CPUC proposes requiring faster rural broadband, wider coverage, more California jobs to approve T-Mobile/Sprint deal

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

T-Mobile must keep the broadband availability and pricing promises it made, in order to win approval of its merger with Sprint from the California Public Utilities Commission. That’s assuming the commission adopts the proposed decision published yesterday by administrative law judge Karl Bemesderfer. As drafted, the decision would bless the deal but impose conditions that were pulled from commitments T-Mobile made directly to the CPUC during the course of the review, and to federal agencies and private organisations.

Improved broadband service is a key condition. T-Mobile would have to upgrade and expand broadband availability over the next 10 years, reaching 91% of Californians with at least 50 Mbps download speeds by the end of 2023 and building to 100 Mbps service availability to 99% of the population by the end of 2026. Within that, T-Mobile will have to be able to serve 81% of rural Californians with 50 Mbps download speeds by the end of 2023, increasing to 96% by 2030, with 90% able to access 100 Mbps service then.

T-Mobile will also have to live up to its claim that it’ll compete for in-home customers…

New T-Mobile shall offer in-home broadband service wherever 5G service is available. Within 3 years of the close of the merger, T-Mobile shall have in-home broadband service available to at least 912,000 California households, of which at least 58,000 shall be rural. Within 6 years of the close of the merger, T-Mobile shall have in-home broadband service available to at least 2.3 million California households, of which at least 123,000 shall be rural. There will be an affordable plan offering that is priced substantially less than other available in-home broadband service, with no contract, no equipment charges, no installation charges, and no surprises.

Job promises will also have to be kept, without weaseling the numbers

New T-Mobile shall have a net increase in jobs in California, such that the number of full time and full-time equivalent New T-Mobile employees in the State of California at three years after the close of the transaction shall be at least 1,000 greater than the total number of full-time and full-time equivalent employees of Sprint, Assurance Wireless and T-Mobile in the State of California as of the date of the Transaction closing.

The proposed decision also has the CPUC hiring, and T-Mobile paying for, a person (or perhaps, company) to continually monitor compliance with all the conditions. T-Mobile would also have to regularly submit data and reports detailing its efforts.

California attorney general Xavier Becerra also announced a settlement with T-Mobile yesterday. The agreement puts additional California-specific obligations on T-Mobile.

The draft CPUC decision doesn’t directly address anti-trust issues generally, nor does it have anything specific to say about what DISH might or might not do with the assets it will get from T-Mobile. Those are federal problems…

We accept the conclusion of the [federal justice department] that creating a fourth national carrier will over time offset, at the national level, the loss of competition resulting from T-Mobile’s purchase of Sprint. In reaching this conclusion, we note that it accords with the February 11, 2020 decision of the federal district court in the Southern District of New York finding in favor of defendant wireless companies in the anti-trust action brought by a consortium of states.

The 20-day public comment period on the draft is now open. Assuming there are no further glitches, the CPUC will take up the proposed decision at its 16 April 2020 meeting.

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.