Tag Archives: t-mobile

T-Mobile gives CPUC some insight into post-Sprint merger plans for California, but won’t make it public

by Steve Blum • , , , ,

The hundred-plus pages of testimony submitted by three T-Mobile executives to the California Public Utilities Commission sheds a little more light on what the company intends to do in California when – if – it acquires Sprint and spins off customers, employees and assets to DISH. But most of the specific plans for California submitted to the CPUC last week were filed confidentially.

Chief operating officer Michael Sievert toned down the company’s weasel words about T-Mobile and Sprint workers in California, saying that the number of employees three years after the merger closes will be “equal to, or greater than” the current T-Mobile and Sprint total, even taking into account employees who might be transferred to DISH. However, he didn’t reconcile his pledge with another T-Mobile commitment to open a call center in the San Joaquin Valley and staff it up with 1,000 workers. That leaves open the possibility that hundreds of employees, from all over California, will be given a choice between unemployment or moving to Fresno County to begin a new career as a customer service rep.

Chief technical officer Neville Ray’s testimony boils down to we weren’t planning to use Sprint’s 800 MHz spectrum for 5G or much of anything else, so nothing changed. He also discusses leasing 600 MHz spectrum from DISH – T-Mobile has an option to do so but, according to Ray, hasn’t decided whether or to what extent to exercise it. If T-Mobile did lease that spectrum, though, it would mean cash flowing back to DISH and, presumably, less pressure to do something with it before the Federal Communications Commission takes it back.

In other words, T-Mobile’s option might result in a significant financial benefit to DISH, that could offset some of the financial penalties it might incur if it doesn’t meet its obligations to build out a competitive 5G network. Given DISH’s history of spectrum dealing, there’s reason to question the settlement’s fundamental premise that a new, facilities-based mobile broadband network will result. The lower the net cost of walking away, the less incentive DISH has to meet its nominal commitments.

Ray also submitted California-specific information about T-Mobile’s 5G deployment and service plans, mirroring the national level information given to the FCC. But unlike the national data, T-Mobile wants to keep its promises to California secret. Those could become public as the CPUC review moves ahead, but there’s no particular reason at this point to think they will.

The filing made by executive vice president Thomas Keys made minor updates to his previous testimony, but wasn’t particularly enlightening.

Opponents of the merger have two weeks to digest T-Mobile’s testimony and respond. The CPUC public advocates office’s quest for more information from DISH is running in parallel. Opponents could similarly ask T-Mobile to provide additional data and/or ask for more time to review it all, but at this point the case is still on a trajectory for a final decision in February 2020.

Links to the stack of arguments and exhibits everyone has filed are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary, but I like to think I’m good looking too. Take it for what it’s worth.

The wonderfulness of the T-Mobile/Sprint merger is only more wonderful, CPUC told

by Steve Blum • , , , ,

Tmobile store la 23oct2019

T-Mobile, Sprint and DISH filed their responses to the latest questions posed by the California Public Utilities Commission as it extends its review of the T-Mobile/Sprint merger to take into account the settlement reached by the companies with federal anti-trust attorneys.

I’m still working through the nearly 200 pages of “testimony”, particularly the statements by T-Mobile executives. From a quick scan, it looks like they’re following the line laid down by the company’s lawyers: nothing to see here, move on. But more on that later. Or check out the links below.

DISH’s chief D.C. staff lobbyist, Jeff Blum, responded to the question posed by commissioner Clifford Rechtschaffen in his ruling extending the CPUC’s review: “what are DISH Network’s California service obligations?”. Responded, but didn’t exactly answer. He detailed DISH’s federal obligations, and since California is still arguably one of the fifty United States the implication is those apply equally here. But he also laid out the fine print, which details granular requirements with granular penalties for granular non-compliance, which doesn’t exactly guarantee that DISH will do anything in particular in California.

Two Sprint executives – chief commercial officer Brandon Draper and staff lobbyist Peter Sywenki – filed declarations that amounted to I know nothing. Since they don’t work for T-Mobile, they aren’t “privy to [T-Mobile’s] business and network plans”.

