable roaming rates, terms, and
    conditions to RWA members. 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?
        Mr. Brake. That is right. Thank you for the question. So
    the rural coverage is a multifaceted issue. This roaming issue
    is a narrow component of it. And I just want to be very clear
    about the sort of dynamic here, right. The members of the Rural
    Wireless Association enjoyed favorable negotiations with Sprint
    mainly because they had a very small network focused on cities
    and did not have the rural coverage. And so, and I don't mean
    to disparage the members, right. There is nothing more American
    than trying to, you know, 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 is better to
    do that at scale than to hamstring providers to have individual
    small companies in each pocket of rural America.
        Mr. Johnson. All right. Well, thank you.
        Ms. Bennet. I am sorry. I just have to interject here if I
    could have permission.
        Mr. Johnson. No. I have got to move on because I am limited
    on my time.
        Mr. Legere indicated in his testimony, in 2012 CWA claimed
    that the T-Mobile MetroPCS merger would destroy 10,000 jobs
    when that merger actually generated 12,000 new jobs following
    the transaction. So, Mr. Shelton, why should we believe CWA's
    claims that the current merger will result in 30,000 job
    losses, which incidentally exceeds Sprint's entire employee
    head count?
        Mr. Shelton. Well, in the first instance, we were concerned
    about call centers jobs because T-Mobile had just shut down
    seven U.S. call centers in the U.S. laying off 3,300 people and
    sending the work to the Philippines. MetroPCS outsourced its
    entire call center operation. If T-Mobile adopted MetroPCS'
    outsourcing model, then 10,000 T-Mobile call center workers'
    jobs were at risk at the time.
        Mr. Johnson. OK, my time has expired. So let me ask Mr.
    Legere real quick if the chairman will indulge, do you want to
    respond to that as well?
        Mr. Legere. Yes, I think what my colleague was attempting
    to explain is why his estimates were wrong and it didn't take
    place. I would also just like to submit that the CWA predicted
    that the AT&T/T-Mobile transaction that was disapproved would
    add 96,000 jobs. So I know what my business plan is and I am
    very clear jobs will be created.
        Mr. Doyle. The gentleman's time is expired.
        The Chair now recognizes the gentleman from Virginia, Mr.
    McEachin.
        Mr. McEachin. Thank you, Mr. Chairman. And thank you for
    holding this hearing to help us better understand these very
    complex issues. As for me, I am particularly interested in how
    the T-Mobile/Sprint merger will affect market for low-income
    consumers with poor credit. The services you provide are
    absolutely essential in the vulnerable communities and that
    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. Berenbroick--did I say that right?
        Mr. Berenbroick. Close enough, sir.
        Mr. McEachin. Thank you. In your testimony you discuss the
    effects of this merger on these customers, that is again the
    prepaid mobile market. Can you expand on probably what this
    merger means for this customer base in terms of choice and
    price?
        Mr. Berenbroick. Yes, sir. And that is an important
    question. The prepaid market is, you know, right now it has
    about 97 million subscribers. I think that was the number at
    the end of 2017. And, you know, those nearly a hundred 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 is too expensive.
    They are more likely to be 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 antitrust 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 power and the incentives to
    raise prices on those consumers, consumers who, frankly, are
    reliant on that mobile connection and have nowhere else to go.
        Mr. McEachin. Now, Mr. Legere, you have suggested that the
    prepaid market would benefit from the merger and even made
    commitments to the FCC not to raise rates for these plans for 3
    years. And we have already heard arguments that the spirit of
    those commitments may not really bind you in practice. I assume
    you are making this commitment in good faith, but business
    plans change. How can we be sure prices will not increase
    especially for low-income Americans? For instance, could
    consumers take you to court?
        Mr. Legere. Thank you very much, sir. This whole topic is
    one that is extremely important. And what I have attempted to
    do and what T-Mobile has been successful in doing is blurring
    the lines between what is called postpaid and prepaid, such
    that it is almost a payment term. You pay on the first of the
    month or the last of the month, so that prepaid customers are
    not getting lesser capabilities or quality or data than
    previously.
        We are very proud that we are a large provider second
    behind billionaire-backed TracFone in serving the prepaid
    market and that is very important to us. And our track record
    is that our prepaid customers over the last 5 years have had a
    four percent decline in price, a 12 times increase in data, and
    I have 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 postpaid. And I have a
    migration of about 150,000 customers a quarter going from
    prepaid to postpaid very proudly and that will continue.
        Mr. McEachin. Mr. Berenbroick, 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?
        Mr. Berenbroick. Yes. I guess I just--I didn't know if
    there was a commitment there or a promise. But, 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? Does the combined firm and the
    other players left in the prepaid market have the power and
    have the incentives to raise prices?
        And when you constrict this marketplace down to two
    facilities-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.
        Mr. Legere. Sir, could I just emphasize the last word. 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
    that I asserted on February 4th, I believe was the date, was
    not in response to a negative review 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 that was a very clear attempt
    that I made.
        Mr. McEachin. Mr. Chairman, thank you. I yield back.
        Mr. Doyle. Thank you.
        The Chair now recognizes the gentleman from Missouri, Mr.
    Long.
        Mr. Long. Thank you, Mr. Chairman.
        And, 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. And in 2006 and 2007 it was ranked number one by
    417 Magazine as the best place to work in Springfield,
    Missouri, my hometown.
        Can you talk about the New T-Mobile commitment of at least
    600 new retail stores, five new customer experience centers,
    and 11,000 new employees on the ground in rural areas, small
    towns, communities that need them most? What affect will this
    merger have on jobs in my district?
        Mr. Legere. Thank you, sir. I am very proud of the fact
    that a core component of the uncarrier and T-Mobile was even
    changing the definition of what is a call center, away from
    IVRs and robotic responses and taking and empowering those
    people like in Springfield, Missouri to own, personally,
    customers, called team of experts. And what I am doing with the
    merger is I am creating five new, gigantic centers to deploy
    call of centers, a team of experts across what is going to
    happen with Sprint.
        So there will be five major centers with 5,600 new
    employees. The existing centers will expand by 2,000 employees,
    meaning just in that area 7,600 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
    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 7,600 customer care jobs, and
    thousands of jobs on network integration heavily all in rural
    America.
        Mr. Long. Thank you.
        And, Mr. Claure, should we be concerned that these two
    companies once merged would hold a significant share of the
    prepaid market?
        Mr. Claure. Even after the companies are combined, market
    share will only be 38 percent and the biggest beneficiaries
    will be those prepaid customers that are going to have the same
    access today to the great network that we are going to go
    build. So we believe we have been very clear that everybody is
    going to benefit from this merger whether you are a prepaid,
    whether you are a postpaid. Sprint has a long history of
    serving all prepaid customers all the way down to Lifeline to
    our different brands that we have, Boost and Virgin. And we
    have decided that we are basically going to keep all the
    brands, so therefore want to continue to up the ante in the
    prepaid ecosystem.
        Mr. Long. OK, thank you.
        Ms. Bennet, if you came down to Branson, Missouri and you
    went to the corner of Commercial Street and Main and on each
    corner there were different folks with carts selling Gala
    apples, apple company 1, 2, 3, and 4, selling edible apples,
    and one of those companies got to talking to the other one on a
    smoke break and said, hey, you know, we could combine and we
    could, you know, figure out how to grow more apples at less
    money, save on trucking expenses, bring them to the market at a
    smaller fee, do you think combining those two companies would
    affect the price of apples on that corner?
        Can you turn your mike on there, please, and turn it up a
    little bit?
        Ms. Bennet. Since we are talking apples I don't think that
    that would have an effect on the market because they are all
    the same.
        Mr. Long. OK. And----
        Ms. Bennet. But the difference here is we are talking
    wireless and we are talking about wireless in rural America
    where both of these companies have had over 20 years to build
    out to rural America and Sprint tries a path of working with
    carriers. Mr. Brake over here just said, oh, that is a bad path
    to choose. Let's just eliminate all the rural carriers. There
    is your nail on the head on the antitrust concerns about here.
        These two companies have worked to--if they are combined
    together we are going to have the New T-Mobile with Mr. Legere
    sitting at the head who has not made one iota to build out to
    rural America. I don't even know if Mr. Legere has been to
    rural America. But it is a very hard row to hoe as you know
    with your rural constituents. It is a lot of work. It is a lot
    of money. It is a lot of fiber.
