Tag Archives: becerra

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

by Steve Blum • , , , ,

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.

CPUC sets April target for deciding whether or not to allow T-Mobile/Sprint merger

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

The T-Mobile/Sprint merger will be on the California Public Utilities Commission’s 16 April 2020 agenda, for a decision one way or the other.

Probably.

Yesterday, Karl Bemesderfer, the administrative law judge managing the CPUC’s review of the merger, issued a ruling that set a new schedule for the proceeding. He plans to publish a proposed decision by 13 March 2020, and he expects it’ll be taken up at the commission’s scheduled voting meeting on 16 April, which would allow for at least 30 days for the public to review and provide comments on it, per CPUC practice.

There’s no guarantee that Bemesderfer’s schedule will be met – it’s a plan, not holy writ – but the fact that he published it indicates a significant degree of confidence that all the necessary facts are in the record, or shortly will be, and that a draft decision can be completed in two and half weeks.

Bemesderfer’s ruling comes after T-Mobile and Sprint pushed for an earlier decision. They wanted a proposed decision posted by today, so that a vote could be taken at the commission’s 26 March 2020 meeting. That would be in time for them to complete their merger by their stated goal of 1 April 2020.

That’s assuming that the CPUC approves the merger, either as is or with some conditions or modifications to the deal the two companies put on the table. Which is not a particularly safe assumption. The commissioners could reject it completely, although that hasn’t been the way they’ve handled big telecoms mergers in recent years.

Three such have been considered since 2015. Frontier Communications’ purchase of Verizon’s wireline telephone systems in California and Charter Communication’s acquisition of Time Warner Cable were approved with a long list of conditions. Comcast’s attempted takeover of Time Warner Cable (which also involved market swaps with Charter) was on track for similar approval, albeit with at least one commissioner pushing to kill it, before federal officials did the job for them.

Federal judge matters not to California’s review of T-Mobile/Sprint deal, CPUC told

by Steve Blum • , , , ,

Fred gwynne judge

Opposition to the T-Mobile/Sprint merger is alive and kicking in California, as the California Public Utilities Commission’s review continues. The primary opponents of the deal – the CPUC’s public advocates office, the consumer advocacy groups TURN and the Greenlining Institute, and the Communications Workers of America union – replied to T-Mobile’s plea for immediate approval yesterday.

Like T-Mobile, the group – AKA joint advocates – made their position known in an email addressed to the CPUC commissioner and administrative law judge who are in charge of the case. A federal judge’s approval doesn’t matter so much in California, they said…

The Commission must acknowledge that the events at the [federal] District court have little direct impact on this Commission’s review of the transaction. Quite distinct from the federal review by the FCC and DOJ, the Commission has independent authority and obligation to review this merger and it should rely on that authority to continue its review…the Commission has a very clear statutory obligation to conduct a thorough and detailed review of this transaction to ensure it is in the public interest and will benefit California consumers.

The fact that the District Court has concluded its review does not require this Commission to accelerate its own review of the merger or to change its intended path in any way…Joint Advocates strongly believe that the record in this proceeding demonstrates that this transaction will harm California consumers

The email also pointed out that the CPUC has a formal process for putting things such as court decisions into the official record, which T-Mobile did not follow. The last time T-Mobile tried an end run around the formalities was when it similarly asked the CPUC to defer to the greater wisdom of the federal justice department and rubber stamp the deal. That didn’t end well – the result was another round of hearings and months of delay.

T-Mobile has already made a thinly veiled threat to close the Sprint merger without California’s blessing, and yesterday’s email might be read as setting 1 April 2020 as the deadline for that.

CPUC, Becerra yet to bless T-Mobile/Sprint deal, as California’s review extends to end of March or later

by Steve Blum • , , , ,

Tmobile billboard 2 las vegas 6jan2020

T-Mobile’s proposed takeover of Sprint was approved by federal judge Victor Marrero in New York yesterday. That leaves a separate, and more focused, federal court case in Washington, D.C. and the California Public Utilities Commission’s review as the final regulatory hurdles that the merger must clear.

Yesterday was also the 30-day public review deadline for the CPUC to post a draft decision that could be considered at its 12 March 2020 meeting. That didn’t happen, so the soonest the CPUC could approve or deny the merger will be at its 26 March 2020 meeting, unless 1. the groups supporting and challenging the merger all agree to expedite a vote (highly unlikely) or 2. the CPUC reckons it to be an emergency (even less probable).

T-Mobile’s San Francisco lawyer, Suzanne Toller, emailed Marrero’s decision to Karl Bemesderfer, the CPUC administrative law judge managing the case, and Clifford Rechtschaffen, the commissioner overseeing it. She asked them to issue a proposed decision “as promptly as possible, and no later than February 25, 2020”, so it’ll be on the 26 March 2020 agenda, in time for T-Mobile to close its acquisition of Sprint by 1 April 2020 and bestow all the glorious wonderfulness of the merger on Californians.

