the state department releases its annual human trafficking report. veterans affairs secretary nominee robert wilkie testifying at his senate confirmation hearing. executives from t-mobile and sprint testify that a senate hearing looking into the proposed merger. it would form the country's second largest wireless carrier. they talked about how the deal would affect that of element of 5g technology. the merger is awaiting approval from the justice department and federal communications commission. this a senate judiciary subcommittee hearing is two

hours and 20 minutes. welcome to this hearing on this subcommittee on antitrust competition policy and consumer rights. before we start, i want to thank our ranking member and for her staff and their outstanding assistance in preparation for this hearing. i want to thank the chairman of the full judiciary committee

for his support for this hearing. after senator clover shire and i each have an opportunity to give opening remarks, we will hear from our panel of witnesses. we will be hearing from each one of you. i will introduce each one of you briefly before that happens. 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. they came along 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. 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 pocket

or even fits on your wrist. 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. according to the cellular telecommunications and internet association, wireless subscriber connections have grown from around 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. house holds are now wireless only meaning that they rely exclusively on their cell phones for a telephone connection, having abandoned the own -- the old landline. that reminds me of the fact that a few years ago, my son james once came up with an

autosuggestion. he said because people lose phones, someone should invent a telephone, one that is connected with a wire to the wall. he was a dead serious. the volume of wireless data being transmitted has also expanded exponentially. according to ctia, before 2014, the amount of wireless data traffic grew from four terabits to almost 14 terabits per year. that is an increase of almost 240% in two years. with the number of connected devices of all kinds expected to exceed $30 billion by 2023, wireless traffic will continue to grow significantly, substantially at a breathtaking rate. 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 healthcare to commerce just to name a very few. thanks to wireless technology, you can now check your email and stream music or by 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 their productivity by wirelessly tracking inventory, managing fleets of vehicles, or efficiently connecting with employees in the field. competition among wireless service providers has helped to increase the availability of such services both geographically and also 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, have a strong interest in ensuring that competition continues to deliver such benefits to them and to 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 two companies have sought to combine for a number of years. most recently, last fall. earlier merger discussions in 2014 were ended after the obama

administration signaled that such a deal would face strong opposition. in april of this year, 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. the nation's antitrust laws for bid combinations of firms that may substantially lessen competition. 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 deficiencies which could enhance the merged firms ability to compete and also its incentive to compete.

our purpose today is to hear from the merging parties and from our panel of distinguished efforts to ask questions about what they believe to be the primary issues the public should be thinking about when considering a 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. opponents of the deal point to t-mobile as an aggressive competitor and one that has sought to gain market share with its under carrier marketing strategy. their fear is that the transaction will reduce the incentives of the merge 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 the merged parties prepaid brands. consumers purchase prepaid services up front 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 subscriptions used by more americans. opponents of the transaction claim that competition laws 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 that the merger will supercharge their efforts to disrupt the wireless

marketplace. they claim that by putting t- mobile's on carrier 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 will have to pay. in particular, the parties argue that by combining their network assets, that includes spectrum holdings and cell sites , 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 in the long-term. parties also claim the transaction will accelerate the adoption of 5g wireless technology. the telecom industry expects that the move to 5g is the latest generation of wireless technology and will deliver data at greater speed with lower latency and will also deliver the ability to connect

many more devices at the same time. t-mobile and sprint argue that the 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 that the hearing we are holding 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. >> thank you mr. chairman. i will note the chairman was demoting the fact that justice kennedy did not wait until after our hearing to make this announcement but we are pleased to see so many people here. i would note that we hope the president will find someone who is someone who carries on the tradition of being someone who makes decisions based on law and someone who makes decisions based on precedent. we will await this announcement but when you look at this merger in front of us and when you look at all of the decisions that were made in the 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. there are many customers of these companies so this matters. more than three quarters of american adults now own smart phones. they are so common that many of us take for granted that we are essentially walking around with little supercomputers in our pockets. these increasingly sophisticated devices would not be near as useful if they were not connected to the powerful wireless network that crisscrosses our country. it is these wireless networks that led -- led us to extraordinary things. we can share pictures, order rides, watch movies, read the news and reach the entire world.

as these wireless networks have become more powerful and as 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. you think about the last time your phone was missing? that is what it would be like if we did not have them. millions of americans, particularly low income americans, depend on wireless networks for their primary connection to the internet. according to the pew research center, 20% of americans rely exclusively on their smart phone 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. in this is the only way that they get their internet access. it is essential that 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. we need consumer choice and 5g. 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 came to the senate, i was a prosecutor for eight years. before that, i was in the private sector for 13 years. starting as a brand-new lawyer, one of my 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 which was determined to disrupt the industry by competing with local monopoly carriers. it was exciting to be representing a company like that. there scrappy lawyers viewed

themselves as cowboys of sorts, fighting for consumers and lower prices. i still remember at one of my first regulatory hearings, i made the comparison between the stories of the first words of alexander graham bell when the first telephone worked. he said come here, watson, i need you. in the fast-moving world of mci, when they first got there first connection to work between st. louis and chicago, one of their benefactors memorialized the great moment and said i'll be damned, it actually worked. without antitrust law, mci would never have worked. mci took on bell operating company and then at&t and ultimately helped rake up a monopoly. this breakup lowered long- distance prices and also spawned this incredibly competitive cellular arena. what we saw then in the long- distance market was a bit of a precursor to what we have seen now in the cell phone market. today, we are in the cusp of a

new revolution in wireless telcom and just as in the long- distance market, antitrust law is rent 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. 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. despite at&t's arguments, the four remaining carriers have all introduced a 4g service throughout most of the country. as sprint and t-mobile have

been discussing mergers, the parent company explore the possibility with the justice department. i was told that the deal will face opposition of both agencies so the proposal was dropped. the idea for the deal as we know did not go away. it came up again last year and again, the former doj officials published an opinion piece warning the public about the potential anticompetitive effects of the merger. i wrote a letter to the doj and the fcc before there was even a signed deal with a group of other senators raising concern 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 editors is not very many given all of the public use of cell phones.

over the last few years, we have still seen vigorous competition because of the companies before us today. most of this 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. they have offered innovative plans and they have certainly offered innovative outfits. first we need to ask, will a combined t-mobile and sprint need to compete as hard? will the competitive energy remain with the lowest cost provider is gone and the merged company is similar in scale to verizon and at&t? how would that merger affect prices and service for consumers who rely on lower cost be paid plans in rural areas? what will be the proposed merger's affect on innovation? those are the things i think we

need to consider. i realize there could be some potential benefits. we have heard about this with 5g but merging parties and the investment community often promise millions, sometimes billions of dollars. 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. i am glad that we are having this hearing and we will hear from the witnesses today. thank you. >> thank you, senator. we will now turn to our witnesses and i will be introducing each of them. let's start to my left and then moved to the right. we will have you speak in the order as well. i will introduce all of you together first.

john leger is the chief executive officer of t-mobile u.s. it is a position he has held since september 2012. he keeps the theme consistent with making sure it is a payroll reveal. as you have experienced working in the telecommunications industry, what has been your experience? >> from 2001 to 2011, he held previous positions with dell and at&t. he has a bachelors degree in business administration from the university of massachusetts, a master of science degree from mit, a master of business administration degree. marcello clarion is the executive chairman of the board of the sprint corporation. he also serves as the chief operating officer of southbank. southbank group is a japanese multinational conglomerate that

owns a majority stake in a sprint. in 1997, mr. clariion bounded brightstar corporation as a small distributor of mobile devices. 20 years later, brightstar which is now majority-owned by soft nick has annual revenues in excess of $12 billion. an immigrant to the united states from bolivia, he earned a bachelors of science degree in economics and finance from bentley university in massachusetts. >> ashok eddie is vice president of architecture and client group and general manager of next generation and standards with intel. she is responsible for investigating and delivering the technologies that intel is pursuing in the 5g arena. she has more than 17 years experience leading and managing wireless and mobile broadband technology and product areas.

she holds a degree in computer engineering from bombay university in india and an ms degree in computer science from clemson university. gym josh jean kimmelman is the president and ceo public knowledge. he served as director of the internet freedoms and human rights project at the new america foundation. as chief counsel for the u.s. department of justice's antitrust division. he is a graduate of brown university and the university of virginia law school where he received a fellowship. he was also a fulbright fellow. doctor roslyn dayton focuses on evidence-based policy for information, communications, and digital technology industries. she is also a visiting researcher at how borg university center for communication, media, and information technologies. she is a vice president at strand consuls in denmark.

