Bemesderfer said, in effect, yeah, it matters and thanks for mentioning it…
A motion “to inform the Commission” of an action by a separate government body is not well-formed, but rather than reject it out of hand I have chosen to interpret it as a motion to re-open the record…
Because the [settlement documents submitted by T-Mobile and Sprint] appear to fundamentally change the Transaction, I agree with [T-Mobile and Sprint] that this proceeding will have a radically incomplete record on which to base a decision unless I re-open the record to admit them. But I also agree with [the CPUC public advocates office and the Communications Workers of America] that if I re-open the record…I must order [T-Mobile and Sprint] to amend the wireless transfer application to identify the changes in the Transaction…and provide other parties with an opportunity for comment…I will also schedule a pre-hearing conference to set a revised scope and schedule for the re-opened proceeding.
In theory, Bemesderfer’s ruling could completely reboot the CPUC’s review of the T-Mobile/Sprint/(and now) DISH deal and push a decision off until sometime next summer. In practice, it’s likely to have a more limited effect, with exchanges of exhibits, testimony and rebuttal, plus decision drafts and a final commission vote, taking a few months.
Yeah, it’s bizarre logic but it makes sense in a twisted sort of way. T-Mobile “advised” the CPUC of the federal anti-trust settlement apparently in a fit of selfless good citizenship, I suppose because no one might have noticed it otherwise. Of course, it’s simply one more bit of proof that T-Mobile and Sprint want to combine with each other and shrink the U.S. mobile broadband market from four competitive players to three oligopolistic ones because of the avalanche of social progress that will be unleashed, and not from any untoward desire to extract monopoly profits from the deal. But actually, T-Mobile’s reply brief argues, the dump truck load of public benefits that it’s backing up to California is already big enough and there’s no need to quibble about federal anti-trust proceedings because the “record before the Commission is comprehensive and complete, and the case stands submitted”.
The California Public Utilities Commission’s review of the merger will continue into Fall. Yesterday was the deadline for publishing a proposed decision – not that one was expected – to make it on the commission’s 12 September 2019 meeting agenda. Opponents of the merger want it to go even further, and have asked that the evidence gathering phase be reopened in light of the settlement. T-Mobile is yet to file its counter argument.
Since the settlement was announced, both Oregon and Texas have signed on to the multi-state lawsuit launched by state attorneys general to block the deal. The addition of Texas AG Ken Paxton lines a prominent republican up with a herd of democrats, and takes much of the anti-Trump edge off of what ought to be an antitrust issue. In a press release, Paxton said fewer competitors in the mobile marketplace means less service and higher prices…
After careful evaluation of the proposed merger and the settlement, we do not anticipate that the proposed new entrant will replace the competitive role of Sprint anytime soon…It is the Attorney General’s responsibility to preserve free market competition, which has proven to result in lower prices and better quality for consumers. The bargain struck by the U.S. Dept. of Justice is not in the best interest of working Texans, who need affordable mobile wireless telecommunication services that are fit to match the speed and technological innovation demands of Texas’ growing economy.
On the other hand, T-Mobile is appealing to its republican friends on the FCC, in the hopes of blocking any further review there. Lobbying groups representing mostly wireless broadband providers and rural telecoms companies want the FCC to take public comment on the settlement reached with the federal justice department, and on DISH’s request for extension of deadlines for making use of spectrum it already controls. T-Mobile’s response amounts to you’re already on our side, so what’s to discuss?…
Prior to the announcement of the [antitrust settlement], a majority of the Commissioners publicly stated their support for the merger based on the record before the Commission. The additional commitments resulting from the Consent Decree only create added public interest benefits for consumers and competition…However, consideration of these additional benefits is not necessary to find the transaction to be in the public interest.
You’d think that maybe someone would want to confirm that the terms of the antitrust settlement are 100% benefits, but if everyone has already made up their minds, why bother?
Allnet Insights President Brian Goemmer said he has typically focused on Dish’s spectrum holdings in major markets, and was surprised that Dish’s AWS–3 spectrum is fairly limited in rural areas. Based on his assessment, coverage is going to be Dish’s big challenge. There’s a big difference between covering all of the U.S. population versus having good enough coverage to take rural customers from AT&T and Verizon.
AWS–3 spectrum is a grab bag of frequencies that the FCC auctioned off beginning in 2014. It’s what’s known as mid-band spectrum, in the 1.7 GHz and 2.1 GHz ranges. Those bands are the workhorses of the mobile telecommunications world, with a good balance of total capacity, and propagation distance and penetration.
Those bands are particularly important in many parts of rural California, such as the Salinas and San Joaquin valleys, where people live in densely populated small (by Californian standards) communities. Low-band spectrum, which is typically thought of as a rural solution, is good at serving wide areas with low density populations, but won’t be as effective in what are for all practical purposes mini-urban communities in the middle of largely unpopulated rural areas.