California attorney general Xavier Becerra is a wildcard in the CPUC proceeding. California law allows him to weigh in, and so far he’s been a strong opponent of the deal. He was a co-leader in the antitrust lawsuit that was tossed out yesterday, and he issued a statement saying the “coalition [of state attorneys general] is prepared to fight as long as necessary to protect innovation and competitive costs”. That’s not exactly a promise of battle to the death, but it’s a fair bet that he won’t be telling the CPUC that the merger is a fantastic idea and should be approved.

The CPUC isn’t strictly bound by Becerra’s opinion, assuming he provides one. But it can’t ignore it, either, and could deny the merger on that basis or impose mitigation measures that he might recommend. Typically, an opinion from the California attorney general would be privately conveyed to the CPUC, which then publishes and evaluates it in the text of the final decision, taking into account the evidence in the proceeding’s record and the arguments made by all sides.

As of now, the CPUC’s review is in Bemesderfer’s and Rechtschaffen’s hands. Last week, Bemesderfer ordered DISH – the third player in the deal – to answer detailed questions submitted by the CPUC’s public advocates office. That means there’s still work to do, and a draft decision isn’t necessarily imminent. Looking ahead, the CPUC has one voting meeting scheduled in April, on the 16th, and two in May, on the 7th and 28th.

Marrero was unequivocal in his approval of the T-Mobile/Sprint merger, saying it would increase competition in the mobile broadband market by improving T-Mobile’s position versus AT&T and Verizon. He paints Sprint as a failed competitor that’s made poor technology choices and is losing market share and talent.

“Sprint’s financial situation…remains poor and hamstrings any meaningful investment efforts”, the decision said. “The court is thus substantially persuaded that Sprint does not have a sustainable long-term competitive strategy and will in fact cease to be a truly national [mobile network operator]”.

On the other hand, unlike the deal’s Californian opponents, he’s convinced that DISH can add competitive heat to the mobile broadband market.

“The presence of DISH as a new entrant will constitute a substantial incentive to competition in the [mobile broadband market]”, Marrero wrote. “DISH is undeniably well equipped t o enter the market by virtue of its large spectrum portfolio, which is worth roughly $22 billion dollars and rivals Verizon’s in size”.

Concerns that DISH won’t keep its promises are outweighed, in Marerro’s opinion, by the endorsement and presumed future oversight of the federal justice department and the Federal Communications Commission.

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.

CPUC decision on T-Mobile/Sprint merger fades to March or later, as state attorneys general ask DC judge to wait

by Steve Blum • , , , ,

Tmobile store la 23oct2019

The California Public Utilities Commission won’t vote on approving – or not – T-Mobile’s takeover of Sprint until mid-March at the earliest, assuming there’s no extraordinary attempt to speed up a decision. Yesterday was the 30-day deadline for posting a draft decision ahead of the commission’s 27 February 2020 voting meeting.

After that, the next scheduled meeting is on 12 March 2020. There’s no particular reason, though, to expect a draft decision to be published in time to make that meeting. Or any in March. April could be in doubt, too.

A federal judge in New York still has to issue a verdict in a lawsuit filed by California attorney general Xavier Becerra and others to block the merger. There’s no particular schedule the New York judge has to follow, so a ruling could come in hours or in months. The late February/early March time frame for that is a best guess of many observers who followed the trial closely.

The CPUC reviews telecoms mergers independently, so it could move ahead on its own. Even so, it is required by state law to ask Becerra for his opinion. Becerra could decline to offer his advice, or the CPUC could ignore it, but neither scenario is likely.

Becerra seems to be in favor of waiting. He hasn’t said anything publicly about the CPUC’s proceeding, but he presumably signed off on arguments his coalition of state attorneys general filed with another federal judge in Washington, D.C. That judge is conducting a more technical review of the T-Mobile/Sprint merger and the settlement the companies reached with federal antitrust enforcers. In the filing, the AGs suggest the D.C. judge “might wish to schedule any hearings and determination regarding the settlement for a date after the states’ merger suit was concluded”.

In other words, let us go first.

California attorney general’s opposition to T-Mobile/Sprint deal will be the deciding factor in CPUC’s review

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

Advice from California’s attorney general hasn’t played much of a role in the California Public Utilities Commission’s review of major telecoms mergers in recent years, but T-Mobile’s proposed takeover of Sprint will be different. Attorney general Xavier Becerra’s forceful opposition to the merger will, all but certainly, figure prominently in whatever decision the CPUC makes.