she served on the 2016-17 federal communications commission presidential transitions team. doctor layton has a phd in this is economics and an mba with a ba in international service. george clover is a senior policy counsel. he helps develop and coordinate the organizations regulatory comments related to its advocacy across a wide range of policy issues including safety, telecommunications, energy, and finance. we have 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 to swear you all in as

witnesses. do you swear that the testimony you are about to give to the committee will be the truth, the whole truth, and nothing but the truth? >> thank you. >> you may begin. >> thank you for inviting us and the rest of the panel here today to speak to the subcommittee on antitrust. i look forward to answering all of your questions. the subcommittee has a perfect name, and particularly the consumer rights part. at t-mobile, we are all about doing right by customers and putting them first. customers are at the heart. as i have said many times, i set out to fix a stupid, broken, arrogant industry. so far, i have ended two year

service contracts. i have made it easier for people to upgrade to new devices. we have freed people to travel with roaming left on. we even pioneered unlimited data. we have done all of that while delivering lower prices than the big carriers at&t and verizon. while we have made a positive impact on behalf of customers, 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 the un-carrier and end the status quo. we want to promote you is leadership in 5g. i want to talk to you today as a ceo that is both passionate and optimistic about the merger. i have had the privilege to meet with most of you previously in advance of this hearing and many of you ask if

the new t-mobile will mean more competition, provide better service, create jobs, and drive product innovation. my answer to these questions is an emphatic and absolute yes. first and foremost, we will make sure american 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 is about enabling amazing innovations and then ensuring that these new abilities and services are both available and affordable to everyone. 5g will completely transform the way americans live, work on the travel, and play. 5g means real-time virtual navigation. every business will be able to use 5g to revolutionize how they create and deliver goods and services. . 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 co uld not be m i couldor not be more proud of wht our sprint team has accomplished in making sprint a stable company for the first time in many years. we were able to achieve this mainly by significant cost reductions. however, many challenges still remain. we struggle to attract new customers, and once we attract them, we struggle to keep them. customer perception of our network still trails our competitors, and to be blunt, we like to be able to challenge the others. it will require us to make massive new investment in a network even as we haven't paid

for 4g. we would have to invest billions, and that would only work if it would cover to large areas. sprint already operates with $32 billion in debt and we have to struggle to break even and we have to invest billions just to offer 5g in limited areas. as a stand-alone entity, we would have to pay for this investment. given all of this, we have few options. what i have found is that this merger is the best option for employees, our shareholders, but more importantly for the american consumer. in business timing is everything and today the stars are aligned for us. what makes this merger, this allows us to take advantage of

the rapid emergence of 5g. best partnerships come, and we need t-mobile and t-mobile needs us. with this merger, we're committed to build the world's most advanced network, urban, suburban, and rural. this new network will power safer self driving cars, smarter farming, lifesaving medicine, and other exciting innovations. because of the new growth, we will create thousands of new jobs starting from day one and by -- we will vastly increase the amount of giga bites that the company will have available for american consumers. we will need to fill the capacity by gaining market share

and we will do this by attracting customers. this will give us the ability to compete with verizon and at&t. we also plan to challenge the dominant cable companies like comcast and charter, both monopolies on broad band. because of this verizon and at&t are going to need to invest more to compete with us. that will be good for consumers and innovation. the new company will be able to compete in many new cities and towns allv allow us to attract enterprise. when u.s. led the development in 4g, they led technological innovation. america cannot lose the race to 5g. in closing i believe this will be one of the most beneficial mergers in american history. they are committed to building

the world's most advanced 5g network, expand the coverage to lower prices, create thousands of new jobs and stimulate innovation we can only dream of. thank you again for inviting us here today and giving us the opportunity to show case the merger and i look forward to answering your questions. >> thank you, sir. >> chairman lee, ranking member and members of the sub committee, thank you for inviting me to talk about 5g. with 4g we worked hard to connect everyone, and now with 5g, we connect everyone to everything. 5g is all about economics of scale. if you think about that, everyone and everything, it's truly phenomenal and transformational. because the technology i like to say is predictable but what human beings do with it is not. what do i mean by that? let's take a step back. 2g was about wireless and we tried to make it better with 3g.

however, then the smart phones came along and there's an app for that came along and the data revolution started happening. so then we created the 4g network which was supposed to be about data. many new companies that 4g allowed started innovations and today how we hail cabs, how we travel, everything is done by companies that didn't exist a few years ago. and so now these applications have fund. ly changed and indeed improved our daily lives. we also then couldn't stop. we are consumers but then we started producing more data. and then we also wanted to connect things because we want to use technology in how we do agriculture or other things, and this led to the need for 5g, which is actually one of the world's first global cellular standards. as we scale 5g networks, we can

drive this type of innovation across many different industries, enabling an even boulder and broader transformation. these applications span global economy from industry automation to e health, to agriculture, to smart cities, and the list goes on and on. it's estimated about 3 million jobs over the next ten years and 500 billion to the gdp. to do this, we have to rethink everything to the air interface to how the network is defined. intel is at the core of the transformation. it is inside the computer, to the things that power the cloud all the way, including the infrastructure. what we also need, we need to ensure that the network transforms and we go from a more proprietary fixed function to a more software-defined function where we can enable quicker and lower cost services and intel is

involved here. to date because of this much of industry and cellular and consumers, we have worked on trials around the world. we have 25-plus trials in countries around the world looking at different use cases, all the way from connected cars to remote tractors to, you know, residential broad band use and all kinds of things. we showcased a lot of these with about -- and i've given some of the details in the testimony. we just had father's day a couple of weeks ago and at the u.s. open we were able to transport to people's home without any wireless backup. and then one of the next things i want to talk about is spectrum. without spectrum, we can't do anything in wireless. it's the crux of wireless communication. every operator will need access

to low, mid, and high-band spectrum to enable 5g use. when i talk about low band spectrum, think of it maybe as very long distance. they might not be able to go as fast, but they can cover long distances. on the other hand, they can go like sprinters. faster. mid band is also important because then it enables a mix of speed and range. in the it triangle in the written testimony, you can see there's a variety of use cases and we have to enable all of these. by having these three types of spectrum available in a timely manner, the data set of 5g applications could be able to benefit for 5g. without this we won't be able to reap the full benefits of 5g. the u.s. has made very good progress in low band and

high-band spectrum, making more available especially in the mid band spectrum and critical for u.s. policymakers and congress, the sec, must take action of this now. we are at the cusp of initial 5g deployment. it is important to note that the global standards will continue in the future as more features are added. thank you. >> thank you, ms. keddy. >> thank you, chairman lee, senator klobuchar, senator hatch, on behalf of public knowledge, i appreciate the opportunity to testify today. senator klobuchar, your comments about your past reminded me about bill mcgowan, the great leader of mci, and here we have some wonderful ceos who are totally committed to serving consumers and making a lot of promises and certainly have represented an image of a highly committed maverick approach, and that was the essence of mci and

bill mcgowan. but that was bought by verizon and that is not the bill mcgowan maverick company that mci was. so i start with that by saying that this issue is not about promises. there are a lot of interesting things that need to be thoroughly investigated by the department of justice in reviewing a merger. this is about law enforcement. this is about what the clayton act requires, as passed by congress, the justice department to enforce the law. in doing that, promises are interesting and certainly thoroughly reviewed, but what is fundamental is what is the market structure that we're looking at and what is the impact a merger will have, given that market structure, and what are the post-market incentives? that's why i bring up bill mcgowan. mergers sometimes and often can

change companies and incentives, and that's what needs to be thoroughly investigated by the justice department. here, notwithstanding what has been said, i believe that really our only four competitors, meaningful way in the wireless market today, and it's a highly concentrated market. the combination of these two firms would substantially increase that concentration. what does that mean in reality? generally it means that we have found historically across markets, but particularly in wireless, it creates an incentive to inflate prices, harms innovation and quality. it doesn't necessarily raise prices because they've been falling in this market. leave prices higher than what a competitive marketplace would bear. so i think that is the burden on these parties as they go before the justice department, and that's why we are at this juncture based on a reading of the clayton act, against moving from four to three, against the combination of sprint and

t-mobile. and the history bears out why this is an important issue for consumers. when the justice department rejected or was about to reject the at&t-t-mobile deal, we saw massive market adjustments as the parties withdrew their application and the markets responded, led by t-mobile, but also led by sprint. millions of people have changed carrier, from t-mobile to sprint, sprint to t-mobile, at&t to t-mobile, t-mobile to at&t, all through the system. it's not just the market shares, it is the vibrancy of the activity, as mr. ledger described, wonderful, aggressive competition. that is what we got, we got enormous innovation. we got rid of a lot of high-priced plans, two-year commitments, connection of phone with the actual service plan,

all of that blown away forced by direct competition between sprint and t-mobile and upward pressure on at&t and verizon. that is what we fear would be lost with this merger as well. so in this kind of a market structure, with this kind of an impact, 5g is important, but there are many ways to look at how to get to 5g. these companies have themselves invested heavily. they are the leaders, in fact, so far, and while i totally understand their desire to combine assets, the question is whether that combination actually yields the investment they claim, the benefits they claim, or inflated prices for consumers. i think applying the law to the deal as proposed would lead it a presumption against benefit, a presumption that consumers would end up worse off. so i am confident that as the justice department looks at this, it is likely to find that

with all the factors taken into account, there are other ways four players can survive in this market, there are other options for these companies, as there were when at&t-t-mobile was rejected, and they will agree that it's necessary to preserve four players. thank you. >> thank you, mr. kimmelman. ms. layton? >> thank you. thank you for the opportunity to testify. my comments reflect my opinion. i have no financial relationships with the parties, nor do i own their stock. let me make a quick summary for this hearing called game of phones. critics say the merger will reduce competition by reducing the number of firms. that only works at times. in the actual game of thrones, you would actually increase competition. who wins the thrown is a

