Tag Archives: monopoly

Charter, Comcast two months free offers are cash bonanzas, not charity

by Steve Blum • , , , ,

Printing money us treasury image

The covid–19 emergency is turning into a windfall for broadband companies, particularly Comcast and Charter Communications. As lockdowns came into effect in mid-March, people turned to broadband to stay connected, and for many that meant subscribing to service for the first time. It also meant running the gauntlet of high pressure sales pitches that steered many away from low cost standalone Internet deals and into expensive video packages that start billing immediately.

In its first quarter financial report, Comcast said it gained 509,000 new broadband subscribers between January and March, including 32,000 who signed up for the $10 per month standalone Internet service that the company offers to low income households, and that currently carries a first two months free promotion. The remaining 477,000 landed in market rate packages with payment due. It was the biggest quarterly broadband subscriber gain that Comcast booked in the past 12 years.

Charter had a more expansive first two months free promotion, applying it to all of its Internet packages for households with students. It did even better than Comcast, picking up 580,000 net new broadband subscribers. Of those, 120,000 came in during the promotion period and opted for the free introductory offer. Charter’s aggressive up selling paid off, according to the Seeking Alpha transcript of CEO Tom Rutledge’s first quarter earnings call with financial analysts…

Interestingly, and uniquely, about 50% of the customers who participated in the offer in March chose to order additional products with immediate billing. The vast majority of these customers are taking our flagship Internet product at 200 megabits per second or 100 megabits per second, and a small minority subscribe to our low-income offer or our ultra and 1 gigabit premium offerings.

Although both companies try to score political points by spinning their covid–19 offers as acts of good corporate citizenship, when they speak to Wall Street, they tell the truth: trolling free and/or discounted broadband service past low income households and then shamelessly up selling them is good business.

T-Mobile/Sprint deal opponents ask CPUC for a California do over, while T-Mobile sits it out for now

by Steve Blum • , , , ,

The wrangling over T-Mobile’s take over of Sprint continues in California. Yesterday, three organisations that stood against the merger during the nearly two years that it was under review asked the California Public Utilities Commission to reconsider its 16 April 2020 approval. But T-Mobile didn’t.

The CPUC’s public advocates office, TURN (lately standing for The Utility Reform Network) and the Greenlining Institute filed a joint application for rehearing that rehashes the arguments and evidence they previously offered in their failed bid to kill the transaction. Commissioners will go through the motions of considering the request, but there’s little chance that they’ll change their mind.

But once the rehearing is denied, the final procedural box will be ticked at the CPUC, and opponents will be free to challenge the decision in a court – likely a Californian court. The legal basis for their appeal is a section of California public utilities law that tasks the CPUC with ensuring that mergers of public utilities are “in the public interest”, do not “adversely affect competition” and, if there are any “significant adverse consequences”, impose “mitigation measures” that fix the problem. It’s no surprise that opponents believe none of that happened, and that the CPUC’s decision “contains numerous inconsistent and contradictory statements and analysis that fail to support its findings of fact and conclusions of law”, another potential legal defect that an appeals court might consider.

Yesterday was a deadline for requesting a rehearing of the T-Mobile/Sprint deal, which T-Mobile seems to have ignored. That could mean a couple things. T-Mobile might want to make a point by waiting until the next deadline – 27 May 2020 – which is for requesting rehearings of matters that don’t involve mergers, since it never conceded that the CPUC has the jurisdiction to rule on the transaction. Or it’ll put off going to court until the CPUC tries to enforce some of the conditions it imposed, like telling T-Mobile to add 1,000 jobs to its newly combined Californian workforce.

One thing you can bet on: T-Mobile isn’t going to meekly submit to the State of California’s professed authority.

Links to arguments, exhibits and other paperwork 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.

Cable, satellite TV companies build business plans on fear and ignorance

by Steve Blum • , , , ,

The future, if you want to call it that, of traditional, linear subscription television services will depend on customers who don’t understand, and consequently fear, online video services. Martin Peers, a reporter for The Information, looked at his mother-in-law’s Comcast bill and discovered a stack of add on fees and increasing monthly rates for services that can be had for less money via over-the-top video platforms.