When evaluating major transactions involving regulated utilities, state law requires the CPUC to “request an advisory opinion from the attorney general regarding whether competition will be adversely affected and what mitigation measures could be adopted”.

Mere advice or not, the AG’s office expects the CPUC to listen. Or at least it did in 2015 when it gave a green light to the Frontier’ purchase of Verizon’s wireline telephone systems. The opinion from then-attorney general Kamala Harris warned that even though California law considers it “as advisory” and does not require the commission to defer to it, “the attorney general’s advice is entitled to the weight commonly accorded an attorney general’s opinion” and “attorney general opinions are generally accorded great weight”.

Three big telecoms deals have been reviewed by the CPUC in the past five years – Frontier’s takeover of Verizon’s territories, Comcast’s three-way purchase and market consolidation deal with Charter Communications and Time Warner Cable and, after that was killed by federal antitrust enforcers, Charter’s takeover of Time Warner.

I’ve looked through the records of those three cases, and a formal opinion from the California AG appears in only one – Frontier/Verizon. It found that allowing Frontier to take over operation of Verizon’s decaying copper lines would “not adversely impact competition”, since the two companies didn’t compete directly with each other and the deal wouldn’t block new market entrants. That finding was cited among the many reasons the CPUC approved the transaction, albeit with a long list of conditions.

No mention was made, though, of AG opinions in the course of the CPUC’s review of the two cable transactions. It’s worth noting that the same logic might be applied – like telcos, cable companies don’t directly compete with each other in local markets.

That’s not true of T-Mobile and Sprint. They’re fierce competitors, particularly at the lower end of the mobile broadband and voice market, and approval of their merger depends on whether DISH can plausibly replace the competitive heat that would be lost if they combine. That’s a far more complicated question to answer. I think it’s a safe bet that the AG’s office will respond to the CPUC’s pro forma request for advice, and it won’t be ignored.

What Becerra will tell the CPUC about T-Mobile/Sprint merger

by Steve Blum • , , , ,

Tmobile billboard las vegas 6jan2020

California’s attorney general has more than one roadblock he can try to throw into T-Mobile’s path to a takeover of Sprint. The antitrust suit that Xavier Becerra and other state attorneys general filed in a New York federal court is one possibility. Closing arguments were made in that case last week – the judge hearing it didn’t ask any questions, so there are no clues about what he’s thinking. His decision is expected in the late February/early March time frame. Maybe.

Becerra’s other option lies with the California Public Utilities Commission, which is also reviewing the deal. Assuming it’s treated as a major merger (i.e. involves a utility company under CPUC jurisdiction with at least $500 million of annual Californian revenue – that’s one of many points lawyers are wrangling), California law says

Before authorizing the merger, acquisition, or control of any…telephone corporation organized and doing business in this state…the commission shall find that the proposal not adversely affect competition. In making this finding, the commission shall request an advisory opinion from the Attorney General regarding whether competition will be adversely affected and what mitigation measures could be adopted to avoid this result.

That opinion is requested and delivered privately, and typically doesn’t become public until the CPUC publishes a proposed decision. But it’s not hard to guess what Becerra will say. After the New York hearing wrapped up, Becerra put out a statement saying…

There should be no question now: this attempted megamerger would thwart competition in the telecom market and harm consumers from California to New York, and everywhere in between…At trial, we have repeatedly demonstrated the dramatically increased market concentration that would result if T-Mobile and Sprint were to merge.

Right now, Sprint and T-Mobile compete intensely with each other on price, features and quality. That’s competition we can’t afford to lose.

As you might expect in the middle of litigation, Becerra didn’t publicly suggest any “mitigation measures” – his stated solution is to not allow the merger at all. If that’s the advice he’s offering privately, then the CPUC will either have to try to block it (whether it can or not is another billing bonanza for the lawyers), or reach into the evidence presented and demonstrate why Becerra is wrong.

It’s one thing to sort out the arguments made by litigating parties – in this case it’s the CPUC’s public advocates office, the Communications Workers of America, consumer advocacy groups versus T-Mobile, Sprint and, following megabuck payoffs to buy their support, DISH and the California Emerging Technology Fund. It’s quite another for the CPUC to argue T-Mobile’s case against the California attorney general.

“Fleas of a thousand dogs” add gravitas to T-Mobile/Sprint merger as court challenge wraps up

by Steve Blum • , , , ,

Dog scratch

T-Mobile and Sprint square off today against a coalition of state attorneys general in a federal courtroom in New York, during closing arguments in a trial to determine whether their proposed merger violates antitrust laws. It’s one of the last hurdles for the deal, which has been under regulatory review since 2018.

