Tag Archives: sprint

California kicks T-Mobile-Sprint deal to September. Or maybe much later

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

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.

California attorney general joins lawsuit to block T-Mobile-Sprint deal, likely delays it indefinitely

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

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.

According to several news reports, the move is unusual because state AGs usually coordinate with the federal justice department. Staff attorneys there reportedly want to block it, but the republican-appointed head of the anti-trust unit is on the fence. The lawsuit could delay the merger for months or even years.

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.

CPUC approval of T-Mobile-Sprint deal slipping to August, if then

by Steve Blum • , , , ,

Caltrans slow 2

Even if the federal justice department has an Ajit Pai-like epiphany about T-Mobile’s proposed takeover of Sprint and approves the deal today – not likely – there’s diminishing hope that California’s review of the merger will wrap up before August. And the possibility of a mid-September decision is growing.

There are three structural reasons for the delay. First, the CPUC only has one voting meeting scheduled for July, on the 11th, and there’s a four week gap between the commission’s last August meeting and its first one in September. Second, there’s a statutory minimum 30-day public review period between the publication of a draft decision and a vote by commissioners.

To make the 11 July 2019 meeting agenda, the CPUC administrative law judge managing the case, Karl Bemesderfer, would have to publish his proposed decision by next Tuesday. He could do that, but the third structural problem – the commission’s slow moving, adversarial and quasi-judicial decision making process – argues against it.

Two weeks ago, T-Mobile filed a motion to “advise” the CPUC about the deal it reached with the Federal Communications Commission. That set a two-week clock ticking for opponents to weigh in. Yesterday, the CPUC’s public advocates office (PAO) argued that commission decisions have to based on what’s in the official record, and not on news bulletins from Washington, D.C. The PAO’s response pointed out that T-Mobile took exactly that position earlier this year…

Joint Applicants’ [i.e. T-Mobile’s and Sprint’s] request to “advise” the Commission of their FCC filings is essentially the same as DISH Network’s January 29, 2019, Motion to Take Official Notice of Supplemental Authority, which requested that DISH’s FCC filings be considered in this proceeding. In response to DISH’s Motion, Joint Applicants argued that it “would cause prejudice to the Joint Applicants by enabling DISH to belatedly introduce arguments long after the relevant deadlines have passed, to which the Joint Applicants could have responded had the arguments been timely made.” On February 5, 2019, [Bemesderfer] denied DISH’s request, stating “…introducing what amounts to a legal pleading at this [point] is simply prejudicial to the applicants and so that motion is denied.” The arguments regarding prejudice and timeliness are equally applicable now.

A significant change in the way the merger is put together, such as divesting Boost Mobile or spinning off enough assets to create a new national mobile carrier, is something the CPUC ought to consider. Bemesderfer has allowed new information to be introduced, but has also given opponents a few extra weeks to respond to it. Add in the 30-day public comment period, and a decision might not land on the CPUC’s agenda until it meets on 12 September 2019.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.

Federal anti-trust staff want to block T-Mobile-Sprint merger, report says

by Steve Blum • , , , ,

Despite Monday’s raucous cheerleading from republican members of the Federal Communications Commission, the federal justice department is moving toward blocking T-Mobile’s proposed takeover of Sprint. According to a Reuters report, a staff review has concluded that allowing the two companies to combine, thereby reducing the competitive landscape from four nationwide mobile carriers to three, would do too much damage to the telecoms marketplace…

The U.S. Justice Department’s antitrust division staff has recommended the agency block T-Mobile US Inc’s $26 billion acquisition of smaller rival Sprint Corp, according to two sources familiar with the matter…

The final decision on whether to allow two of the four nationwide wireless carriers to merge now lies with political appointees at the department, headed by antitrust division chief Makan Delrahim…

One critic of the deal, Gene Kimmelman, president of Public Knowledge, the nonprofit public interest group, said top brass in the Justice Department’s antitrust division do not generally overrule the staff but they occasionally do.

“I’d be extremely surprised if the front office overruled this,” added Kimmelman, a veteran of the Obama Justice Department.