function of technology and innovation, the better weapon, or the superior strategy. what matters in a competitive market is rivalry, not the number of phones. sure, mobile operators would like to increase price, with the launch of 3g in year 2000, they dreamed they could double the price. but the opposite happened. prices declined 90%, network traffic has exploded one thousand 1,000 %. speed and quality has increased. that's the impact and the global trend. as for investment, they reduce redundancy. sprint only offers wireless. their competitors are multi plays, many products. the pure plays can't do that. this is rooted in a study of industrial organizations from the 1950s and they are typified by the organizations, the risk of the ceo in the gray flanl

suit. today's ceo is a maverick in ma genta and let the record note that t-shirt and shoes. we can see this maverick strategy in many countries. in fact, it was used against t-mobile's own parent in germany as well as in japan. now, the study of antitrust has been revolutionized by chicago, harvard, game theory, and behavioral economics. we have moved away from bright-line rules because of too many false positives. now we put greater focus on the empirical evidence of competitive effects. some fear this merger would create collusion, but mavericks by definition don't collude. and there is nothing to say that there couldn't be three companies anyway. one could go out of business. it's a real risk to them if they're not acquired.

some assert today that we have this competitive market because doj rejected the bid fof t-mobile. i disagree. before the launch of iphone or 4g, and now we have a decade of data to prove otherwise. how about blockbuster and hollywood video, denied by the 1950s mind-set. there are no dvd stores anymore and netflix has (12) 500-0000 customers and 150 million market cap. it could create its own distribution channel. there's no penalty for antitrust authorities when they get it wrong. they get to keep their jobs. but many jobs and firms are lost because of their decisions. the other critique is that it leads to high prices. that's also wrong. the only reason we have high price s is because we force

consumers to pay most of the cost. when netflix sent the dvds by mail, they paid the postage. but now that they're on line, they send the bill to broad band providers, who have to get it from all their customers. it's a pretty nice setup when they deliver one-third of the traffic. now, mobile operators want to lower prices but they were blocked by investigators under pressure from so-called consumer advocates. what was the response of the prior fcc and now the california legislature? well, shut down the program consumers love. this cost our economy $4 billion a year. we could have closed the digital divide years ago had we pry or tieszed the welfare of the poor

over silicon valley. consider tesla. it sells 3,000 cars a month and it's a smartphone on wheels. they prepay the mobile data. the u.s. is less than 5% of the population and it enjoys 25% of the world's network investment. that's the kind of spending that got us 4g and we have to keep it up with 5g and we're already behind. while we sit around here talking about magic numbers, china is about to eat our lunch in the internet economy. it's the largest market by downloads and revenue. amazon makes facebook and google look tame. in throwing, game of thrones was inspired by 15th century england. what ultimately liberated the serfs was people being able to own their property and monetize innovation. this is exactly what's going on in this merger. imposing a number on the mobile

market is denying what consumers want and technology can create. it's disguised as competition policy. the role of our 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, dr. layton. >> chairman lee, senator klobuchar, senator hatch, senator blumenthal, thank you for inviting consumers union to participate in this hearing. hundreds of millions of consumers rely on their mobile phone to conduct their lives, stay in touch with friends and family, get information they need, goods and services, and get help in an emergency. it is already concentrated, yet consumers are benefiting from competition. sprint and t-mobile have been competing vigorously to jump out ahead of each other to bring

consumers the best plan options at the best prices. in fact, they are their best competitors. what keeps them on their toes is not having to worry about what verizon and at&t will do next. it's what each other will do. that's what consumers stand to lose with this merger. competition gives the consumers the power to take their business elsewhere when they can get a better deal. it's a basic fact in antitrust that 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 from 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. but sprint and t-mobile don't need to combine forces to build

a new 5g network. they've both already independently committed to building that network, with plans already underway. at most the merger is a shortcut. and just because a shortcut is good for their business plan doesn't mean it's good for consumers or for 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 where they travel. sprint and t-mobile may want it everywhere, understandably. but the whole premise under the clayton act is that it's better for consumers and for the company for companies who want it to build it, not buy it, to compete with each other, not combine with each other. making a company stronger faster does not justify making the

marketplace weaker. it's ultimately better to have sprint and t-mobile both racing to build 5g networks and then competing to offer good deals on their networks they built. a few years ago we were in this same situation but with different companies seeking to merge. the merger was denied and a new network was built by each of the four carriers building their own, and that's what we want to see again now. and also a few years from now when there will surely be another promising new network that needs to get built and 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 also 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 as we have seen, each of them can and has forced at&t and verizon to pay more attention to consumers and offer better and more affordable service. and each has been a competitive spur to the other. that's where the benefits to consumers come from, not from just creating another big carrier, like number one and two. sprint and t-mobile also say this market is about to explode wide open, that a revolutionary market convergens is upon us with tech giants poised to completely upend mobile phone service as we know it. here comes comcast and google. maybe. we'll see. we've heard those same kinds of confident predictions in every telecom merger pitch over at least the last 20 years. some come to pass. rarely on the predicted schedule. and it is foolhardy to let go of the bird in hand that we have in

hopes that new competition might soon fly in the window. finally, the stakes are particularly stark for the roughly 50 million prepaid wireless customers. many of them have trouble affording the cost of a regular monthly mobile phone plan and they depend on the lower-cost prepaid service with limited use. these customers buy prepaid minutes from resellers, but it ultimately depends on the carriers being able to sell those minutes in the first place, and the two carriers who are most willing, it turns out, and who offer the best prices are sprint and t-mobile. they compete vigorously against each other now, but after the merger, that competition would evaporate. in sum, to us, the advantages of giving sprint and t-mobile a shortcut to increase capabilities does not seem enough to overcome the harm to competition and consumers that we believe would result. >> thank you very much for your

testimony. we're now going to begin seven-minute question rounds with each member of the committee being able to ask questions. i will start, mr. legere, i'd like to start with you. is it fair to say the two largest carriers, at&t and verizon together have about two-thirds of the market in terms of consumers? >> after listening to the statements of my fellow panelists, you bring up a very good point. at&t and verizon, after the culmination of this merger of sprint and t-mobile, the new company would be one-third the size of at&t and verizon and one-eighth the free cash flow. so from a customer standpoint as well as economic standpoint, they are much, much bigger. >> but as of right now, they've got about two-thirds of the subscribers, those two carriers?

>> more than two-thirds. >> okay. and t-mobile is currently in position three in terms of the number of subscribers? >> yes, senator. >> recently advanced from no. 4? >> we moved from no. 4 to no. 3, and, again, we acquired metro pcs five years ago, who was the no. 5. the no. 5 and no. 4 came together and ultimately we moved to no. 3. >> now, in your written testimony, you said that you still haven't been able -- notwithstanding the fact that you've gone from no. 4 to no. 3 in terms of subscribers, that you -- let's see, quote, we have not been able to make much of a dent in the two-thirds market share held by the two leading carriers, at&t, and verizon. does that mean that t-mobile has been primarily taking market share away from sprint? >> senator, actually more than 50% or approximately 50% of the new post paid customers come from at&t. on a daily basis right now, the

post paid porting ratios, we add two customers a day to one that we send to verizon, two customers a day from at&t, and the ratio is actually much lower with sprint. >> okay. dr. layton, i'd like to turn to you next. according to the parties' estimates, to the estimates provided by the two companies that would like to merge, the new t-mobile would have almost twice the capacity as the two stand alone companies would combined if they were left stand alone. now, mr. kimmelman and mr. mr. slover question whether the savings would be passed along to consumers, even if the efficiencies were reached. let's assume for a most that the efficiencies are, in fact, reached or at least that by

combining t-mobile's assets with sprint's assets, that that would result in a significant increase in the overall capacity of the two firms relative to their remaining in the marketplace as independent, freestanding companies. how do you think that would affect the merged firm's incentives post merger? in other words, assuming that capacity assumption holds, assuming that's true, what would make it more likely that they would compete aggressively and cut prices rather than take advantage of the market share that they have and raise them? >> even in the last five years, we've seen prices fall by 20%, and i think it's extremely difficult to try to raise prices

in this particular market, especially when their competitors are able to offer a bundled solution. i'm very skeptical that they could be able to raise prices, especially as far as they would come and then decide to throw out the strategy that's worked for them, to throw it out the window. in terms of incentives, they have a high incentive to steal market share from the larger players. the other thing i would say is that the kind of investment that they want to do, if anything they're going to have to expand the kinds of products they offer, not just in, you know, the consumer market, but particularly in the wholesale market. now, they do an amazing business with wholesale customers all over the united states, and i think that that will explode for them, particularly when you look at the sort of services. i referenced the tesla example because when we look at devices, we're moving away -- i know we talked about game of phones. we're moving into every other device, and to just assume we would have our broad band on the