Approval (or not) by the California Public Utilities Commission is also pending, as is a separate, more technical federal court review in Washington, D.C.

“We are desperately waiting for the outcome of our merger activities”, Jan Geldmacher, president of Sprint’s business to business division said at CES in Las Vegas last week. Nonetheless, he believes “a positive end is near”.

He backed his optimism up with a New Year’s greeting, perhaps in the hope of persuading opponents of the righteousness of his cause. “May the fleas of a thousand dogs infest the arse of anyone who fucks up your new year”, he said. “And may their arms be too short to scratch it”.

The AGs and the deal’s Californian opponents will risk that itch, but the federal justice department won’t. It urged federal judge Victor Marrero to defer to its wisdom and approve the deal. In arguments filed last week, the AGs said they have a say in the matter and, particularly, so does the judge…

The States have a special role in enforcing the antitrust laws on behalf of the public. TheSupreme Court has made clear that neither the States nor this Court need defer to the federal government’s approval of a merger. The States are independent enforcers of the antitrust laws, and it is the role of the Court—not any federal agency—to decide the lawfulness of the merger.

The AG’s latest (last?) filing laid out their case for blocking the deal. It boils down to two points: 1. going from four national mobile broadband companies will concentrate market power to the point that prices will rise and service will fall, and 2. there’s reason to believe DISH can add meaningful competition, even if it keeps its build out promises. The AGs doubt it will.

Privacy is now a Made in California product

by Steve Blum • , , , ,

California’s data privacy law took effect yesterday, although formal regulations and active enforcement by the attorney general’s office don’t kick in until July. Even so, the AG plans to respond to complaints and monitor compliance with the bits of the law that do have teeth now. Until – unless – congress does something, the California Consumer Privacy Act (CCPA) is the national standard.

If you want confirmation, just look in your email inbox. If it’s anything like mine, it’s full of CCPA notifications. A similar flood of messages happened when the European Union’s data privacy regulations took effect last year. The notices were sent regardless of whether a customer lived in the EU or not, because it’s easier and safer to apply a single standard to everyone when it’s practical to do so. In the U.S., the path of least resistance is complying with California’s standard.

Microsoft certainly agrees

We are strong supporters of California’s new law and the expansion of privacy protections in the United States that it represents. Our approach to privacy starts with the belief that privacy is a fundamental human right and includes our commitment to provide robust protection for every individual. This is why, in 2018, we were the first company to voluntarily extend the core data privacy rights included in the European Union’s General Data Protection Regulation (GDPR) to customers around the world, not just to those in the EU who are covered by the regulation. Similarly, we will extend CCPA’s core rights for people to control their data to all our customers in the U.S.

Google jumped on California’s bandwagon, too. Its CCPA-compliant tools are available worldwide.

Although there seems to be general agreement in Washington, D.C. that something must be done, there isn’t consensus on what that something will be. The big question is whether or not to preempt state privacy laws and impose a single, national standard. A bipartisan draft produced by a house of representatives committee doesn’t offer an answer, because it’s still a partisan issue. Which means California might set the standard for some time to come.

California’s review of T-Mobile/Sprint merger could turn into March madness

by Steve Blum • , , , ,

Tmobile arena

The CPUC’s review of the T-Mobile/Sprint merger is likely to run for two or three more months. The briefs filed last week were the last item on the schedule set in October, but that’s not necessarily the end of the road. Rebuttals might be allowed. Other kinds of requests that might result in a delay are possible, although T-Mobile seems to have put aside the sandbagging and stonewalling tactics that cost it at least a couple of months of extra time earlier this year.

California attorney general Xavier Becerra also has a role to play, and he’s yet to appear on the CPUC’s stage. The commission is obligated to ask for his opinion in certain circumstances, and he’s not likely to offer it until the anti-trust lawsuit he filed, along with other state attorneys general, to block the merger is decided in federal court. Testimony in that case ended in New York last Friday, and closing arguments are scheduled for 15 January 2020.

Once that’s all done, administrative law judge Karl Bemesderfer and commissioner Clifford Rechtschaffen have to draft a proposed decision. That’s a process that sometimes, but not always, takes several weeks. The job falls mostly to Bemesderfer, and he has a track record of producing complex decisions relatively quickly.

Once a draft decision is published, there’s a mandatory 30 day public review period before the full commission can vote on it. T-Mobile is demanding that a draft be posted by the first Tuesday of the new year, so it can can be heard at the commission’s 6 February meeting. Anything is possible, but I would bet against it. My guess is that the CPUC will wait for Becerra to weigh in, and I don’t think that will happen until there’s a verdict in his federal court challenge. That could happen in time for a draft to be published and make it onto the commission’s 27 February 2020 agenda, but that’s optimistic. A March decision seems more likely.