one of you briefly before that happens. and then after each of you has had a chance to speak, we will have a series of seven minute question rounds from members of the subcommittee. we have come a long way since the very first handheld telephones came along about 35 years ago.

these handheld cell phones were revolutionary. they were very different than they are now. that first device was 10 inches long. it weighed over two pounds and it allowed for a whopping 20 minutes of talk time before the battery up and died. today you can place a phone call or surf the internet using a mobile device that fits in your ,ocket or even on your wrist and you can use it for 18 hours before it needs a charge. over the past two decades, growth in wireless technology and connectivity has been truly astounding, surpassing what almost anyone could have imagined back then. according to the cellular telecommunications and internet association, ctia, wireless subscriber communications have grown from 110 million in 2000 to more than 395 million in

2016. today, more than 95% of american adults own a cell phone. moreover, a majority of u.s. households are now wireless only , meaning they rely exclusively on their cell phones for a telephone collection -- connection, having abandoned the landline. which reminds me of the fact that a few years ago my son james came up with an odd suggestion. because people lose phones and they can't find them, someone should invent a telephone connected with a wire to the wall. [laughter] sen. lee: he was dead serious. the volume of wireless data being transmitted has also expanded exponentially. according to ctia, between 2014 and 2016, the amount of wireless data traffic grew from about four terabits to almost 14 terabits per year, an increase

of almost 240% in just two years. with the number of connected devices of all kinds expected to exceed 30 billion by 2023, while this traffic will continue to grow significantly, substantially, at a breathtaking rate, in the future. these figures demonstrate the importance of wireless services to american consumers and to american businesses. neither of which could really survive or thrive in today's world without wireless services. mobile services impact many parts of our modern lives, from recreation to health care to commerce, just to name a very few. thanks to wireless technology, you can now check your email and stream music or buy concert tickets and register to vote away from your home or office, all on your mobile device. similarly, businesses can use mobile devices to increase

productivity by wirelessly tracking inventory, managing fleets of vehicles, or efficiently connecting with employees in the field and monitoring their progress and productivity, what they are doing with their time. competition among wireless service providers has helped increase the availability of such services, both geographically and financially. these benefits have included expanding access to wireless services to those in rural areas and ensuring the affordability of these services to americans with lower incomes. the resulting rise in consumer demand for wireless services has promoted development and implementation of some really innovative technologies. consumers of wireless services, whatever their walk of life, therefore have a strong interest in ensuring competition continues to deliver such benefits to them and do so in a

way that makes them affordable and therefore accessible. today's hearing is intended to consider these issues with regard to the proposed merger of t-mobile and sprint, two of the four large nationwide providers of wireless services. the companies have sought to combine for a number of years, most recently last fall. earlier merger discussions in 2014 were apparently ended after the obama administration signaled that such a deal would face strong opposition. in april of this year, however, t-mobile and sprint agreed to the transaction that is the basis of today's hearing. the proposed transaction is a horizontal merger, one that would combine competitors offering the same product in many of the same geographic markets within the united states. laws forn's antitrust a bit combinations of firms that may substantially lessen

competition, because this is all about the consumer, what happens to the consumer as a result of diminishing competition. the government agencies that analyze such transactions recognize that mergers offer the potential to generate significant efficiency, which would enhance the merged firms' ability to compete and also incentive to compete. our purpose today is to hear from the merging parties and our panel of distinguished experts, to ask them questions about what they believe to be the primary issues the public should be thinking about when considering the likely competitive impact of this proposed merger between t-mobile and sprint. critics of the merger note that it would reduce the number of nationwide wireless carriers from four to three, leaving the new t-mobile to compete with just verizon and at&t.

point to of the deal t-mobile as an aggressive competitor and one that has sought to gain market share with its uncarrier marketing strategy. their fear is that the transaction will reduce the incentives of the merged firm to continue aggressive, competitive efforts that have benefited consumers. the most vocal critics of this proposed transaction claim that it will eliminate the head-to-head rivalry between emerged parties -- between the merged parties prepaid brands, metro pcs and boost. consumers purchase prepaid services upfront with deductions made against the amount of minutes and data initially purchased. prepaid plans often are used by consumers who are unable to provide the credit history required for postpaid's instructions, used by -- postpaid subscriptions, used by

more americans. opponents of the transaction claim that competition lost because of the merger will hurt poor consumers the hardest, since they rely on prepaid services the most. rather than diminish their competitive spirit, t-mobile and sprint insist the merger will supercharge their efforts to disrupt the wireless marketplace. they claim that by putting t-mobile's uncarrier strategy into overdrive, the merger will increase their ability to compete with verizon and at&t, which will reduce rather than increase the prices that consumers have to pay. in particular, the parties argue that by confining their network assets -- combining their network assets, spectrum holdings and sell sites, that the merged resulting firm will greatly increase network capacity, which will create long-standing and very strong incentives to compete

aggressively for customers in both the short-term and long-term. the merging parties also claimed the transaction will accelerate the adoption of 5g wireless technology. the telecom industry expects the move to 5g, the latest generation of wireless technology, will deliver data at greater speed with lower latency and also deliver the ability to connect many more devices at the same time. t-mobile and sprint argue that their proposed merger will help this process along, since they will be the only carrier capable of delivering nationwide 5g in the very early stage of innovation. as with any antitrust analysis, the inquiry is always very fact-intensive. mergers are particularly complicated in this respect, as they require prediction about the future. they are not simply static.

we can't just assume all of today's market forces, because the market itself is dynamic. in any event, we are not here today ourselves empowered with the ability to decide the fate of this merger. i do believe, however, that the hearing this afternoon can help frame the relevant issues and arguments for the public by offering a public forum for us to discuss some of the most important issues. i look forward to hearing from each of our witnesses and hearing questions from my colleagues and any answers you may be able to provide. sen. klobuchar: you now have the floor. sen. klobuchar: thank you very much. i will note the chairman was bemoaning the fact that justice did not wait until after our hearing to make this announcement, but we are pleased to see so many people here. i would just note that we hope the president will find someone

who carries on the tradition of being someone who makes decisions based on the law and someone who makes decisions based on president -- based on precedent, and we will await this announcement. when you look at this merger in front of us and all the decisions made last week, this is a very important position. now we turn to the matter at hand, which is very important to many people in our country. in fact, there are many customers -- i was looking at the numbers for the tens of millions of customers of these companies, so this matters. more than three quarters of american adults now own smartphones. they are so common that many of us take for granted that we are essentially walking around with little supercomputers in our pockets. it is these increasingly

sophisticated devices that would not be nearly as useful if they were not connected to the powerless wireless networks that crisscross our country. it is these wireless networks that let us do extraordinary things. i mention a few of them. share pictures, share cap videos , order brides, watch movies, read the news, and reach the entire world. as these wireless networks have become more powerful and new generations of technology have allowed us to do more and more things on our phones, wireless network connectivity has become essential for the vast majority of americans. many of us can't imagine how we would do our jobs or stay in touch with loved ones without them. think about the last time your phone was missing. well, that's what it would be like if we did not have them. millions of americans, particularly low income, depend on wireless networks for their primary connection to the internet. according to the pew research center, 20% of americans rely

exclusively on their smartphones for home internet access. that is up from 13% in 2015. you wonder why this is a big deal? think about that. 20% of americans, that is the only way they get home internet access and you have three quarters of all americans using smartphones. it is essential we have access to reliable wireless at fair and competitive rates, and it is also essential that we continue to promote innovation. let's be clear -- we need competition and innovation. ,e need consumer choice and 5g but we should not have to choose between them. what we are here to discuss today is a proposed merger that could reshape the wireless market in various ways. let me explain my own personal background in this. before i can to the senate, i did have a life before that. i was a prosecutor for eight years, but before that i was in

