Tag Archives: t-mobile

T-Mobile plays daddy says no, go ask mommy game at CPUC

by Steve Blum • , , , ,

Brady bunch

Instead of playing nice with the other kids, T-Mobile is asking for parental intervention as the California Public Utilities Commission reviews its proposed deal to takeover Sprint. Possibly afraid its document dumping and foot dragging tactics are going to backfire and cause even more delays at the CPUC, T-Mobile sent a joint letter to commissioner Clifford Rechtschaffen yesterday, telling him don’t tap the brakes, you need to step on the gas dude

The Commission’s timely review will help ensure that Californians benefit from the broad range of benefits documented in the extensive evidence we have submitted to the Commission. Conversely, any action that could delay consummation of the merger would slow the build-out of New T-Mobile’s robust, 5G network in California, thereby delaying New T- Mobile’s ability to provide all consumers in California the benefits of that network—such as increased speeds and expanded coverage, lower prices, and a bona fide wireless alternative to traditional in-home broadband service.

The problem is that T-Mobile, which is walking point at the CPUC for both companies, keeps turning up the volume on both its claims of wonderfulness and the amount of paperwork its shovelling as it attempts to convince regulators that the deal won’t do more harm to consumers than good.

The FCC paused its review of the deal for at least three weeks, because T-Mobile’s latest filings “contain substantial new material and reach conclusions about the effects of the transaction that were not previously in the record”. The CPUC administrative law judge (ALJ) managing the case, Karl Bemesderfer, added four weeks to his review because T-Mobile similarly introduced thousands of pages of new evidence to shore up its arguments that its takeover of Sprint would benefit Californians, rather than killing a competitive market for mobile broadband services.

Rechtschaffen is the commissioner assigned to oversee the T-Mobile/Sprint review. It would be procedurally and politically dicey, to say the least, if he intervened. Similar pleas have been made in high profile telecoms mergers in the past to no apparent effect, particularly on Bemesderfer who rates as one of the keenest and most telecoms savvy ALJs at the commission.

Right now, he’s considering a request from the CPUC’s public advocates office to force T-Mobile to handover supporting documents that were requested weeks ago. T-Mobile’s response is expected tomorrow. We’ll find out whether they think a cooperative attitude will help speed up the process.

T-Mobile stalls CPUC, FCC reviews of Sprint merger with cheap lawyer tricks

by Steve Blum • , , , ,

Getting a fast approval of its proposed takeover of Sprint from federal and state regulators is supposedly T-Mobile’s goal, but it’s not helping itself. Last week, its habit of stonewalling and waiting until the last minute to provide information to regulators reviewing the merger resulted in a three week (minimum) hold at the Federal Communications Commission and a demand from California Public Utilities Commission staff to turn over stacks of documents previously requested. That demand could also lead to a further delay in getting California’s blessing for the deal.

According to an FCC notice, the agency needs time to review new claims about the wonderfulness of the merger made by T-Mobile and get public feedback…

On February 21, 2019, and March 6, 2019, the Applicants filed significant additional information regarding their network integration plans for 2019–2021, an extension of their previously filed merger simulation analysis to cover the years 2019–2021, and additional information regarding their claims related to fixed wireless broadband services. These filings contain substantial new material and reach conclusions about the effects of the transaction that were not previously in the record.

As a result, the FCC added at least three weeks to its review, pausing its informal 180-day shot clock at 121 days, with a restart not scheduled until 4 April 2019 at the earliest.

One problem is that a key filing describing T-Mobile’s plans to offer in-home service is marked confidential, so the FCC won’t be getting much public comment on it.

The CPUC’s public advocates office (PAO) asked the administrative law judge (ALJ) managing the case to force T-Mobile to produce more data, to back up the claims made in a similar avalanche of data ahead of hearings last month. That dump and T-Mobile’s introduction of new claims, resulted in a four week delay. The PAO says that “in response to the Public Advocates Office’s Data Requests to T-Mobile…T-Mobile provided only objections and no substantively responsive answers. T-Mobile’s objections are unfounded and inappropriate”.

The back and forth argument over evidence is eating up the extra time added to the schedule by the ALJ. If that causes the problem, the obvious solution is to add even more time, something T-Mobile claims it doesn’t want to happen.

Alternating last minute data dumps with lawyerly foot dragging seems like a bad way of getting a quick decision from the CPUC and the FCC. If T-Mobile is really in the hurry it claims to be to get the Sprint deal approved, it needs to start playing nice with the other kids.

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

T-Mobile, Sprint sandbag themselves as California’s merger review is bumped a month

by Steve Blum • , , , ,

Sandbags

A document dump by T-Mobile and Sprint backfired at the California Public Utilities Commission. The administrative law judge managing the commission’s review of the proposed merger of the two companies gave opponents four extra weeks to digest and rebut thousands of pages of material submitted shortly before hearings were held earlier this month.