The reason she’s writing unnecessarily high checks each month? “She’s nervous of changing what she’s got”, Peers writes, and that fear is at the base of the profit-maximising strategies adopted by Comcast, Charter Communications, DirecTv and DISH…

[Comcast chief financial officer Michael] Cavanagh acknowledged that recent price rises imposed by Comcast will drive an increased rate of subscriber losses this year. Comcast’s average customer bill rose 3.6% this year, a little more than last year…

Comcast is not alone in focusing more on customers willing to pony up for cable and letting others in search of budget solutions cancel. DirecTV’s owner, AT&T, has had fewer price promotions for the satellite TV service as it focuses on high-value customers. Charter, the third biggest cable service, has a similar philosophy. Comcast, Charter, DirecTV and Dish lost a combined 5.1 million subscribers in 2019, 71% higher than the losses of 2018.

It’s a classic case of haves and have nots. Consumers who feel comfortable navigating the online world can take advantage of competitive video pricing. Those who don’t share that awareness – a group that disproportionately includes low income and elderly people – get soaked for high monthly subscription fees that include a raft of services they don’t need or use.

That strategy is the driving motivation behind the scorched earth tactics cable companies use to defend their grasp on low income communities. Maintaining effective monopolies isn’t just about blocking competitive broadband providers. It’s also about keeping vulnerable customers fenced in.

CPUC tries to correct past merger mistakes as it approves T-Mobile/Sprint deal

by Steve Blum • , , , ,

Tmobile billboard

Two weeks after the fact, T-Mobile gained California’s blessing to take over Sprint yesterday, as the California Public Utilities Commission unanimously approved a decision that imposes a long list of requirements that the newly combined company is expected to meet in California.

Expected, but not guaranteed.

As he presented the decision, Clifford Rechtschaffen, the commissioner in charge of the CPUC’s review, said that “the applicants continue to dispute our jurisdiction to review wireless mergers. We very fundamentally disagree on this point and the decision rejects their challenge to our jurisdiction”. Unless one side or the other backs down – unlikely – that sets up a dispute that’ll land in federal court.

It’s something to worry about later, and it’s largely out of the CPUC’s hands. And it’s not the only problem with CPUC merger reviews that the decision addresses.

The chronic weakness of CPUC decisions of this sort is that enforcement of merger conditions ranges from non-existent to late and sporadic. Commissioner Martha Guzman-Aceves, who assisted Rechtschaffen with the review, said it was on their minds because the covid–19 emergency has highlighted how many merger promises haven’t been kept…

The merger agreements tend to be never monitored or enforced. We sit here today during the covid crisis, we see many of the merger commitments that were made in previous agreements, particularly regarding the affordable plan offerings that had been made under those agreements, to be not fully implemented…

Things like, you know, little elements like those that we’re facing today with the covid response of…verifying eligibility through these programs and how difficult some of the carriers are making this right now, or how easy some of the carriers have stepped up to make it right now.

The solution, at least for the T-Mobile/Sprint merger, is to define a process for enforcing requirements such as service coverage and speed, job creation and programs for low income Californians. It includes verification of T-Mobile’s progress reports through independent testing, hiring an outside monitor responsible to the CPUC at T-Mobile’s expense and issuing enforceable citations that’ll impose penalties if T-Mobile doesn’t perform, even on relatively minor matters. CPUC citations are appealable, but don’t involve the months – sometimes years – that formal enforcement procedures entail.

Unlike Frontier Communication’s purchase of Verizon’s wireline systems or Charter’s acquisition of Time Warner’s cable system, where the CPUC imposed conditions without defining oversight or enforcement responsibility, there’s reason to hope that T-Mobile can be held to account. Whether it will or not is all but certainly in the hands of federal judges.

Links to arguments, exhibits and other paperwork 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.