phone, i think is an outdated idea. we will get it in a variety of ways and not that we would be thinking about it as a phone in the first place. i think maybe ms. keddy might be able to expand on that. >> thank you. mr. slover, how do you respond to dr. layton 's conclusions? >> well, i think the premise, the supposition that you are asking us to accept is one plus one is three or four, and that -- >> so you don't accept the initial premise of increased capacity? >> well, that is it, that the two combined will find synergies and capabilities that overwhelm even what they could do separately, if you combined them, that new capability will come from the combination that wasn't there before. but i think there are -- what i think you want to look at is

what the alternatives would be, not just looking at the two companies as they are now, but what the two companies could be if the merger was denied and they go forward with their plans to each build their own networks and they seek investment to enable them to do that and they enrich their capacities. so i think what we want to do is have as many in the mix as we can. >> i get that. i get that. of course, it is necessarily the government's job to decide which company's merger would undertake which strategy, but governments do have a role in deciding what to do when two companies want to merge. >> could i add something? >> yeah, go ahead. >> because actually the physics involved are that one plus one equals six, and this is something we understand in detail. what happens is, when you put these networks together, you've got three characteristics: one is, you have a much denser site

network. so we would have 110,000 sites on the network that we would choose 75 and then add ten. we'd have 84,000. so site density increases. spectrum per site increases dramatically. and then 5g versus the previous services, the physics are that one plus one equals closer to six, and what we will have is in 2024, we will have seven times the capacity of what t-mobile and sprint have today and we'll have three times the 5g capacity that the separate companies would have and double the overall. so the physics prove out the fact that supply will be up dramatically and the price will go down approximately 55%. >> could i just take on your challenge and say that i accept for a moment that they have all these synergies? they're a profit-maximizing firm

like anyone else. once you save $10 billion, $20 billion -- by the way, there are a lot of costs in moving all these things around. the physics are different here, but they're not new. look at what happened when sprint and nextel merged. they said all of this was going to be fluid and transparent and great efficiencies. but they're still great profit maximizers. not all of this has to go into one pocket. they can build out their network to some extent. they can shift pricing, offer different plans. if they don't face competition from each other, what we've learned historically as we've learned with airlines as we lose them, you often see fee increases, new charges, parallel behavior among firms. that's the danger here. >> with the indulgence of the ranking member, i'm going to follow through on this one even though my time has expired. so unlike mr. slover, you're willing to accept here the premise -- >> i'm willing to accept that

that could be true. >> that that could be the case. >> yes, but there still are a lot of problems that need to be looked at in terms of corporate profit maximizing incentive. >> okay. but if we accept the assumption that as mr. legere would put it, one plus one equals six and we have this significant sort of exponential expansion in capacity, you're still saying that that wouldn't translate to lower prices. but wouldn't that really almost require us to assume that they would be content with idle capacity rather than stretching their offerings of their capacity so that they could get more customers, which would in turn require price competition? >> what ms. caddy prescribed was low, middle, high band spectrum that all carriers have to nafsh gate now as they get to 5g. there are combinations of them.

it's not just one simple capacity. there are towers that they can gain efficiency by moving spectrum around, but they have long term leases and can't make the cost go away. so there are a variety of factors here as to how you take any synergies you get, any efficiencies you get, and you apply them. you can apply greater investment, apply in return to shareholders, apply it in a number of business strategies. my point is, without them biting at each other with low-cost plans and new options and at&t and verizon not doing it, they have incentives also to price after the leaders, follow the leaders. >> okay. we'll follow up on that more later, i guess. senator klobuchar. >> thank you very much. there are four significant wireless carriers left, we talked about this, and this transaction would reduce it to three. much of the competition, to your credit, both of you, and your predecessors in this market has

previously been driven by t-mobile and sprint, the two companies have introduced no contract and unlimited plans as well as lower-priced options forcing verizon and at&t to do the same, in my mind. 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 in the space? mr. legere. >> one of the things i would like to put forward, especially in the notion of this being four to three, is i strongly believe that this is actually moving from two to three. this is creating a viable competitor who can compete with at&t and verizon, who have shown historically that they only respond when forced to respond. we shouldn't be punished for our

competing aggressively in the past and stopping from having the ability to create the arsenal of weapons that can take this innovation and competition to the next level. the next thing i would say, 5g in the country is lagging and the investments that we would make, $40 billion in the first three years, will be driven mostly from the synergies that we obtain by putting the two companies together, and i strongly believe that will force at&t and verizon to respond in the innovation and the investment in 5g, bringing the country to a position that is very necessary both competitively and security-wise. >> maybe before you answer, i'm going to get a little more specific. even with the recent improvements that your company, sprint, has made to its network, it remains very aggressive on price. for example, reports indicate that sprint has recently offered an unlimited plan for $60 per month compared with $160 for a

similar plan on t-mobile. sprint also reportedly offered a popular $15 unlimited data promotion to attract new customers, which is less expensive than what t-mobile has done. so if t-mobile does not see the need to match sprint's lower pricing right now at this moment, why should we expect t-mobile to offer lower pricing if the merger is approved? i guess we're back to you, mr. legere. >> i guess one item i would submit, the average user is actually higher than t-mobile, and there would actually be a tremendous savings for all sprint customers in addition to a tremendous increase in coverage and service from day one by hands sets that are already compatible. >> so that's a commitment? do you both commit to have those lower prices? you're going to take each other's lower prices? a combined deal?

>> the new t-mobile has said well be honoring sprint's pricing. senator, one of the things i like to point out for historical purposes, i've been the ceo for six years, so not just promises, there's a track record here. from the time we purchased metro pcs, i heard all these stories about what was going to happen to that brand as we took it over. i'll say after five years, twice as many customers, twice as many doors, five times as many locations, three times the employees, and pricing for metro pcs customers have gone down between 17% and 25% while tremendously increasing what they use for data to actually be more than the average t-mobile customer because some of them have that as their only coverage. we put these networks together in two years as opposed to three committed and we had 40% more synergies than estimated. so our track record on doing

these exact things is pretty good. >> mr. claure, without an independent sprint, couldn't they still maintain and even grow the customer base given the size? >> this is a highly competitive market in which in order for us to gain market share with the new network that is going to be built, we're going to have to lower prices in order to be able to fill the capacity. i mean, that is crucial to this entire merger. there's a couple of very important points. one is imagine if you have a factory and you're able to produce something for about a sixth or an eighth of a cost. you're going to reduce your prices in order for you to gain more market share. you've got to think of the combined company having six times the amount of capacity at a cost of one-sixth to produce a gigabyte. so common sense will tell us that we will absolutely go ahead and lower prices in order to

attract new customers. >> what incentive would a customer have to try to get a lower price if it's just the three? >> some will stay with the current carrier. the best way we've found to move them, provide amazing products and services and reduce the price. that is the magic formula to get customers to come. secondly when you look at sprint as a whole, i want to make it clear, in order to build the 5g network we have announced, it is a different type of 5g network. it is going to be mainly in cities that are large enough. we're not going to be able to go to rural america and we're going to have to invest about $25 billion. in order for us, for sprint to invest $25 billion, most likely we're going to have to raise prices. i've been clear about that for a long time. >> thank you. >> thank you. >> ms. keddy, my understanding for the u.s. to deploy 5g, the

fcc is going to have to make more spectrum available? >> yes. >> would you say that's a main factor holding back 5g? >> i would say for any operator to succeed in the world, they need a combination of low band, mid band, and high band. in the u.s., they've made progress on low band and high band and we need to make immediate progress on enabling enough sufficient mid band spectrum to all operators. >> okay. mr. kimmelman, you talked about the issue of the prepaid wireless, and maybe you want to respond to what the ceo said for the pricing and just how you see this, but in addition to that, how you see the combination of sprint's boost mobile and t-mobile's pcs common ownership to affect prices on prepaid, but if you can talk a little bit in response to what you heard.

>> certainly. so mr. legere, nobody, certainly i do not want to punish you for your great success. i did not suggest that you merge with sprint. you suggested that. i just want law enforcement to enforce the law. that's all. you say it's a market that's two to three, but you also say it's eight to seven. i kind of don't think you can have it both ways. one of you says it's highly competitive. the other one says it's competitively broken. which is it? there's a problem here, in the whole presentation of what's going on, and i think that's why it's important to look at the incentives. again, i have no doubt about the compensations and the willingness to make commitments and promises. the prepaid market is particularly difficult and these companies in their efforts to try to take on at&t and verizon,

which is laudable, have done yeoman's work to actually offer lower plans to lower-income marginalized households, and it's a wonderful benefit. the question will be with certainly at&t and verizon showing no particular appetite to serve that market, will one company preserve those options? if they're moving to 5g, there could be tremendous efficiencies, but there also are dangers are all of the costs of getting from here to there and you'll note they've asked for a five-year period to review what the overall plan is. that's a long time for the justice department to look. if it's going to take five years, there are enormous costs in the interim. when we want to fly, we don't all want to fly the concorde super sonic and the prices you have to pay. some people just want a plain old airplane. so 5g is great.