the private sector for 14 years. as a brand-new lawyer, one of my first big clients was mci. it was at a time when they were trying to get into the market and battling monopolies to do that. they were a young, innovative company that was determined to disrupt the industry by competing with monopoly carriers. it was exciting to represent a country -- a company like that. they're scrappy lawyers viewed themselves as cowboys, fighting for consumers and lower prices. i still remember one of my first regulatory hearings. i made the comparison between the story of the first words of alexander graham bell when the first telephone worked and he said, come here, watson, i need you. in the fast-moving world of mci, when they got their first connection between st. louis and chicago, one of their benefactors memorialized the great moment and said, i'll be dammed, it actually worked. without antitrust law, mci would

never have worked. mci took on bell operating companies and at&t and ultimately helped break up a monopoly. this breakup lowered long-distance prices and spawned this incredibly competitive cellular arena. what we saw then in the long-distance market was really a precursor to what we see now in the cell phone market. sp of, we are on the cu revolution in wireless telecom. just as in the long-distance market, antitrust law is front and center. the wireless market has gone through a great deal of change since the turn-of-the-century. a big part of that has to do with technological advancement. but we have also seen consolidation. we went from seven national wireless carriers in 2002 to just four in 2009. the push to consolidate continued until 2011, when the justice department blocked the

at&t attempt to buy t-mobile. we have had the same four carriers ever since, which i know is the exact number of monopoly railroad companies on the monopoly board. 2011te at&t's argument in that the transaction was necessary to unleash the next generation wireless network, the four remaining carriers have all introduced 4g service through most of the country. a sprint-t-mobile merger has been discussed for years. sprint's parents company discussed the possibility with the justice department and fcc in 2014 and was told the deal would face opposition at both agencies, said the proposal was dropped. the idea for the deal did not go away. it came up again last year, and again former doj and fcc warnings published aps the public about the potential anti-competitive effects of the merger. i wrote a letter to the doj and fcc last fall before there was

even a deal with a group of other senators raising concerns about the potential deal. after the deal was announced, the parties have been very forthcoming with their views, and i appreciate their answers to many of my questions. at the same time, i still have concerns. first, four competitors is not very many, given all the public use of cell phones. but over the last few years, we have still seen vigorous competition, in part because of the companies before us today. most competition has been driven by the maverick behavior of t-mobile and sprint. out of necessity, they have competed hard to take market share from each other and from the two larger players, verizon and at&t. they have lowered prices, offered innovative plans, and certainly innovative outfits. that is for you, mr. legere. [laughter] sen. klobuchar: first we need to

ask, will a combined t-mobile and sprint need to compete as hard? will the competitive energy remain when the lowest cost provider is gone and the merged company is similar in scale to verizon and at&t? how would the merger affect prices and services for consumers who rely on lower cost prepaid plans or live in berlin areas? third, what will be the proposed merger's effect on innovation? those are the things i think we need to consider. mr. chairman, i realize there could be potential benefits. we have heard about this with 5g, but merging parties and the community almost -- often promised billions of dollars in efficiency and cost savings. the question is whether consumers will actually see the promised lower prices or improved quality when the deal is done, and consumers have definitely fewer carriers to choose from. this is an important transaction with long-term implications for

consumers, and i am glad we are having this hearing and we will hear from the witnesses today. sen. lee: thanks so much, senator klobuchar. we will now turn to our witnesses and i will introduce them before they speak to us. we will start to my left and moved to the right and have you speak in that order as well, but i will introduce all of you first. john legere is the chief executive officer of t-mobile u.s., a position he has held since september 2012. he keeps the theme consistent with making sure his apparel reveals the company for which he works. mr. legere has years of experience working in the telecommunications and technology industries. prior to joining t-mobile, mr. legere served as ceo of global 2011 andfrom 2001 to previously held senior positions with bell and at&t. mr. legere has a bachelors

degree in business administration from the university of massachusetts, master of science from m.i.t., master of business administration from fairleigh dickinson university. marcelo claure is the executive chairman of the board of sprint corporation. he also serves as the chief operating officer of softbank group -- softbank group corp., the japanese multinational conglomerate that owns a majority stake in sprint. founded mr. claure brightstar corporation as a small district reader of mobile devices -- a small distributor of mobile devices. 20 years later, brightstar has annual revenues in a sense of $10 billion. an immigrant from bolivia, mr. claure earned a bachelor of science in economics and finance from bentley university in massachusetts. asha keddy is vice president of

technology systems architecture and client group and general manager of next-generation standards with intel. she is responsible for investigating and delivering the technologies that intel is pursuing in the 5g arena. ms. keddy has more than 17 years experience leading and managing wireless and mobile broadband technology and product areas. ms. keddy holds a degree in computer engineering from bombay university in india and an ms degree in computer science from clemson. gene kimmelman is the president and ceo of public knowledge. he previously served as director of the internet freedom and human rights project at the new america foundation and his chief counsel for the u.s. department of justice's antitrust division. mr. kimmelman is a graduate of brown university and the university of virginia law school, where he received the

schwartzman fellowship. he was also a fulbright fellow. dr. roslyn layton is a visiting scholar at the american enterprise institute, where she focuses on evidence-based policy for information, communications, and digital technology industries. she is also a visiting researcher at holberg university center for communication, media, and information technologies and a vice president at a company in denmark. she surf 2016-17 federal communications presidential transition team. she has a phd in economics, an mba from the rotterdam school of management, and a ba in international service from american university. george slover is a senior policy counsel in consumers union washington office, where he develops and grenades regulatory comments related to advocacy across a wide range of issues,

including safety, telecommunications, energy, and finance. he oversees antitrust and competition policy issues. mr. slover has three decades of federal government policy experience with service in all three branches of government. mr. slover holds a jd from the university of texas law school and a master of public affairs from the lbj school. before we begin, i would like this where you all in as witnesses. if you will stand and raise your hand. do you swear the testimony you are about to get to the testimony will be the truth, the whole truth, and nothing but the truth thank you -- nothing but the truth? thank you. mr. legere, you may begin. mr. legere: chairman thank you for inviting the rest of the panel today to speak on antitrust competition policy and consumer rights.

the subcommittee has a perfect name. in particular, the consumer rights part. at t-mobile, where about doing right by customers by supporting them first. customer needs truly drive the decisions we make. as i have said many times, we set out to fix a stupid, broken, arrogant industry. we have ended punitive overages. we made it easy to upgrade to new devices, and made it free to travel with roaming left on. we also retired unlimited data. we also delivered lower prices than the carriers, at&t and verizon. while we have made a positive impact, there is still a lot of work to do, especially in this converging marketplace. today i am pleased to tell you how we want to supercharge and end the unacceptable status quo by increasing competition,

creating jobs, and promoting 5g.ership in i want to talk to you today as a ceo who is optimistic about the future and the benefits our merger with sprint will create for the economy. i have met with most of you personally in advance of this hearing. many of you asked if the new t-mobile means better competition, better service, creating jobs and drive product innovation. my question to these -- my entergy's questions is an emphatic yes. we will make sure america wins the global 5g race. 5g will unlock capabilities to fuel job creation well beyond what we have seen so far. 5g is about enabling amazing innovation, then ensuring these services are available and affordable to everyone.