Belated approval of T-Mobile/Sprint deal, with a long and contested list of conditions, set for CPUC vote today

by Steve Blum • , , , ,

T-Mobile and Sprint will finally get permission to merge from the California Public Utilities Commission later today, assuming commissioners approve a revised draft decision that was posted yesterday. Nothing is guaranteed – the vote could be delayed, for example – but given that commissioners met in closed session to discuss it on Monday and yesterday’s revision is more of a refinement than a major change to the original draft, approval looks like a good bet.

The new draft sidesteps T-Mobile’s decision to close the deal without the CPUC’s blessing and Sprint’s attempt to duck out of the proceeding by abandoning its license to operate a wireline telephone business in California. The CPUC rejected Sprint’s request to cancel its certificate of public convenience and necessity (CPCN) on Tuesday and the new draft grants permission to transfer it to T-Mobile, albeit with a lot of conditions. If T-Mobile wants to get rid of the CPCN, it’ll have to go through a lengthy and formal process to do so.

No mention whatsoever is made of the 1 April 2020 transaction closing date, nor of the subsequent order issued by commissioner Clifford Rechtschaffen that forbid any merger of the two companies’ Californian operations before the commission votes to allow it. That doesn’t mean all is forgiven. The companies might – I’d guess will – face CPUC disciplinary action later.

What the new draft does do is make it crystal clear that the CPUC believes it has jurisdiction over any telephone company operating in California, wired or wireless…

Wireless carriers are “telephone corporations” and therefore public utilities under Public Utilities Code Sections 216, 233 and 234. Both Joint Applicants, T-Mobile and Sprint, have California wireless subsidiaries that are public utility telephone corporations under state law, and subject to the jurisdiction of the Commission.

The revised draft certainly exercises that authority. It expands on T-Mobile’s responsibilities to the Lifeline program, which provides discounted service to low income households, and maintains a requirement for T-Mobile to add 1,000 net new jobs in California, over and above what the two companies together had before they merged.

Service obligations were tweaked. T-Mobile will have to be able to deliver 300 Mbps download speeds to 93% of Californians by 2024, but its obligation to serve rural communities will be capped at offering 50 Mbps download speeds to 94% of rural residents and 100 Mbps to 85% by 2026.

Testing and oversight requirements were tightened, with the job of defining and policing merger obligations more clearly assigned to the CPUC. A deal T-Mobile cut with the California Emerging Technology Fund that included a $35 million payoff and vague performance and build out obligations will have to be enforced by California courts, if at all.

This game may be over, but the series will drag on. As mentioned, there are penalties for the CPUC to consider as well as the status of Sprint’s CPCN. T-Mobile won’t head for the showers either. It has consistently rejected the CPUC’s claim of jurisdiction, and that dispute must eventually be resolved in federal court.

Proposed Decision Granting Application and Approving Wireless Transfer subject to conditions, Revision 1, 15 April 2020
Redlined version of Proposed Decision Granting Application and Approving Wireless Transfer subject to conditions, Revision 1, 15 April 2020

Links to arguments, exhibits and other paperwork 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 takes up T-Mobile/Sprint merger behind closed doors as Thursday’s scheduled vote nears

by Steve Blum • , , , ,

The California Public Utilities Commission will hold a rare closed door meeting later this morning to discuss the T-Mobile/Sprint merger. The announcement was made on Friday morning, following the Thursday afternoon flurry of filings and weeks of lobbying by supporters and opponents of the deal.

Although the commission is careful to provide proper notice that a closed door “ratesetting deliberative meeting” might be held in this sort of case, it’s unusual. I don’t follow all the action everyday at the commission, so I won’t hazard a guess as to how often they do this, but I can’t recall it ever happening in a proceeding that I’ve been following. On the other hand, the bulk of the CPUC’s business involves utilities, such as energy and water, that I don’t spend a lot of time on and that are more directly involved with true ratesetting processes.