5g is going to be wonderful. everybody is going for it, everybody is trying to do it, but mixing and matching the kinds of spectrum and the kinds of networks we have, maybe four options for that is better than three. >> why don't i ask the prepaid one, i'll ask that later. thank you. >> okay. let's go back to you, dr. layton. mr. kimmelman and mr. slover have both argued quite passionately and articulately that the benefits that the parties claim are themselves too uncertain or at least sufficiently uncertain so that we can't assume that there won't be competitive harm. in other words, we know that we will be in a sense eliminating a competitor and the elimination

of a competitor can't -- and the risks associated with that can't be offset by the possibility of the pro competitive impact. and there's been a lot of talk about this. i've heard a lot of ratios discussed in this discussion and in the days leading up to it. some have said that this is a four to three transition. others have said that it's a two to three transition. some have said it's an eight to seven transition and others have said a zero to one transition. we can actually have a whole lot of fun just with that. but this contrasts a little bit with something you've said in your written testimony, which is, your point in response to all this is that it's not just a number -- it shouldn't be so much about the number of competitors as it should be about the actual empirical evidence of what's going to happen to competition. what empirical evidence can you point to that suggests that the merged firm will actually be a stronger competitor to the big two and therefore likely to

bring about more price competition? >> thank you for that question. i think it is important -- well, i invite everyone to see the 2018 revised version of the antitrust textbook, which is excellent, giving a lot of these examples. the key takeaway is that we have relied so much on this predictive -- or on predictions about the future, and we haven't looked at the actual evidence. part of the reason is, to be fair to regulators and antitrust authorities, it's very difficult. the tools are quite blunt. the numbers are very imprecise, and that is one of the challenges when you actually try to study pricing data. they lump all the different prices for every kind of different offer in the same thing, and what we're talking about here, higher prices and so on, is based upon a sticker price. that's very often what the

consumer does not pay. quite frequently as described here, a sprint customer would be onboarded into t-mobile, they would maintain the existing price, so the actual sticker price that was there wouldn't be what they would pay. and then, of course, you have to add in, are there subsidies for phones and other services being brought in. so it's very difficult to look at those things. that is why it's important that we look back. the other thing i would say, mr. kimmelman talks about law enforcement. we have law enforcement coming out of our ears. we have all kinds of ways to address if there's concerns about behavior in the market. part of the advantage of the u.s. approach, that's why we're the country of innovation, we don't have a precautionary principle for everything. we give parties the benefit of the doubt, particularly when they've demonstrated it and we allow them to try. that is the essence of our innovative economy.

you're making a huge assumption higher on using the models from the old telephone network or where, in fact, it was the same kinds of products and service the, the very mono culture kind of network, and here you're also bringing in a significant, when you talk about prepaid, cable companies, you have satellite companies, and also fixed wireless solutions. so there's many -- and i understand that that makes it difficult from a numbers perspective, but that's why i think we have to resist falling back to this rule of thumb. we have to challenge ourselves to be able to say let's actually review the data. as the final backstop, there are the existing antitrust enforcements to intervene if harm does result. >> thank you. ms. keddy, you bring technical expertise to this that most of us are not familiar with.

actually, i should speak only for myself. i'm sure senator klobuchar knows all of the physics behind this. in your written testimony, you indicated that the development of 5g is going to require sufficient access to certain spectrum, specifically i think you referred to the 3.7 to 4.2 giga hertz spectrum and the 6 giga hertz bands. you said that those will be essential to applications across 5g scenarios. is that a fair characterization? >> yes, it is. >> but with this merger, my understanding is that the parties intend to build out their 5g network relying primarily on t-mobile's 600 mega hertz spectrum and sprint's 2.5 giga hertz spectrum bands. does this mean that even this

combination of spectrum will be adequate in terms of giving them adequate access to 5g capabilities? >> so i cannot talk to the specifics of the data that sprint and t-mobile have since it's not public, but what i will say is, you need low band spectrum is about 1.5 giga hertz or less, mid band is 6 giga hertz or less, and high band is generally like millimeter. to answer your question, any operator to succeed needs a combination of spectrum in the low band, in the mid band, and in the high band, and they need all three. >> mr. claure, do you want to respond to that point and tell me how you're able to succeed in this within the framework of what she's talking about? does the combination of spectrum that you're going to provide, would that provide adequate access to 5g? will it enable you adequately to

provide 5g services? >> thank you, senator. like many my opening statement, i say that all stars are aligned because we have t-mobile's low spectrum, and we have sprint's mid band spectrum and today with the 5g network, this is what you need to get started and to reach worldwide leadership. there's been so many articles about the value of 2 to 5 spectrum combined with 600 spectrum will allow us to build the world's best 5g network today. i assume that the new t-mobile will participate and buy additional millimeter, but we're very lucky to have 600 available spectrum that we have in use that's ready to be deployed. >> senator klobuchar. >> very good. thank you, mr. chairman. dr. layton, you noted in your testimony that there has been

wireless consolidation but that you say prices have gone down. are you suggesting that consolidation in wireless leads to lower prices? do you think that's true? >> what i wanted to give you as an example i think that is extremely helpful that we have experienced from the earlier mobile generations, if we look back earlier in the century, remember europe decided on the gsm standard and was rolling out 3g and at the time the united states had the cdma networks. well, it turned out that the cool phones were being made for 3g and they wouldn't work on the american networks. so, in fact, it didn't matter if there were one hundred or one thousand or one thousand cdma networks if no one wanted to buy the phones to work with that network. so pretty fast verizon had to decide we're going to get moving and they launched 4g and then all the other operators got on the bandwagon. so that's an exact example that i'm talking about that the

number of players don't matter. it's a technological change. if you are a horse and buggy and the automobile comes along, it doesn't matter how many horse and buggies come along, you're going to drive in the car. maybe you have the horse and buggy for quaint purposes, but that's how it works. networks are like a carton of work. it will expire if it's not renewed. you want t-mobile and sprint to sit around and do their own thing as separate operators, at&t and verizon have a lot more. they have to combine their assets in order to do it. >> do you want to respond to that, mr. slover? >> well, i think the combining of their assets might be a convenient shortcut for them. it might enable them to more

quickly go for being -- overtaking as a market leader the two big companies, but i don't think that's necessarily important for consumers. i think what consumers want is the most leverage they can get through effective choice, and sprint and t-mobile have both shown that they are fully capable of giving that impetus to those choices to consumers and driving the big ones to respond. as gene was saying a minute ago, the change in the structure of the market that results from the merger is going to change the incentives, and there will be a different dynamic when sprint is t-mobile don't have anybody nipping at their heels when they're just looking ahead at the big guys and what they can do to make life difficult for

them. they will still be competing, but they won't be competing in the same way, and consumers will lose a choice. >> can i interject? >> yes. >> just a few things. i want to be clear. i've been in this industry for about 38 years, and as ceo for close to 20. this consolidation will lead to lower prices. that's number one. number two, from a standpoint of consumer welfare, amongst the things that this network coming together will allow us to do is to compete in in-home broad band. 66% of the united states will be covered with greater than 100 mega bits of service by 2021 and 90% by 2024, which means that people can avoid an $80 fee for broad band by using an in-home broad band. we expect to sell $80 a month, 960, we expect prices to not only go down but supply for each

customer to go up. we're arguing for the same things, and i'm very comfortable with the prove-it approach. prices will go down, capacity will go up and it's very good for consumers. >> okay. i know you want to answer that, mr. kimmelman. why don't you answer that quickly and then i have my billion-dollar question. >> i certainly hope each company separately will try to go to in-home broad band and if they were to be combined, we'd try to do this. i just want to point out that the biggest problem we found when we heard from at&t, which had massive capacity as well, was they couldn't get the programming to compete for the video product. so there are a number of other obstacles. we know their solution was a buy time warner. i don't know if the other guys' solution will be to buy cbs. >> so in 2014, when t-mobile and

sprint last considered merging and also in 2011, the parties made similar arguments to what we're hearing today, that merging was necessary to allow them to improve their networks and introduce the next generation of technology. in both cases the justice department was not convinced. other than administration, what else has changed since this deal was last considered? >> less rather than more, senator klobuchar. the technology keeps improving and they are absolutely right that they have a vision of something that could be extremely attractive. but the key for law enforcement, what is the but-for here? is there a way to get much, a lot, all of this with four rather than three? >> so what you're saying, there's less competition now so there would be even less of an argument? i'm just trying to get your -- >> no, i'm saying that less has changed in that time period

rather than more. >> less has changed. >> the fundamental structure has changed. the at&t-t-mobile transaction, for sure, different since then, and they have shown signs of being able to compete not exactly the way they would like to with this merger, granted, but they have shown tremendous signs of being able to compete against each other and the top two players. >> what do you make of the statements that before this was announced both companies said that they would roll out 5g independently and now they've said it would be hard to do. what do you make of these statements? why wouldn't we assume that they would introduce 5g even without the merger? >> i think they're committed to it, i don't think they're walking away from it. i applaud them for doing that. they have been leaders in that. i think the but-for here, if the merger were not to go through, it is not just the status quo of t-mobile and sprint as they are today. they will look for other partnerships, they will look for

