Tag Archives: sprint

No help for California in FCC’s lifeline plea deal with T-Mobile

by Steve Blum • , , , ,

Sprint booth mwc la 2019 22oct2019

T-Mobile will pay a $200 million fine to clear Sprint’s bad conduct off of the Federal Communication Commission’s books, but the deal doesn’t include repayment of state subsidies that the company took for low income “lifeline” customers who weren’t actually using the service. T-Mobile assumed responsibility for Sprint’s lifeline service – Assurance Mobile – when it took over Sprint earlier this year. The violations of the subsidy rules and improper collection of “tens of millions of dollars” from the FCC’s lifeline piggy bank happened before the merger but came to light while the FCC and the California Public Utilities Commission were reviewing it. A “consent decree” squares T-Mobile with the FCC but leaves repayment questions unanswered.

The money from the federal settlement will go directly into the “United States treasury” and no mention is made of reimbursing states, such as California, that supplement the FCC’s program with state funds. In a press release, FCC chair Ajit Pai thanked the Oregon Public Utility Commission, which uncovered Sprint’s malfeasance and said that “states play an important role in helping low-income consumers get access to affordable communications through Lifeline and making sure the program is run efficiently”.

Gratitude and flattery appear to be the extent of the FCC’s concern. Sprint admits no wrongdoing, and both it and the FCC agreed that the settlement “shall not be used as evidence or precedent in any action or proceeding, except an action to enforce this consent decree”. State regulators, as well as federal officials charged with managing lifeline subsidies, will have to proceed with their own collection efforts.

California’s hit from Sprint’s false billing is undetermined, but a back of the envelope estimate that I did last year puts it something on the order of $2 million a month, and Sprint admitted that what it calls an “error” had been its practice for at least three years. Before the merger closed, Sprint’s chief financial officer claimed that the company is “committed to reimbursing federal and state governments for any subsidy payments that were collected incorrectly”. Presumably, T-Mobile is obligated to make good on that promise, but how it intends to do so remains to be seen.

T-Mobile might get extra time to deploy in California, but must add extra jobs and meet California test standards

by Steve Blum • , , , ,

Tmobile billboard las vegas 6jan2020

T-Mobile will get another two years – until 2026 – to deploy 300 Mbps 5G service to 93% of Californians, if a draft decision published on Friday is approved by the California Public Utilities Commission. But two other requested “modifications” to the CPUC’s conditions for approving T-Mobile’s merger with Sprint were rejected in the decision proposed by administrative law judge Karl Bemesderfer.

Assuming that CPUC commissioners vote in favor of it – a pretty good bet – it means that T-Mobile will have to add 1,000 net new jobs in California, instead of firing 1,000 higher paid employees and hiring 1,000 lower wage workers at a call center in Fresno County, as it appears to be doing. Bemesderfer’s draft rejects the claim that the CPUC doesn’t have legal authority over its labor practices on a legal technicality. T-Mobile’s ace lawyers bundled it into a “petition for modification”, instead of the “request for rehearing” that Bemesderfer says is the proper way to do it.

He also said that there’s nothing wrong with using California’s own mobile broadband testing program to track T-Mobile’s compliance with California’s own conditions…

On balance, while we recognize that there is a possibility of conflict between state and federal performance standards, we find that the benefits of measuring T-Mobile’s compliance with California-specific conditions with the CalSPEED test outweigh the possible inconvenience of having the same activity measured two different ways. While Joint Applicants raise the possibility of federal pre-emption, we see no indication in the federal proceedings of an intention on the part of federal regulators to pre-empt state action in this area.

T-Mobile had argued that the Federal Communications Commission’s mobile testing program is sufficient, which Bemesderfer didn’t buy. He did, however, accept T-Mobile’s argument that the deployment timeline they promised – and that he wrote into the original decision – was 2026, six years from when the merger closed, instead of 2024, which would have been six years from when the CPUC began reviewing the deal.