“Ratesetting”, by the way, is used as a catch-all category for matters that don’t fit neatly into the other three types: quasi-legislative, adjudicatory and catastrophic wildfire, the latter being a recent addition to the lexicon. The different types of proceedings run under different rules, particularly where lobbying and other ex parte communications with CPUC decision makers are concerned. The ratesetting procedural rules are, in effect, the default rules.

A closed door meeting provides an opportunity for commissioners to discuss a complicated case ahead of a formal vote. They’re not supposed to come to an agreement, or even a general consensus, regarding the outcome, but they can sort out the issues among themselves – the companies and their friends and foes won’t be there.

A draft decision approving the T-Mobile/Sprint merger with stiff conditions is still on Thursday’s “voting meeting” agenda, but events have overtaken it. The two companies completed their transaction without CPUC permission two weeks ago. T-Mobile said it would abide by an order to not begin merging the operations it acquired in California, but only until Thursday, and it’s threatened to pull back on what it considers to be optional commitments if the case isn’t closed then.

It’s going to be an interesting week.

Links to arguments, exhibits and other paperwork 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.

T-Mobile’s actions mean its California obligations “will be taken lightly” or “totally ignored”, CPUC told

by Steve Blum • , , , ,

Tmobile 5g small towns 6jan2020

A final flurry of rebuttals defending and attacking T-Mobile’s de facto takeover of Sprint landed at the California Public Utilities Commission yesterday. The bulk of the comments amount to what I said before. But there are some interesting bits amongst all that.

The Communications Workers of America (CWA) – the primary telecoms union in California – unearthed a U.S. congressional report from 1993, when the lines were drawn between state and federal jurisdiction over mobile carriers. As CWA relates it, that staff report specifically included “transfers of control” in the list of matters that fall under a state’s authority to regulate “the other conditions of commercial mobile service”, beyond the market entry and pricing issues that are reserved for the Federal Communications Commission.

There is support in past CPUC decisions and California public utilities law for the notion that the commission has the authority to approve or deny mergers between mobile companies, but the final battle over that position will be fought in a federal court where federal law rules.

The California Emerging Technology Fund submitted a letter from a T-Mobile lawyer who said the company “fully intends to honor” the $35 million payoff and other generally vague conditions it agreed to in exchange for CETF’s support, “provided of course that the CPUC Final Decision or other CPUC action – such as a prolonged duration of [the order from commissioner Clifford Rechtschaffen halting the merger in California] do not substantially impact our ability to meet” those commitments.

Translation: if the CPUC jams us up, our intentions will change.

T-Mobile’s future good behavior is unlikely, according to the CPUC’s public advocates office (PAO). In its filing, the PAO concludes…

[T-Mobile’s and Sprint’s] statements and actions are further proof and a red flag that compliance with any merger decision or conditions will be taken lightly and ignored or challenged by the companies if the merger is approved or totally ignored if the merger is rejected; ultimately harming California consumers.

The draft decision that’s on next week’s CPUC agenda would approve the merger but impose a long of conditions. The game has changed, though, since it was published nearly a month ago. Draft decisions can change too, and in this case probably will to one extent or another. We should know for sure by the middle of next week.

Comments on the proposed decision of administrative law judge Karl Bemesderfer, 1 April 2020:
Joint Applicants (T-Mobile and Sprint)
CPUC Public Advocates Office
Communications Workers of America
TURN and Greenlining
California Emerging Technology Fund
CETF attachment A
CETF attachment B
CETF attachment C

Links to arguments, exhibits and other paperwork 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.

T-Mobile pauses merger of Sprint operations in California, but only until next week

by Steve Blum • , , , ,

Tmobile billboard las vegas 6jan2020

In a whirlwind of conference calls with California Public Utilities Commission staff and one key commissioner, T-Mobile said it would abide by an order that stopped its merger with Sprint on an operational level in California, at least until next week’s CPUC meeting. When the two companies closed their deal last week without permission from the CPUC staff, commissioner Clifford Rechtschaffen, who is in charge of the regulatory review, quickly directed them to “not begin merger of their California operations until after the CPUC issues a final decision”.

