DISH matters, so CPUC’s T-Mobile/Sprint merger review expands, and extends into 2020

by Steve Blum • , , , ,

Dish kangaroos ces 5jan2015

T-Mobile was ordered yesterday to provide more details about how its proposed acquisition of Sprint and its spin off of subscribers, employees, stores, cell sites and spectrum to DISH will affect customers and communities in California. In a ruling, CPUC commissioner Clifford Rechtschaffen rejected T-Mobile’s insistent requests for immediate approval of the Sprint merger, and instead expanded the “scope” of the California Public Utilities Commission’s review to include a look at commitments the companies made to federal officials, including the side deal with DISH. He included a new schedule for the case, which will extend it until sometime next year.

Rechtschaffen set out a list of eight new questions that T-Mobile has to answer. It’ll need the cooperation, if not the direct participation, of DISH to answer at least two of them, including “what are DISH Network’s California service obligations?” and, specifically, what will happen to the pre-paid, and typically lower income, customers that Sprint will transfer to DISH.

Other questions address how the deals T-Mobile cut with the Federal Communications Commission and federal justice department anti-trust lawyers will affect past promises and future performance in California. The final question on Rechtschaffen’s list drills deep into those details.

In a letter to the FCC in May, T-Mobile made ambitious “commitments” on a national level. For example, it promised that within three years of the merger closing, 85% of people living in rural areas of the U.S. will be covered by 5G service riding on “low-band” (i.e. longer range but lower capacity) frequencies, and 55% by “mid-band” service, which doesn’t go as far but carries more bits. Within six years, that’ll grow to 90% and 67% of the U.S. rural population, respectively. Those promises were reasonably detailed regarding service levels – 90% of the U.S. rural population will have access to 50 Mbps download speeds within six years, for example. Other detailed, quantitative promises include such things as “in home broadband” service and rural 5G cell sites.

T-Mobile must now disclose specifically what those numbers will be for California.

Rechtschaffen also set out a new timetable for the review process. It moves at warp speed by CPUC standards. T-Mobile has two weeks to provide answers to his questions and merger opponents will get two weeks to identify any “alleged material issues of disputed fact”. Witnesses might have to testify and be cross examined in person two weeks later, with both sides submitting their written arguments by 20 December 2019. After that, the schedule is hazy, but typically there would be a couple of weeks for rebuttals, and then a proposed decision would be drafted, which would have to be published at least 30 days before a final commission vote.

Even if the evidentiary hearings are scrapped, that vote won’t happen before February, and it would take barely a nudge to bump it into March or April. Particularly if T-Mobile lawyers resort to the same brilliant sandbagging tactics they used earlier this year. Those document dumps ended up extending the litigation by at least two months.

The joker in the deck is T-Mobile’s vague threat to close the Sprint merger without the CPUC’s blessing, and its stated intention not to “address DISH’s fitness as a wireless provider or its viability as a fourth competitor”, since it doesn’t consider those issues “properly within the scope” of the CPUC’s review. If T-Mobile decides to look for a judge who agrees, all bets are off.

Links to the stack of arguments and exhibits everyone has filed are here.

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