Ajit Pai, the chairman of the Federal Communications Commission (FCC) says that he plans to recommend the agency approve the $26.5 billion merger of wireless carriers T-Mobile US and Sprint. He said that it will speed up 5G deployment in the U.S.
He said on Monday that the combination will help give a faster mobile broadband experience to rural Americans.
“FCC’s top priorities right now includes closing the digital divide in rural America and advancing U.S leadership in 5G which is the next generation of wireless connectivity. The commitments made today by T-Mobile and Sprint would advance each of these critical objectives substantially” he said in a statement.
Pai said that the two companies have committed to deploying a 5G network that would cover almost 97% of the U.S. population within 3 years of closing of the merger and 99% of Americans within 6 years. 85% of rural Americans in addition would be covered within 3 years and 90% covered within 6 years. T-Mobile and Sprint have also guaranteed that 90% of Americans would be having access to mobile broadband service at speeds of at least 100 Mbps whereas 99% would have access to speeds of 50 Mbps at least.
Pai said that T-Mobile US Inc. and Sprint Corp. would suffer serious consequences if they fail to meet their FCC commitments, which also includes the possibility of having to pay billions of dollars to the Treasury Department.
The FCC and Justice Department both must approve the deal. The companies argue that the combination will help in the betterment of “5G” service, the next generation of wireless. They have also promised to create jobs in U.S and say that they will compete with cable companies as well as Verizon and AT&T. Labor and public interest groups have also shown concerns about wireless price increases and job cuts.
The Obama administration had rebuffed the companies’ earlier effort to merge. An attempted deal between T-Mobile and AT&T had to face the same consequences on concerns that such deals could hurt competition in the wireless industry.
Shares of T-Mobile jumped almost 7 percent in early trading. Sprint’s stock soared 27 percent.