Two hired gun economists, Mark Israel and Timothy Bresnahan, affirmed their previous paid testimony in support of the merger and offered assurances that what that they described the first time around was, if anything, even better than they thought.

Supplemental Testimony of G. Michael Sievert, 7 November 2019
Supplemental Testimony of Neville R. Ray, 7 November 2019
Supplemental Testimony of Thomas C. Keys, 7 November 2019
Testimony of Jeff Blum on behalf of Dish Network Corporation, 7 November 2019
Supplemental Testimony of Brandon Dow Draper, 7 November 2019
Supplemental Testimony of Peter N. Sywenki, 7 November 2019
Supplemental Testimony of Mark A. Israel, 7 November 2019
Supplemental Testimony of Timothy F. Bresnahan, 7 November 2019

Links to the stack of arguments and exhibits everyone has filed are here.

I don’t know who Jeff Blum is, and he’s not my dad. My dad was Geoff Blum. My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary, but I like to think I’m good looking too. My dad was amused by that. Take it for what it’s worth.

DISH stalls discovery of its California plans, so PAO asks judge to compel cooperation

by Steve Blum • , , , ,

Dish ces press conference 2012

DISH doesn’t want to disclose what its intentions are for the Californian customers, employees, spectrum, cell sites and retail stores it might – or might not – get from T-Mobile and Sprint when – if – the two companies combine. In a motion filed on Tuesday, the California Public Utilities Commission’s public advocates office (PAO) said that DISH stonewalled requests for information about its California-specific privacy policy, and network build out and customer service plans. So, the PAO is asking the administrative law judge managing the CPUC’s review of the merger to “compel responses” from DISH.

Last month, the scope of the CPUC’s inquiry was expanded to include DISH’s future role in California’s telecoms marketplace, following a settlement with federal anti-trust enforcers that calls for pre-paid subscribers, and redundant employees and real estate to be transferred to DISH, in order to keep four competitors alive in the U.S. mobile telecoms market.

The PAO has broad authority to request and, generally, get information from companies involved in mergers and asset transfers. Usually, companies push back and DISH is no different – its answers (see links below) consist largely of complaints that the PAO’s questions “are overbroad, unduly burdensome,
vague, and ambiguous” and “not relevant to the scope of this proceeding”. The bit about the scope of the proceeding is important because DISH, like T-Mobile and Sprint, disputes “the scope of the Commission’s jurisdiction…over wireless services”.

Arm wrestling over information disclosures is common enough. What makes it different in this case is the compressed timeline for the CPUC’s expanded review of the T-Mobile/Sprint merger. Assuming no deviation from the current schedule, the case is on a trajectory for a final commission vote in February. But if there’s a procedural detour to resolve DISH’s role and responsibility in the case or to, once again, allow time to work through a late document dump, the review could be extended for weeks, or even months. Or T-Mobile could make good on its threat to move ahead without the CPUC’s blessing.

More information should be forthcoming later today. T-Mobile, Sprint and, it appears, DISH are due to submit their explanation for why the federal settlement only makes the California wonderfulness of the merger even more wonderful. Or at least no worse. Stay tuned.

DISH Network Corporation’s Responses and Objections To the California Public Advocates Office’s Data Request No. 001, 20 September 2019
DISH Network Corporation’s Responses and Objections To the California Public Advocates Office’s Data Request No. 002, 31 October 2019
Motion of the Public Advocates Office to Compel Responses to Data Requests, 5 November 2019

Links to the stack of arguments and exhibits everyone has filed are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary, but I like to think I’m good looking too. Take it for what it’s worth.

Sprint takes half billion dollar revenue hit after ending improper California, federal subsidies

by Steve Blum • , , , ,

Sprint booth mwc la 2019 22oct2019  Klovia 2 att net s conflicted copy 2019 11 04

Losing California and federal subsidies it took for inactive Lifeline accounts smacked Sprint hard in the third quarter of 2019. The company released financial results yesterday, reporting that its third quarter revenue dropped to $5.0 billion, compared to $5.3 billion in the second quarter, and $5.4 billion in the third quarter last year.