other ways to grow their networks if they're not allowed to combine. from a consumer perspective, there could be a lot of benefit to having different arrangements in the market, four rather than three players. >> could i use a visual while we're on it? that chart on the right is sprint's 5g stand-alone network, and, yes, you can see it's quite a bit more white than there is yellow. that's the 5g network that sprint will be able to create on their own. on the left is a combination of what we'll be able to do with the two networks coming together. amongst the things that have changed, since i was the ceo in 2014, one small factor, but there was no deal. that's one thing. >> but that's just as people were still sending out clear signs that they didn't -- they weren't going to approve it, and they've said said it. that's what i'm trying to figure out, what the change is, and maybe mr. claure -- >> both of us, marcelo and i,

have stayed in touch, and as we see 5g coming in, we saw what we can do together that we can't do separately. the impetus for this transaction, and the 40 billion that we can spend by putting the networks together. the other thing that hasn't changed, at&t and verizon have maintained the status quo and we've been able to take some competition to them, but not the way we can compete if we're able to get this significant increase in supply and unit cost increase. they continue to stick with the minimum of what they're forced to do. >> what has changed? we've heard fcc chair said four national wireless providers are good for american consumers, bill bear, the head of antitrust at doj says it's going to be hard for a persuasive argument that it will increase competition for the benefit of

the american consumers. >> what has changed is 5g is up on us, and if the u.s. doesn't launch 5g, there are going to be other countries like china that are going to launch 5g ahead of us. we often forget that the world's most valuable companies today were born because the u.s. built amazing 4g networks that led to innovation of companies that we wouldn't think that would exist, hoover, air bnb, apple, the world's most valuable company. let's think for a second, what if china leads the world in 5g? innovation will move to china. and one thing i will guarantee you, the only company that can build a true 5g network is the combination of t-mobile and sprint. it's very simple. today we have capacity, but we do not have the coverage. to say because of 5g, now it makes sense to combine the two companies. apart from 5g revolutionizing

the way we do things, 5g allows us to massively reduce the cost per gigabyte. and because we're going to massively reduce, we're going to have so much capacity and the only way we win, we bring more consumers and the only way to bring them is by lowering prices. this is what makes the merger so different than any other time. maybe two years ago was not the right time. probably two years from now wouldn't be the right time. that's why we're committed to try to get this done. >> thank you. >> senator blumenthal? >> thanks, mr. chairman. thank you all for being here today. i want to talk about jobs. there is some very deep disagreement about this issue. in the public interest statement filed with the fcc, you stated, mr. legere, that the merger would actually create jobs

through investment in a nationwide 5g network. the statement says you will employ, quote, 3,600 more direct internal employees than the two stand-alone companies would have absent the merger. end quote. the communication workers of america said in a statement this morning to the contrary, job losses will be in the thousands. you claim the estimates of job creation are actually conservative and point to positive track record on jobs with your merger of metro pcs. but they were focused in the prepaid, not the post-paid market, as you know. so the analogy seems somewhat strained here. each company has plans to create its own 5g network. i'd like to know how you can know that these new jobs are

merger specific and isn't it true that your jobs numbers are based on assumptions of very robust company growth? >> senator, thank you very much for the question. just one clarification. t-mobile added approximately 27,000 jobs last year. the predominant jobs were all in the post paid retail expansion of the business. so our track record on metro pcs is true, it's three times the jobs, but the growth in employment has been existent and it's been equally across both parts of the business. my statements hold. the new t-mobile would add approximately 3,625 jobs in 2019, going out to 11,060 jobs in 2024, and those are full-time equivalent. if you look at full and part time, by 2021, we'll add close to 10,000. what the communication workers of america's release failed to see is that with the onshoring

of customer care jobs from sprint along with the customer care expansion, we'll be adding approximately 7,700 care positions in the united states in the period. we'll also be -- >> are those new jobs? >> these are new jobs. yes, they are. >> can you commit that those jobs will be provided? >> yes, senator. at the time of the transaction, 5,300 jobs will be created by the launching of four or five new centers in rural america to cover what sprint currently does offshore. >> and will any jobs be lost? >> there will be a rationalization of jobs in the first year or so. when you get to the increase, for example, of 11,000 what you have is significant increases on network implementation, increases in in-home broad band, increase ins care, increases in rural retail, and you have some rationalization mostly in urban retail, and it's mostly savings, but there will be some decline

in positions in a small amount, a couple thousand people on dum ply indicate gna or headquarter staff functions, probably split between the two companies. >> you refer to rationalization. how many jobs would be ragsized? >> in the entire period of retail rationalization will be approximately 3,200 full-time equivalent jobs and about 8,000 indirect and direct retail jobs. in that same time period, senator, there will be over 10,000 jobs created in the new business's in-home broad band and approximately 12,000 jobs created in rural america, specifically retail and -- >> i apologize for interrupting. >> no problem. >> let me give you an example of why i have this concern, just in

micro form. in hartford, connecticut, on park street there is both a metro pcs and a boost mobile store. the two are on the very same street, literally within walking distance of each other. can you really commit to me that both of these stores are going to remain open at full present capacity? >>? and what about other duplicate retail scores? >> thank you, senator. a couple of things that would come into play there. we have not suggested any change per se in the use of the metro pcs, boost, and virgin brands. they serve very different purposes and different groups of customers, and so far we see that being a less likely store rationalization than if they were a sprint and t-mobile store next to each other. the second thing i will tell

you, if two stores were directly related to each other in the sprint-t-mobile version, you may close one, but the staffing in the other store would be a function of foot traffic, growth avdz and the aspirations to gross adds, so that would likely go up. >> so you can commit to me that the numbers in connecticut will be increased, not diminished. >> i haven't looked at the numbers, but i will. >> if you would, i would appreciate it. >> yes, i will. >> and overall in those same situations where there's a duplicate of stores, i hear you telling me that even if one location is closed, in effect those positions would be moved to the other store so that there would be no net loss, maybe an increase. >> right. no, eachenter is -- in the pis filing and what we've said associated with jobs, the total jobs for the company will go up.

over the periods retail jobs in aggregate will go down, some urban jobs will go down, many rural jobs will be created. so there will be some decrease in retail positions over the planning period. >> can you give me a number? >> on a full-time retail job, full-time equivalent, 3,295 through 2024, and full-time and part-time, including distributors, approximately 8,000 to 2024. >> my time has expired, but i'll have some additional questions and i appreciate your answers today and your answers in writing in response to my questions. thank you very much. >> thank you. >> both you and our other very distinguished and important panel. thanks. >> thank you, senator blumenthal. mr. legere, you appear to have walked back from some statements you had previously made as recently i think as february of

this year, that -- statements that discounted the competitiveness of other companies, and by other companies i mean people like cable providers, for instance, offering wireless services. these competitors, as i understand it, basically resell wireless services that they've purchased from actual wireless carriers. is that correct? >> senator, i believe you're talking about small players like comcast and charter. but yes. and i can explain my statements, if that would be helpful. >> right, right, and i didn't mean to suggest that they were small companies doing it, but i mean to suggest that these are people who are not themselves providers of wireless services, but are purchasing wireless services from a wireless provider and then reselling them. >> yes, essentially. if i could, for a second, i'm glad you brought this up because in the constant discussion, and i think you framed it well, i've

gone with the four to three being two to three as a way to explain the rationalization, but there are many other players who are in wireless or coming in. comcast and charter have signed a partnership to invest together to create the wireless business. comcast has entered and over the last five quarters has added more customers than at&t and verizon combined. dish has committed to $10 billion worth of spending. google is in this business. and comcast users and mvno with verizon, as does charter, as does several other players. >> is it your statement that these are competitors? >> my statements were and still are they're not competing to the level that they should. it was a long entry into wireless and when it came it was priced above market and it was skimming to their customer base. however, analysts have said that

as many as 5 million customers could go to comcast and charter over the next two years and that each of them have a net present value of about $20 billion in their wireless business. >> so in that sense you're saying they're now competitors. >> they're very viable competitors, especially as the markets converged. >> what's changed other than the announcement of this merger, what's changed since february when you made a statement that they're not competitors until now, other than the announcement of your merger? >> right. t-mobile continues to lead in the acquisition of new customers, but as i've said, comcast's entry has added 570,000 post-paid nets, more than verizon, so they're becoming a viable player. last thing, senator, the players in cable, they're not just mvnos because they have significant wi-fi networks that they can offload to, and comcast participated very heavily in the low band spectrum option, so

they own spectrum as well. also, they're heavily into in-home broad band, as you know, and that's a business that we're trying to compete with, so they're clearly competitors across the spectrum. >> mr. claure, a key claim that you, the merging companies have made, is that the transaction as we've discussed with previous questions that we've discussed at this hearing, that the merged companies, that the merger will expand the ability of the merged company to expand capacity and that that capacity will then translate into increase incentives and ability to be competitive and to lower prices. now, some more claims were made, of course, with respect to the proposed at&t and t-mobile merger, the failed merger attempt in 2011. sprint, in fact, opposed that merger and it did so by arguing

against these very same efficiency claims. as i recall, sprint argued that the -- that those claims about efficiency translate to go reduced prices were overstated and that in the alternative, similar efficiencies and competitiveness could still be achieved even absent the merger. what's different here about this proposed merger than -- now that sprint is the partner, the proposed partner with t-mobile, rather than at&t? >> thank you, senator. completely the opposite. back then you had a dominant giant, at&t, trying to gobble up a truly struggling company, t-mobile, who was in dire straits.