The federal justice department’s opinion will matter in California, too. The substantive objection to the deal made during the ongoing California Public Utilities Commission review is, likewise, that it’s anti-competitive. The economic analysis done by the CPUC’s public advocates office reaches that conclusion using the DOJ’s methodology. T-Mobile’s rebuttal relies on novel techniques developed by the “world renowned” economists it hired to make its case. Assuming the Reuters report is correct, they did not impress federal anti-trust enforcers.

A final decision by the DOJ is expected to come within a month or so. The CPUC’s review will probably run longer, for a lot of reasons, including that it might not be a bad idea to wait until a decision is made at the federal level. That could mean a CPUC vote won’t come until August, at the earliest.

Pai jumps in on T-Mobile’s side, CPUC and federal justice department not cheering Sprint deal yet

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

T-Mobile threw a hail mary pass to Federal Communications Commission chair Ajit Pai yesterday, hoping to move its proposed merger with Sprint over the regulatory approval line. Pai caught it and started running, but could be tackled short of the end zone by the justice department. And the California Public Utilities Commission’s review is still a whole ’nother ball game.

Yesterday morning began with Pai announcing that new promises from T-Mobile about divesting a down market subsidiary – Boost Mobile – and expanding rural wireless coverage led him to “believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it”. One colleague, commissioner Brendan Carr, who sometimes seems to thinks he’s still a private attorney representing mobile companies, joined in, saying the deal will let the U.S. “notch another win in the global race to 5G”.

Awesome stuff.

Unfortunately for T-Mobile and its republican-appointed cheering section at the FCC, not everyone agrees. Commissioner Jessica Rosenworcel, a democrat appointee, tweeted her skepticism: “we’ve seen this kind of consolidation in airlines and with drug companies. It hasn’t worked out well for consumers…I have serious doubts”.

So does the federal justice department, at least according to a story by David McLaughlin in Bloomberg

The Justice Department is leaning against approving T-Mobile US Inc.’s proposed takeover of Sprint Corp., according to a person familiar with the review, even after the companies won the backing of the chairman of the Federal Communications Commission.

The remedies proposed by the wireless carriers earlier Monday don’t go far enough to resolve the department’s concerns that the deal risks harming competition, said the person, who asked not to be named because the investigation is confidential.

The California Public Utilities Commission is also reviewing the merger. T-Mobile wasted no time yesterday telling the administrative law judge (ALJ) managing the case about the FCC’s epiphany. The immediate effect is to add another layer of complexity and, perhaps, more time to an already complicated and lengthy case. Californian opponents of the merger get time to make an argument against accepting the FCC’s T-Mobile’s manifesto or to ask for a procedural detour to delve into it. Enough time to all but guarantee that a draft decision won’t be published in time to make it onto the agenda for commission’s last meeting in June.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.

Soft promises, hard arguments offered for CPUC approval of T-Mobile Sprint merger

by Steve Blum • , , , ,

Kim putin

T-Mobile’s closing case for the California Public Utilities Commission review of its merger with Sprint boils down to trust us, it’ll be glorious. Opponents, led by the CPUC’s Public Advocates Office (PAO), say you gotta be kidding. T-Mobile (and Sprint and the California Emerging Technology Fund, but T-Mobile is the lead dog in that pack) filed final arguments on Friday, saying the CPUC should approve the merger. The PAO, the Communications Workers of America (CWA), TURN and the Greenlining Institute urged commissioners to deny it, because consumer prices will rise and rural communities will be left out, among other ills. Links to the “reply briefs” are below.

The PAO argues that any benefits to the public – as opposed to rents extracted by special interest groups – “will occur without the merger, if at all”. Its rebuttal dismisses T-Mobile’s promises as “vague” and “not specific, measurable, verifiable, and enforceable”.

Just so. In Friday’s filing, T-Mobile included a long list of what it calls “commitments”, but what a careful reading shows to be mostly meaningless fluff.