Cutting off, and perhaps reimbursing, the money it was collecting for 885,000 Lifeline customers nationwide – and an estimated 145,000 in California – who were no longer using the service was number one of two reasons for the slide, according to a statement released by chief financial officer Andrew Davies

We recently notified the FCC that we had claimed monthly subsidies for serving subscribers even though these subscribers may not have met usage requirements under Sprint’s usage policy for the Lifeline program. We are committed to reimbursing federal and state governments for any subsidy payments that were collected incorrectly. While not material to overall results, net operating revenue, wireless service revenue, adjusted EBITDA*, operating income, and net loss in the quarter were all negatively impacted by this issue.

Wireless service revenue of $5.0 billion in the quarter was down $453 million year over year, mostly due to both lower Lifeline revenue as a result of the associated usage issue discussed above and the continued amortization of prepaid contract balances as a result of adopting the new revenue standard last year.

The Federal Communications Commission initially pegged Sprint’s liability at “tens of millions”, but that was just starters. It didn’t include co-subsidies from state programs or fines. One investment analyst group estimates the total liability in “the low billions of dollars”.

So far Sprint’s, um, oops hasn’t surfaced in the California Public Utilities Commission’s review of the pending Sprint/T-Mobile merger, although the Communications Workers of America tried unsuccessfully to make it an issue at the FCC.

We’ll know in 2020 what kind of service and customer enthusiasm lies beneath U.S. 5G hype

by Steve Blum • , , , ,

Small cell lacc 22oct2019

5G service will begin to enter the mainstream consumer market in the United States next year. Senior technology officers from all four major U.S. mobile carriers talked about their plans for moving beyond test markets and technology demonstrations last week at the Mobile World Congress trade show in Los Angeles. With consumer devices – smartphones, particularly – on the market and cell site construction and upgrades picking up pace, success will finally be judged on subscriber uptake and revenue, rather than on whose marketing pitch is the cleverest.

Verizon’s 5G rollout will lean heavily, if not exclusively, on high band millimeter wave frequencies, according to Nicki Palmer, a senior vice president with the company. Those bands are in the 20 GHz and up range, and can carry a lot of data – “massive bandwidth” that’s ideal for in-home service, Palmer said.

She also provided some insight into Verizon’s 5G in home service trials, the first of which was rolled out in Sacramento last year. Palmer claimed that Verizon can deliver between 300 Mbps and 1 gigabit download speeds to home users, some of whom are connecting up to 35 different devices to the network at once. That’s not so surprising, though – technophile adopters of any type of advanced service tend to be heavy users.

T-Mobile intends to offer 5G service on low, high and mid-band spectrum, according to chief technology officer Neville Ray. Getting access to Sprint’s midband frequencies is central to that plan, though, and that merger has not been approved yet.

Merger or not, Sprint is moving ahead with mid-band 5G service, according to chief technology officer John Saw. Sprint’s service on 2.5 GHz frequencies is the only mid-band 5G offering in the U.S., he claimed. He didn’t say how many customers are using the service, but the ones that are use three to five times more bandwidth than the typical 4G subscriber. That’s typical of technophiles and early adopters – the digital equivalent of four pack a day smokers.

AT&T’s 5G rollout strategy is aimed at businesses users more than consumers, according to chief technology officer Andre Fuetsch, who said enterprise applications will be “the sweet spot” for 5G. Even so, AT&T plans to light up 5G service nationwide on low band frequencies. What really got Fuetsch going, though, was the ability of 5G technology to serve many more devices at once. He said that where a 4G network can support thousands of devices, a 5G network will be able to serve millions in the same area.

Even so, 2020 will not see explosive growth in 5G subscriber numbers. Deployments will be meaningful, but it will be many years before any will be considered complete, and full availability in rural communities and less affluent suburbs might never come. Handset costs will also remain high, while technological challenges, such as battery life, are ironed out.

