T-Mobile, CETF slammed for $35 million deal to win approval of Sprint merger

by Steve Blum • , , , ,

Your winnings sir

A $35 million payoff that, um, inspired the California Emerging Technology Fund (CETF) to “enthusiastically and wholeheartedly support” T-Mobile’s acquisition of Sprint was lambasted yesterday by organisations that still oppose it. The California Public Utilities Commission’s Public Advocates Office (PAO) and two advocacy organisations, TURN and the Greenlining Institute, filed objections to the agreement.

One issue in dispute is whether it is a formal settlement, which has to be negotiated and reviewed under CPUC rules, or something else. Which is what T-Mobile and CETF seem to think it is, because they didn’t follow those rules, according to the filings.

But the substance of the deal also came under fire. The objections noted, as I did last week, that T-Mobile’s promises of good behavior and grand public benefits were either recycled (in a somewhat melted form) from earlier statements or were so vague and subject to T-Mobile’s discretion as to be no promise at all.

The single significant new commitment in the agreement was $35 million, to be paid to CETF over five years by T-Mobile. The money is supposed to go towards what the contract calls “digital inclusion policy and programs”, with $22 million earmarked for various non-profits and public agencies, in a manner to be determined by CETF and T-Mobile. CETF keeps the remaining $13 million to spend on its ongoing operations.

The PAO asked the commission to reject the deal. Noting that CETF “receives a disproportional amount of funding” that “exceeds any commission approved operating costs percentage”, the PAO said it…

…has determined that the agreement is not in the public interest or reasonable on its face…

The Agreement requires New T-Mobile to provide $35 million over 5 years to CETF’s “Digital Inclusion Policy and Programs” projects without any basis in the record to evaluate, verify, and monitor these programs to ensure that the amount of $35 million is appropriate. While the Public Advocates Office strongly supports efforts to close the digital divide, as described above, additional hearings are necessary to investigate these proposals. The record does not sufficiently describe what these programs do, the amount of money necessary to properly fund them, who operates them, or any other details about them.

CETF and T-Mobile have ten days to respond. One possible outcome is that the administrative law judge managing the CPUC’s review could order new hearings to delve into the details of the agreement. That has the potential to further delay an inquiry that has been extended by at least a couple of months because of earlier cheap lawyer tricks by T-Mobile.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.