For example, it promises to offer lifeline service “indefinitely”, which sounds like “forever” but could also mean “for an unspecified period of time”. High sounding goals are guarded by weasel words like “strive to” and “good faith efforts”. Any firm promises – for example pricing, wholesale terms and data caps – are limited to no more than three years, which is something like the minimum amount of time required to fully integrate the two companies.

The grand network buildout T-Mobile first promised will be limited to “90% of the cell site locations” identified in the plan it submitted earlier as evidence of its good intentions. As CWA points out, the original pledge was for a 99% build out, but the California Emerging Technology Fund helpfully negotiated it down to 90%.

And 90% of cell site locations is not the same as 90% of California’s land area. Given the far higher density of cell sites in cities and suburbs, it’s not hard to guess where the unfortunate 10% will be. Roughly 95% of California’s population lives on 5% of the land and cell site deployment correlates with population density. So eliminating the least profitable 10% of cell sites from T-Mobile’s aspirational powerpoint presentation could leave the majority of rural Californians in the dark.

By omission, T-Mobile’s brief confirms (if confirmation was needed) that it won’t offer the full benefits of 5G service to rural Californians. It talks a lot about using low and mid-band spectrum in rural communities, but not the high capacity, high frequency millimeter wave bands or high density, low latency deployments that will be used to improve service in urban areas where affluent customers are thickest.

It also tries to rebut a key point made earlier by an economist working for the PAO, Lee Selwyn, who said that T-Mobile’s promises of a rural 5G renaissance were bogus because even its mid-band coverage claims were based on unrealistic assumptions about how many new cell sites would be built. T-Mobile offered a quibbling response about coverage patterns, but didn’t address the core economic question of whether there’s enough revenue potential in, say, Kings County to justify building a significant number of new towers or small cell facilities.

Selwyn also leaned on conventional anti-trust analysis to show that reducing the mobile market from four carriers to three will reduce competition and result in increased prices. T-Mobile hit back at that conclusion by touting the supposedly superior (and certainly more creative) economic model produced by three economists it hired.

Who to believe? If you think the new, merged company would, as T-Mobile plausibly claims, have lower marginal – e.g. operating – costs, then the question becomes whether those savings would be used to lower consumer prices or increase corporate profits. The answer depends in large part on whether T-Mobile, AT&T and Verizon reach a comfortable pricing equilibrium instead of fighting a bloody price slashing war. Profitable equilibriums are even easier to find in a three player oligopoly than in a more heated four player market. As the PAO’s rebuttal puts it, “AT&T and Verizon already have substantially higher prices” than T-Mobile. That’s despite having lower marginal costs. Without Sprint nipping at its heels, T-Mobile can join that club too.

T-Mobile’s rebuttal also goes on at great length about its plan to offer in-home service via its 5G network, but doesn’t explain where the necessary capacity will come from, or why it would want to sell 5G bandwidth at residential prices when there’s more money to be made filling the booming demand for mobile data. The fundamental business case for 5G deployment is based on mobile revenue streams. In-home data consumption is a couple orders of magnitude greater than mobile usage, so it’s hard to see how residential service will be a mainstream offering, rather than a tactic to offload temporarily surplus capacity. Wall Street analysts are not buying residential 5G pitches, not least because what’s known publicly about Verizon’s Sacramento experiment is not encouraging.

Some of T-Mobile’s rebuttal focuses on legal issues, particularly its claim that the CPUC has no business reviewing a merger between two mobile carriers because, among other things, it says that’s the Federal Communications Commission’s job. T-Mobile’s objections will set the stage for court challenges to any adverse decision the CPUC might reach, which could kill any conditions or restrictions the CPUC might impose.

There are a few procedural loose ends to tie up, but the substantive evidence and lawyerly pleadings are in the record. The next step is for the CPUC administrative law judge managing the review, Karl Bemesderfer, to draft a proposed decision for the commission to consider. If he does that in the next couple of weeks, commissioners could vote on it as soon as 27 June 2019. It’s a complicated case and there are other potential bumps in the road, though. T-Mobile and Sprint’s agreement to extend their self imposed deadline to the end of July was a wise move.