DISH matters, so CPUC’s T-Mobile/Sprint merger review expands, and extends into 2020

by Steve Blum • , , , ,

Dish kangaroos ces 5jan2015

T-Mobile was ordered yesterday to provide more details about how its proposed acquisition of Sprint and its spin off of subscribers, employees, stores, cell sites and spectrum to DISH will affect customers and communities in California. In a ruling, CPUC commissioner Clifford Rechtschaffen rejected T-Mobile’s insistent requests for immediate approval of the Sprint merger, and instead expanded the “scope” of the California Public Utilities Commission’s review to include a look at commitments the companies made to federal officials, including the side deal with DISH. He included a new schedule for the case, which will extend it until sometime next year.

Rechtschaffen set out a list of eight new questions that T-Mobile has to answer. It’ll need the cooperation, if not the direct participation, of DISH to answer at least two of them, including “what are DISH Network’s California service obligations?” and, specifically, what will happen to the pre-paid, and typically lower income, customers that Sprint will transfer to DISH.

Other questions address how the deals T-Mobile cut with the Federal Communications Commission and federal justice department anti-trust lawyers will affect past promises and future performance in California. The final question on Rechtschaffen’s list drills deep into those details.

In a letter to the FCC in May, T-Mobile made ambitious “commitments” on a national level. For example, it promised that within three years of the merger closing, 85% of people living in rural areas of the U.S. will be covered by 5G service riding on “low-band” (i.e. longer range but lower capacity) frequencies, and 55% by “mid-band” service, which doesn’t go as far but carries more bits. Within six years, that’ll grow to 90% and 67% of the U.S. rural population, respectively. Those promises were reasonably detailed regarding service levels – 90% of the U.S. rural population will have access to 50 Mbps download speeds within six years, for example. Other detailed, quantitative promises include such things as “in home broadband” service and rural 5G cell sites.

T-Mobile must now disclose specifically what those numbers will be for California.

Rechtschaffen also set out a new timetable for the review process. It moves at warp speed by CPUC standards. T-Mobile has two weeks to provide answers to his questions and merger opponents will get two weeks to identify any “alleged material issues of disputed fact”. Witnesses might have to testify and be cross examined in person two weeks later, with both sides submitting their written arguments by 20 December 2019. After that, the schedule is hazy, but typically there would be a couple of weeks for rebuttals, and then a proposed decision would be drafted, which would have to be published at least 30 days before a final commission vote.

Even if the evidentiary hearings are scrapped, that vote won’t happen before February, and it would take barely a nudge to bump it into March or April. Particularly if T-Mobile lawyers resort to the same brilliant sandbagging tactics they used earlier this year. Those document dumps ended up extending the litigation by at least two months.

The joker in the deck is T-Mobile’s vague threat to close the Sprint merger without the CPUC’s blessing, and its stated intention not to “address DISH’s fitness as a wireless provider or its viability as a fourth competitor”, since it doesn’t consider those issues “properly within the scope” of the CPUC’s review. If T-Mobile decides to look for a judge who agrees, all bets are off.

Links to the stack of arguments and exhibits everyone has filed are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary, but I like to think I’m good looking too. Take it for what it’s worth.

T-Mobile tells CPUC it does not “intend to address DISH’s fitness” in Sprint merger review

by Steve Blum • , , , ,

The Federal Communications Commission formally approved T-Mobile’s takeover of Sprint on Wednesday, but California’s blessing (or not) will almost certainly wait until sometime next year. How far into next year the California Public Utilities Commission’s review of the merger goes will depend on whether T-Mobile’s plan to transfer people, spectrum, stores and cell sites to DISH, to create a new U.S. mobile carrier to replace Sprint as a fourth competitor in the market, is deemed relevant.

T-Mobile’s lawyers think it’s irrelevant, and don’t want to cooperate if the CPUC’s inquiry heads in that direction. In a very small print footnote, in an email sent yesterday to the administrative law judge (ALJ) managing the CPUC’s inquiry, T-Mobile’s lead California attorney Suzanne Toller said…

Joint Applicants [T-Mobile and Sprint] do not intend to address DISH’s fitness as a wireless provider or its viability as a fourth competitor, as those matters are not properly within the scope of these proceedings.