        Mr. Long. The four companies that are competing together
    regardless of the product that they are selling, if one of
    those combined with the other do you think that prices for
    their product would necessarily go up?
        Ms. Bennet. If we are talking apples and they are all the
    same----
        Mr. Long. No, I didn't say we are talking apples.
        Ms. Bennet. Your example was apples. Yes, I think the
    prices----
        Mr. Long. I moved on. I said we are talking about selling
    the same product.
        Ms. Bennet [continuing]. Are going to go up because I think
    they are motivated to put other companies out of business,
    other small companies. And that is just what I heard Mr. Brake
    said.
        Mr. Long. You think prices would go up then if the two of
    them combined?
        Ms. Bennet. I think prices will go up, yes.
        Mr. Long. OK. Now what if one of those companies just said
    this deal of selling whatever that service or product is, it is
    of equal value, maybe not apples but whatever that is, what if
    they said this is not as much fun as it used to be, you know,
    the competition has knocked us out, we are not making the
    profits, you know, for a shareholder, we are going to go out of
    business?
        Ms. Bennet. I think there is a lot of that----
        Mr. Long. If they went away do you think that--let me
    finish my question, if you would. Do you think that that would
    also increase prices or would that lower prices if one of those
    three merchants went away? Four merchants, I am sorry.
        Ms. Bennet. I think that others will step in and sell the
    apples.
        Mr. Long. OK, my time has expired. I yield back. Thank you.
        Mr. Doyle. Thank you.
        The Chair now recognizes the gentleman from Florida, Mr.
    Soto.
        Mr. Soto. Thank you, Mr. Chairman.
        I think we all understand this is a complex decision which
    is why I thank all of you for being here today. We are dealing
    with various interests like workers and consumers, advancing
    technology like 5G and broadband, rates and 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 is a good thing, but it also
    draws concerns about whether that would continue obviously. We
    applaud your promise to have no rate increases for 3 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?
        Mr. Legere. Could you repeat the commitment, sir?
        Mr. Soto. There were commitments that there would be no job
    losses and that rates wouldn't go up for 3 years. And I was
    wondering if you all would be in agreement with that being a
    condition of approval of the merger.
        Mr. Legere. 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 am committing
    to prices declining and jobs increasing and I will make those
    commitments in any fashion that is 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 point out.
        Mr. Soto. Thank you, Mr. Legere. I am sorry. My time is
    limited. But I appreciate that.
        Mr. Claure, would you also agree to these promises as a
    condition of approval of a merger by the Federal Government?
        Mr. Claure. Mr. Legere is going to be the CEO running the
    company, but what I can tell you is before agreeing to merger
    companies we have had lengthy discussion in terms of how
    important it is going to be to increase the number of jobs and
    to bring prices down. If we tried to keep this extremely
    factually, we are going to increase our capacity by eight
    times. There is no other way to do it, bringing your customers
    down to lowering prices.
        Mr. Soto. Thank you, Mr. Claure. So I accept those as both
    yeses then. Thank you for that.
        And, Mr. Shelton, can you go into what the current wages
    right now are at both Sprint and at T-Mobile versus other
    carriers and what your opinion is as far as how the merger
    would affect those wages?
        Mr. Shelton. Since we don't represent either Sprint or T-
    Mobile, I don't exactly know what the wages are in either of
    those companies. But 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 the companies' own admission there is $43 billion in
    synergies here. And to me synergies is a word that has a
    synonym called job cuts. And if there is $43 billion in job
    cuts, you know, you are going to decrease competition for
    labor, or increase competition for labor and therefore wages
    are going down. And they are not only going down in T-Mobile
    and Sprint, but they are going down in every wireless carrier
    in the country.
        Mr. Soto. Thank you.
        Mr. Legere. Sir, could I provide some facts to this
    discussion?
        Mr. Soto. I assume that you disagree with that. I have some
    other----
        Mr. Legere. That was a significant absence of facts. I can
    tell you that the average wages of a retail employee at T-
    Mobile are approximately $50,000 a year. A customer care person
    makes about $46,000 a year. Every single employee receives
    stock grants every year as well.
        Mr. Soto. Thank you, Mr. Legere. Thank you for that. And
    that is important to get----
        Mr. Legere. And synergies are not in jobs.
        Mr. Soto. Thank you for getting that on the record too.
        I want to end with Mr. Berenbroick. There is a public
    interest analysis that is done by the FCC. Obviously we are
    here in oversight of the FCC. Do you have any opinions on how
    this would score and any predictions on the FCC's review of
    this potential merger?
        Mr. Berenbroick. Sure. And thank you for the question. So
    as you know the FCC's analysis is different from the Department
    of Justice's. They both look at competition harms, harms to
    consumers, antitrust type issues. The FCC also looks at issues
    like, you know, will Americans continue to have access to----
        Mr. Soto. Just if we could get to it, how do you think it
    will score? What is your prediction?
        Mr. Berenbroick. I think this merger has many of the same
    harmful characteristics, if not more, as the rejected AT&T/T-
    Mobile merger in 2011.
        Mr. Soto. OK. Well, thank you all for your opinions.
        Mr. Doyle. Thank you. The gentleman's time has expired. The
    Chair now recognizes the gentleman from Texas, Mr. Flores.
        Mr. Flores. Thank you, Mr. Chairman. And I appreciate the
    panel for joining us for today's hearing.
        Mr. Legere, would you repeat the comments you made about
    the use of Huawei and ZTE technology in your opening
    statements, for the record?
        Mr. Legere. Yes, sir. There is no Huawei or ZTE equipment
    in the network of T-Mobile. There will not be any. We will not
    be using any. In fact, we have had a litigious relationship
    with them and we are, frankly, very supportive of the United
    State Government's increased action against them.
        Mr. Flores. Glad to hear that. I spent 30 years of my life
    in business before I did this and 20 years of that was as a C-
    level person in companies and a big part of my portfolio had to
    do with M&A. And I had to look at every transaction as if there
    were only two outcomes because that is really the truth, either
    you are going to merge or you are not. The acquisition is going
    to happen or it is not.
        So we have had a lot of comments from the panel today about
    what happens if we do this, both some good, some bad. What
    happens if it doesn't happen? So, Mr. Legere, if you would,
    spend about a minute to talk about the impact on T-Mobile's
    customers and employees and stakeholders if the merger doesn't
    happen.
        Mr. Claure, we are going to go to you next.
        And, Mr. Brake, we are going to ask you about the wireless
    ecosystem at large if the merger doesn't happen.
        Mr. Legere. Yes, thank you. And I will try to be brief and
    pass to Mr. Claure. I will not be able to and the United States
    will not be able to enable its promise on building a world-
    leading 5G network. What we will create and Sprint will create
    along with AT&T and Verizon will be inferior to what is being
    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 will be able to move forward, but not in the same
    fashion creating competition. I will have limited if no ability
    to expand into the in-home broadband and provide Comcast and
    Charter the competition that they need.
        Mr. Flores. OK.
        Mr. Claure, could you talk about Sprint's, if the merger
    fails, the impact on Sprint's customers, employees, and
    stakeholders.
        Mr. Claure. Thank you. What I think that is important to
    reiterate is today we live in a duopoly. And you were a
    businessman and you know that if the duopoly, AT&T and Verizon,
    control over 93 percent of the cash flow that is generated it
    is impossible to compete. It is impossible to invest. So Sprint
    ain't going away, but what Sprint is going to be is going to be
    a very different type of company. It is going to be one that we
    can only invest in the traditional urban and suburban and we
    will bring a limited 5G.
        Unfortunately, as you know Sprint doesn't generate any cash
    flow. And if we have got to build this network on our own we
    need to spend between 20 to 25 billion dollars. We are going to
    have to go to the banks, we are going to have to go to the bond
    markets, and we are going to have to borrow that money. In
    order for us to pay back the investment in 5G, unfortunately,
    Sprint is no longer going to be able to be the price leader.
    Prices will go up.
        And I am going to reiterate one thing that we don't talk
    enough, 93 percent of the cash flow in this industry is being
    generated by AT&T and Verizon. That is exactly what as close to
    a monopoly or duopoly is in this country.
        Mr. Flores. OK, thank you, Mr. Claure.
        Mr. Brake, if the merger fails what is the impact on the
    wireless ecosystem writ large?