It’s another good reason for the California Public Utilities Commission to take a fresh look at the merger, and not blindly accept the wisdom of T-Mobile and its friends in Washington, D.C.
Two organisations that largely make their living objecting to utility company requests at the California Public Utilities Commission, and then billing the company involved or the CPUC for their time, filed a me too response yesterday to T-Mobile’s bid to speed up review of its proposed merger with Sprint.
The CPUC’s public advocates office and a major telecoms union swiftly replied, arguing that 1. there was no procedural basis for what T-Mobile asked, and 2. the new deal with DISH needs to be examined rather than rubber stamped.
TURN and Greenlining, which style themselves utility consumer advocates and vigorously partake of the CPUC’s “intervenor compensation” program, [restated those arguments in yesterday’s filing](https://tellusventure.com/downloads/cpuc/t
mobile_sprint/turn_opposition_motion_to_advise_tmobile_sprint_5aug2019.pdf). DISH’s plans, in particular, took some heat, raising the question of how deeply and actively it might need to be involved as the CPUC’s merger review moves ahead.
They also rightly accused T-Mobile of “dismiss[ing] the need for a [CPUC] review and public interest determination of its wireless transaction, instead operating under the presumption that the commission’s review of the wireless transaction has no legal effect”.
There’s no end in sight yet, for either the tussle over the DISH settlement or for the CPUC’s review overall. Last week, T-Mobile asked for and received emailed permission from the administrative law judge managing the case to file a response to everyone’s objections. They can do that any time in the next couple of weeks, but don’t expect them to wait very long.
The objections fall mainly into two categories: procedural and substantive. The procedural objections boil down to “this motion asks the commission to do something that is not provided for anywhere in the rules – to take ‘advisement’ of new facts, after the case has been submitted and the record closed”.
The substantive objections revolve around the sketchy details and uncertain outcome of the settlement that T-Mobile, Sprint and DISH reached with federal justice department. For the past year, the CPUC review has generated thousands of pages of legal argument and testimony about a deal that’s not exactly on the table anymore…
The proposed merger as set forth in this proceeding is solely between Sprint and T-Mobile; however, it appears that Dish Network now has a crucial role in the transaction; namely, to acquire some of Sprint’s assets in order to become a fourth major wireless carrier and allegedly alleviate antitrust concerns. Obviously, Dish’s role in this was not part of the Application because it had not occurred yet; thus, no party has had the opportunity to investigate or analyze the current proposal…
The Commission should consider whether the deal that is actually being proposed is in the public interest.
The standard process for reopening the record and allowing new developments, such as the agreement with DISH to (maybe) launch a competing nationwide mobile network, is lengthier and more contentious. It’s no surprise that T-Mobile, or anyone in their right mind, would want to avoid it. Whether they can or not is in the hands of the administrative law judge managing the case. There’s no particular timeline for him to make a decision.
That’s arguable, but might not matter. The California attorney general took the lead on the competition question. The CPUC, on the other hand, is looking at a broader range of issues, which may include whether the merger is “fair and reasonable to affected public utility employees, including both union and nonunion employees”.
Under the deal, DISH would get Sprint’s “prepaid” – i.e. pay for service in advance – wireless customers, who tend to have lower incomes than “post paid” – billed monthly for services used – subscribers. Those customers will continue to use the networks operated by the new, merged Sprint/T-Mobile company, as will any other customers DISH signs up. In industry jargon, DISH will be a “mobile virtual network operator” (MVNO), reselling services provided by the new T-Mobile company.
T-Mobile agreed to hand over information about employees who work on the “prepaid” side of the house, and make them “available for interviews” in case DISH wants to “make offers of employment”. But DISH isn’t required to hire them, and T-Mobile isn’t required to keep them. Combined with DISH’s decades-long obsession with keeping labor costs low and its reliance on independent retailers, that adds considerable weight to the argument made by the Communications Workers of America that the merger will “eliminate jobs”.
It’s also another reason for the CPUC to not rush to judgement on the merits of the merger, as T-Mobile urged last week. It could be months before a decision, and when it comes it might not be yes.
The T-Mobile/Sprint merger ball is back in California’s court. Friday, T-Mobile, Sprint and DISH reached an agreement to shuffle assets and set the stage for a new, nationwide mobile network to emerge.
Becerra is one of 13 state AGs who are backing a joint lawsuit in federal court, with the goal of blocking the merger as originally proposed. He’s still opposed, saying in a press release “DISH has never shown any inclination or ability to build a nationwide mobile network on its own and has repeatedly broken assurances to the Federal Communications Commission about deployment of its spectrum”.