“Reply briefs” regarding T-Mobile’s acquisition of Sprint, filed with the CPUC on 10 May 2019:

T-Mobile and Sprint (aka Joint Applicants)

(Technically, two CPUC reviews are underway. One concerns Sprint’s wireline operations in California, and the other involves mobile services. The two reviews were combined into a single proceeding, but T-Mobile is trying to split them up again. The wireline transfer is relatively uncontroversial, but is squarely within the CPUC’s jurisdiction; the mobile merger is hotly contested, but the CPUC’s authority is less certain. It would benefit T-Mobile if the two issues were handled separately).


Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.

T-Mobile’s $35 million payoff to CETF was done properly and “adds weight” to its case, CPUC judge rules

by Steve Blum • , , , ,

Beautiful friendship

The $35 million deal to gain the California Emerging Technology Fund’s (CETF) support for T-Mobile’s merger with Sprint was done properly. That’s the ruling from Karl Bemesderfer, the administrative law judge managing the California Public Utilities Commission’s review of the transaction.

The contract, which also contains a long list of vague promises previously floated by T-Mobile, was challenged by the CPUC’s public advocates office (PAO) and two consumer groups, TURN and the Greenlining Institute. Generally, they objected to the way it was handled, arguing that T-Mobile and CETF should have used the CPUC’s formal settlement process, which would offer them a chance to ask for more details and, if they choose, object to it.

Instead, CETF and T-Mobile (and technically Sprint, but it’s T-Mobile that’s running the show) negotiated their deal and then submitted it to Bemesderfer, along with a request from CETF to be allowed to change sides in the case and “enthusiastically and wholeheartedly support” the merger. He said that’s how it’s been done at times in the past, so the agreement can be used to support T-Mobile’s push for CPUC approval of the Sprint merger, but that’s all…

However, all parties should be aware that granting the Motion merely permits CETF and Joint Applicants [T-Mobile and Sprint] to enter their MOU into the record of this proceeding and changes the litigation position of CETF from opposing the Sprint-T-Mobile merger to supporting it. Granting the motion does not pre-judge the question of whether the merger is in the public interest though it adds weight to the argument of Joint Applicants for that conclusion.

Bemesderfer is yet to rule on a flurry of motions filed in the past week. TURN and Greenlining either want the CETF deal excluded from consideration, or be given more time to offer a rebuttal. No decision yet on that request, but Bemesderfer’s latest ruling might be read as an indication of where it’s heading. Also pending are a motion by the PAO to exclude T-Mobile’s not very detailed offer of 1,000 new jobs at a Central Valley call center if the merger is completed, and another request by Sprint and T-Mobile for the CPUC’s immediate approval.

At this point, the only immediate action to expect is another weekend with plenty to read – rebuttal arguments from all sides are due later today. Assuming all goes to plan, I’ll post an update on that on Monday.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.

T-Mobile’s merger tactics catch more heat in California

by Steve Blum • , , , ,

Derby referee 625

The lawyerly squabbling over T-Mobile’s proposed takeover of Sprint continues in California, with new accusations of off the record promises and a defence of a $35 million payoff to a key opponent in return for its enthusiastic and wholehearted support of the merger. Amidst a growing list of disputes in California and increasing doubt over federal approval, T-Mobile and Sprint extended their self imposed deadline for closing the transaction to 29 July 2019.

The California Public Utilities Commission’s review of the deal could run until then. Its public advocates office (PAO) and two consumer groups – TURN and the Greenlining Institute – are pushing hard to kill it. Last week, the PAO asked the administrative law judge managing the case to exclude a vague new offer of Californian jobs made by T-Mobile in a meeting with a commissioner and in a recent filing.

In its opening brief, and an ex parte meeting disclosure filed the same day, T-Mobile claimed it will “build a new customer experience center in the Central Valley that alone will create approximately 1,000 new jobs in the state”. T-Mobile neglected to mention this incredible benefit in the thousands of pages of evidence and arguments it previously entered into the record, or during hours of cross examination by opponents. The purpose of all that give and take is to flesh out sketchy statements, and get specific and enforceable promises into the record. Without that opportunity, the commission won’t have “a firm understanding of [the offer’s] nature and truthfulness”, the PAO argues.