        Mr. Brake. Sure. Of course there will be a number of
    different impacts. But to my mind one of the most important
    impacts is you will see a much slower, more gradual transition
    to a 5G network. One of the main reasons for this merger is the
    synergistic 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 the limited
    cash flow is unlikely to be able to deploy, you know, a 5G
    network at the scale that would be needed to get the coverage
    out of the mid band spectrum. There is limited propagation.
        And the FCC is trying to bring mid band spectrum available
    to market that T-Mobile may have the resources to acquire, but
    that would be years down the road and would take a much longer
    process. I could talk for a while about the benefits of 5G and
    why that is so important. It is anticipated to be a very
    flexible, adaptable network, right, that isn't just about
    phones. It is about integrating with business and the broader
    economy writ large.
        So it is, 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 spectrum to see
    a really robust 5G network.
        Mr. Flores. Thank you for your responses.
        Mr. Chairman, I am going to give you back 15 seconds.
        Mr. Doyle. I thank the gentleman.
        The Chair now recognizes my good friend from California,
    Ms. Eshoo, for 5 minutes.
        Ms. Eshoo. 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. We have another very important
    subcommittee that is meeting upstairs, and I chair that and
    that is the reason I wasn't here. But I am now. I want to use
    my time not to ask questions but to make a statement. And again
    thank you for appearing, all of you, and for the testimony that
    you have submitted.
        I have had the opportunity to meet with various
    stakeholders of speaking to them and listening to them both pro
    and con about this merger. I have given a lot of thought to it.
    And as I said, I want to use this time to state my position.
    Since I first joined this subcommittee in 1995, only 5 minutes
    ago, my work has been guided by two overarching priorities: to
    create and maintain healthy competition in our country and to
    protect consumers.
        Capitalism doesn't work without competition, and when
    markets don't work consumers are the first to lose. Competition
    is the lifeblood 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 5 years ago, 10 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 duopoly in the country.
    Americans pay some of the highest prices for mobile wireless
    service in the developed world. They have 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 challenged AT&T and Verizon in
    recent years and they have fought tooth and nail to gain market
    share while adopting proconsumer policies that have forced real
    change in the industry. 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 has a strong track record as an aggressive
    competitor. That I think we can all stipulate to. But the
    company lacks critical midband spectrum to provide the network
    capacity it needs to compete more aggressively with the top
    two. And that is where Sprint come in. Spectrum is gold, and
    Sprint has it. But Sprint has something else. They have a $40
    billion debt that they are carrying and they can't make the
    kind of investments that are necessary to build out a network
    and compete with the top two carriers. Sprint's debt, I think,
    is unsustainable and I think it is 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. This outcome would clearly, I think, be worse for the
    market for employees, for consumers, and I can just picture the
    Chairman of the FCC allowing the spectrum to go to the duopoly,
    so that is not a pretty picture either. I think it is something
    that we all need to consider.
        Some have argued that consolidating the current market from
    four carriers to three will increase prices and harm consumers.
    I think this argument assumes that the new company will not
    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 eightfold. New T-
    Mobile will have the resources and the capacity to grow its
    subscriber base and to do so it will need to aggressively
    compete. They are not going to sit--why would someone buy and
    then sit on their oars and not try to attract new customers?
        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 Lifeline
    program that I have fought so hard for and will keep prices low
    in the prepaid market.
        So I have more in my statement, Mr. Chairman, but I think
    each call center, all call centers are 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 are not. But I think
    that competition and the protection of consumers is front and
    center in this and that is why I support the merger.
        I thank the chairman for his patience with my overuse of my
    time. Thank you.
        Mr. Doyle. As usual. I thank my friend.
        Ms. Eshoo. As much in as I can.
        Mr. Doyle. The Chair now yields to Mrs. Brooks.
        Mrs. 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, Debbie Dingell--
    and I just want to extend my sorrow to her and to 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 that 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 were supporting this merger,
    but before I ask you about 5G, because I think you wanted to
    talk more about the importance of 5G, I would like to--I ask
    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, submitted to the FCC a letter of
    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 that is happening right now, and
    I find it interesting and ask unanimous consent to submit this
    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 of the merger for the New T-Mobile.
        Mr. Chairman?
        Mr. Doyle. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mrs. Brooks. Thank you.
        Mr. Brake, on behalf of the Information Technology and
    Innovation Foundation, can you please talk with us about the
    importance of 5G? We need to do a better job educating
    everybody about 5G and the importance of how 5G, when we have
    rural communities still at 2G, 3G, 4G, we know there is a
    growing digital divide and how important it is that we catch up
    with Japan, with Korea, with other parts of the globe that are
    right now beating us in 5G. Can you very briefly talk about the
    importance of 5G?
        Mr. Brake. Right. Thank you very much, Mrs. Brooks, for the
    question. And thank you so much for your leadership with the 5G
    Caucus. We at ITIF are in strong agreement it is an incredibly
    important issue. So a lot to unpack with 5G, I will try to be
    as brief as possible. 5G in its sort of most capacious sense,
    right, the broadest sense of 5G is best understood simply by
    the specification, the technology defined by a standard-setting
    body, international standard-setting body called 3GPP.
        This new radio standard unlocks a number of different
    capabilities, but its sort of defining hallmark is its
    flexibility, its adaptability, right. As I mentioned in my
    opening statement, this isn't just about faster downloads and
    more responsive interaction with your phone, though it is that
    and that is important. It brings real consumer benefit.
        But there are a number of ways in which the technology can
    be, can adapt itself, for example, can radically simplify
    communications for IoT devices. So if something only needs to
    wake up, you know, once a day to send a little, you know, a few
    packets of information about the humidity on a farm or, you
    know, a water main leak or something like that, it can do so
    while maintaining extremely long battery life on the, you know,
    measured in the terms of years rather than days.
        So all this is to say that 5G poses a unique opportunity to
    see a much greater innovation of wireless services with the
    broader economy and has the opportunity to greatly increase
    productivity overall for businesses throughout America. That is
    why we want to see a quick transition to 5G in a way that is
    both broad and deep, right, and that is where the specific
    spectrum combination at play here comes in.
        Mrs. Brooks. This is going to be revolutionary, the
    possibilities of what 5G will bring.
        And so, Mr. Legere, I think the concern that you have heard
    about is how will this new network, how will the New T-Mobile,
    you know, help these untapped markets, these underserved areas,
    the rural areas? I represent both urban, suburban, and rural
    areas. How can we make it ensure that you are going to get
    there and that it is going to be more cost effective?
        Mr. Legere. Yes, 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. And for the promise of 5G to be true, we need all
    spectrum bands across all of the Nation. Think about something
    like autonomous driving, something where a 10 millisecond delay
    is attained by the 5G networks and you are actually going to
    have autonomous driving cars. How would that work if it was
    only in one small geographic area?
        T-Mobile and Sprint together are going to be the only full
    broad and deep 5G capability that is nationwide and that will
    spur AT&T and Verizon to broaden their views as well.
        Mrs. Brooks. Thank you.
        My time is up. I yield back.
        Mr. Doyle. The Chair now recognizes the gentlewoman from
    California, Ms. Matsui.
        Ms. Matsui. Thank you, Mr. Chairman. And I also apologize
    for not being here to hear your testimony because I was also on
    the Health Subcommittee hearing also.
        But I am curious. This is a very important topic and it is
    very important for the future of our country. Now I understand
    that Sprint is in the process of deploying massive MIMO radios
    to utilize its 2.5 gigahertz spectrum and complete the first 5G
    data transmission on a MIMO radio earlier this year. I realize
    it is technical, but I am leading to something here. As you
    know, band 41 was included in 3GPP's 5G new radio specification
    in late 2017. Of course, the benefits of these radios are that
    they enable both LTE and 5G transmission simultaneously and are
    software upgraded to the full 5G. This appears to offer a
    particularly promising path in the effort to deploy 5G.
        Mr. Claure, with Sprint already deploying this radio
    technology, is it necessary for the company to combine to
    deliver its next generation offering?
        Mr. Claure. Yes, 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
    and others, with coverage, which is what Sprint lacks. It will
    be no good for Sprint to offer just 5G in some specific
    neighborhood or some specific cities. What this is going to
    allow us to do when we merge with T-Mobile is we are going to
    be able to have the ultra-capacity that you have mentioned
    combined with T-Mobile's 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 two companies, it is the only way that we are going to be
    able to build a 5G network that basically has capacity all over
    the U.S.