Links to arguments, exhibits and other paperwork regarding the T-Mobile/Sprint merger 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 reaffirms T-Mobile/Sprint approval, but wrangling over California jobs continues

by Steve Blum • , , , ,

Tmobile store la 23oct2019

The conditions imposed by the California Public Utilities Commission when it approved T-Mobile’s takeover of Sprint will stand, at least for now. The CPUC decided earlier this month to reject a request to re-do its decision made by opponents of the deal. Tweaks were made to the April decision that approved the merger, but those amount to yes, we meant what we said.

Requests for rehearing are often made but rarely granted. It’s a procedural box that needs to be ticked before a CPUC decision can be challenged in court, either by T-Mobile or its opponents.

T-Mobile is also asking for changes to the CPUC’s conditions, but it’s using a different process – a petition for modification of the decision. Among other things, it wants to remove a requirement to add 1,000 new jobs while keeping the combined T-Mobile/Sprint workforce in California more or less intact.

Although T-Mobile “voluntarily committed” to keep its post-merger California headcount the same as the pre-merger total, that included a plan to hire 1,000 people for a new call center in Fresno County. So 1,000 people elsewhere in California would lose their jobs. Or move to Fresno to take presumably lower paying positions.

In its objection, the Communications Workers of America, the primary telecoms union in California, said that data scraped from T-Mobile’s website shows the bloodletting is already underway

From April 2020 to July 2020, in California, T-Mobile closed 16% of Sprint retail locations, 6% percent of T-Mobile branded stores and 2% of Metro stores. 6% of Boost stores were also closed during this period.

Industry sources back up that assertion.

T-Mobile didn’t dispute those numbers in its response, instead repeating its argument that the CPUC doesn’t have the authority to tell it to hire more people.

Modification petitions usually come to the same end as rehearing requests: technical tweaks might be made, but the substance of the CPUC’s original decision will stand. Whether the CPUC can enforce the decision is still an open question, though. I don’t doubt it’ll try, but given T-Mobile’s defiance, federal courts will provide the final answer.

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 asks CPUC for permission to employ fewer people in California

by Steve Blum • , , , ,

Sprint store

T-Mobile wants the California Public Utilities Commission to dial back some of the obligations it imposed when it approved the Sprint merger in April. A “petition for modification” of the CPUC’s decision asks for three changes:

  • Strike the order to add 1,000 new jobs in California. As it has consistently argued, T-Mobile says the CPUC doesn’t have that authority. Meanwhile, T-Mobile is offering hundreds of former Sprint employees the, um, opportunity to “consider a career change”.
  • Push back a deadline for “providing average speeds of 300 Mbps to 93% of California” by two years, to 2026. T-Mobile seems to think there was a misunderstanding. It says the clock on its voluntary commitment to reach that service level started running when the merger closed, not when it was first proposed in 2018.
  • Trust the Federal Communications Commission and the California Emerging Technology Fund, which is now on T-Mobile’s payroll to the tune of $7 million a year, to verify 5G coverage and speed promises. As it stands, T-Mobile has to prove its claims using the CPUC’s independent Calspeed testing program.

The modification request won’t have much, if any, of a direct effect on the CPUC’s decision allowing the Sprint merger and the long list of conditions it attached. The request for extra time to meet the 300 Mbps download benchmark might get some consideration, but T-Mobile’s appeal doesn’t say anything new about the requirements to add 1,000 jobs in California and to do speed testing the CPUC’s way.

The deal’s opponents will respond, of course, and the commission will take up T-Mobile’s petition and opponents pending request for a rehearing eventually. Minor tweaks aside, both are likely to be rejected. At that point, the CPUC’s lengthy – two years and counting – process will be complete, which clears the path to court challenges, at the state and federal level. That’s where the real action will happen.

Hundreds of layoffs are following in the wake of the T-Mobile/Sprint deal

by Steve Blum • , , , ,

Sprint booth mwc la 2019 22oct2019

T-Mobile is laying off hundreds of former Sprint employees as it consolidates the operations of the two mobile carriers that merged in April. A story by Zack Whittaker and Brian Heater at Tech Crunch broke the news about Sprint employees on Tuesday…

In a conference call on Monday lasting under six minutes, T-Mobile vice president James Kirby told hundreds of Sprint employees that their services were no longer needed. He declined to answer his employees’ questions, citing the “personal” nature of employee feedback, and ended the call.