5g will completely transform the way americans live, work, travel, and play. 5g means real-time virtual 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 deliver goods and services. to deliver on the full promise of 5g, we need to combine and t-mobile now. in a moment marcelo will describe how the two company's standalone networks will compare to the combined company. from the charts we have in the room, consumers will have broad and nationwide coverage. that is what this transaction is about. the benefits of 5g leadership won't just flow to the cities, these benefits will be brought to consumers everywhere, especially rural america.

we will open up to five new call centers in rural and small-town. this transaction will be job positive since day one. when we do this, at&t and verizon will be forced to follow our lead. we will happily take their customers and give them better price. in reality, when we invest, they must invest. we we lower prices, they must lower prices. when we innovate, they must innovate. trust me, the new t-mobile will not stop. we will be relentless. we will renew competition to a market where verizon controlled 90%. w will alsoe take on at&t -- we will also take on at&t and comcast in the broadband market. we will be an alternative for the cable cord cutters. we will finally offer an

alternative to the notoriously uncompetitive market and provide millions of consumers to free themselves from the grip of traditional broadband providers. t-mobile is a proud disruptor. it is in our dna. it is what drives my magenta wearing employees. it is our brand of success, and we have no plans on changing that now. if we stay true to who we are, and i promise under of we -- und er oath that we will, t-mobile will bring new opportunities to consumers across the country. >> thank you members of the subcommittee. i am incredibly excited about sprint's proposed merger with t-mobile. i will demonstrate why this is good for consumers, sprint employees, u.s. technological leadership and entrepreneurs. heart. entrepreneur at

i bought a cell phone shop in boston and grew into a leader of retail cell phones. it grew into an $8 billion company and worldwide distribution center. broad start also became the largest hispanic owned business in u.s. history. toater stalled broadstar softbank. sprint has faced a lot of challenges in recent years. the company has lost $35 billion last 105 billion in the years. i was hired to turn around that trajectory. i could not be more proud of our team in making sprint a more stable company. we achieve this mainly by cost reductions. we still struggle to attract new customers. once we attract them, we

struggle to keep them. customer perception of our net work still trails to our competitors, and we lack the tools to compete with at&t and verizon. deploying 5g presents a tremendous opportunity, but will require sprint to make massive new investments in the network, even as we have not finished paying for 4g. as a standalone company, sprint would have to invest $25 billion into 5g . that investment would only cover a 5g network limited to dense urban areas. we have struggled to barely breakeven, and will have to invest another 20 billion to $25 billion just to offer 5g in limited areas. as a standalone entity, we would have to increase prices in order to pay for this investment in 5g.

given the investment we face, i have analyzed all options to sprint. what i have found is this merger is the best option for employees and shareholders, but more importantly for the american consumers. in business, timing is everything, and the stars are aligned for us. our combined assets will allow us to take advantage of the rapid emergence of 5g, an imperative for emerging -- for american leadership. merger --th of this neither two companies can do this alone. we need t-mobile, and t-mobile needs us. we are committed to building the world's most advanced 5g network with urban, suburban, and rural coverage. this new network willpower safer -- will power safer self-driving

car's, lifesaving tele medicine. we will great thousands of new jobs starting from day one. by combining our network, we will grow our capacity six times, meaning we will vastly increase the amount of gigabytes a company has available for american consumers. to be successful, we will need to fill this capacity by gaining market share. we will do this by lowering prices to attract customers. this will give us the ability to compete and disrupt the dominance of verizon and at&t. because of its incredible speeds, we plan to challenge the dominant cable companies, like comcast and charter, and accelerate the trend of cord cutters. verizon and at&t will need to invest more to compete with us now that they are forced to react and compute harder. the new company will be able to compete in new cities and towns

over rule america and challenge -- rural america and challenge the duopoly in internet services. americans should not let china or south korea takeaway technology leadership. we cannot lose the race to 5g. in closing, this will be one of the most beneficial measures in american history. we are committed to building the world's most advanced i.t., network, lower prices, great thousands of new jobs, and stimulate innovation we can only dream of. fork you for enjoy -- inviting us here today. i look forward to answering your questions. subcommittee,the thank you for inviting me to talk about 5g. with 4g, we work hard to connect everyone. everyone5g, we connect

to everything. 5g is all about economics of scale. if you think about that -- everyone and everything -- it is truly phenomenal and transformational. the technology is predictable, but what human beings do with it is not. what do i mean by that? we try to make better systems with 3g. however smartphones came along, and apps came along, and the data revolution started happening. we created the 4g network, which was supposed to be about data. many companies started innovations, and today how we hail cabs, how we travel, everything is done by companies that did not exist a few years ago. these human centric applications have changed and indeed improved our daily lives. e also then click not stop --

we start producing more data. we want to start connecting things. we want to use technology in agriculture and other things. this led to the need for 5g, the world's first global solar standard. entrepreneurs can drive this type of innovation across many different industries, enabling an even bolder and broader transformation. from global economy to telehealth, smart cities, and the list goes on. environments industries estimates about 3 million jobs over the next 10 years, and $500 billion to the gdp. to do this, we have to rethink everything from the air interface to the way the network is defined. intel is at the core of this

transformation. we are no longer just inside your computer, we are inside things, from inside your computer to the things that power the cloud. what we also need is to ensure that the network transforms, and we go from a proprietary fixed function to a software defined function, where we can lower-cost services. intel is involved here. to date, because of the merge of industries, we have worked on trials around the world. we have 25 plus trials in countries around the world, all the way from connected cars to remote tractors to residential broadband use, and all kinds of things. at the winter olympics this year, we showcased a lot of these. we have given some of the

details in the testimony. just on father's day at the u.s. open. we were able to transmit four k people's-- 4k video to homes without any wireless backup. without spectrum, we can't do anything in wireless. it is the crux of wireless communications. every operator will need access to low, mid, and hide and spectrum -- high band spectrum. when i talk about low band spectrum, think about a very long distance -- they may not be able to go as much, but can cover long distances. high band can be seen as sprinters -- they can go extremely fast, but shorter distances. mid band is important because it allows a mix of speed and range.

in the i.t. triangle in the testimony, you see there are a variety of use cases. by having these three types of spectrum available in a timely manner, 5g applications could be available to benefit society. without this, we will not be able to reach the full benefits of 5g. the u.s. has made good progress in low bands and high band, making more spectrum available, especially the mid band spectrum is critical for u.s. policymakers. congress must take action on this now. we are on the cusp of the initial commercialization and 5g deployments. it is important to note the global standards will continue in the future as more features are added. thank you. >> thank you chairman lee, senator klobuchar, senator hatch, appreciate the

opportunity to testify today. senator klobuchar, your comments about your past reminded me about the great leader of mci. here we have some wonderful ceos who are truly committed to serving consumers, and have certainly presented an image of a highly competitive maverick approach. that was the essence of mcgowan at mci. but mci was not by verizon. -- was bought by verizon. that company is not the bill mcgowan maverick company that mci was. i start with that by saying this issue is not about promises. there are a lot of interesting things that need to be thoroughly investigated by the prominent justice in revealing a merger. this is the best law enforcement. this is about what the clayton act requires of the justice

department to enforce the law. in doing that, promises are interesting and are certainly thoroughly reviewed. what is the market structure we are looking at, and what is the impact a merger will have, given that market structure? and what are the post-market incentives? mergers sometimes often change company incentives. that is what needs to be thoroughly investigated by the justice department. here notwithstanding what has been sent, i believe four competitors are meaningful in the wireless market today. it is a highly competitive market. firmstration of these two would substantially increase competition. we have found historically across markets, but particularly in wireless, it creates an incentive to inflate prices,

harms innovation and quality. not necessarily raise prices. leave prices higher than what a competitive marketplace would bear. that is the burden on these parties before they go before the justice department. that is why at this juncture, based upon a reading of the clayton act, we are against the merger of sprint and t-mobile 4-3. the history bears out why this is important issue for consumers. when the justice department was about to reject the at&t-t-mobile deal, we saw massive market adjustment as the parties withdrew their application and markets responded, led by t-mobile, but also by sprint. millions of people have changed carrier, sprint to t-mobile, at&t to t-mobile, all through