        Ms. Matsui. So what I get from that is that you are
    definitely going to, Mr. Legere, adopt this deployment strategy
    and the New T-Mobile will leverage these assets in a way that
    Sprint has not by the combination; is that correct?
        Mr. Legere. Yes. Very importantly, and thank you for
    introducing 4x4 MIMO and carrier aggregation and 256-QAM which
    are the main characteristics of what AT&T is now falsely
    calling 5GE. We will put that in. One of the big issues with
    deploying a nationwide broad and deep network is the amount of
    sites and between T-Mobile and Sprint we have an inadequate set
    of network macro nodes.
        The biggest improvement here is together we have 110,000
    macro nodes. We will be able to pick 75,000 of them, build
    10,000 more, and the decommissioning of 35,000 of those sites
    is actually going to provide the significant amount of this
    synergy. When you take that many sites and you get that extra
    spectrum per site and the spectral efficiency of 5G that is the
    magic that unloads, you know, the real promise of 5G.
        Ms. Matsui. Now Sprint acquired Nextel Communications in
    2005, bringing with it a considerable amount of band 41
    spectrum leases and significant groundwork put into IP-based
    mobile broadband technologies. And with Sprint's Clearwire
    acquisition, the mobile broadband technology selected by both
    companies to leverage the spectrum assets for 4G was WiMax.
    However, Sprint began deploying LTE technology on its network
    in 2011 and the leap from third to fourth generation of mobile
    internet that WiMax was supposed to offer by utilizing Sprint's
    2.5 gigahertz spectrum assets was not fully realized.
        Mr. Claure and Mr. Legere, what lessons do you see as being
    learned from this effort and how do those lessons inform your
    companies' 5G strategies?
        Mr. Claure. Thank you for the question. I think Sprint
    chose the wrong technology. WiMax was not the right technology.
    And what makes this merger unique is we are both choosing the
    exact same technology for 5G. And basically your complementary
    spectrum assets is what is going to allow us to go ahead and
    build the fastest--and we made both statements. I believe that
    we have a chance to build the world's best 5G network, as
    simple as combining the two spectrums that we have.
        Mr. Legere. Congresswoman, if I could just add, with all
    the great work that T-Mobile has done I think it points out
    that when these generational shifts take place in wireless,
    whether it was 3G to 4G, 4G to 5G, with all the great work we
    have done a big enabler of our ability to deploy 5G happened to
    be the spectrum and the cash that came to T-Mobile from the
    failed AT&T merger as well as the acquisition of MetroPCS and
    the utilization of their capabilities. So it does take the kind
    of things that we are 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.
        Ms. Matsui. OK, thank you.
        And I ran out of time, I yield back.
        Mr. Doyle. I thank the gentle lady.
        OK, let's see. Who is left over there? Mr. Walberg, you are
    up for 5 minutes.
        Mr. Walberg. I am looking around and I don't see anybody
    else, so it is 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 at 1G or 2G, let alone 5G. But it is
    incredibly important to my rural district areas that we not be
    left behind as carriers move to 5G, but also probably more
    importantly that we get reliable wireless service to begin
    with, in the process.
        So, Mr. Legere, you have talked a lot about the jobs that
    might result if your transaction were to be approved both in
    your announcements of the new retail stores in rural parts of
    the country where you hope to expand service, but also to the
    new customer 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 it is
    tower crews erecting new macro cell sites or other industries
    like agriculture and manufacturing that might be fueled by a
    better connectivity?
        Mr. Legere. Yes. Thank you very much, sir, for the
    question. I would point out that the rural America has been
    left behind already. It is that divide that we need to cure. I
    am very proud of the fact that in the recent broadcast spectrum
    auction one of the first times that low-bid spectrum was made
    available T-Mobile showed up and won the majority of the
    spectrum and has been deploying 600 and 700 megahertz now to
    301 million people in the United States. So we are bridging
    that basic divide already.
        Very importantly, CTIA has shown that the advent of 5G will
    mean three 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
    utilization of new applications in 5G or the onslaught of the
    utilization, for example, in rural farming applications, et
    cetera, it is three million jobs that are at stake and with the
    deployment of 5G rural America will benefit the most.
        Mr. Walberg. That is important to understand because it is
    rural America that is catching up and too often left behind in
    the thought process that we don't need it. I am looking forward
    to the first time I have broadband 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 and Mr. Legere, there has been a lot of
    discussion today about the spectrum bands that would help a New
    T-Mobile be competitive and able to better serve rural America.
    But Sprint also has a widespread network of wireless assets
    that would be just as critical for connecting the new network
    to the backbone and ensuring Michiganders can get wireless
    broadband access.
        Can you talk about--both of you--about these wireline
    components, while maybe not as exciting as the flashy 5G, how
    will those position your company to expand wireless
    connectivity to enterprises, customers both small and large?
        Mr. Claure. So thank you for the question and many times we
    don't talk enough of wireline, and wireline has been the
    backbone for wireless networks. The plan would be us to
    continue to invest in our wireline network and to continue to
    be able to compete against Verizon and AT&T who are even more
    dominant players in that wireline. And we are going to be able
    to do that through a different efficiency that we are going to
    have in this merger.
        Mr. Legere. Sir, I would just add, the enterprise business
    is controlled 90 percent by AT&T and Verizon. T-Mobile and
    Sprint have 5 and 4 percent market share. We are going to add
    1,100 jobs into the enterprise space and we plan to double our
    market share in the enterprise business.
        Second part of building out this network, it is a bit of a
    build-it-and-they-will-come, and the fiber deployment
    associated with the backhaul required to build our network has
    been advancing greatly and about 86 percent of our build-out
    has been covered by that. So those are also good opportunities
    as well.
        Mr. Walberg. Thank you.
        Ms. Bennet, can you describe for me how you plan to compete
    with the New T-Mobile if the transaction were to be approved?
    What would happen to your prices and what would your
    subscribers' choices look like?
        Ms. Bennet. Our members are again concerned. We have been
    working with T-Mobile for the--or a form of T-Mobile before Mr.
    Legere joined. Back when we were trying to do 3G we tried to
    work--they had a big meeting. They brought all the carriers in.
    They said they were going to work with us. They were going to
    get us equipment discounts, all kinds of things to be a great
    rural partner. That never came to be. It was another promise
    they made to us that they broke. Again that was not on Mr.
    Legere's watch. It was prior to him. Since he has been on board
    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 overbuild any of these rural carriers then we are there
    to compete. But for every cell site we have seen T-Mobile put
    up in a rural market we have at least 10 times the number of
    cell sites. So we live and work in those areas.
        And I am sorry that you don't have service in your area. I
    wish one of my rural carriers was serving out there. I am
    betting they don't, but if they did you would have a gigabit of
    service. You would have fiber. You would have fiber in the
    backhaul. You would have wireless. You would have 4G and you
    would have the promise of 5G coming. So we would do it if we
    were there. Unfortunately, we are not everywhere.
        And I think what T-Mobile probably fails to recognize is it
    takes a lot of work to build out a rural wireless network. We
    build out to where maybe only eight people will work a cell
    site. I don't think they are going to do that. So.
        Mr. Walberg. Thanks for the extra time.
        Mr. Doyle. The gentleman's time has expired. The Chair now
    recognizes Mr. Schrader.
        Mr. Schrader. Thank you, Mr. Chairman, a good hearing. I
    appreciate the hearing.
        Mr. Shelton, it doesn't seem like you are a big fan of this
    potential 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 the marketplace
    much more than what we are talking about here. So why was CWA
    in favor of one and not this particular merger?
        Mr. Shelton. During that merger we had a written, binding
    commitment for jobs and a binding promise not to interfere with
    our organizing at the new company. And that is why we were----
        Mr. Schrader. Oh. Well, I understand that. That was to
    protect the union workers. But, you know, one can argue the
    consumers might have been terribly disadvantaged with that
    degree of consolidation. I just put that out there. I
    appreciate the work you are doing though very, very much on
    behalf of working men and women.
        I guess for Mr. Legere, you know, T-Mobile has been,
    especially since your tenure, been very disruptive--I mean that
    in a positive way--very innovative, you know, coming up with
    new ideas for the marketplace. You know, once you and Sprint,
    you know, merge together, you become one of the big three, you
    know, obviously there is not a lot of incentive to do that
    anymore. Can consumers expect to see less innovation from the
    New T-Mobile?
        Mr. Legere. Yes. 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 have been unable
    to crack the share of the top two. They are 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 am salivating to take it to the cable
    players as well.