the good thing the government did, which was phenomenal, they stopped that merger. because of that, t-mobile got $3 billion in cash and got a tremendous amount of spectrum, which is what they used to go build a 4g network. if the outcome would have been different, competition would have been destroyed, so it was the right thing to do. here is the complete opposite. here you're merging competitor no. 3, competitor no. 4 to create a no. 3. we're not number two. we're still going to be number three. and there's one thing that we don't talk enough. the total net income of at&t and verizon, they've got to be 90% of the profit that this industry gets, so what you're having here is, you're having two -- you want to go from two very strong competitors, at&t and verizon, to three competitors, which is going to be the addition of the combined company and we're going to be able to compete better. back then, you would destroy competition. >> so you say that's the magic number, the magic ratio, the two

to three number, that's the one that ought to be kept in mind. >> very different. here you're going to create a strong no. there. over there, at&t would have been enormous. >> we're open to zero to one as well. >> so many ratios, hard to keep up. that's a total of four combinations we can put together a really neat chart on. mr. kimmelman, you noted that prices for wireless services have been falling in recent years. now, over that same period of time in which prices for wireless services have been falling, we have seen significant con solidation in the wireless industry, shrinking to essentially four carriers, at least four major carriers, today. so if that con solidation, bringing the major carriers down

to a list of four, has accompanied or even as some would say helped bring about price competition and price reduction. doesn't this demonstrate that this consolidation could have that same effect and could result in cost savings for consumers? >> certainly i think the picture is a little more complicated. the data we have showed we had the most enormous price reductions when we had eight and seven, and they started to be smaller and smaller when you went to six, five, and then four. there was a stagnation for a while. and then immediately after the justice department pressured at&t and t-mobile to back away from their deal, you saw a new spurt and a lot of that is due to mr. legere's engagement. so there have been periods of even greater price declines. now, this is earlier versions of technology. dr. layton is absolutely right,

there's no magic number here, but this is about market structure and the dynamics in the market, with the technology at that time and the networks as they appear. so it's a much more complicated picture. i'm not saying that you couldn't get price reductions with three. everything i've seen, though, would suggest that we more likely would be able to get better quality, better innovation and better price withes four, and again it's not just the status quo ante. if there were rejected, i'm sure they would be looking for other partners to draw what they need. >> but you wouldn't accept dr. layton's argument that it is not about the total number of competitors as much as it is the empirical data that is suggesting what's going to happen. >> absolutely correct, and the data that i see suggests that you're going to have dangers with coordination, but i think

the justice department should look at all of that. and if there's anything that should be updated, it should be a fact-based analysis. >> senator klobuchar. >> thank you. mr. legere, how will the proposed merger affect pricing in rural areas, particularly areas where sprint and t-mobile are currently competing with each other? and you might say it's not huge areas, but for the rural customers, it's a huge deal. >> by our estimate, there are approximately 62 million rural commerce. 14 million of them have less than 10 mega bits of service. frankly, there's very few places where -- there's only 10 million customers that have three carriers competing. so rural america doesn't have carrier competition. what's going to happen with the creation of this new network is 74 -- well, 96% of rural america will be covered by wireless

service. 76% of rural america will be covered by greater than 10 mega bits of service, and 84 percent will be able to get 25 mega hertz of in-home broad band using cpe. so prices will go down. >> we've been told that the combined company will invest 40 building in building up that work as you've described and this sum is more than sprint and t-mobile would have spent if they were stand alone companies. so where will this money come from? >> that's roughly three times what the spending had been for t-mobile. what happens when you take these two companies and you put the networks together? you have the combined company with synergies of approximately $43 billion dollars. 26 billion of that is very clear, predictable network integration mostly from site decommissioning and those synergies are the source of what

we'll be using to invest the 40 billion in the network. >> will will those synergies result in the jobs lost? >> it will be greater from day one and every day thereafter than the two stand alone companies. when i make that statement, that's more jobs than the stand alone plans of two very aggressive stand alone plans, and i think it's far more secure a number than the extrapolated out stand-alone companies. but, yes, senator, there will be more jobs on day one and every day thereafter. >> but back to the rural, can you explain how they're going to pay for this? i can't help but think it's going to mean higher prices in some way. one of the arguments for the combined company is they would have a larger subscriber base over which to spread the cost for the 5g. but here's another billion-dollar question. so at&t and verizon are big, very big, and you would, in

fact, with this merger become the second-biggest company, but they seem to have faced these same challenges with 5g. why do you think your larger subscriber base would yield a different result when it comes to connectivity in rural areas? because we're having problems with connectivity with the big giants and we'll have one more big giant. why would you have any more luck doing this than they have? >> senator, we were successful as t-mobile in acquiring tremendous amounts of spectrum, 600 mega hertz low band which previously only at&t and verizon had, and in many, many rural places, only is one or both of them and as we come to these rural areas and put in new stores to, you know, sell our capacity, we are met with tremendous fanfare, not just from the communities, but from at&t and verizon, causing them

to recompete, which is extremely important to us. importantly, as we've said and economists have shown in our modeling and our pis statement, overall industry supply will go up 120%, and the unit cost of a gigabyte of data will go down dramatically. so it's not just us, the whole industry will have tremendous supply, and rural america is the biggest beneficiary of every part of our plan. >> okay. couldn't this same argument be used to say that we should combine at&t with one of you or that we should combine at&t and verizon? >> at&t and verizon have consistently shown their lack of desire to compete except when absolutely made to. >> i agree, and that's what you have brought to the table. so our concern is that that will go away. >> right. the biggest point in this merger

is, in addition to 5g, are super charging -- by the way we spent a lot of time talking purely will price as if it's a static equation. one of the biggest things that has created the uncarrier that we will take forward with this greater capacity is a total transformation of what you get when you're in a wireless business. international data roaming, you know, the way you use your phone, no contracts, et cetera. it's a series of 14 significant changes. and it's not just like for like. and one by one we're forcing at&t and verizon to change, and with this network, we'll be able to significantly change not just how they compete, but how they invest, and i believe and i would suggest that we could cause as much as $20 billion of incremental investment in 5g by getting this jump and forcing at&t and verizon. one last point, senator, very important, when we talked about

5g across all spectrum bands, so far at&t have verizon have chosen to use what they use as broad band replacement because it suits them. i would suggest that the cost of them deploying that nationwide would be a site every thousand square yards at a cost that would be 1.5 trillion. so they clearly have only started to deploy a 5g that suits their needs because no one is forcing them. so i think it will force them and it will be great for the country. >> mr. kimmelman? >> i think they're upping their investment as we speak, but i think mr. legere is correct, it's taken a lot of kicking to get them to get in. and i will say again with all of

the data that's being presented before you, the question will still be is the motivation there to spend all of that for these purposes in this time frame? this is not the kind of thing the justice department would usually want to get in the middle of. the jobs issue is not part of the clayton 7 review, but i think this is what the fcc has historically looked at and the question would be whether these kinds of commitments can be really solid phied with the f cc's refew view of the transaction. it's not usually what the justice department wants to engage in. >> mr. slover? >> i think the question will be whether the incentive to build out into the rural areas will be sustained at the same level when there is just one company that is pushing it rather than two companies that are worrying about who is going to push it first and harder. so i think there's going to be

potentially an advantage to keeping both of them in there that the justice department will look at. >> okay. then my last question, mr. kimmelman, you raised this early on, the prepaid market, now it's on everyone's mind that actually millions of lower income customers rely on prepaid to access wireless services and for many people this is the primary connection to the internet. how is this combination of sprint and boost mobile metro pcs under common ownership in your mind going to affect the prices in the prepaid? >> to the extent that the justice department views it as a separate market, which will be an open question, but certainly ought to get scrutiny as a significant portion of the market -- >> 40%, i think, more than 40% of the prepaid market? >> yes, yes, and it has very different attributes, but this will be for justice to determine. i suggest that they ought to see it as a separate market.

