Why Are There So Few Wireless Carriers in the United States? A New Study Says “Performative Competition”

In 2020, the Federal Communications Commission (FCC) approved the T-Mobile/Sprint merger, reducing the number of wireless carriers in the U.S. to just three. 

In a new paper titled “Performative competition: The U.S. wireless communication market and the T-Mobile/Sprint merger,” published in the journal International Communication Gazette, several researchers with ties to the Annenberg School for Communication at the University of Pennsylvania examine the evolving political economy of the U.S. wireless communications market through a case study of the merger, arguing that telecom executives and regulators worked to construct a perception of competition to justify the merger’s approval. 

The researchers, Postdoctoral Fellow Sydney Forde, Visiting Scholar Hendrik Theine, and alumni Pawel Popiel (Ph.D. ‘20) and Christopher Ali (Ph.D. ‘13), call this strategy “performative competition.” Drawing from policy documents and industry data from the Global Media & Internet Concentration Project (GMICP), they show how the FCC justified ongoing consolidation in the U.S. wireless communications market by downplaying antitrust concerns, reframing consumer harms, and emphasizing the speculative promises of new technology.

“The wireless industry has long been dominated by just a handful of corporations,” says Forde, postdoctoral fellow at Annenberg’s Media, Inequality, & Change Center. “AT&T and Verizon, alongside smaller competitors Sprint and T-Mobile, have made up a tight oligopoly since the early 2000s,” she says.

In 2014, Sprint proposed acquiring T-Mobile, arguing that AT&T and Verizon had grown too large. Their proposal aimed to create a true competitor to the duopoly, but government officials balked at eliminating a fourth competitor in the wireless market. “Then-FCC chairman Tom Wheeler made it clear that the commission drew the proverbial line at four competitors, stating explicitly that ‘four national wireless providers is good for American consumers,’” Forde says.

Four years later, Sprint and T-Mobile tried to merge again, and this time, the companies succeeded. The researchers argue that the merger was approved because stakeholders successfully employed “performative competition,” the practice of strategically deploying empirical evidence and ignoring others to advance their policy goals.

The Justice Department settled with the companies, and the FCC approved the merger based on the condition that the companies expand rural broadband and 5G networks and sell their prepaid mobile businesses to DISH Network, paving the way for DISH to become the new fourth national mobile provider. The researchers argue that these conditions were insufficient to justify the FCC’s approval of the merger, and instead represented a capitulation to the interests of telecom giants.

The researchers identify five examples of performative competition leading to the FCC’s approval of the merger:

1. Market concentration: The FCC rejected concerns that the merger would significantly raise market concentration, arguing that mobile markets are “continually evolving,” the researchers say. Their analysis shows that concentration in the mobile market had already surpassed the thresholds of competitive concern in 2018 and would increase further post-merger. In addition, the stipulation that “New T-Mobile” divest a portion of its assets to DISH Network would only slightly decrease market concentration.
2. Price increases: Despite calculating that the merger would increase prices for consumers, the FCC argued that the potential to enhance 5G coverage outweighed the costs, aligning with the interests of wireless providers over consumers.
3. Impact on rural mobile development: The FCC mandated that the New T-Mobile ensure that “within three years of the merger's closing, 66.7% of the rural population will have access to download speeds of at least 50 Mbps, and 55% will have access to download speeds of at least 100 Mbps. T-Mobile expanded its 5G network post-merger, including in rural areas, but its coverage and quality are uneven, the researchers say.
4. Impact on low-income customers: With the sale of Boost Mobile to DISH Market, the FCC hoped that DISH would become the new low-cost network. The researchers say that it did not happen. In 2023, the satellite company EchoStar purchased DISH Network, announced it would not exercise its option to purchase T-Mobile's spectrum, and tried to sell DISH to DirecTV for $1.
5. Impact on labor: The Communications Workers of America estimated that the merger would result in a loss of 30,000 jobs. The FCC disregarded the CWA's predictions, and wireless carrier store closures led to job losses among wireless workers.

The researchers concluded that performative competition was clearly on display during the T-Mobile/Sprint merger: “The end result demonstrates how both the FCC and Department of Justice were more concerned with the appearance of competition, its performance, than actual market conditions.”