In his ruling, ALJ Karl Bemesderfer rejected a request by the CPUC’s public advocates office (PAO] for a second round of hearings, but acknowledged that T-Mobile and Sprint did not leave enough time to review all the documents they dropped on the CPUC…

Regardless of whether Joint Applicants’ rebuttal testimony contains new evidence and arguments, the sheer volume of the material together with the complexity of the subject matter has worked a disadvantage to [the PAO] that requires a remedy…

Accordingly, the schedule in this proceeding will be adjusted by moving the date for submission of opening briefs to March 29, 2019 and the date for submission of reply briefs to April 12, 2019. The anticipated date for a proposed decision remains unchanged; consequently, I find that the revised schedule does not work a hardship on Joint Applicants.

Originally, opening briefs were supposed to be submitted this Friday, 1 March 2019. Bemesderfer is arguably correct in saying that the timeline hasn’t changed, but that’s because it was vague. The final schedule set by the commissioner overseeing the inquiry, Clifford Rechtschaffen, called for publishing a proposed decision in “2nd Quarter 2019”. So long as the CPUC’s proposed decision is posted before the end of June, that schedule will be met. But four more weeks is four more weeks, and the two companies are not happy about it.

Commission rules require a 30 day public review period before a vote can be taken, which means the proposed decision might not come before the commission until sometime in July or even August. That said, it wouldn’t be a surprise if Bemesderfer finishes his draft decision by mid-May, which would leave enough time for a final decision to be reached in June.

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

T-Mobile’s merger with Sprint could get even closer scrutiny in California

by Steve Blum • , , , ,

Californian opponents of T-Mobile’s proposed takeover of Sprint want more hearings and another round of written evidence and rebuttals, before the California Public Utilities Commission moves ahead with approving or rejecting it. Prior to last week’s hearings, the CPUC in-house consumer advocacy unit – the public advocates office (PAO) – asked the administrative law judge hearing the case to, in effect, slow the proceeding down to give them time to review four thousand pages of testimony and evidence that T-Mobile and Sprint dropped on them. The PAO is recommending that the CPUC not allow the merger to take place.

After the hearings, other opponents – two private consumer advocacy groups, TURN and the Greenlining Institute, and the Communications Workers of America (CWA), a telecoms labor union – endorsed the request for more testimony and hearings. As CWA put it

Justifying an application for the first time with 4,000 pages of “rebuttal testimony” is entirely improper and violates intervenors’ due process rights. The Commission has held that “[p]roviding the basic justification in rebuttal is unfair, since parties are not generally given the opportunity to respond to rebuttal with testimony of their own.”

Sprint and T-Mobile naturally don’t agree. They submitted more than 250 pages of additional material that argues that there was nothing in the 4,000 pages that was particularly new or didn’t directly respond to points previously made by opponents to the deal. The companies particularly object to adding more hearings and filings because doing so “would substantially disrupt the schedule adopted by the Commission – adding at least six weeks of unjustified delay”.

The Federal Communications Commission is also reviewing the proposed merger. Assuming there isn’t another federal government shutdown, it’s scheduled to reach a decision by the end of May. Even if the CPUC’s review remains on its original track, it could run even longer than that.

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

T-Mobile tries to make California merger case with soft engineering and hard hype

by Steve Blum • , , , ,

Ebbc mobile broadband availability 2012

T-Mobile and Sprint claim that if they are allowed to merge, then California will see “enormous public-interest benefits”. That’s what the companies told the California Public Utilities Commission in testimony submitted as part of the regulatory review of their proposed deal. That claim is founded in large part on T-Mobile’s description of a glorious 5G future that includes download speeds of up to half a gigabit and coverage that reaches deep into the most rural areas of California.

The catch is that this wonderfulness is “projected” and not promised. Even if the infrastructure is built, T-Mobile’s president, Michael Sievert, is careful to add a footnote in small print that reminds us…

Average data rate is not equivalent to the actual user experience. The user experience will be affected by a number of variable factors, including received signal strength, location of the mobile device and base station, and whether the device is in motion, among others.

His testimony is supplemented with an impressive collection of county by county maps offered by his chief technology officer, Neville Ray, that show how much better 5G service will be if T-Mobile can scoop up Sprint. It appears that Ray is assuming that Sprint won’t grow much – his projections for Sprint’s 5G coverage area look a lot like its current 4G and below footprint.

The real problem is that this sort of modelling produces coverage predictions that far outstrip actual results. An example is shown above. It’s two mobile broadband coverage maps for the east San Francisco Bay Area posted by the CPUC in 2012. The one on the left is an aggregate of the availability reports generated by the four major mobile carriers using predictive modelling, the one on the right is based on actual mobile download tests conducted by the CPUC, and then run through the same process. The carriers claimed nearly everything was green, the color of good and great. The CPUC’s measurements showed that service in most of the region is brown to yellow, the color of, well, you get the picture.

Oral testimony in the case begins today in a CPUC courtroom in San Francisco. We can only hope that it won’t be as larded with marketing hype as T-Mobile’s and Sprint’s written statements.

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

T-Mobile-Sprint merger gets a hard look in California this week

by Steve Blum • , , , ,

California’s review of the proposed merger of T-Mobile and Sprint goes into high gear on Wednesday. The California Public Utilities Commission will hold a hearing to allow lawyers for the two companies and the organisations that oppose the deal to cross examine experts, and others, who submitted written testimony about it. Three days have been blocked out, although it might not go that long.