The “scope of these proceedings” is still to be determined. ALJ Karl Bemesderfer must decide if he will allow opponents of the merger to challenge T-Mobile’s claim that its arrangement with DISH and other aspects of its settlement with the federal justice department’s anti-trust unit have no meaningful effect on the California wonderfulness of the Sprint merger. He framed it, in part, as a due process question during a hearing last week, and indicated he was considering a request made by opponents, with specific attention to DISH’s capabilities and intentions, for several months of additional testimony, rebuttal and arguments.

Lawyerly bluster aside, the “properly” bit seems to be at the base of the vague threat to ignore Californian proceedings that T-Mobile’s legal team floated at the hearing. If the effect of the merger on competition in California’s broadband market is “properly” within the CPUC’s jurisdiction, then DISH is fair game and T-Mobile will have to wait for a decision. If the question is completely in the hands of federal agencies, then we already have the answer.

Links to the stack of arguments and exhibits everyone has filed are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary, but I like to think I’m good looking too. Take it for what it’s worth.

With or without California’s approval, T-Mobile looks for quick consummation of Sprint merger

by Steve Blum • , , , ,

Tmobile san francisco 18may2019

Does DISH matter? That’s the question that’ll determine whether the California Public Utilities Commission makes a (relatively) fast decision to allow T-Mobile to acquire Sprint. If it doesn’t, lawyers for T-Mobile and its allies hinted that the deal might move ahead without Californian conditions or, indeed, permission.

Yesterday, CPUC administrative law judge Karl Bemesderfer listened to arguments from lawyers on T-Mobile’s side who pressed for a quick end to the case, and from opponents of the deal who pushed for lengthy, formal litigation. At issue is T-Mobile’s (and Sprint’s, but T-Mobile is running the show) proposal to shift people, spectrum and real estate to DISH, and create a new, fourth competitor in California’s mobile broadband marketplace.

That agreement was reached with anti-trust lawyers working for the federal justice department, after the CPUC’s nearly year-long inquiry was closed. T-Mobile’s ace legal team asked Bemesderfer to “take notice” of the settement, which led him to formally re-open the record and, perhaps, restart a process that could run until sometime next spring.

At the end of the 80 minute “pre-hearing conference” – CPUC-speak for a hearing to decide if there’s going to be a hearing – Bemesderfer cut to the chase…

Both sides have raised, I think, quite compelling points. Joint applicants have made the case that the California-only commitments have not been altered by the post closing-of-the record events in Washington. And I also think joint intervenors have made a case that they have a due process right to test that proposition…

I thank you all for coming and supplying me with your thoughts, and I will go think about this for a while and then I’ll supply you with mine.

Then there’s the vague threat T-Mobile’s lawyer floated about what might happen if the CPUC is the last regulatory agency in the U.S. that doesn’t approve the deal. Suzanne Toller said that it would raise “a number of some very interesting questions about the scope of the commission’s jurisdiction” over T-Mobile, Sprint or any other mobile carrier.

Translation: jam us up and we’ll jam you up in federal court.

Rachelle Chong, a lawyer representing the California Emerging Technology Fund, which flipped from opposing the deal to enthusiastically supporting it after accepting a $35 million payoff honorarium from T-Mobile that it can only cash in if the deal goes through, put it more bluntly. She expressed “very serious concern” about what would happen “if T-Mobile were to pack up its bags and leave California because it can’t get its approvals for this deal”.

Translation: T-Mobile won’t give us the money. Its other California-specific commitments are toast too.

There’s no chance T-Mobile will turn off its network in California, but there’s a real possibility that it can get a federal (or even Californian) judge to say the CPUC is out of bounds. At that point, all promises are off the table.

There’s no particular timeline for Bemesderfer to issue a decision, but a week or two wouldn’t be a crazy guess.

Links to the stack of arguments and exhibits everyone has filed are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary. I like to think I’m good looking too. Take it for what it’s worth.

T-Mobile/Sprint merger review might go longer and harder in California, as DISH’s act is questioned

by Steve Blum • , , , ,

The California Public Utilities Commission should get the dish on DISH, before deciding whether T-Mobile’s proposed takeover of Sprint “would serve the public interest”, according to a protest filed yesterday by a coalition of opponents to the deal. The group includes the CPUC’s public advocates office, two consumer advocacy groups and the Communications Workers of America, the primary telecoms union in California. To do that, they propose a schedule of testimony and arguments that would bump any decision on the merger until sometime next spring.