the system. it is not just the market shares, it is the vibrancy of the activity, as mr. legere described, wonderful aggressive petition. that is what we got. we got enormous innovation. we got rid of a lot of high-priced plans, two year commitment, connection of phone with the actual service plan -- all of that phone away, forced by direct competition between sprint and t-mobile and a for depression on -- and upward pressure on at&t and verizon. that is what we fear would be lost by this merger as well. with this kind of impact, 5g is important, but there are many ways to look at how to get to 5g. these companies themselves have invested heavily. they are the leaders so far. while i totally understand their

desire to combine assets, the question is whether that combination yields the investments they claim, the benefits they claim, or inflated prices for consumers. the law as proposed would lead to a presumption against benefit, a presumption that consumers would end up worse off. i am confident as the justice department looks at this, it is likely to find with all factors taken into account, there are otherways -- there are ways for these companies, and they will agree it is necessary to preserve four players. thank you for the opportunity to testify. my comments reflect my own opinion. i have no financial

relationships with the party, nor do i own their stocks. let me make a quick summary on competition and investment on this hearing. critics say the merger will reduce competition by reducing the number of firms. that theory only marks and products with identical markets and strategy. in the actual game of thrones, if you reduce the number of parties, you increase competition. who wins the throne is a function of competition. what matters in a competitive market is rivalry, not the number of phones. sure mobile operators would like to increase price. they thought they could double the price, but the opposite happened. prices declined 90%. network traffic has exploded 1000%. speed and quality has increased. that is the impact of a technological information -- mergers attempt to harness synergies by producing cost

redundancy across firms. sprint and t-mobile only offer wireless. their competitors offer broadband, television, and wireless. the larger firms can spread cost across many products. the pure plays can't. this 4-3 argument is rooted in a study of industrial organizations. today's ceo is a never in magenta -- is a maverick in magenta. we can see this strategy in challenges wasrt used against t-mobile in germany. the study of antitrust has been revolutionized by chicago, game theory, and behavioral economics. we have moved away from bright line rules because of too many fault positives. we focus on the imperial cult --

the empirical effects. mavericks by definition don't cooperate. there are high costs to collude. there is no guarantee that the market would not reduce the three networks and early -- networks anyway. it is a real risk to them if they are not required. some assert today we have this competitive market because doj rejected at&t's bid for t-mobile. they based their view on the assumption of two g and 3g network capacity. now we have a decade of data to prove otherwise. how about blockbuster and hollywood video, the horizontal merger, tonight by the 1950's mindset? -- denied by the 1950's mindset?

there are no video stores anymore and netflix could swallow at&t and sprint and create its own distribution channel. there is no penalty for antitrust authorities when they get it wrong. they get to keep their jobs. many jobs are lost as a result of their decisions. the idea that it leads to high prices is also wrong. to payes force consumers most of the cost. now that netflix is online, they send the bill to broadband providers, who get the cost whether or not the subscribed units looks. -- subscribe to netflix. mobile operators want to lower prices, but were blocked by regulators under pressure from so-called consumer advocates.

what was the response from the fcc? shut down the program consumers love. this regulatory discrimination cost our economy $4 billion a year. we could have closed the digital divide years ago had we prioritized the welfare of the poor of the profits of silicon valley. we won't get 5g if we have two-sided markets. tesla is a smart phone on wheels. they prepay the mobile data. the u.s. is less than 5% of the population and enjoys 5% of the world's network investment. that is the kind of spending that got us 4g. we have to keep it up with 5g, and we are already behind. china is about to eat our lunch in the internet economy. it is the world's largest mobile ad market buying downloads and revenue. alibaba and amazon make facebook

and google look tame. game of thrones was inspired by the war of roses in the 15th century england. what ultimately liberated those wretched serfs was free enterprise, and people being able to own property and monetize labor and inventions. the same power of free enterprise is exactly what is going on in this merger. its central planning disguised as consumer policy. the role of government is to protect freedom. consumers have never had it better than they do today, and that trend will only continue with this merger. >> thank you for inviting consumers union to participate in this hearing. hundreds of millions of

consumers rely on mobile phones to stay in touch with friends and family, get information they need, find goods and services, and get help in an emergency. mobile wireless is already highly concentrated, and yet consumers are benefiting from a fair amount of competition. the reason is sprint and t-mobile have been competing vigorously to jump out ahead of each other and consumers the best plan options at the best prices. they are each other's name competitors. what keeps them on their toes is not so much having to worry about what verizon and at&t will do next, it is about what each other will do. that is what consumers stand to lose with this merger. competition gives consumers the leverage of meaningful choice, the power to take their business elsewhere when they can get a better deal. it is a basic fact in antitrust the more concentrated a market gets, the less room for competition to work. the concentration levels here

and the changes in the numbers that would result in this merger are all in the red zone. sprint and t-mobile say those numbers don't tell the story, but we are not convinced. they say the merger will help them build and deploy the promising new 5g network, faster and farther -- maybe. independent technical experts will need to look at that. sprint and t-mobile don't need to combine forces to build a new 5g network. they both independently committed to building that network, with plans already underway. at most, the merger is a shortcut. just because a shortcut is good for their business plan does not mean it is good for consumers or the overall economy. even for consumers who might be eager for 5g, they don't need their own carrier to have 5g coverage everywhere in the country, they just want it where they live and maybe when they

travel. sprint and t-mobile may want it everywhere, understandably, but the whole premise of merger enforcement under the clean is -- clayton act is that it is better for consumers and the economy to compete with each other, not complying with each other. making companies stronger faster does not justify making the marketplace weaker. it is ultimately better for consumers to have sprint and t-mobile both racing to build 5g networks, and computing to offer deals on those networks they built. a few years ago we were in the same situation, but with a different pair of giant wireless carriers seeking to merge. the merger was denied, and a new network was built by each of the four carriers building their own. that is what we want to see again now, and also a few years

from now, when surely there will be a promising new network that needs to be deployed. the focus needs to be not on today's latest object, which will come and go, it needs to be on the enduring benefits of preserving meaningful competition. sprint and t-mobile say they need to be big like verizon and at&t to have an impact, but we don't see that. both have nationwide networks, and each of them, and has forced at&t and verizon to pay more attention to consumers and offer more affordable service. each has been a competitive spur to the other. that is where the benefits to consumers come from, not just from creating another big carrier. sprint and t-mobile also say this market is about to explode why open. -- wide open. with tech giants poised to upend

mobilephone service as we know it. here comes comcast and google -- maybe, we will see. we have heard those same confident predictions in every telecom merger pitch in at least the last 20 years. some of these predictions come to pass, rarely on the predicted schedule, and it is foolhardy to let go of the competition we have in finally, the stakes are start for the 50 million prepaid customers. many of them have trouble affording the cost of a regular monthly plan, and depend on the lower cost prepaid service. these customers by prepaid minutes from resellers, and it ultimately depends on the four carriers they prepared to sell it in the first place. the two carriers who are most willing, it turns out, are sprint and t-mobile.

they compete vigorously against each other now, but after the merger, that competition would evaporate. m, the advantages the advantages do not seem enough to overcome the harms to competition and consumers that we believe would result. >> thank you. we will now begin the seven minute question rounds with each member of the committee being able to ask questions. i will start. is it correct to say that the two largest carriers, at&t and verizon, together, occupy two thirds of the market? thank you for the question, senator. you bring up a good point.

