Econ_May_05

12 Leaders

The Economist

May 5th 2018

O MANY false starts would

have soured other romances.

Resistance from antitrust au-

thorities halted a union be-

tween

-Mobile and Sprint,

America’s third- and fourth-larg-

est wireless carriers, in 2014. A

row over merger terms scup-

pered talks last year. But the attraction never dimmed.

This week the pair announced an all-stock deal that would

create a company with a heft similar to that of

AT&T

and Veri-

zon. The happy couple promises lower prices for customers,

higher profits for shareholders and a sharpening of America’s

technological edge (see Business section). Regulators should

be sceptical. The tie-up is bad for consumers; and there are bet-

terways to buildwhizzy newnetworks.

Consumer welfare first. The international evidence sug-

gests that cutting the number ofbigoperatorswouldbe bad for

customers. Research by British regulators into 25 countries

shows that average prices were up to one-fifth lower in mar-

kets with four network operators than in those with three. (Ig-

nore the claims of

-Mobile and Sprint that the Americanmar-

ket is contested by as many as eight firms: in its latest report on

the industry, the Federal CommunicationsCommission found

that the four carriers accounted for over 98% of connections.)

T-Mobile itself is testament to the benefits of a more crowd-

edmarket. Trustbusters not only zapped its discussions in 2014

with Sprint but also blocked an earlier attempt by

AT&T

to buy

it in 2011. The firm has thrived on its own. It has added almost

40mcustomers in the past five years by cutting prices and add-

ing features such as free video-streaming. Subscribers every-

where have felt the benefits. Between 2013 and 2016 overall

consumer prices in America rose by 4.5%; prices for wireless

telephone services decreased by 8%. Consolidation threatens

a different outcome. The combined firm projects relatively

slowgrowth in revenue, a jump in profitmargins and rapid de-

leveraging. That does not sound like the plan for a pricewar.

If regulators have opposed such tie-ups before, why do

Mobile and Sprint expect a different answer this time? One ex-

planation is the risk that Sprint, which is heavily indebted and

has been struggling for a while, might go bust if it remains a

stand-alone entity. But that ought not to sway the trustbusters.

Sprint could shed its debts in a Chapter 11 bankruptcy process

and re-emerge in better shape, or it might get swallowed up by

a different firmentirely.

Trumpeterian destruction

The second explanation is that the two firms think that they

can win a public-interest argument about technological lead-

ership. The bosses of

-Mobile and Sprint argue that by bring-

ing together their bands of spectrum, they would be able to

build America’s first national 5

network. Their merger pre-

sentation, featuring slides with headlines such as “

must

lead innovation again” and “Global economic leadership is at

stake!”, was aimed as much at economic nationalists in the

White House as analystswith spreadsheets.

It is true that 5

networks are expensive to build: they re-

quiremore antennae, base stations and fibre-optic cables than

their predecessors. It is also true that 5

’s speed provides a

platform upon which all sorts of data-hungry new services,

from self-driving cars to industrial robots, can develop. But

that does notmeanoperators have to build their own, separate

networks. Mobile providers in South Korea have agreed to

share the costs and use of 5

infrastructure. Mexico is building

a wholesale mobile network; its capacity can be leased out to

different firms. Better this approach than muted competition

and price-gouged consumers. The union of

-Mobile and

Sprint is one that regulators should not bless.

T-Mobile and Sprint

Block the call

Mobile-phone connections

United States, 2016, m

100

150

Verizon

AT&T

T-Mobile

Sprint

Regulators should squashplans for a big telecomsmerger inAmerica

HE harassment of theWind-

rush generation of Caribbe-

an migrants is a shameful chap-

ter in Britain’s history, and

ministers are paying for it. One

home secretary resigned on

April 29th; her predecessor, The-

resa May, now the prime minis-

ter, is weakened. It falls to Sajid Javid, who took charge of the

Home Office thisweek, to clear up themess.

There is little to like about Mrs May’s migration policy. The

state-ledhoundingofthousands oflaw-abidingBritish citizens

was a side-effect of the “hostile environment” for illegal immi-

grants that she created as home secretary.

Indeed, Mrs May’s rigid insistence on reducing net inflows

to the arbitrary level of 100,000 a year created a hostile envi-

ronment for all migrants, not just the illegal ones (see Britain

section). Landlords, employers and otherswere given newdu-

ties to checkpeople’smigration status. The result has been that

those with incomplete paperwork have been denied homes,

jobs and public services, and have even been locked up. Mrs

May sent mobile billboards bearing the legend “

GOHOME OR

FACE ARREST

” to migrant-heavy districts. She ridiculed “citi-

zens of nowhere” and threatened to make companies publish

lists of their foreign workers (before backing down). Cowboy-

ish Home Office officials desperate to reach their targets have

Britain’s Windrush scandal

Identity crisis

Themistreatment ofCaribbean Britons shows the need for a betterwayof checking identity

РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News"

VK.COM/WSNWS