T-Mobile’s deal with the California Emerging Technology Fund (CETF) also caught flack from opponents, not least for its lack of specificity. On Friday, T-Mobile and CETF jointly defended it, claiming it had “very specific parameters”, “significant and adequate detail” and “substantial merits”, but without making any more meaningful commitments. Except for the $35 million to CETF, the agreement doesn’t suggest T-Mobile will do anything noteworthy that it hadn’t already put on the table, nor is there much that’s truly enforceable.

CETF and T-Mobile are also taking hits on procedural grounds.

When an organisation opposes, say, a proposed merger, but then negotiates a deal and stops objecting to it, there is a specific settlement process that the CPUC lays out for incorporating it into the final decision in the case. That process isn’t always used. As T-Mobile and CETF point out, sometimes the commission will give its blessing to an agreement that settles a particular dispute, without formally calling it a “settlement”. That happened during the CPUC’s review of Frontier Communications’ purchase of Verizon’s wireline systems in 2015 and Charter Communications’ acquisition of Time Warner and Brighthouse cable systems in 2016.

T-Mobile’s takeover of Sprint is different. No one took great exception to the various agreements with Charter or Frontier, but the PAO and the two consumer groups are sharply challenging the substance of T-Mobile’s deal with CETF. On Friday, TURN and Greenlining asked for more time to do that.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here

I helped put together the City of Gonzales’ settlement with Charter in 2016. We didn’t follow the formal process when we presented it to the CPUC. We weren’t out to get a megabuck payday either. Take it for what it’s worth.

“Revolutionary opportunities” or higher prices, poorer service and less rural coverage from T-Mobile’s takeover of Sprint?

by Steve Blum • , , , ,

Maduro inaguration

California is either heading for a proletarian broadband paradise or an economic meltdown of Venezuelan proportions. Following months of testimony, document dumps and stupid lawyer tricks, on Friday the companies and their opponents laid out arguments for why the California Public Utilities Commission should or shouldn’t approve the deal.

In two separate filings, T-Mobile (and technically Sprint, but it’s T-Mobile that’s running the show) mostly reiterated the same points and pleadings they’ve been pushing since the beginning: the CPUC is sticking its nose where it doesn’t belong and the merger will benefit everyone – Californian consumers, rural communities, low income and disadvantaged people, job seekers, employees hoping to keep their jobs, and the list goes on.

Over the course of a couple hundred pages, T-Mobile repeated claims made in earlier filings and testimony about how the new, combined company would lower prices, increase speeds, widen coverage and add jobs. Much of it is argumentative, and none of it comes with an enforceable pledge to make good on those promises.

Instead, T-Mobile mostly relies on a hyperbolic salad of marketing superlatives: revolutionary opportunities, incredibly successful, especially striking, fundamentally transform, world-renowned experts, unique pioneering. Much of it involves claimed benefits, such as Internet of things support and low income lifeline services, that are, or should be, course of business for any mobile carrier, merged or not.

The primary opponent to the deal is the CPUC’s public advocates office (PAO). It concludes that the merger is not in the public interest and “will lead to higher prices, reduced capital expenditures in California, stifled innovation, poorer service quality, reduced rural coverage, elimination of low-income plans…and deteriorated consumer privacy”.

The PAO’s sharpest points comes from an economist, Lee Selwyn, it hired to review the merger and, particularly, some of T-Mobile’s microeconomic claims. He makes two important points.

First, contrary to the fragile and convoluted case offered by T-Mobile’s world renowned experts, fundamental anti-trust analysis supports the otherwise obvious conclusion that reducing the mobile telecoms market from four carriers to three means less competition and, ultimately, higher costs and fewer benefits to consumers. His well supported observation that T-Mobile and Sprint mostly compete against each other, rather than against AT&T and Verizon, indicates that the damage done to the market will be that much greater.