at&t and verizon, after the culmination of this merger, the new t-mobile would be one half to one third the size of at&t and verizon, and 1/8 of the free cash flow of at&t. from a customer and economic standpoint, these behemoths are much bigger. >> but as of right now, they have about two thirds of the subscribers? >> more than two thirds. and t-mobile is currently in position three? recently advanced from four? numberntly from four to three. number five and number four came together, and ultimately we moved to three. in your testimony, notwithstanding the fact you have gone from four to three,

that you quote have not been able to make a dent in the two thirds market share. does that mean that t-mobile has been primarily taking market share away from sprint? actually, approximately 50% of the new paid customers come from at&t. now, wely basis, right had to customers a day to one that we sent to verizon to customers a day from at&t, and the ratio is much lower with sprint. dr., i would like to turn to next, if i could. according to the estimates next. , the new t-mobile would have almost as the twoapacity standalone companies would

combined? , i questionelman whether the merger would, in fact, be in savings pass along to consumers. moment thate for a the efficiencies are in fact reached. or that by combining t-mobile's assets with sprint, that it would result in a significant increase in the overall capacity , relative torms them remaining in the marketplace. how would that affect the merged firms incentives? words, assuming that capacity assumption holds and is , what would make it more

likely they would compete aggressively and cut prices rather than take advantage of their market share and raise them? last five years, we have seen prices fall by 20%. i think it is extremely difficult to raise prices in this market. especially when competitors are able to offer a bundled solution. so i am very skeptical they would be able to raise prices. far as they have come, and decide to throw at this working strategy. in terms of incentives, they have a high incentive to steal market share. would say isng i the kind of investment they want to do, they would have to expand the products they offer.

not just in the consumer market, but in the wholesale market. they do an amazing business with wholesale customers, and i think that will explode. particularly when you look at the services. i referenced tesla, because when we look at devices, we are moving into every device. assume we would have broadband on the phone is an outdated idea. we will get our broadband in a variety of ways. teddy might be able to expand on that. thank you, how do you respond? the supposition that you are asking us to accept is that one plus one is three. you do not accept the initial premise of increased capacity? >> that is it.

that the two combined will find synergies and capabilities that overwhelm what they could do separately. them, that new capability will come from the combination that was not there before. what i think you want to look at is the alternative. at the twooking companies as they are, but what they could be, if the merger was and they go forward with their plans to each build their own networks and seek investments to enable them and in the rich their capacities. what we want to do is have as many in the mix as we can. >> i get that. it is not necessarily be

governments job to decide which strategy they would take, but we do have a role in deciding what to do when two companies want to merge. >> can i ask something? the physics involved are that one plus one equals six. this is something we understand in detail. what happens is when you put these networks together, you have three characteristics. one is a much denser site network. a hundred 10,000 sites on the network, and would choose 75. 84,000 macro sites. spectrum per site goes up dramatically. thethe third component is efficiency of 5g versus previous services. the physics are, one plus one actually is closer to six what we will have seven times the capacity of what

t-mobile and sprint have today and three times the 5g capacity the separate companies have, in double the overall lt. the physics prove out the fact that supply will be up dramatically. unit cost per gigabyte of data will go down approximately 55%. senator, can i just take on your challenge and except for a moment they have the synergies. they are profit maximizing firm. the physics are different, but they are not new look at what happened. merged,int and nextel they said they would be all these efficiencies. not all of this has to go into one pockets. they can build up their networks , they can shift pricing, offer plans. if they do not face competition from each other, what we have

learned historically, as we have with airlines, you offer see fee increases, new charges. you see parallel behavior. that is the danger here. i am going to follow through. you are willing to accept your the premise. >> i am willing to accept that could be true. but there still are a lot of problems that needed to be looked at in terms of corporate and profit maximizing incentives. >> if we accept the assumption that, as he would put it, one plus one equals six, and we would have this exponential expansion in capacity. you are still saying that would not translate to lower prices.

but that almost requires us to assume they would be content with idle capacity. rather than stretching the offerings of their capacity so they could get more customers, which would in turn required price of addition. what was described as a potpourri. 5g,e are combinations of there are cowards that they can gain efficiency. ,ut they have long-term leases they cannot make the cost to go away. there are a variety of factors of how you take any synergies you get, any efficiencies, and apply them you can apply them to investment, to shareholders, to a number of business strategy. without them biting at each other with low-cost plans and , they have

incentives also to price after the leaders. later. follow up on that there are only four significant wireless carriers left, we have talked about this. this transaction would reduce it to three. much of the competition, to your credit, has previously been driven by t-mobile and sprint. the two country -- companies have introduced no contracts as well as low price options, forcing verizon and at&t to do the same. a combined t-mobile sprint would have a customer base of 127 million people. making it the second largest of the three potential carriers. why would a combined t-mobile sprint continue to compete as aggressively with fewer

competitors? is of the things i would like to put forward is that i strongly believe this is moving from two to three. viable creating a competitor who can compete with at&t and verizon, who have shown historically that they only respond when forced to respond. we should not be punished for andaggressive competition stopping from having the ability to create a weapon that can take this innovation to the next level. , 5glast thing i would say in this country is lagging. the investments we would make would be driven mostly from the synergies we obtain. will force a tnt and verizon to respond in the innovation and spent, ray the

country to a position that is very necessary. maybe, before you answer, i was get more specific. even with the recent improvements for company has made to its network, it remains very aggressive on price. example, reports indicate you have recently offered an unlimited plan for $60 from a, compared to a hundred $60 for a similar plan in t-mobile. offered ao reportedly competitive data promotion, less expensive than t-mobile. if t-mobile does not see the need to match sprints lower pricing at this moment, why should we expect them to if the merger is approved? one item i was smith is that the average revenue per user in sprint is much higher than t-mobile.

and we was certainly honor all of the pricing commitment the sprint customers have. tremendoustually be savings for all sprint customers, in addition to a tremendous increase in coverage and service. >> so that is a commitments? commit to having lower prices? the new t-mobile has said that they will be honoring those prices. one of the things i like to point out for a historical purpose is that i have been ceo for six years. there is a track record here. we purchased metro pcs, i heard all the stories about what will happen to that rent. -- brand. that overt to say five years, twice as many customers, five times locations three times the employees, and pricing for metro pcs has gone

down between 17 and 25%, while whatndously increasing they use for data to actually be more than an average t-mobile customer. our track record of putting networks together, we have put this network together in two years, as opposed to three committed. and we have 40% more synergies than estimated. so our track record is pretty good. >> without an independent sprint, couldn't a new company set prices just below and still maintain or grow its customer base? this is a highly competitive market, where in order for us to gain market share with this network, we are going to have to lower prices to fill the capacity. that is crucial to this merger. a couple of important points.

imagine if you have a factory and are able to produce something for a six or eight of the cost. he will comes in, and have to reduce your prices. thehave got to think of combined company having six times the capacity at a cost of 16. --1/6 therefore, comon sense tells us we will lower prices. what will customers do to get a lower price? is the best way we found to move them is by providing amazing products and services and producing price. that is the magic formula. secondly, looking at sprint as whole, i want to make this clear. it is a different type of 5g network. it will be in large cities, and

we are going to have to invest $25 billion. to invest, we will most likely have to raise prices, i've been clear about the. -- that. >> thank you. my understanding is that to deploy the 5g, the fcc will have to make additional spectrum available. need aany operator, they combination of low to high band. in the u.s., we have made progress on low and high, and need to make immediate progress on enabling enough minivan operations. kimmelman, you talked

about the issue of the prepaid wireless. maybe want to respond to what the ceo has said. and in addition, how you see the combination of sprint, boost, mobile. if you could just talk a little bit in response to what you have heard. certainy. nobody, certainly not high, want to punish you for your great success. i did not suggest emerging sprint, you did. i does what law enforcement to enforce the law. is say it is a market that 2-3, but also 7-8/ . one says it is highly

competitive, the other says it is competitively broken. which isn't? there is a problem here in the presentation of what is going on. i have no doubt of the intentions and willingness to make commitments and promises. difficult. market is and these companies, in thier efforts, have done yeoman's to overcome and allow marginalized households. it is a wonderful benefits. the question will be, going from , will one company preserve those prices and options? if they are moving to a 5g network, there could be tremendous efficiencies.