The CPUC also has to approve the transaction, and its review has been going on for more than a year. Also on Friday, T-Mobile asked Karl Bemesderfer, the CPUC administrative law judge managing the case, to accept the federal government’s wisdom and then speedily approve the merger.
That won’t happen.
The CPUC dances to its own rhythm, and the next beat of the drum is two weeks away: opponents of the deal have that much time to respond to Friday’s motion. It’s not hard to guess what they’re going to say – just read the CPUC public advocates office’s objections to a substantially identical request to “advise the commission” of the endorsement of the merger by the Federal Communications Commission’s republican majority. The PAO argued then that decisions have to be based only on what’s in the CPUC’s official record, and the typical process for adding new information to the record takes weeks, if not months.
An hour before T-Mobile served its CPUC motion on Friday, the California Emerging Technology Fund (CETF) launched a lobbying campaign aimed at pressuring Becerra and the CPUC into “immediately” approving the deal. Back when this all started, CETF opposed the merger, but quickly flipped to enthusiastic support after receiving a $35 million payoff from T-Mobile.
The California Public Utilities Commission can’t act on T-Mobile’s request for permission to acquire Sprint until the middle of September, at the earliest. Yesterday was the deadline for any proposed decisions – in any proceeding, T-Mobile or not – to be placed on the commission’s 15 August 2019 meeting agenda. The next scheduled meeting after that is on 12 September, which means a draft decision would have to be released for the legally required 30-day public review period by 13 August.
Even that date is optimistic. There are two good reasons to doubt that the CPUC will be in any hurry to move ahead on a final decision for the next few months. First, no one knows what the T-Mobile/Sprint deal looks like yet. All the testimony and legal exchanges to date are predicated on the relatively straightforward purchase agreement the two companies announced a year ago. If a new agreement that satisfies the concerns of the federal justice department emerges, the organisations that have been fighting against the original deal at the CPUC will want a chance to review it. That process can be shortened, but even if it moves at lightning speed it will still require several weeks.
Then there’s California attorney general Xavier Becerra, who is one of several state AGs suing to block the merger. He’s gone to court to kill the deal, so it’s a reasonable guess that he hasn’t yet responded positively – or at all – to the CPUC’s request for an opinion, as required by the California Public Utilities Code. T-Mobile might settle its dispute with the state AGs out of court, but if it doesn’t it’s looking at a trial that could stretch into next year, particularly if the judge hearing the case grants the request for a delay made by the states on Monday.
The CPUC might let Becerra worry about the anti-competitive aspects of the deal, and move ahead with a decision regarding other issues such as the merger’s impact on services for low income Californians and infrastructure in rural areas. But the fluid nature of the deal raises the possibility that an early CPUC decision could get overtaken by substantive changes to the terms, which should have been considered. That would be a risky course to take, with little or no gain to the CPUC even if it turned out well.
Extra meetings can happen. The CPUC held one on an emergency basis earlier this year when PG&E filed for bankruptcy, and another is scheduled – with proper notice – for later this month. There are also provisions for waiving the 30-day review period under California law. Don’t expect T-Mobile to get that kind of accomodation, though. The possibility of the lights going out in northern California rates as an emergency; missing an arbitrary corporate deadline does not.
T-Mobile’s proposed merger with Sprint is “presumptively anticompetitive” according to California attorney general Xavier Becerra and eight other state attorneys general (plus their counterpart in the District of Columbia). On Tuesday, they sued the companies in a New York-based federal court with the goal of blocking the deal. The ten – all democrats – say there would be substantial damage to the market for mobile telecoms services if it goes through…
Sprint and T-Mobile are close competitors. Direct competition between Sprint and T-Mobile has led to lower prices, higher quality service, and more features for consumers. If consummated, the merger will eliminate the competition between Sprint and T-Mobile and will increase the ability of the three remaining MNOs to coordinate on pricing. The new combined company will also have reduced incentives to engage in innovative strategies to attract and retain customers compared to Sprint and T-Mobile today…The cumulative effect of this merger, therefore, will be to decrease competition in the retail mobile wireless telecommunications services market and increase prices that consumers pay for mobile wireless telecommunications services.
One likely side effect is that the California Public Utilities Commission’s review of the merger will be further delayed, perhaps indefinitely. Under some circumstances, when reviewing mergers California 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 to avoid this result”. Since the lawsuit asks that T-Mobile and Sprint “be permanently enjoined from and restrained from carrying out the merger”, Becerra won’t be suggesting mitigation measures until the case is either decided by the court, or a settlement is negotiated. T-Mobile has argued that the particular circumstance involved – annual California revenue of half a billion dollars or more – doesn’t apply in this case, but so far hasn’t prevailed.