T-Mobile’s “loopholes” and DISH’s number games could leave rural California unserved, merger opponents say

by Steve Blum • , , , ,

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Opponents of T-Mobile’s proposed takeover of Sprint filed their opinions of the deal as it currently stands at the California Public Utilities Commission on Friday. There’s a few hundred pages of testimony and exhibits to plow through, which are linked below if you’re interested.

One issue in front of the CPUC, which has to decide whether to allow the merger to happen, is the effect it would have on rural broadband service. That includes promises from T-Mobile and DISH, which is being spun up as a competitive replacement to Sprint.

Kristina Donnelly, an analyst with CPUC’s public advocates office, pointed out that the promises T-Mobile made to the FCC and the deal it cut to pay $35 million to the California Emerging Technology Fund (CETF) don’t amount to much, and could leave rural Californians without 5G service…

T-Mobile included many loopholes in both the FCC and CETF commitments that New T-Mobile can later use to circumvent build-out responsibilities…

Aside from the ineffectual nature of certain monetary fines contained in the [settlement with with the federal justice department], there are other concerns with how the FCC commitments and the CETF [memorandum of understanding] commitments are structured. For example, the 90 percent build-out commitment in the CETF MOU would allow New T-Mobile to avoid costly rural deployments. In fact, this commitment is structured in a way that means most rural areas may not see any purported 5G coverage or speed benefits of the proposed merger.

The rural loophole isn’t small. In DISH’s case, it’s the size of 48 counties, according to Lee Selwyn, an economist hired by the PAO. Noting that DISH promised to reach 20% of the U.S. population by 2022 and 70% by 2023, Selwyn testified “in the context of California” that means…

DISH can meet the 20% coverage commitment by serving less than all of Los Angeles County only. DISH can meet the 70% commitment by serving most, but not even all, of just ten of the state’s 58 counties. While DISH has talked about how it will serve rural areas, the small number of cell sites that it apparently plans to deploy raise questions as to the veracity of that promise. While I do not expect that DISH will actually pursue the type of highly concentrated geographic coverage that these commitments would seem to allow, there is no question but that DISH can meet these 20% and 70% coverage goals at considerably lower cost by focusing its investments in the more densely populated parts of the State.

Debbie Goldman, a Washington, D.C. staffer for the Communications Workers of America, invoked T-Mobile’s erstwhile disdain for DISH to drive that point home…

T-Mobile itself highlighted DISH’s lack of fitness as a buyer in an FCC filing in March, 2019, commenting that DISH has a track record of price increases for its services, speculative warehousing of spectrum, and failing to meet FCC-imposed deadlines. T-Mobile additionally commented that “DISH stands out for its efforts to game the regulatory system” and “has little interest in actually delivering real 5G service.”

There might or might not be a formal hearing next week where either side can cross examine the other, although the PAO is asking for one. So far, the CPUC’s extended review of the T-Mobile/Sprint deal is still running on a trajectory that could land a final decision in February.

Opposition testimony and exhibits filed on 22 November 2019

CPUC public advocates office:
Kristina Donnelly, testimony
Kristina Donnelly, exhibits
Shelly Lyser, testimony
Eileen Odell, testimony
Cameron Reed, testimony
Cameron Reed, exhibits
Lee Selwyn, testimony

Communications Workers of America:
Debbie Goldman, testimony
Attachment A
Attachment B
Attachment C
Attachment D

Paul Goodman, Greenlining Institute

Sunne Wright McPeak, California Emerging Technology Fund

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. Take it for what it’s worth.