        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 am pretty sure these folks wouldn't speak
    to me if I was the last person in the room. So that is 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 duopolists kicking and screaming to what they
    need to do for the consumer in wireless, I mean rural, as well
    as let's get into the in-home broadband market as well and make
    these cable guys start playing also.
        Mr. Schrader. Pretty good.
        Ms. Bennet, you have talked about the concern about low-
    income folks, the minorities, people that ostensibly don't have
    as easy access to, you know, internet services, broadband, and
    that the merger could be very detrimental to a lot of those
    folks that rely on some of the largesse from both Sprint and T-
    Mobile at this point in time.
        The question I have is why are you so concerned about that
    but the U.S. Hispanic Chamber of Commerce, the Black Chamber of
    Commerce, the National Hispanic Caucus of State Legislators,
    National Rural Education Association, Puerto Rico Chamber of
    Commerce all think this is a good thing? Why the disparity?
        Ms. Bennet. Well, first of all, I have been focusing on the
    rural carriers' perspective and we do have low-income folks in
    rural America that those carriers also serve. It is just a
    different position. I can't speak to why they are for it. It
    seems odd to me and I will just leave it at that.
        Mr. Schrader. Well, that is very fair, very fair.
        Mr. Legere, back to you, you know, while the market share
    may be small, 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?
         Mr. Legere. Yes. Well, first of all, the wireless business
    is a national market. Our pricing is national, the 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 know, you need to look at what
    the cable players are doing and the in-home broadband market,
    et cetera. So I think there is plenty of room.
        Mr. Schrader. All right, very good.
        And I yield back, Mr. Chairman.
        Mr. Doyle. I thank the gentleman.
        The Chair recognizes Mr. Bilirakis.
        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
    mentioned costs associated with switching providers and number
    portability. Over the years we have all seen the commercials in
    the cell phone market comparing rates, statistics, and data
    services. Can you further detail the ease, if it is easy, and
    costs of switching wireless providers, and do you have any
    information related to frequency a customer switches providers
    whether in the prepaid or postpaid market?
        Mr. Brake. Sure. Thank you for the question. Right, so
    switching costs have historically played a very important role
    in competition in communications networks, I mean going far
    back beyond even the advent of wireless, right, for wired
    telephone service. Number portability played an important role.
    If you can't bring your own phone number that all of your
    friends know to a new network you have little incentive to
    change costs.
        So there are a number of different tools that have made
    those switching costs lower and lower over time that makes it
    very easy for consumers to change providers. I think an
    important one going forward is this advent of the so-called
    eSIM, the electronic SIM card that allows for consumers to very
    easily change carriers and also plays an important role in
    the--or important future role in the MVNO market. When virtual
    providers can change the carrier that their consumers use it
    has an important role in maintaining competition in those
    markets.
        Mr. Bilirakis. Well, 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 a 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?
        Mr. Legere. Yes. Thank you very much for the question. I
    want to point out that T-Mobile has been one of the main reason
    that customers are able to switch. Amongst the first things
    that I did was separate the device in the rate plan so that
    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 carrier. We have also been a strong
    proponent of eSIM as well which allows customers to move freely
    between them.
        I am not afraid of any kind of a competition from a
    standpoint of creating the value that customers would need to
    switch. And with the capacity that this network will bring and
    the scale and scope that I will be able to have and the unit
    cost, it is highly likely that I will be the one creating those
    offers that are going to cause people to think twice.
        Mr. Bilirakis. Thank you. It sounds like there is decent
    competition within the marketplace; is that correct? I mean you
    just said that so I will assume that. Is that right?
        Mr. Legere. Yes.
        Mr. Bilirakis. Yes, all right.
        Let's see. In closing, like Mr. Walden, I am wondering now
    is the process already in place for 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 this, I have full faith that the
    FCC and DOJ thoroughly review all the facts to determine
    whether it is in the public interest of course, the merger.
    Like the witnesses, I await the decision and the reasoning for
    that conclusion from all the information in the record.
        And I yield back, Mr. Chairman. Thank you for holding this
    hearing.
        Mr. Doyle. I thank the gentleman.
        The Chair now recognizes Ms. Clarke.
        Ms. Clarke. Thank you very much, Mr. Chairman. I thank our
    ranking member, and our 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. However, they have grown quite
    weary and cynical of big corporations that seem to rake in
    money hand over fist while their hardworking 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 my question, first, is to Mr. Shelton. And Mr. Shelton,
    I would like to know if at all how will losing one additional
    employer affect the wages of communication workers, even those
    that don't work for the new T-Mobile?
        Mr. Shelton. As I have said before, when you decrease
    competition for labor, wages go down. And that is what will
    happen and it will happen throughout the whole wireless
    industry if this merger takes place not only at T-Mobile and
    Sprint, but also at Verizon and AT&T and any other wireless
    carrier.
        Ms. Clarke. Now what makes you say that? I mean currently
    you have a baseline of wages and what would less competition do
    in terms of particularly those in unionized shops of impacting
    on their wages? I think it is important for the public to
    understand that.
        Mr. Shelton. Well, we believe that there will be
    substantially less employees working at T-Mobile/Sprint and
    therefore you will be flooding the labor market with people who
    know the wireless industry and know how to do the job at any
    wireless company. The only one that we really have protections
    because of collective bargaining is AT&T. So at Verizon and T-
    Mobile and Sprint you will have wages going down.
        Ms. Clarke. OK. Mr. Legere, would you care to respond to
    those concerns of----
        Mr. Legere. Yes. Thank you very much. And I would say that
    I have already made my commitments very clear to the State of
    New York associated with what employment would be and that 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----
        Ms. Clarke. They are all in my neighborhood. I don't have
    to walk because they are right there.
        Mr. Legere. And I would say you are going to find a very
    happy, very well paid, highly compensated group of employees
    that are extremely excited about this merger and the future.
        Ms. Clarke. Well, let me ask another question. Given that
    Lifeline provides essential service including mobile broadband
    service, does the New T-Mobile intend to continue Sprint's
    existing commitments to Lifeline and other contractual
    agreements that they have currently engaged in?
        Mr. Legere. Yes. And thank you very much for that
    opportunity to discuss this because it has been a question.
        Very clearly we are supporting the Lifeline agreements that
    Sprint has. And, frankly, you know, New T-Mobile will have a
    capability to support Lifeline that old T-Mobile didn't. So I
    think not only will we support all the agreements, but we will
    be a better Lifeline provider than we were before.
        Ms. Clarke. Very well. And then I would like to get a sense
    from you post-merger. What would be--well, what is the current
    and future racial and gender composition of your board of
    directors and executive management team? Can we get that
    information?
        Mr. Legere. I would be glad to. Our employees are 62
    percent diverse, but I would be glad to provide all that
    information.
        Ms. Clarke. Looking at particularly 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.
        Mr. Legere. I would be glad to include that.
        Ms. Clarke. Very well.
        Mr. Chairman?
        Mr. Berenbroick. Congresswoman?
        Ms. Clarke. Oh, sure.
        Mr. Berenbroick. Can I jump in on the Lifeline question
    very quickly?
        Ms. Clarke. Would you, please, absolutely.
        Mr. Berenbroick. So, you know, as you know, and you have
    been a champion of the Lifeline program, it is the service that
    serves the most low-income segment of the population that
    absolutely needs that subsidy for basic connectivity.
        Ms. Clarke. Yes.
        Mr. Berenbroick. Sprint has been a great partner in the
    Lifeline program. And you just heard Mr. Legere fail to make
    any commitments that New T-Mobile will actually participate in
    the Lifeline program other than keeping Sprint's current
    commitments in the Lifeline program. There was no future
    commitment to Lifeline. And most importantly, Sprint is a
    wholesale provider to many of the wireless resellers that
    participate in the Lifeline program and serve 70 percent of
    that marketplace. There was no commitment to continue those
    relationships going forward as well.
        Ms. Clarke. Very well. My time is up. But Mr. Legere, my
    eyes are on you.
        Mr. Legere. Yes, my microphone might have been off when I
    said we will honor all of the Lifeline commitments. We will be
    a good provider going forward and we honor all of the wholesale
    agreements that are in existence and look forward to extending
    those.
        Ms. Clarke. I yield back, Mr. Chairman. Thank you.
        Mr. Doyle. Thank you.
        The Chair recognizes Mr. Veasey.