T-Mobile refiled its application for CPUC approval last month, after its deal with Sprint was extended to include spinning off assets to DISH in order to maintain sufficient competition in the mobile services marketplace. Or so the federal justice department believes. DISH owns a considerable amount of mobile spectrum, but hasn’t put it to use yet – it’s primarily a satellite TV outfit, not a telecommunications network operator or service provider.

Under the new agreement, DISH gets spectrum, cell sites and retail outlets from T-Mobile and Sprint, so it can eventually build its own network. In the meantime, it would lease capacity from T-Mobile, and resell it under its own brand name – become what’s known as a mobile virtual network operator (MVNO). In their protest, the opponents questioned whether DISH is capable of fulfilling those promises…

This Proposed Transaction dissolves the fourth main wireless carrier and proposes the creation of a possibly inferior substitute to become a new fourth carrier. This could have profound impacts on competition, jobs, and quality of service, among other things. Especially, the Commission should examine whether approving the [deal with DISH] and creating a new wireless carrier is more beneficial to California than simply keeping Sprint as a strong and viable fourth carrier.

  • Is DISH, as [an MVNO] operating on New T-Mobile’s network for the first several years of the settlement, an adequate replacement for Sprint to serve customers in the prepaid market?
  • Can a client MVNO, new to the mobile wireless market, realistically be expected to provide the same level of competitive check that Sprint, a competitive Mobile Network Operator (MNO), currently exerts on T- Mobile?

There are more questions in the full document, but one they didn’t ask and should have was is DISH any more serious about this promise than it was about past pledges to build a mobile network?

T-Mobile, along with everyone else, is scheduled to meet later today with the CPUC administrative law judge managing the case. They’ll talk about next steps.

Links to the stack of arguments and exhibits everyone has filed are here.

My clients include California cities who do business with T-Mobile. I like to think that has no bearing on my commentary, but I like to think I’m good looking too. Take it for what it’s worth.

Sprint took megabuck subsidies for inactive lifeline customers, federally and in California

by Steve Blum • , , , ,

Sprint mwca 2018

Sprint could be collecting payments from California’s broadband and telephone lifeline subsidy program for hundreds of thousands of inactive accounts. A Federal Communications Commission press release accuses Sprint of taking “tens of millions of dollars” for 885,000 federally subsidised customers who weren’t using the service anymore. That represents 30% of Sprint’s national lifeline customer base, says the FCC.

Sprint is the 500 pound gorilla of the California Public Utilities Commission’s lifeline program, which supplements the $9.25 monthly federal subsidy with up to $15 per month. According to a brief submitted by the CPUC’s public advocates office during the ongoing review of Sprint’s proposed merger with T-Mobile…

Sprint, through its Virgin Mobile brand, is the only [facilities-based mobile network operator] that participates in the California LifeLine program. Under the trade name of “Assurance Wireless brought to you by Virgin Mobile,” Virgin Mobile serves roughly 482,000 LifeLine wireless customers in California, over 200,000 more customers than the next largest LifeLine wireless carrier, and more than all other LifeLine wireline carriers combined.

If the FCC’s 30% “inactive” rate applies equally to Sprint’s California lifeline base, then the CPUC gave the company subsidies for 145,000 non-existent customers. There isn’t enough information available yet to figure out how much money that represents, but on a back of the envelope basis, 145,000 inactive accounts subsidised at $15 each comes out to about $2.2 million per month. Even given that every payment wasn’t the $15 max, it doesn’t take too many months for California’s outlay to land in the FCC’s “tens of millions of dollars” ballpark too.

The Communications Workers of America union is one of the leading opponents of the T-Mobile/Sprint merger, in California and federally, and has already asked the FCC to put everything on hold “until [Sprint’s corporate] character issue is investigated and resolved”. It’s a fair bet that T-Mobile and Sprint will have to answer for the false billing – Sprint is calling it an “error” dating back to 2016 – as they try to gain CPUC approval for their merger. A hearing to decide next steps in the case is scheduled at the CPUC on 10 October 2019.