[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:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
    
    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\
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    \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.
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    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\
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    \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.
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    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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