        Mr. Veasey. Thank you, Mr. Chair.
        Mr. Legere, I wanted to ask you particularly about your
    economists. They told the FCC that this merger is in the public
    interest because consumers should be willing to pay more for a
    better product. And I want to know, will low-income consumers
    be able to participate in this better product or will they be
    forced to endure second-tier service because they cannot pay
    for the more expensive product?
        Mr. Legere. I appreciate the question, but I don't recall
    any time I have 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.
        Mr. Veasey. If Sprint becomes your partner on this merger
    and it goes through, one of the areas that I would be
    interested in learning more about is if Sprint is not willing
    to make the commitment right now to build out their broadband
    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 merger?
    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 in other adventures outside of the cell phone
    product.
        Mr. Legere. Yes.
        Mr. Veasey. So I guess I am trying to figure out what is it
    about this merger that would actually make them want to invest
    money moving forward.
        Mr. Legere. Yes, thank you. Thank you very much. It is 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 were put upon them.
    This transaction itself provides the financing that both of us
    need to do this build-out. And pinnacle 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
    these networks and how the $43 billion worth of synergies, 26
    billion of which are coming from the network integration, will
    provide the financing for $40 billion worth of investment in
    the first 3 years in the 5G network.
        So the transaction itself is not only the financing but it
    is the accelerant of the investment. And it won't be Sprint
    building out, the New T-Mobile will be doing the integration
    and the build-out of the network.
        Mr. Veasey. The investors have the money right currently
    now. Why are they not building out that capacity as we speak?
        Mr. Legere. Again I think we have both been very clear that
    neither of us have the capital and the financing to do this 5G
    build-out. We have created a business plan and we have reviewed
    it with rating agents and we do have the ability to finance
    this through the New T-Mobile's company as well as the
    synergies that the deal will provide.
        And I just want to point out that at some point synergies
    were referred to as job losses and they are not. They are
    coming in the form of decommissioning of sites, of things that
    are part of the network integration, so that is the funding
    mechanism for this transaction.
        Mr. Veasey. Thank you, Mr. Chair. I yield back.
        Mr. Doyle. I thank the gentleman.
        The Chair recognizes the distinguished Minority Whip, Mr.
    Scalise.
        Mr. Scalise. I thank the gentleman.
        Mr. Doyle. And second baseman.
        Mr. Scalise. The second baseman in baseball, right? I thank
    the gentleman from Pittsburgh for yielding. The Pirates are
    represented very well with you.
        And I appreciate the opportunity to talk about this 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, you
    know, what we are seeing in terms of more wireless usage,
    connectivity, the devices that are able to be connected, you
    know, 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. It
    creates more opportunity. It creates more efficiencies and
    improvements in people's quality of life. And I do think that
    is 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 are able to access it does really improve their
    lives on a daily basis. There is things that I know I am able
    to do. You watch how it is able to allow people to do more
    things and in a much more effective way.
        I know you have 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 have talked about some of that in your
    testimony, Mr. Legere. So if you could first talk about the
    ability for consumers to have more competition and have access
    to lower costs for the increased amount of data that they are
    using.
        Mr. Legere. Thank you very much for the question. There is
    so much in what you said that is extremely important including
    starting 5G. The promise of 5G is a hundred times the speeds, a
    hundred times the number of devices that can go on networks, 10
    times the improvement in the response or the delay that is
    created. Our New T-Mobile will provide 15 times the speed that
    we have now, up to 450 megabits average speed across the U.S.
    and users will go from an average of ten gigs of data usage to
    80 while the unit price will go down 87 percent. And the track
    record is there, especially with low-income users who have had
    a price decline and a disproportionate increase.
        So that is what this transaction with the DOJ heavily is
    about, showing the network modeling that will take this
    industry and significantly increase capacity and provide a
    pricing decline, and because of that network integration how
    that will impact consumers, the offers that they have and the
    utilization. And that is what their whole transactions review
    has been about thus far.
        Mr. Scalise. Yes. I think the idea that not only can you
    see in your case 15 times the speed as well as lower costs,
    both of those are, I think, something that would be very
    attractive to consumers who shop around really good for all
    kind of products, but clearly data plans. You know, you watch
    the commercials and the reason there are so many commercials is
    because there is a competition for consumers because everybody
    knows how important it is to be connected. And how you have
    talked about an integrated network plan, what these 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 are waiting for something to
    download will become a relic that the Smithsonian Institute
    might hold because people won't have that problem anymore. You
    will have to Google that--well, what are you talking about? I
    don't know what that circle is you are referring to.
        Mr. Legere. Sir, that will happen as soon as you switch to
    T-Mobile.
        [Laughter.]
        Mr. Scalise. I see you are already well-branded.
        Mr. Legere. Yes.
        Mr. Scalise. You know, it is a nice opportunity to give a
    plug for, you know, for your products. And again competition is
    what made this industry great. You know, when we look at what
    5G can mean for consumers, because ultimately that is what, you
    know, we are trying to help make sure the consumers can have an
    even better experience, all this is coming from private
    investment and, you know, this isn't government that is
    spending billions of dollars to build out these networks. It is
    companies like yours and other companies.
        And, you know, we know all the other players in this space,
    but, you know, 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 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. And I have heard
    numbers like 10,000 new jobs referenced. What kind of jobs are
    you talking about? I don't want to get into spectrum and some
    other things, but I am not going to have enough time to get
    into all of that. And maybe for the record later if you can let
    me know about some of the combined spectrum assets of the
    companies and how that would be good for more innovation and
    opportunities, but on the job side if you can touch on that is
    my last question.
        Mr. Legere. Yes, I would be glad to. We have talked a bit
    today about customer experience centers which are one of the
    core jobs in our company now. There will be 5,600 new jobs,
    2,000 expanded jobs in that, so about 7,600 in the customer
    experience centers. And those are good paying, 45-$50,000 wage
    jobs. It would be about 11,800 people involved in network
    integration and deployment.
        There will be 5,000 people in new retail stores especially
    in rural America. And there will be about 11,000 jobs created
    over the period for the new businesses we are going in-Internet
    of Things, video, broadband, et cetera, businesses that we
    aren't in now. So those are the key growth areas of new jobs.
        Mr. Scalise. Thanks, Mr. Legere. I appreciate your
    testimony.
        Thanks for your discretion, Mr. Chairman. I yield back.
        Mr. Doyle. I thank the gentleman.
        The Chair now yields to Mr. Lujan.
        Mr. Lujan. Thank you, Mr. Chairman.
        Well, I appreciate the conversation today about 5G and what
    it will mean for our economy and our future. However,
    unfortunately, too many people where I live in a very rural
    State--my district is 47,000 square miles, it takes 8\1/2\
    hours to drive across it--I have better connectivity over the
    State of New Mexico in many cases when I am on an airplane than
    when I am 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
    is where my questioning concentrates. As Mr. ``Berenborick''--
    did I pronounce that correct, sir?
        Mr. Berenbroick. Close enough, sir.
        Mr. Lujan. Pronounce it correctly for me.
        Mr. Berenbroick. Berenbroick.
        Mr. Lujan. Berenbroick notes in his testimony, this gap
    exists because low population density and high per-consumer
    costs means that rural areas have historically lacked the
    economies of scale needed to attract strong investment from
    major carriers.
        Mr. Legere, in your testimony you insist that a merger will
    allow you to, quote, close the gaps in rural broadband access
    and increase outdoor wireless coverage to reach 59.4 million
    rural residents or 95.8 percent of the estimated 62 million
    rural residents. Mr. Legere, first, yes or no, do you agree
    with Phil's diagnosis of why rural communities have been left
    behind?
        Mr. Legere. I apologize. I am not sure what the diagnosis
    was.
        Mr. Lujan. The gap exists because low population density
    and high per-consumer costs means that rural areas have
    historically lacked the economies of scale needed to attract
    strong investment.
        Mr. Legere. I would submit that that is an analysis that
    had to be have done by those that had the low band spectrum to
    cover those communities, which was AT&T and Verizon at the
    time. Right now that we have nationwide low band spectrum we
    are deploying quickly across all of rural America and it is our
    hope to cover every square inch.
        Mr. Lujan. So do you agree with Phil's assessment?
        Mr. Legere. I guess, sorry.
        Mr. Lujan. I am going to say yes, unless I was told no.
        Mr. Legere. I will make that a yes, sir.