the levels of concentration are high, there are very few players, and i think there are substantial dangers for low-income consumers and marginalized families who really can't afford to pay for the smartphone and the bigger package of services. i thought i heard mr. legere say that there's some things that they could do. again, i think that this is something that just on the straight market, economics, justice would have a hard time with allowing. >> because of that higher percentage? >> yes, yes. >> between these two companies because they've been -- they're more mavericky competitors, they've been going into this market now. >> if you're only charging $20 or $30, that's a great deal compared to 80 or $90. but for the population that needs that, if it goes to 40 or 50 or 55, that's a big hit. >> response from either of you? okay. >> prepaid have completely changed. in the past they didn't have

access to the latest devices. the charges were much higher. today it's one in the same. today it's one at the end of the month and one pay at the end of the month. what we've been able to bring to prepay, they've got pretty much the same benefits as the post paid customer. >> that's great. what we're worried about is once they get up to the 40% when you're combining, what the effect that will be that we'll be able to keep those prices. go ahead. finish. >> the combined market share is 27%, so i don't know where we're getting the numbers. today sprint has 11% and t-mobile -- >> but it's almost 40. i'm not like off by 50%. the senatorial 1 to 3%. >> senator, one more thing, you've said a couple of times that we'll become the

second-largest carrier. we're not. when you combine three and four, we will still be the third carrier. we're not moving to number two. >> by the way, this conversation publicly has been advanced by an individual who is not even disguising the fact that he is funded by private equity and hedge funds to attempt to buy this business should it be forced to move. >> the prepaid issue? >> the prepaid, they have too much, and by the way why don't you make them divest 15 million customers in boost, and, hey, i know somebody that will buy it. so that's part of the credibility factor. >> okay. i didn't know that, so i'll look into it. thank you. >> yeah. the prepaid market has been one of the biggest beneficiaries so far, and one of the reasons we have a combined 38% market share is, we didn't turn our back on this market. by the way, verizon today announced the doubling in the sides of their data bucket, so -- >> this is one of the points about your competitive nature and how you've been out there

going after markets that other people didn't that i'm personally very grateful for. >> yes. >> senator, i would say when i hear this, if you look at our plans, we plan on -- by the way, we have made prepaid so similar to post paid that it's almost the difference if you pay on the first of the month or the last of the month, and we've given all the benefits to many customers. as i said, our prepaid customers use more data than our overall customer base and we plan for those prepaid customers to be amongst the biggest beneficiaries going forward. and i think there's tremendous competition there as well. >> when the chairman starts looking at his watch, i might take the message that i will not continue to ask more percentage questions and that any other questions i'll ask on the record. so thank you. >> you can have another round because i've got more. >> oh. >> i wasn't trying to send you the signal that it was time. i wasn't even reaching for the gavel. i mean, we're just getting started. i plan on being here another six

or seven hours. [ laughter ] mr. legere, let's go back to you for a minute. you heard today from some critics who have expressed some legitimate concerns with this deal, who suggest that if the merger moves forward, t-mobile and perhaps even you personally might lose this sort of maverick quality that has come to define you and your company. i don't know whether the ma genta will disappear or the logo from your suit coat. some have suggested there might even be coordination between the merged company and another large player like at&t, for example, to the detriment of your consumers. what would the impact on t-mobile's uncarrier brand, if you were to do this, be? if your customers were to see that you were becoming less competitive. >> senator, i appreciate that.

anybody that suggests there will be coordination between me and at&t and verizon frets the fact that they for gets the fact that they wouldn't speak to me if we were in a crowded room together. the uncarrier brand is possibly the most valuable thing that we have. we're the one most likely to be switched to and it's because of the commitment we've made to continue to not stop the innovation and to take the fight to the big carriers and cause the change. for us to behave differently would be the complete annihilation of our brand and put us in the pack with everyone else. our goal is to use the competition and force them to change, force the industry to change. our goal is over time not to be number three, be number one, do it through competing and lower prices and getting this brand to continue to mean more and more

to the country. >> mr. claure, is it true that we can have realtime translation services with 5g? >> absolutely. >> [ speaking in spanish ] [ laughter ]. >> he just agreed to let me borrow his car. >> oh, i bet. hour two. >> i had to. >> i'm actually quite impressed. >> ms. keddy, both mr. legere and mr. claure have suggested that u.s. companies are in a race to get to 5g is there any sense in which the race to get to 5g is not just among and between u.s. carriers, but among and between different countries to see which country is going to

achieve 5g capability first? >> yes. if you look at 5g, it is truly the world's first global 5g standard, and just as we talked about earlier, like when we did 4g, it enabled a new set of industries that did not exist before. the reason i've been making such a repeated push on some of the spectrum issues is that without spectrum operators can't build networks and in the rest of the world, including europe, china, japan, and even korea, they have cleared a lot more spectrum in the mid band than the u.s. has. >> and you think this merger might have some impact on that? >> to repeat what i'm saying, right, every operator has to have mid band, which is like between 1.5 to 6, and so that's something for you to consider. >> got it. >> and let me make one more

point. earlier i said 5g is about connecting everyone and everything and so the operators start actually deploying these spectrum and it intersects with different industries, the kind of transformation we saw in 4g that was more consumer driven will actually likely happen by companies that take advantage of different industries. >> thank you. that's helpful. >> senator, can i make a point on your 5g because that virtual translation was very important, and make a quick point. >> sure, if you do it quickly. >> a very important part of 5g is not just the hundred times capacity, hundred times speed, it's the ten times improvement in lateensy and what you talk about is indicative of what 5g will be. right now the response time is about 25 millisecond. when you get down to 10 milliseconds or so which we can only do with 5g, that's where the simultaneous translation takes place, and when you get to

single digit, that's when things can be done without harm. so up 5g, that lateency point is one of the most critical things of the 5g network and it's also why 5g has to be nationwide. you can't just go have coverage in a small urban area and then drive out and lose your application. >> right, right. thank you for that point. dr. layton, in his testimony, his prepared testimony and to a degree in response to questions, mr. kimmelman has brought up some points about international comparisons that he says confirm the benefits of a four-carrier competitive environment as opposed to a three-carrier competitive environment. in particular he points as an example are where consolidation

increased the price that consumers were paying. how do you respond to that and is this point consistent with your understanding of the impact that consolidation has had on wireless carriers in europe? >> i live in copien hagen and i'm following the european markets very closely and i'd be happy to supply information to the senate following this. it's interesting because we have four to three -- this is the way of the world. this is going on all over the place and there are some places where there's holdouts for political reasons. i have the report from economists looking at austria four to three, and what they're noting is the global downward trend for prices and that they cannot prove either way, in fact. it's part of the challenge of the data. what i find interesting, though,

if we look at denmark, we had attempt for four to three about four years ago and it failed. prices actually went up for the first time in 20 years because only one of the carriers was profitable, two of them breaking even and one losing money. they wanted to invest and they actually had to increase prices. this is very embarrassing for the european commission. and what i would say is that the actually the data across europe is that prices are going down. so in this hearing we've talked a lot -- there's the saying that the economists, they know the price of everything, the value of nothing. when we look at what people pay for connectivity, it's a very small part of their total income. they're paying a lot more for housing and transportation, food, clothing, vacations, and the interesting thing is, we get a tremendous value for what we get. you know, i live abroad and i want to sometimes go to a hearing, i do it remotely.

what is the valuable of that and i'm paying such a low price for broad band but the value i'm getting is high. but the other side we need to consider, if we want the operators to invest in large networks, what's the incentive for them if they can't make money? i have a suggestion, but it actually works in other countries. it's called free basics for the u.s.a., looking at the people who are truly poor, the operators could be able to provide a set of free data, 1 to 2% of their traffic, maybe less. they have unlimited phone and texts, but we would understand that there's a basic set of internet services that we need to connect to. could be job information, educational information, and so on, and ensure that sort of this basket of essential services was always there and allow those of you who are willing to pay more because it's so valuable, they can. and, in fact, we know that healthcare providers in

particular would be willing to subsidize this because they would pay the mobile subscription outright because the money they save preventing a heart attack is worth the outlay. we are being small minded because we have not allowed the other part of the market to participate. that is one of the biggest opportunities we have is to allow all of the new services who want to come forth to get customers to adopt them, who want to get on monitoring services for heart attacks or get you to watch a video, how do you stop smoking or whatever it might be. so that's what i would bring out in another hearing. a man was blind, and he had his remote center in san diego was being able to tell him what's going on in the hearing and it's a blind man, he can cross the street by using these various strategies, the cars are coming,

you can get on the bus, so people with disabilities can live a normal life with a person who doesn't. so at any -- i hope that answers your question. >> yes, that's very helpful. i want to thank each much our witnesses today. each one of you has brought something very valuable to this hearing and i've appreciated your insight. it's no convince coincidence that this has been one of the longer -- >> one reporter said something about an epic airing. but what this means to people with budgets, who are having trouble affording their mortgages and then you at cell phone costs, we want to have a competitive marketplace. that's why we've raised the concerns and we'll forward these concerns to the justice department. >> indeed. that is the reason why we have these things. it's important to the american public, and these things can

have significant potential to impact the lives of americans, particularly the poor and middle class. the subcommittee has received multiple letters and op eds that have been submitted, americans for tax reform. i move to have these added to the record. >> no objection. >> they'll be added. the record will remain open for two weeks, and the hearing is adjourned. >> thank you.

. coming up friday on c-span at 12:30 p.m., journalists review the recent supreme court

term. at 3:30. john roberts will speak at the judicial conference of the fourth circuit. on c-span 2 at 9 a.m. a discussion about recently imposed tariffs and at noon a discussion about the legal challenges facing immigrants. c-span's washington journal live every day, the issues that impact you. coming up friday morning, mark janice, lead plaintiff in the supreme court case, and his attorney discuss the high court's ruling this week. then author malcolm nance talk about russian interference in the 2016 election. watch friday morning. join the discussion. . friday a conversation