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The court?s decision to allow T-Mobile and Sprint to merge is clear: Sprint sucks

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The New York Times
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Filed under:Judge Victor Marrero thinks John Legere is just the coolestAfter a lengthy trial, a federal court ruled in favor of allowing T-Mobile and Sprint to merge yesterday, along with a complicated scheme to turn Dish Network into the fourth national wireless carrier over several years.The decision is not necessarily surprising: even though antitrust scrutiny of big tech platforms like Google and Facebook is heating up, giant telecom mergers are still sailing through. But the decision itself is extremely surprising: Judge Victor Marrero of the United States District Court for the Southern District of New York basically decided that the various data and experts put forward by the 10 state attorneys general who sued to stop the merger weren’t worth taking seriously and that he would decide for himself whether T-Mobile and Dish seemed like cool companies worth trusting.And… it turns out that Judge Marrero thinks CEO John Legere and the rest of T-Mobile’s executives are extremely cool and smart and that Dish Network is definitely trustworthy and that everything is going to work out great.Also, the judge thinks that Sprint sucks. The rest of this piece will be directed by his ghost.After all that setup, Judge Marrero moves on to discuss the current state of the US wireless industry, starting with the two big carriers.The representations of both sides and the evidence developed at trial suggest that while Verizon and AT&T have high quality networks, neither [carrier] is distinguished for innovation of beneficial consumer services, such as unlimited data plans or the bundling of services such as Netflix with their mobile wireless services.Hi. A couple of notes here: both Verizon and AT&T offer unlimited data plans. But in retrospect, they reflect a desperate and ultimately unsuccessful effort to stay relevant rather than a sustainable long-term business strategy.If Sprint’s ability to briefly achieve profitability deserves some recognition, the company is at best struggling to even tread water while its competitors continue to grow the revenues that will allow them to keep pace in the race to next generation wireless networks.In the end, Judge Marrero says, he is convinced that Sprint sucks.The Court is thus substantially persuaded that Sprint does not have a sustainable long-term competitive strategy and will in fact cease to be a truly national [wireless carrier].A huge part of the argument for the merger is that the Department of Justice brokered a deal by which Dish Network will take control of Boost Wireless from Sprint along with some spectrum and then use those assets along with its current stockpile of spectrum to build a new 5G network. But Judge Marrero looked into Dish chairman Charlie Ergen’s ~vibes~ and decided to roll the dice on the ol’ maverick.DISH’s track record and numerous awards for innovation and customer experience, as well as evidence of the currently confidential and creative strategic partnerships that DISH is planning, suggest that DISH would compete as a disruptive “maverick” in the [wireless] Markets, offering low prices for innovative and high- quality services.But what if Dish doesn’t keep its promises or T-Mobile does some shady tricks to limit access to its network? It’s honestly a little cute and heartwarming that Judge Marrero thinks a government lawyer will be able to police how well T-Mobile treats Dish Network as an MVNO customer.These arrangements all ensure that DISH could compete with New T­-Mobile and other market incumbents on highly advantageous terms upon entry, and that the MVNO agreement will inure far more to DISH’s benefit than New T-Mobile’s.This is the purest example of the judge just falling for it: does anyone really think that John Legere made a deal that works out more to Dish’s benefit than T-Mobile’s? It’s bizarre.Judge Marrero also seemed wowed by Dish Network’s 5G buildout plan, which he thinks does not require “large amounts of hardware” because, um, Amazon will be involved.DISH’s innovative network plans also demonstrate that construction of its mobile wireless network will be less costly and time-intensive than might normally be expected. From this evaluation the Court culled a number of telltale patterns of conduct business managers manifest that could serve as persuasive predictors of whether or not commercial firms are likely to engage in anticompetitive actions potentially yielding higher prices or lower quality under particular market conditions.Specifically, the list of the behavioral clues the Court gleaned and examined includes: manifested personal and commercial ambition and aggressiveness by company executives in pursuit of business goals; concerns over the individual’s and the business’s reputation in the industry; responsiveness to professional and corporate peer pressure; strength of character brought to bear upon company policies and operations; level of commitment to business objectives and resourcefulness and creativity in securing and managing the means to carry them out; impulse to prevail in competitive settings and to exercise will power directed to that end; motivation to achieve marketing targets surpassing competitors; inducement to strive harder impelled by the prospect of promotion and rise of standing within a corporation or industry; resort to disruptive or contrarian ways to gain competitive ends and demonstrable success in doing so; and patterns of past conduct and duration and consistency of openly known identification with and adherence to a recognized professional or business culture.Having observed the presentations of the T-Mobile executives at the trial, watched their demeanor, assessed their credibility, and weighed their testimony in its totality in the light of the behavioral guides the Court articulated above, the Court finds that the portrayal of the likely post-merger competitive posture New T-Mobile would adopt warrants credit as believable and consistent with the realities of competition in the [wireless] market.I know that’s a lot, but in the end, the judge made up a list of things a cool CEO would do and decided John Legere would do those things. And he really, really believes it — to the point that he writes what is basically T-Mobile’s own marketing copy for the deal in his decision.What the Court observed at trial in the testimony and documentary evidence credibly presented by T-Mobile executives revealed a different image: a company reinforced with a massive infusion of spectrum, capacity, capital, and other resources, and chomping to take on its new market peers and rivals in head-on competition.And what of the idea that T-Mobile will raise prices once it doesn’t have a lower-cost national competitor in Sprint? Well, Judge Marrero just doesn’t see it because, well, he thinks telecom execs are sane, rational decision-makers.As the Court discussed above, against a backdrop of T-Mobile’s longstanding business strategy as the self-styled maverick and disruptive Un-carrier, it would be counter-productive, even self-defeating, for New T-Mobile soon after the merger to fail to invest, innovate, and improve network speed, capacity, and quality, or to refrain from offering products incorporating the most advanced technologies, enhanced content, and improved service plans, and ultimately to lower prices, as market dynamism would demand and more reliably predict.

As said here by Nilay Patel