Becerra lines up with CPUC on mitigating “anticompetitive” effects of T-Mobile/Sprint deal

13 March 2020 by Steve Blum
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A proposed California Public Utilities Commission decision published on Wednesday and scheduled for a vote on 16 April 2020 would allow T-Mobile to take over Sprint, and become the dominant mobile carrier in many Californian communities. The merger “is presumably anticompetitive” in at least some of those areas, according to advice from California attorney general Xavier Becerra requested and received by the CPUC…

We find that T-Mobile’s acquisition of Sprint will likely harm competition in 18 specific California markets for retail mobile wireless telecommunications services, resulting in higher prices and fewer choices for California consumers. However, certain conditions could be developed with the potential to alleviate in part some of the harms.

Becerra agreed to a separate settlement with T-Mobile that covers politically popular items like low cost mobile service plans and benefits for schools, but left the heavy regulatory lifting to the CPUC. The conditions proposed by the draft CPUC decision, which include broadband buildout and availability requirements and an increase of 1,000 employees in T-Mobile’s Californian workforce, track with Becerra’s advice. He wanted the CPUC to impose…

Coverage and speed requirements as measured via drive-by tests; clear commitments with respect to LifeLine service; enhanced commitments to public safety; commitments to maintain and increase California jobs; monetary penalties for failing to meet these conditions; an independent monitor to evaluate compliance; and the ability for the CPUC and the California Attorney General to enforce compliance in a California court under California law.

An agreement between T-Mobile and the California Emerging Technology Fund (CETF) which outlined weaker and vaguer coverage and service requirements, and included a $35 million payoff to CETF in exchange for its support of the merger, was not particularly useful, Becerra said…

While the CETF Agreement could be beneficial to California consumers, the inability of CETF to meaningfully enforce the terms of the agreement renders many of these benefits illusory. T-Mobile and CETF failed to follow any of the procedural requirements of Article 12 (Settlements) of the California Public Utilities Commission’s Rules of Practice and Procedure (Rules), which requires notice of the settlement, public settlement conferences, reasonableness requirements, and a finding from the Commission that the settlement is in the public interest…

Because the CETF Agreement is merely “a common position” by CETF and T-Mobile, it gives CETF minimal ability to find relief if T-Mobile’s view of the “common position” turns out to be in dispute.

Becerra also expressed doubt about whether DISH will, as it kinda sorta said it would, build out 5G mobile infrastructure in rural California. “DISH testified that it intended to focus on large urban markets, which makes Los Angeles a likely beneficiary of any DISH network, but not Imperial County”, the opinion said.

Proposed Decision Granting T-Mobile Application and Approving Wireless Transfer Subject to Conditions, 11 March 2020
Attachments 1 to 5
Opinion of the Attorney General on Competitive Effects of Proposed Merger of T-Mobile USA, Inc. And Sprint Communications Company L.P. (attachment 5 to proposed CPUC decision, dated 11 March 2020)
Settlement Agreement between T-Mobile and the State of California, 9 March 2020

Links to arguments and exhibits filed at the CPUC and elsewhere are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. Take it for what it’s worth.