but there also are dangerous with all of the costs associated with getting from here to there. you have noted they asked for a five-year. to review. that is a long time to look. but there are enormous costs in the interim. when we want to fly, we don't all want to fly the concorde supersonic. some people just want in airplane. 5g is great, it will be wonderful. everybody is going for it trying to do it. but mixing and matching the kind of spectrum and networks we have made -- maybe for options is better than three. >> thank you. you.t's go back to

both ceos have argued passionately and articulately that the benefits they claim are themselves uncertain, or sufficiently uncertain. so that we cannot assume that there won't be competitive harm. we know we will be, in a sense, eliminating a competitor. and that the elimination of a competitor and risks associated to that can be offset by the possibility of the procompetitive impact. there has been a long talk about this. i have heard a lot of ratios discussed. some have said it is a 4-3 transition, a 2-30, and 8-7 transition. we could have a whole lot of fun just with that.

little bit to a something you said in your written testimony. which is your point is that it is not just the number of competitors as it should be about the empirical evidence of what is going to happen. what empirical evidence can you point to to suggest that the merged firm will actually be a stronger competitor to the two.a -- the big >> thanks for that question. thevite everybody to see 2018 version of the antitrust textbook. the key take away is that we have relied so much on this andiction about the future have not looked at the actual evidence.

part of the reason is to be fair to regulators, it is difficult. -- tools are quite what blunt, the numbers in precise. challenging,t is they lump all kinds of prices in the same thing. what we are talking about here is a sticker price. it is very often what the consumer does not pay. quite frequently, a sprint customer would be on board into t-mobile and would maintain the existing price. actual figure prices there would not be what they would pay. that you have to add in subsidies for phones and other services. it is difficult to look at those things. that is why it is important that we look back. the other thing i would say is that we have law enforcement coming out of our ears.

we have all kinds of ways to address serious concerns. of the the advantage u.s. approach, we do not have a precautionary principle for everything. we give parties the benefit of the doubt and allow them to try. that is the essence of our innovative economy. you are allowed to fail, allowed to try. you can intervene if there is competitive harm. huge assumption on using the models from the old , where theetwork same kinds of products and services. and here, it is significant when you talk about prepaid. you have satellite companies and six wireless solutions. i understand that makes it difficult from a numbers perspective, but that is why we

need to resist falling back to this rule of thumb. we have to challenge ourselves to be able to say let's review the data. are final backstop, there the existing antitrust enforcement to intervene >> you build some technological expertise to this that most of us are not familiar with. well, i should only speak for myself. in your written testimony, you that thecated development of 5g is going to require sufficient access to certain spectrum. specifically, you are referred bands that you say will be essential. is that a fair characterization?

>> yes, it is. my understanding is that the parties sent to build out their network, relying on t-mobile's 600 megahertz spectrum and sprint's 2.5 gigahertz spectrum. does this mean that even this combination of spectrum will be adequate in terms of giving adequate access to these capabilities? >> i cannot speak to the but i willf the data say that no band spectrum is low. generally like millimeter based. to answer your question, for any operation to succeed, it needs a

commendation of spectrum at the low end, the big band, and the high band. you need all three. >> do you want to respond to that point and tell me how you are able to succeed? would your combination of spectrum provide adequate access to 5g? senator.you, in my opening statement, i said the stars are aligned. we have t-mobile's low-end spectrum. spectrum, and today, this is what you need to get started and to reach worldwide leadership. there have been so my articles published about the value of the spectrum. it will allow us to build the

world's best 5g network. future, i soon t-mobile will buy an additional millimeter wave. we are very lucky to have them available that is ready to be used. you.ry good, thank testimony thatur there has been wireless consolidation, but you say prices have gone down. you suggesting that consolidation of wireless leads to lower prices? what i want to give you is an example that i think is helpful. earlier in the century, rumor europe decided on a gsm standard. at the time, the united states had an inferior network.

it turns out, the cool phones were being made for 3g and would not work on the american networks. it did not matter if there were hundreds of those networks if nobody wants to buy the phone. pretty fast, verizon had to realize we need to get together, so they launched 4g. and the other operators got on the bandwagon. single i am talking about that the number of players do not matter, it is a technological change. if you are the horse set by the company, it does not matter how many horse and buggies, because you're going to drive a car. that is the nature of these markets network is like a carton of milk. it will expire if it is not renewed. sprintt to t-mobile and to sit around and do their own thing, at&t and verizon have a

quantum leap advance. verizon's network is a clean 4g network. they have a long way to go to catch up. and they have to combine their assets to do it. >> do you want to respond? i think that the combining of their assets might be a convenient shortcut. and might enable them to more quickly go for being overtaken. i do not think that is important for consumers. what consumers want is the most leverage that they can get through effective choice. sprint and t-mobile have both shown that they are fully capable of giving that impetus to this choices to consumers, and driving the big ones to

respond. as jeanas jean was saying a min, the change in the structure of the market, the results of the merger will take to the incentives. be a different dynamic when they do not have anybody nipping at their heels and are just looking ahead at the big guys. they will still be competing, but not in the same way, and consumers will lose choice. >> can i interject? just a few things. i want to be clear. i have been in this industry for 38 years, a ceo for close to 20. this consolidation will lead to lower prices. from a standpoint of consumer thatre, amongst the things this network will allow us to do is compete in in-home broadband.

66% of the united states will be covered with more than 100 megabits of service by 2021, 90% by 2024. it means that people can avoid and $80 fee by using an in-home solution. we expect to sell close to 10 million homes with the service. we expect prices to not only go down, but supply to go way up. we are arguing for the same things. i'm very comfortable with the prove it approach. prices go down, capacity goes up, and it is very good. >> i know you want to answer that, why don't you answer it quickly and then i have my billion-dollar question. i certainly hope each company will try to go into in-home broadband. i just want to point out that the biggest problem we have from agencye heard

entity was they could not get the programming to compete for the video product. there are a number of obstacles, and we know what the solution was, by time warner. i have this solution would be to buy cbs. but there are other solutions to offering that competition. in 2014, when t-mobile and sprint last considered emerging and try to merge in 2011, they made arguments similar to what we are hearing. that merging was necessary to allow them to improve their networks. the justices department and ftc were unconvinced. other than the administration, what else has changed? more.s, rather than improving,ogy he's and they are absolutely right that they have a vision of what

could be extremely attractive. the key question is what is the alternative without this. orthere a way to get much all of this with four rather than three. >> what you are saying is that would be even less of an argument? no, i am saying less has changed in that time. rather than more. the fundamental structure is the same. the fundamental increasing concentration is more similar. and they have shown signs of being able to compete. not exactly the way they would have shownt they tremendous signs of being able to compete against each other. >> and what do you make of this statement, that before it was announced, both companies said they would roll out 5g independent.

what do you make of the statements, why wouldn't we assume they would introduce 5g even without the merger? >> i think they are committed. i applaud them, they happen leaders. key point of this environment is that it is not just the status quo of t-mobile and sprint as they are today. for otherlook partnerships, other ways to grow their networks, if they are not allowed to combine. from a consumer perspective, there could be a lot of benefits to different arrangements in the market of four, rather than three. >> can i use a visual? that charge is sprint's standalone network. you can see it is quite more white than yellow. that is the 5g network sprint will create on their own. on the left is a combination of

what we can do with the two networks coming together. amongst the things that have changed since becoming ceo, one small factor, but there was no deal. just as people were sending out very clear signs. that is what i'm trying to figure out. both of us have stayed in touch and as we see 5g coming in, we saw what we can do together that we cannot do separately. the impetus for this transaction and the 40 billion we can spend. the other thing that has changed is that at&t and verizon have maintained the status quo. we have been able to take some competition to them, but not the way we can compete to get the significant increase.