T-Mobile responded with a press release in which it claimed it would “add 5,000 new positions over the next year”, but for now it wanted to “focus” its resources…

This will result in additional career opportunities for many, as the company positions itself for long-term healthy growth. As part of this process, some employees who hold similar positions are being asked to consider a career change inside the company, and others will be supported in their efforts to find a new position outside the company.

Translation: yeah, we’re firing them.

These involuntary “career changes” should come as no surprise. During the California Public Utilities Commission’s review of the merger, T-Mobile promised on the one hand to keep its combined California workforce at the same level for the next three years, while on the other hand agreeing to open a new call center in Fresno County that would employ 1,000 people. Do the math.

The CPUC did the math, and required T-Mobile to make those 1,000 call center jobs a net addition to the combined T-Mobile/Sprint headcount as of the merger date. Whether or not that order has any teeth is unknown. T-Mobile has consistently maintained that the commission has no authority over its wireless business, and matched those words with deeds.

Even bigger job cuts are coming at AT&T. It’s primary union, the Communications Workers of America, says 3,400 AT&T employees are about to be out of work, and hundreds of wireless stores will close, according to a story in FierceWireless by Bevin Fletcher.

T-Mobile rejects Californian conditions on Sprint deal, tells CPUC it has “no jurisdiction”

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

T-Mobile has chosen the path of regulatory defiance in California. It passed on yesterday’s deadline for challenging the California Public Utilities Commission’s decision to impose tough conditions on its acquisition of Sprint. That doesn’t mean it’s staying silent or that the matter is closed. Quite the contrary. T-Mobile responded to a procedural challenge from opponents of the deal with sharp words, and set itself up for a fight at the CPUC and in state and federal courts that will continue for years to come.

Earlier this month, opponents appealed the decision, asking for a rehearing because, well, the commission didn’t completely accept their arguments the first time around. Their request keeps the procedural ball rolling toward an inevitable jump to state and federal courts, but it doesn’t break new ground.

T-Mobile lashed out at the rehearing request in a response filed just before the three-day Memorial Day weekend. The fact that T-Mobile disagrees with its opponents isn’t surprising, or even particularly newsworthy. What’s interesting about the reply is the way T-Mobile dismisses the decision by saying, in effect, the CPUC doesn’t have the authority to tell us what to do, so we don’t care what they say

While [T-Mobile and Sprint] stand by their voluntary commitments made to this Commission, they submit – as they have from the outset of these proceedings – that the Commission has no jurisdiction to approve or deny the transfer of control of [Sprint’s wireless business], or to make its approval contingent on the imposition of mandatory conditions. Thus, the very premise of the [opponents’ rehearing reuqest], i.e., that the merger could be denied by the Commission but, failing that, should or could be subject to additional Commission-mandated conditions, is fatally flawed because the Commission lacks jurisdiction to do either…

The Commission lacks the authority to “approve” (or “deny”) the wireless transactions or to otherwise impose mandatory conditions on it. That power is reserved to the FCC under the plain language of the Communications Act and general principles of federal preemption. Thus, the Commission may not second-guess the FCC’s determination that the merger is in the public interest subject to the conditions it deemed appropriate or otherwise require additional mandatory conditions specific to California.

The response contains approving words for some of the California-specific requirements imposed by the CPUC, but in the context of refuting opponents’ claims that the commission’s decision lacks sufficient enforcement measures. Taken as a whole, T-Mobile’s stance is the same as it was when it started its CPUC odyssey nearly two years ago, as it was throughout the proceeding, and as it was when it defied the CPUC and completed the merger without permission. It doesn’t accept Californian authority over its mobile business and has only offered to “stand by” its “voluntary commitments”.

Sooner rather than later, T-Mobile will ignore one of the CPUC’s conditions or blow off requests to comply. That’ll trigger a (likely) lengthy enforcement process that T-Mobile will try to steer towards the “federal preemption” that it is counting on.

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/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.

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.