        Mr. Lujan. Second, yes or no, would you agree that the
    merger's stated benefits to rural Americans are an important
    aspect of whether it should be approved?
        Mr. Legere. Yes.
        Mr. Lujan. Then help me quickly understand how this merger
    specifically incentivizes this proposed New T-Mobile to better
    serve rural communities and when can my constituents expect to
    enjoy the wonders of 5G connectivity?
        Mr. Legere. Thank you very much, sir. And yes, the rural
    divide is extremely important for us. One of the things that is
    very clear in the output of the models associated with the New
    T-Mobile is the deployment of the 5G capability will have a
    penetration across the country where 90 percent of every person
    in America will have greater than a hundred megabit speed and
    capacity by 2024. And I can break that down by rural community
    in any different part of the country.
        Mr. Lujan. So what I will do is I will submit some
    questions for the record. Here is the question that I have is
    that T-Mobile's chief technology officer, Neville Ray, states
    in an article CNET authored February 6, Mr. Chairman, that I
    would ask unanimous consent to submit to the record.
        Mr. Doyle. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Lujan. What Neville says is that we wouldn't go after
    5G millimeter wave deployment in rural America. So help me
    understand what this comment means. Will my constituents not
    enjoy the same speeds as people living in urban and suburban
    communities?
        Mr. Legere. That is a very good point, sir. And I would
    point out that that is probably more of a condemnation on the
    Verizon and AT&T deployment of 5G only in millimeter wave
    spectrum. Because the analysis would show that in order to use
    only millimeter wave to make a nationwide coverage it would
    need a site every thousand yards which would cost $1.5
    trillion.
        So in order to deploy 5G nationwide you need to use
    millimeter wave, mid band, and low band across all frequencies
    so you have full geographic coverage. Nobody could cover the
    United States with millimeter wave spectrum. What is likely to
    happen is millimeter wave will be used in some densely
    populated urban areas and then enhanced with mid band and low
    band 5G coverage to make a broadband capability nationwide.
        Mr. Lujan. So the concern that I have is we also don't have
    robust fiber in many parts of rural America, and that is 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 need backhaul support from fixed broadband networks. Does
    anything about this merger address that need?
        Mr. Berenbroick. Congress, it is a perfect question. That
    is absolutely right. For 5G, especially for 5G that you know,
    we are talking about to get the full benefits of 5G that Mr.
    Brake has walked us through, you essentially need fiber
    backhaul everywhere to connect to those cell sites and towers.
    The companies don't actually bring those assets to the table.
    They need to lease those assets, which that is not a merger-
    specific necessity. They can lease those assets today.
        And T-Mobile, you know, has gone out on the marketplace and
    acquired 600 megahertz spectrum. You know, kudos to them for
    winning that spectrum at auction, and they have started to
    deploy it. They are making the case that their 5G deployment in
    rural America is based on that 600 megahertz spectrum. Those
    are assets they already have. That is not a merger-specific
    benefit of this deal.
        Mr. Lujan. And, Mr. Chairman, I know my time has expired,
    but as a former regulator details matter. And when I am told
    the rural America is going to get these assets and things don't
    exactly add up, I have a lot more questions. And so I
    appreciate the importance of this hearing, Mr. Chairman. There
    is some important aspects that we need some answers to
    associated with the commitments with mapping and looking at
    rural deployment. So, thank you, Mr. Chairman.
        Mr. Doyle. The Chair recognizes Mr. Cardenas.
        Mr. Cardenas. Thank you very much. Thank you very much, Mr.
    Chairman, and thank you so much for bringing this important
    hearing before the public.
        Mr. Legere, I understand you have made commitments to
    continuing the Lifeline program. You used the word, ``I will
    honor,'' just a few minutes ago. T-Mobile began withdrawing
    from the program in 2014 and no longer provides Lifeline
    services today. This service is extremely important where
    connectivity is basically required to survive both economically
    and when it comes to safety and education, et cetera.
        What is 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?
        Mr. Legere. That would be 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 would point
    out that T-Mobile didn't withdraw from the Lifeline market, we
    moved to being a wholesale provider of it. But yes, the
    commitment is from the New T-Mobile and very willing to put it
    into any form.
        Mr. Cardenas. Well, thank you for clarifying. I wouldn't
    want to mischaracterize your business practices. But when you
    look at Claure, his Sprint is more robustly involved in the
    Lifeline program. What I would love to see is a future if this
    merger goes through, a future organization, the New T-Mobile as
    some people are calling it, to actually 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 have been able to do with
    your company?
        Mr. Claure. Thank you for the question. The New T-Mobile
    has made a commitment and they are doing it in writing, and we
    have taken one step above what was required from us and that is
    make a voluntary filing to the FCC that includes Lifeline.
    Nobody asked us to do that. We thought it was the right thing
    to do to take----
        Mr. Cardenas. On that point, is the New T-Mobile willing to
    do exactly what Mr. Claure just described should this merger go
    through?
        Mr. Claure. Let me have one quick thing and that is we have
    always got to look at, yes, Mr. Legere is the CEO and there
    will be a New T-Mobile, but what is important to know is the
    new network we are going to build is going to have eight times
    the capacity that we have today. So therefore we have an
    economic incentive to bring as many customers as we can whether
    they are Lifeline, whether they are prepaid or they are
    postpaid. So yes, we made commitment. but in addition we have
    an incentive to do that just to fulfill our business plan.
        Mr. Cardenas. Without--now my question to you, Mr. Legere,
    about following suit with what Sprint has done to actually file
    a commitment in writing, is the New T-Mobile ready to do that?
        Mr. Legere. Yes. Just to clarification, sir, it was me that
    made the filing----
        Mr. Cardenas. OK.
        Mr. Legere [continuing]. On behalf of the New T-Mobile. And
    again I want to reiterate we are merging with Sprint. Sprint is
    not going away. So all of the good characteristics and
    behaviors of Sprint we are adopting into the New T-Mobile, and
    this is one of them. And I will make the commitment in Lifeline
    in whatever form is needed.
        Mr. Cardenas. Mr. Berenbroick, are you familiar with that
    submission in writing that they are referring to?
        Mr. Berenbroick. Yes, sir. I am.
        Mr. Cardenas. Is it what I seem to be describing or is it a
    little bit less nuance than that and is it--what is it?
        Mr. Berenbroick. It is heavily caveated.
        Mr. Cardenas. There you go.
        Mr. Berenbroick. Sir. And, you know, like many of the
    commitments that we have seen here today, you know, I think
    Congresswoman Clarke 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. Bennet has spoken about, you know, the high costs
    likely going up for roaming partners and in the MVNO market.
    That is a huge problem for Lifeline subscribers who may see
    costs go up and the commitments of these companies go down.
    Those issues all do need to be explored.
        Mr. Cardenas. And another thing, look, Mr. Legere, I have
    heard a lot of wonderful things about you and how you have
    really changed in a positive way T-Mobile. I commend you for
    that American business.
        Also, Mr. Claure, I followed your career as well.
        One of you guys wears tennis shoes. The other guys wear
    hard shoes to work. Apparently the tennis shoes guy is going to
    stick around as a CEO, likely, and then the hard shoes guy is
    going to probably remain on the board because of the shares
    that Sprint has or what have you. But what I have found when it
    comes to Lifeline specifically, I like the hard shoes guy and
    what he has been doing as CEO rather than the tennis shoes guy.
        So 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?
        Mr. Legere. Yes, sir. I can only reiterate the New T-
    Mobile's commitment to Lifeline and I will follow up in any
    form necessary after this hearing to make sure that that
    commitment is clear.
        Mr. Cardenas. Thank you, Mr. Chair.
        Mr. Doyle. Right.
        The Chair recognizes Mr. Welch.
        Mr. Welch. Thank you for the hearing, Mr. Chairman. I am
    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 gentlemen are
    making is that this will be tremendous for rural America. I
    would like to believe that is true, but I have an apprehension
    that it won't necessarily occur.
        You know, 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 to pay $40 million in a fine
    for violating FCC rules with a practice of faking ringtones. I
    mean this is a big deal for us in Vermont. Dakin Farms in the
    Christmas season depends on those calls. Camel's Hump School
    gets the word out that it has been canceled because of weather.
        And in the settlement, T-Mobile acknowledged it had
    injected false ringtones in hundreds of millions of calls. I
    mean, that is really upsetting to us. And I am 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 because we
    don't have much time.