That led to several ex parte conference calls over the following two days. The first was with Rechtschaffen and CPUC staff; three others were with staff for commissioners Martha Guzman Aceves, Liane Randolph and Genevieve Shiroma. In the follow up disclosure filing required by CPUC rules, T-Mobile says it would comply, sorta…

During each meeting, Joint Applicants’ representatives described the reasoning for the close of the merger on April 1, reiterating and expounding upon the explanation provided in the March 31, 2020 letter from Michael Sievert to Administrative Law Judge Bemesderfer and Commissioner Rechtschaffen. They also acknowledged Commissioner Rechtschaffen’s April 1 Ruling, and stated that the Joint Applicants would refrain from merging their California operations until a Commission decision is made at the April 16 business meeting.

T-Mobile’s weasel worded statement doesn’t promise to abide by the commission’s decision, or to wait beyond next week if the case isn’t closed then. As could happen. The merger is on the commission’s agenda for next Thursday, but it’s not unusual for items to be bumped to future meetings or for complex cases to remain open. Sprint’s request to abandon its license to operate a wireline telephone business in California met with protests from merger opponents who want a formal review, and T-Mobile’s subsequent attempt to withdraw its application for permission to take over that business amounts to throwing a wrench into the gears of a already complicated proceeding. Even if commissioners approve a decision of some sort next week, it doesn’t necessarily mean that’s the end of the case. Or the end of Rechtschaffen’s order to delay combining the companies’ Californian operations.

T-Mobile and Sprint aren’t alone in lobbying commissioners to see things their way. Opponents of the deal are likewise having conference calls with staff, as it the California Emerging Technology Fund, which wants the CPUC to not be so darn harsh on the new T-Mobile.

Links to arguments, exhibits and other paperwork 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.

Friends and foes of the T-Mobile/Sprint deal want changes to CPUC’s proposed approval

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

T-Mobile’s decision to ignore the California Public Utilities Commission and close its acquisition of Sprint without permission will result in at least some, and probably a lot, of revisions to the draft decision approving the deal that’s now waiting for a commission vote. Comments filed on Wednesday by past and present opponents of the merger don’t address T-Mobile’s regulatory insouciance – that’ll come later – but do suggest extensive changes to what’s already on the table.

Four of the five organisations that weighed in on the draft decision argued for tougher conditions, or for rejecting the merger altogether. The fifth said the CPUC was being too tough on T-Mobile.

The CPUC public advocates office (PAO) urged commissioners to kill the deal, saying that the thousands of pages of documents and hours upon hours of hearings did not produce enough evidence to show that the T-Mobile/Sprint merger is “in the public interest”, as state law requires. If commissioners go ahead and approve it, the PAO recommends tightening up some of the conditions and, particularly, adding more teeth to enforcement provisions. TURN, aka the Utility Reform Network, made similar points.

The Communications Workers of America (CWA) and the Greenlining Institute focused on concerns specific to their constituencies. CWA, which is the primary telecommunications union in California, also argues that the evidence in the record shows that the merger doesn’t serve the public interest, with particular attention to the impact on people who work for T-Mobile, Sprint and the sizeable ecosystem of companies that’s grown around them. Although it lays out a case for rejecting the merger outright, it instead asks for additional labor-related guarantees. Greenlining similarly points to a lack of attention the draft decision pays to communities of color, and recommends adding requirements aimed at fixing that problem.

The California Emerging Technology Fund (CETF) advocated – mostly – on T-Mobile’s behalf. CETF originally opposed the deal, but decided to “enthusiastically and wholeheartedly support” it after bagging a $35 million pay off from T-Mobile. The one big point CETF made that won’t warm T-Mobile’s heart was a request for stricter CPUC enforcement of the deal it cut for the money, saying it’s “concerned that [T-Mobile and Sprint] may be tempted to not comply”.

Ya think?

As Greenlining pointed out in its comments, CETF’s contract with T-Mobile is “expressly contingent upon the CPUC’s approval of the Wireline Application”, which is the application that T-Mobile now wants to withdraw.