they continue to stick with the minimum of what they are forced to do. the sec chair set for providers are good for american consumers. the doj said it is going to be hard for someone to make the case that reducing firms will reduce competition -- increased competition. >> what has changed is that 5g is upon us. if the u.s. launches 5g, there are other countries that will launch its like china. we often forget that most of the world's most viable companies today were born because the u.s. built an amazing 40 network that led to the innovation of companies. luber, and b&b, apple. think about what happens if china goes ahead and leave the world and 5g. innovation moves to china.

the thing i guarantee is that the only company that can build a true 5g nation network is become a nation of t-mobile and sprint. today, t-mobile has broad coverage, but that capacity. today, we have capacity but no coverage. of 5g, now it makes sense to combine these two companies. from 5g revolutionizing the way we do things, it allows us to massively reduced the cost per gigabyte. i repeat the point that we will have so much capacity and the only way we win is with more consumers, with lower prices. this is what makes this merger different. may 2 years ago was not right, to the us now is not rights. that is why we are committed. senator. >> thank you, chairman.

i want to talk about jobs. there is some deep disagreements about this issue. in the public interest --tements filed with the sec fcc, you said the merger would create jobs. the statement said you would employees thane the two standalone companies. the communication workers of america said in a statement this morning, to the contrary, job losses will be in the thousands. you claim job creation is actually conservative.

but, they were focused in the prepaid, not the postpaid market . so the analogy seems strained. given that each company has plans to create its own 5g network. i would like to know how you can know that these new jobs are merger specific. jobisn't it true that your numbers are based on assumptions a very robust company growth. >> thank you. just one clarification, t-mobile at approximately 27,000 jobs last year. the predominant jobs were in the retail expansion. our track record on metro pcs is it hashree-time jobs been equal across.

my statement holds. new t-mobile but at thousands of 11,000 60g out to jobs in 2024. those are full-time equivalents. if you look at full and part-time, we live close to 10,000 what the police failed to -- we will be adding approximately 7700 care positions in. -- period. jobs?these are new can you commit they will be provided? >>yes. >> will any just be lost?

will be a rationalization in the next few years. increases in care, broadband, world repair. then you have a door rationalization, mostly faceup saving. -- a stock saving. >> how many jobs will be rationalized? over the entire. of the retail rationalization will be approximately 3200 jobs and about 8000 indirect jobs.

in that same time. , there will be about 10,000 jobs created, and approximately 12,000 jobs in rural america. specifically -- >> let me, and i apologize for interrupting, but our time is limited. let me give you an example of why i have missed concerns -- concerns. in connecticut, there is both a metro pc and a boost mobile store. they are on the same street, within walking distance of each other. thatou really commit to me both of these stores are going to remain open at full present capacity? the same network? what about other duplicates? >> thank you, senator.

a couple things. we have not suggested any change, per se, in the use of the metro pcs boost. they serve very different purposes. so far, we see that being a less likely rationalization than if they were a sprint or t-mobile store. , if two sourceg were directly related, you may close one, but the staffing in the other store would be a function of foot traffic, gross adds, and your aspirations? so you can commit to me that the numbers of employees in connecticut will increase? >> i have not looked, but i will. >> i appreciated. -- it. overall, in those situations, i

location even if none is closed, in effect, those positions would be moved to the other store so there is no net loss. total jobss filing, will go up. retail, in aggregate will go down, and many rural jobs created. there will be a decrease in retail over the planning period. >> can you give me the number? full-time and part-time, including distributors, approximately 8000 to 2024. >> my time has expired but i

have additional questions. thank you, very much. >> you will. you have walked back from some statements you had previously made, as recently as february. statements that discounted the competitiveness of other companies. these competitors, as i basically resell wireless services they have purchased. correct? believe you are talking about small players like comcast and charter.

but yes. i can explain my statement is that would be helpful. >> my did not mean to suggest but were small companies, people who are not themselves providers of wireless services, but are purchasing them and reselling them. >> yes. if i could, i'm glad you brought this up. in the constant discussion, and i think you frame it well, i have gone with it being a two to three as a way of explaining it. but there are many other players coming in. comcast and charter have signed a partnership. lastst has entered, in the five quarters, more customers than at&t and verizon combined. charter is launching this quarter. dish has committed to $10 billion worth of spending. google is in the business. bno, asast uses and and

those rile -- verizon and charter. my statements were and still are that they are not competing to the level that they should. and when itg entry, came, it was price above market and cream skimming to their customer base. analysts have said that as many as 5 million could go to comcast and charter over the next two years. and that each of them have a present value of about $20 billion. >> in that sense, they are not competitors? >> they are very viable. >> what has changed? since as recently as february when you made those statements. t-mobile continues to lead

the acquisition of new customers. addedaid, comcast has 570,000 postpaid networks. they are becoming a viable player. the last couple things, the players in cable, they are not just ndn owes. they have significant wi-fi networks they can offload to. also, comcast has paid very heavily in the low band spectrum options. also, they are heavily into home broadband, as you know, a business we are trying to compete with. a key claim these companies have made is that the transaction, as we have , that the emerging companies will expand the company tothe merged

expand capacity. that capacity would then translate into increased incentives and an ability to be competitive. similar claims were made with respect to the proposed at&t merger. the failed attempt 2011. sprint opposed that merger. and it did so by arguing against these very same efficiency i recall, sprint argued that those efficiency claims translating to reduce prices were overstated. alternative,he similar efficiencies and competitiveness could still be achieved, even absent the merger. what is different here about this proposed merger?

now that sprint is the partner? thank you, senator. completely the opposite. back then, you have the dominant jobs, training -- trying to gobble up t-mobile. the thing to government did, they stopped on merger. because of that that's what they use to build a 4g network. it was the right thing to do. >> here you are merging competitive number three to create number three or so can be number three. and there's one thing we don't talk enough about the total net incomeme of at&t and verizon

they had 90% that this profit gets. back then you would struggle that. you'd see the two to three number. you will create a strong number three. you would've made at&t and or miss. we were open to eight-seven and zero-one as well. >> you noted that prices have been falling prices for

wireless services have been falling we have seen significant consolidation in the wireless industry. shrinking to essentially for carriers.. if that consolidation bringing that major characters down to four. could this consolidation have the same effect.ha i think the picture is a little more complicated. with the most enormous price reductions when we had eight and seven.t

there was a stagnation for a while. pressured at&t and t-mobile to back away from their deal. there had been periods of even greater price declines. there is no magic number here. this is about market structure and dynamics in the market with the technology at that time and the networks as they appear i'm not saying that you couldn't get price reductions with three everything i've seen though would suggest that we are more likely be able to get better information and prices if this were rejected i'm sure sprint would be looking for other partners in other ways to draw the capital

they need with t-mobile. it's not about the total number of competitors as much as it is about the data suggesting what's can happen. the data i have seen from europe is that you get a much better results with four result with four thanh three. the justice department should look at all of that data and there's anything there doing it should be updated. we have estates with significant rural areas. particularly in areas where sprint and t-mobile are currently competing with each other and maybe will say this will say this is not a huge area. but for those rural customers is a big deal.