        Mr. Legere. Yes, sorry. You know, the details associated
    with the settlement associated with that action are far more
    complex, and I am not sure we could go into the process here.
        Mr. Welch. Well, maybe offline we could do that.
        Mr. Legere. I would be glad to.
        Mr. Welch. Because that is--what you are admitting to, or
    T-Mobile admitted to, was that it actually had the system false
    ringtones.
        Mr. Legere. Yes, there was no admission to a willingness of
    participation in any kind of fraud.
        Mr. Welch. Well, that is--I mean you, and I both know that
    is sort of the deal, but it happened. And then this brings me
    to my point about wireless coverage, and I am a little
    skeptical about the deployment promises in rural areas.
        Mr. Chairman, we have got a map of T-Mobile coverage in
    Vermont, and it looks pretty good. It is pretty much the whole
    State. But the Burlington Free Press had somebody get in a car
    and travel the roads, the main roads, for 6,000 miles, and take
    signal coverage over 6 weeks this fall. And as I mentioned, it
    was only on the main roads and it was covering about 65 percent
    of the buildings in Vermont.
        And its results contradict many of what the assertions that
    are made by T-Mobile and Sprint. The data on T-Mobile and
    Sprint, T-Mobile covers 22 percent of the area tested in the
    State with 5 megabits per second or greater speed. T-Mobile has
    no service or spotty service in 62 percent of the areas. Sprint
    has no service or spotty service in 50 percent of the areas.
    And when I sit here and hear what I believe is your sincere
    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 Burlington Free Press found.
        So I am a skeptic, all right. And I guess I am going to ask
    both of you, Mr. Legere and Mr. Claure, when you use your maps
    you are saying it is 96 percent coverage? These maps are bogus.
    I mean, they just don't work. So are you going to redo your
    mapping so that what we are talking about is apples and apples
    and not apples and oranges, briefly?
        Mr. Claure. Thank you. I will take the answer. Today,
    Sprint has a very limited coverage, and we rely mainly on AT&T
    and Verizon to be our roaming partners outside of core zone. So
    we are basically replicating what the maps of AT&T and
    Verizon----
        Mr. Welch. Well, they are no good.
        Mr. Claure. What is that?
        Mr. Welch. These are no good. These are phony maps.
        Mr. Claure. But 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 that we are making is to build a nationwide
    coverage----
        Mr. Welch. Right.
        Mr. Claure [continuing]. Because we just got 600 megahertz
    just a couple of years ago, and we are going to deploy it as
    fast as we can.
        Mr. Welch. Well, I mean, if you were sitting where I am and
    getting the calls I am getting from Vermonters who have a map
    that says they have fantastic service and they can't get a dial
    tone, you would share my skepticism. This is a big deal.
        Mr. Legere. Sir, your concerns are very real. And the
    commitments and the filings that we have made are about the
    network we will create, and we have a strong commitment to
    cover rural America. Thank you.
        Mr. Welch. OK. Mr. Chairman, I would like to submit for the
    record these documents that I referred to.
        Mr. Doyle. Without objection, so ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Welch. I yield back.
        Mr. Doyle. And now we come to our final witness, Mr.
    O'Halleran. You have got 5 minutes.
        Mr. O'Halleran. Thank you, Mr. Chairman. I am sorry I
    didn't make it on time today. I had a commitment at the other
    side of town. But, boy, I have sat here through this hearing
    and listened intently on issues about rural America and I have
    heard time and time again that they will be treated differently
    from now on.
        That doesn't seem to be the case. They are still going to
    be at the low end of the pole. They are going to be down there
    with the lack of ability to compete, lack of ability to make
    sure the families of rural America have the health care
    necessary through telemedicine, the need for our businesses to
    be able to expand and economic development to expand and all of
    a sudden we are back to the same old thing. We are back to the
    cities and everybody else getting the higher amount of coverage
    than rural America. That is unacceptable.
        I have a map just like the gentleman from Vermont had and I
    travel. My district is 58,000 square miles. Half the time that
    map says I should be covered. Half the time I am not, by
    anybody. And so there is a lot of work to do. And what I have
    also heard today are semi-commitments, you know, we are looking
    into it. I mean if--and I have also heard that it is about
    productivity.
        Mr. Brake, 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, and you have indicated very much that on the
    Lifeline and Tribal Lifeline program that you are--are you
    committed? Are you going to ensure, are you going to guarantee
    that those programs will be completed, completed and stay, and
    how are you going to do that? What is the plan, the real plan
    of how, and be specific as you can.
        Mr. Legere. Yes. Sir, on--thank you very much and I
    appreciate your patience. On Lifeline it is 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
    an even better Lifeline provider.
        Second, sir, I would submit to you----
        Mr. O'Halleran. Just a second. I want to make sure that--
    their commitment, honor what they do, for how long?
        Mr. Legere. For as long as the contracts are available.
        Mr. O'Halleran. So how long are those contracts available
    for?
        Mr. Claure. Those are contracts that self-renew. And we
    have, as part of the merger we have discussed that the New T-
    Mobile will basically honor all the commitments and we will
    continue to be a fierce competitor in the Lifeline the same way
    as Sprint has been.
        Mr. O'Halleran. So as long as the contracts go. It is not
    into the extended future, it is just the contract life of that
    particular contract.
        Mr. Legere. Sir, could we be clear? The New T-Mobile is----
        Mr. O'Halleran. And just a second, I am sorry. It is my
    time.
        Mr. Legere. OK. Sorry, sir.
        Mr. O'Halleran. I just, as somebody that represents Tribal
    nations, 12 of them, as somebody that represents vast amount of
    towns in rural America, I am really concerned from what I have
    heard. And, Mr.--I am going to try to get your name right, but
    I know I am not going to do it--Berenbroick--no, never mind.
    What do you anticipate this merger's impacts could be on the
    tribal Lifeline program and do you anticipate the FCC and DOJ
    will meaningfully enforce any conditional commitments made as
    part of an approval, and anything that we talked about here if
    you have comment on that?
        Mr. Berenbroick. Sure. And thank you for the question. This
    is an important line of questioning and I am glad the committee
    has gotten into this. So, you know, as you know tribal lands
    are some of the most underserved areas of the country. You
    know, facilities-based providers often provide wholesale
    service to resellers that serve the tribal Lifeline
    marketplace. One big concern in this merger that we have talked
    about here is we are consolidating that MVNO, or sorry, that
    wholesale marketplace under only three providers who have fewer
    incentives to provide a low-cost wholesale access. And Carrie,
    Ms. Bennet has spoken to this a little bit.
        So what we think that means is the incentives in the
    marketplace will be to increase the costs that those resellers
    have to--that those tribal resellers have to pay for Lifeline,
    those resellers that serve tribal lands pay for Lifeline
    driving up the costs in the Lifeline marketplace, potentially
    driving some of those resellers that serve those communities
    that you care about out of the market entirely, potentially
    leaving those consumers without any Lifeline provider.
        Mr. O'Halleran. Thank you.
        And thank you, Mr. Chairman.
        Mr. Legere. Mr. Chairman, could I make a final comment,
    please, shortly, which is just that with all the concerns about
    rural America, this transaction is the best path forwar4d for
    this country to solve the issues of rural America. So I
    vehemently believe that is the best path forward.
        Mr. Doyle. OK. All time is expired. I request unanimous
    consent to enter the following documents into the record: A map
    from CWA of Sprint and T-Mobile's retail distribution for
    Newark, New Jersey; an op-ed by former Reps Waxman and Tauzin;
    a statement for the record from Consumer Reports; a blog post
    from INCOMPAS; 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 Representative Cardenas, et al, to John
    Legere; a letter from the National Diversity Coalition; a
    letter from CASE; a letter from J. Kenneth Blackwell; a letter
    from Let Freedom Ring; a letter from Consumers' Research; a
    letter from Americans for Limited Government; a letter from
    Americans for Tax Reform; a letter to the FCC and DOJ from
    Members of Congress; and last, but not least, a letter from
    coalition members. Without objection, that is so ordered.\2\
    ---------------------------------------------------------------------------
        \2\ The information appears at the conclusion of the hearing. The
    Democracy Reform Task Force and GSA Inspector General reports have been
    retained in committee files and also are available at https://
    docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=108895.
    ---------------------------------------------------------------------------
        Mr. Doyle. Well, 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 10 business days
    to submit additional questions 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 subcommittee is adjourned.
        [Whereupon, at 1:08 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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