Comments on the proposed decision of administrative law judge Karl Bemesderfer, 1 April 2020:
Joint Applicants (T-Mobile and Sprint)
CPUC Public Advocates Office
Communications Workers of America
TURN
Greenlining
California Emerging Technology Fund

TURN and Greenlining protest of Sprint’s CPCN relinquishment, 1 April 2020
CPUC Public Advocates Office, notice of ex parte meeting with CPUC president Marybel Batjer’s staff, 1 April 2020
Communications Workers of America, notice of ex parte meeting with CPUC president Marybel Batjer’s staff, 1 April 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.

T-Mobile, Sprint ordered to halt merger in California, but don’t seem to care what CPUC thinks

by Steve Blum • , , , ,

Caltrans flagger stop

T-Mobile and Sprint completed their merger yesterday morning, but they’ll have to wait at least a couple more weeks, and maybe longer, for a decision from the California Public Utilities Commission before they can begin combining their operations in California.

If.

If they pay any attention to an order issued yesterday afternoon by CPUC commissioner Clifford Rechtschaffen. Responding to a Tuesday night letter from T-Mobile’s then-COO and now CEO Michael Sievert, Rechtschaffen ruled…

[California] Public Utilities Code Section 854(a) states in relevant part that “[n]o person or corporation, whether or not organized under the laws of this state, shall merge, acquire, or control … either directly or indirectly, any public utility organized and doing business in this state without first securing authorization to do so from the commission.” Both Joint Applicants, T-Mobile and Sprint, have California subsidiaries that are public utility telephone corporations under state law, and subject to the jurisdiction of this agency. The merger of the companies’ operations in California is therefore subject to CPUC approval. Accordingly, Joint Applicants shall not begin merger of their California operations until after the CPUC issues a final decision on the pending applications.

There’s good reason to think the two companies will effectively ignore the order. In the letter, Sievert told Rechtschaffen and CPUC administrative law judge Karl Bemesderfer that they “lack jurisdiction” over the merger, and he would close it without their blessing. Rechtschaffen is the “assigned commissioner” for the CPUC’s review, which means he oversees it, and Bemesderfer is managing it.

In lengthier comments filed yesterday, T-Mobile’s lawyers tried to offer a legal basis for that point of view, but Rechtschaffen is unconvinced, to say the least.

T-Mobile’s defiance is risky, as the company acknowledged yesterday in the fine print of its triumphal press release

There are several factors that could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to…the risk of litigation or regulatory actions, including litigation or actions that may arise from T-Mobile’s consummation of the business combination during the pendency of the California Public Utility Commission’s review of the business combination.

“Regulatory actions” will happen, beginning with the CPUC’s review of the merger, which is scheduled to go to a commission vote on 16 April 2020. Assuming it’s approved more or less as written, the draft of that decision imposes a long list of service and employment conditions on the combined company. Fines and other penalties are also possible, although that will take months, if not years, to sort out.

What is certain to follow, though, is litigation. T-Mobile says its mobile business isn’t governed by California law. Rechtschaffen says it is, and it’s a good bet his fellow commissioners agree. That dispute will have to be settled in a federal court.

Assigned Commissioner’s Ruling, T-Mobile/Sprint merger, 1 April 2020

T-Mobile letter informing CPUC of intent to complete merger, 31 March 2020

Comments on the proposed decision of administrative law judge Karl Bemesderfer, 1 April 2020:
Joint Applicants (T-Mobile and Sprint)
CPUC Public Advocates Office
Communications Workers of America
TURN
Greenlining
California Emerging Technology Fund

TURN and Greenlining protest of Sprint’s CPCN relinquishment, 1 April 2020
CPUC Public Advocates Office, notice of ex parte meeting with CPUC president Marybel Batjer’s staff, 1 April 2020
Communications Workers of America, notice of ex parte meeting with CPUC president Marybel Batjer’s staff, 1 April 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.