Second, even if the especially striking coverage and revolutionary opportunities that T-Mobile promises materialise, the benefits will be limited to densely populated urban areas. Using T-Mobile’s own figures, Selwyn adeptly and quantitatively dismantles visions of a 5G mobile renaissance in rural communities, concluding…

[T-Mobile’s and Sprint’s] claims that the merger will bring coverage to rural areas – and their attempt to buttress such claims with maps that purport to display projected coverage areas at the county level – cannot be squared with the projected capital investments that a merged New T-Mobile anticipates making in each California county through 2024…Rural areas are not served because they are costly to serve, and this fundamental economic reality is not materially changed by the merger. The maps and coverage area projections advanced by T-Mobile in its rebuttal testimony are not credible and should be afforded no weight by the Commission.

Another problem with T-Mobile’s merger case, which gets less attention from opponents than it deserves, is the disconnect between its broadband capacity and speed promises, and the frequencies it plans to use. T-Mobile has less “millimeter wave” spectrum than AT&T and Verizon, which, as it admits in its own filing, will be “largely limited to densely populated urban areas”. Millimeter wave bands – 30 GHz or so and above – are what make many 5G improvements possible.

Everyone involved has two weeks to file rebuttals. In the meantime, some side skirmishes need to be resolved, including a demand by the Communications Workers of America, which opposes the deal, to delete information about contract negotiations from the record, as well as objections to the $35 million payoff to the California Emerging Technology Fund’s (CETF), which led it to switch sides and “enthusiastically and wholeheartedly support” the merger. CETF did not submit arguments for or against it on Friday.

“Opening briefs” regarding T-Mobile’s acquisition of Sprint, filed with the CPUC by 26 April 2019:

T-Mobile and Sprint (aka Joint Applicants)

CPUC Public Advocates Office

Communications Workers of America
DISH Network

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.

T-Mobile, CETF slammed for $35 million deal to win approval of Sprint merger

by Steve Blum • , , , ,

Your winnings sir

A $35 million payoff that, um, inspired the California Emerging Technology Fund (CETF) to “enthusiastically and wholeheartedly support” T-Mobile’s acquisition of Sprint was lambasted yesterday by organisations that still oppose it. The California Public Utilities Commission’s Public Advocates Office (PAO) and two advocacy organisations, TURN and the Greenlining Institute, filed objections to the agreement.

One issue in dispute is whether it is a formal settlement, which has to be negotiated and reviewed under CPUC rules, or something else. Which is what T-Mobile and CETF seem to think it is, because they didn’t follow those rules, according to the filings.

But the substance of the deal also came under fire. The objections noted, as I did last week, that T-Mobile’s promises of good behavior and grand public benefits were either recycled (in a somewhat melted form) from earlier statements or were so vague and subject to T-Mobile’s discretion as to be no promise at all.

The single significant new commitment in the agreement was $35 million, to be paid to CETF over five years by T-Mobile. The money is supposed to go towards what the contract calls “digital inclusion policy and programs”, with $22 million earmarked for various non-profits and public agencies, in a manner to be determined by CETF and T-Mobile. CETF keeps the remaining $13 million to spend on its ongoing operations.

The PAO asked the commission to reject the deal. Noting that CETF “receives a disproportional amount of funding” that “exceeds any commission approved operating costs percentage”, the PAO said it…

…has determined that the agreement is not in the public interest or reasonable on its face…

The Agreement requires New T-Mobile to provide $35 million over 5 years to CETF’s “Digital Inclusion Policy and Programs” projects without any basis in the record to evaluate, verify, and monitor these programs to ensure that the amount of $35 million is appropriate. While the Public Advocates Office strongly supports efforts to close the digital divide, as described above, additional hearings are necessary to investigate these proposals. The record does not sufficiently describe what these programs do, the amount of money necessary to properly fund them, who operates them, or any other details about them.

CETF and T-Mobile have ten days to respond. One possible outcome is that the administrative law judge managing the CPUC’s review could order new hearings to delve into the details of the agreement. That has the potential to further delay an inquiry that has been extended by at least a couple of months because of earlier cheap lawyer tricks by T-Mobile.

Collected documents from the CPUC’s review of the proposed merger of Sprint and T-Mobile are here.