14million of them have less than ten megabits of service. the rural america doesn't have carrier competition. ninety-six rural america. it will be covered by wireless. an 84% who 25 megabits. jobs will go up and prices will go down. we had been told that the combined company would have that. where will this money come from.

that's roughly three times what the spending have been for t-mobile. you have the combined company. synergies of approximately 43 billion dollars.om mostly from site decommissioning. those synergies are a major source of what we will be using to invest the $40 billion. will they result in lost jobs then. when i make that statement lets more jobs than the standalone plans up two very aggressive standalone plans.

i would have a larger subscriber base over which to spread the cost. at&t and verizon are very big. they seem to have face the same challenges. it would yield a different result. we will have one more big giant. why would you have any more luck in doing this. we were successful as it

t-mobile as acquiring that. a previously only at&t and verizon head in many rural areas and places there is only one or both of them and as we come to these rural areas and put in new stores to sell our capacity. we are met with tremendous, fanfare not just from the communities from at&t and verizon. as we said economists have shown in our modeling. overall industry supply will go up hundred 20%. the whole industry well had tremendous w supply. it is the biggest beneficiary of every part of our plan. >> could at the same argument be used to say that we should

combine at&t with one of you. they have shownt consistently as a lack of desire to compete. that's what you have brought to the table. the biggest point in this merger in addition to 5g are supercharging. one of the biggest things that has created the on carrier as we take forward. as a total transformation of what you get when you're in a wireless business.wh it's not just like for like.

i would suggest that we would cause as much as $20 billion of incremental investment by getting this jump and forcing at&t and verizon one last point. when we we talked about 5g across all spectrum bands. the cost of them is a site that every thousand square yards at a cost that would be $1.5 trillion. they clearly had only started to deploy that.

i think they're upping their investment as we speak.. they're absolutely right on the fundamentals here. it has taken a lot of kicking to get the dominant carriers to serve. i do say here. with all the data that's been presented before you. the question will still be as a motivation there to spend all of that for these purposes in this timeframe. this is not the kind of thing that the justice department would usually want to get on the middle of. i do believe this is what the fcc has historically looked at. do these kind of commitments happen to be really solidified.

not usually what the justice department wants to engage in. i think whether that incentive to build out into the rural areas will be sustained at the same levelam when there is just one company that is pushing it rather than to companies that are worrying about who's going to push it first and harder. in the prepaid market. millions of lower income companies rely on those plans. this is a primary connection.

senator, to the extent that they view as a separate market which would be an open question but certainly always gets scrutiny. more than 40% of the prepaid market. this one will be. for justice to determine. t there are very few players. i think there is potential dangers. they really can't afford to pay'to for the smart phone and the bigger package of service. this is something on the straight market economics justice would have a hard time with allowing j that is a great

deal compared to 80 or $90. if he goes to 40 or 50 or 55 that's a big hit. response from either of you. today is one of the same. one spot at the beginning of the month. and what we been able to bring it to prepay his beer to do them with the same benefits. to the 40% when you're combining what the effect will be. that we will be able to keep those prices. the combined market share is

27 percent. when you look at it 37. in our plan is to continue to drive that down. as a senatorial one to 3%. you said a couple of times it will become the second-largest carrier. we will still be the third carrier. when it moving to number two. this conversation publicly has been advanced by an individual who is not even disguising that fact. i know somebody that will buy it.

interestingly one of the biggest beneficiaries. so far.. as one of the points about the competitive nature.. when i hear this if you look at our plans we plan on and we have made prepaid so similar to postpaid that it's almost a difference if you play -- pan the first or last of the month. oth our prepaid customers use more data than our overall customer base.

i think there is tremendous competition there as well. when the chairman search looking at his watch i might take the message but i will not continue to ask more percentage question. i wasn't trying to send you at the signal the signal that it was time. were just getting started. let's go back to you. you've heard from some critics who well express some legitimate concerns with this deal. if the merger moves forward. t-mobile and even you personally might use the sort of maverick quality that has come to define you and your company.

some had suggested there might even be a coronation between the merged company and another large player like at&t for example. what would be the impact on the on carrier brand if you were to do this. if your customers were to see that you are becoming less competitiveme i appreciate that. anybody that suggests their coordination between me and at&t and verizon. forget the fact that they would not speak to me if we were in a crowded room together. it's possiblyno in the brand associated with that. in industry right now t-mobile

is by far the carrier most a likely to be switched and it's because of the commitment that we've made it to continue to change to not stopping to drive the innovation into take the fight to the big players that cause that change. for us to behave any differently and be the complete annihilation of our brand and put us in the pack ane. everybody else. our goal is to clearly is this competition and forced them to force the industry to change in our goal is overtime to not be number three but to be number one and do it through competing and lower prices.ri is it true that we can in had real time transportation services. [spanish].

it was actually quite impressive. they both had suggested that the u.s. companies are in a race to get to 5g. is there any sense in which the race is not just among and between u.s. carriers among and between different countries. if you look at 5g it is twirly the world's first global 5g standard. a new set of industries that did not exist before. the reason i've been making such a push onom some of the spectrum issues is that operators can't build networks.

the rest of the world including europe and china they had cleared a lot more spectrum than the u.s. has. every operator has to have that. is something for you to consider. earlier i said 5g's about connecting everyone and everything. the operators start employing -- deploying these. it was more consumer driven. it will likely happen by companies that take advantage of those industries. the virtual translation was very important. not just the hundred times

capacity and speed. the thing that you talk about. it's about 25 milliseconds. that's where the latency as such. when you get to single digit milliseconds. it's one of the most critical things.al it's also why 5gfr as to be nationwide. you can just go from a millimeter wave coveragee and then drive out and lose your application. thank you for that point. in his testimony to a degree in response to question.

he has brought up some points about international comparisons. that he saysup confirm the benefits as opposed to it three carrier competitive environment. he points to austria as an example. consolidation increasess the price that consumers were pain.g. have he responded that and is it consistent with your understanding of impact that consolidation has had on wireless carriers in europe. see mike i live in copenhagen. i'll be happy to supply information to the senate following this. it's interesting because we head for 43.

this is the way of the world. there are some places where there are holdouts for political reasons. i have the report from economist looking at austria four-three. the global downward trend for prices they cannot prove either way in fact. as part of the challenge of the data. what i find interesting though. with the attempt four-three. prices actually went up for the first time in almost 20 years because only one of the carriers was profitable they wanted to invest in it.en this is very embarrassing for the european commission and what i would say is the data is across europe. in and the prices are going down. in this.

hearing we talked a lot about this.in when we look at what people pay for connectivity as a very small part of your total income. we get a tremendous value for what we get. i live a broad and i want to sometimes go to a hearing ido do it remotely. i'm pain such a low price for broadband. but the value i get is tremendously high. i think the other side we need to consider is really concerned about low prices. i know it makes people they will have a heart attack but it actually works in other countries it'sfo called free basics. people who are truly poor. the operators could be able to provide a set of free data.

we would understand that there is a basic set of internet services that we need to connect to. it could be job information. educational information.na and sure that that universal service basket was always there. and then allow those of us who are willing to pay more we know the health care providers in particular would be willing to subsidize this because they would pay the mobile subscription out right. the money they save to prevent a heart attack is worth the entire consequence of that outlay.ne we have not allowed the other part of the market to participate. that's what i think one of the biggest opportunities we had is to allow all of the new services who want to come forward and are wanting to get customers to adopt them. they want to get on the monitoring service.on

that is another one. i would bring those folks in. if you remember in the house there was a gentleman on the paidid prioritization. he was using his remote center in san diego was been able to tell him. what's been able to go on and hearing. by using the various strategies. the cars are coming. you can get on the bus. people with disabilities can actually live a fully normal life. like a person who doesn't.. i hope that answers your question. it's very helpful. each of ourank witnesses today. each one of you has brought something very valuable to this hearing.. it's no coincidence that this is been one of the longest once. he calls it an opportunity for epic hearing of the issue.

i do think what this really means to real people who have's budgets. and then you add cell phone cost is we wantve to have competitive marketplace. that's why we had raised these concerns about this. and now we will forward these concerns and if there any other ones please let us know. the poor and middle-class. and the subcommittee has received multiple letters and ipads that have been cemented submitted for the record materials from the international center for law and economics. i moved to have these added to the record. without objectives andec it will remain open for two weeks and the hearing is adjourned. thank you.

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[inaudible conversations] coming up friday on the c-span network. they review the recent supreme court term. john roberts will speak at the judicial conference of the fourth circuit. at 9:00 a.m. a discussion about recently imposed steel and aluminum terrace. i discussion about the legal challenges facing immigrants. best-selling author brad thorpe will be live on sunday noon eastern. his latest book will be