The best supported and most coherent opposition to the merger comes from the CPUC’s in-house watchdog unit, the public advocates office (formerly known as the office of ratepayer advocates). It submitted lengthy arguments and a tall stack of data that shows why tipping the mobile broadband market into oligopoly status is a very bad idea

The Commission should deny the proposed transaction because of the irreparable damage to competition in the wireless market and the low-income customer markets as well as the absence of specific, measurable, and verifiable benefits to the merger. The loss of a competitive player in these markets would create significant risk of parallel conduct and higher pricing for consumers. This pricing risk is demonstrated by the two largest players in the wireless market today, AT&T and Verizon, which generally offer higher-priced plans than T-Mobile and Sprint. New T-Mobile would rival or exceed these companies in market share, creating a strong incentive for oligopolist behavior. New T-Mobile would also comprise nearly 60 percent of the wireless prepaid market that predominantly serves low-income customers, pacing excessive market power under the control of a single company and creating a virtual monopoly over these services. Because [T-Mobile and Sprint] are not under [traditional wireline telephone rate] regulation, protections cannot be implemented that are adequately enforceable and verifiable to address these risks.

Just so. The CPUC has little authority over mobile carriers, and none where mainstream consumer pricing is concerned. It can impose conditions on any approval of the merger – the public advocates office suggests some as a fall back position – but those would provide only temporary and limited protection to Californian consumers.

The best way – the only way in this case – to fix a problem is to not cause it in the first place.

Other groups with a stake in the outcome have also jumped in. The California Emerging Technology Fund (CETF) and the Greenlining Institute expressed concern about the proposed merger’s impact on low income and minority communities, but didn’t particularly object to it so long as money and other benefits were required as mitigation. It’s worth noting that CETF’s primary source of funding is money extracted from companies that have had mergers or similar consolidations under review at the CPUC, and Greenlining relies on so called intervenor compensation from the CPUC, and companies appearing before it, as a reward for raising such issues.

The Communications Workers of America also has a dog in the fight. At this point, the union wants the merger blocked, claiming it would “would result in the loss of 3,432 jobs in California”, but it also left the door open to a settlement. In the past, CWA has opposed telecoms mergers, but then flipped and supported them once its needs were met.

T-Mobile and Sprint naturally objected to all these statements, filing detailed rebuttals, and scheduling time for cross examination at this week’s hearing. I intend to write a future post about those rebuttals, but if you want to read them yourself, you can find it all here:

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

Partisan shift in Congress could influence anti-trust reviews of T-Mobile’s takeover of Sprint

by Steve Blum • , , , ,

The flip from a republican majority to a democratic one in the federal house of representatives has opened a window of opportunity for, among others, those opposed to T-Mobile’s planned takeover of Sprint. A coalition of fourteen labor organisations and a wide range of advocacy are urging the presumed incoming chairmen of the house judiciary, and energy and commerce committees to investigate the “likely effects” of the deal.

In a letter sent yesterday (h/t to a story by Harper Neidig in the Hill for the pointer), the groups reminded representatives Jerry Nadler (D – New York) and Frank Pallone (D – New Jersey) that they spoke out against the merger when democrats were the minority party, that they should follow through now that they’re in the majority…

Representative Pallone, on April 30th you and Representative Doyle wrote to Chairman Walden and Chairman Blackburn requesting a hearing on the proposed Sprint/T-Mobile merger. You correctly pointed out that due to its “primary jurisdiction over the wireless industry, [the Energy and Commerce Committee has] a responsibility to understand the potential effect of this merger on consumers, workers, and the communications market.” You added that “the merger would create a new wireless behemoth by shrinking the number of nationwide wireless providers from four to three.” You went on to say that the Committee should explore the merged entity’s foreign ownership; whether 5G deployment is helped by the proposed merger, despite the fact that both T-Mobile and Sprint have invested in 5G already; and the state of wireless competition.

We agree. We hope you will now announce your intent to schedule exactly this kind of hearing.

The groups include the Greenlining Institute and the Communications Workers of America, which are also opposing the merger at the California Public Utilities Commission.

Congress has no direct role when it comes to reviewing mergers. At the federal level, that job falls to the justice department and the Federal Communications Commission. But they do have to answer to congress, at one level or another.

T-Mobile not worried about speed or result of CPUC review of Sprint deal

by Steve Blum • , , , ,

T-Mobile doesn’t seem to be too worried about getting approval from the California Public Utilities Commission for its proposed takeover of Sprint. The company’s chief financial officer, Braxton Carter, spoke at an investment conference in Barcelona last week, and offered an optimistic timeline to complete the transaction…

The goal, we believe, is still to close this transaction…in the first half, probably in the second quarter of ’19. You look at the shot clock with the FCC, it’s really implying a very early April end of that shot clock at this point, and that’s why I’m more pointing to the second quarter is more probable. It can still be first quarter, but it’s going, we think, exceedingly well. But I think by the end of the year, we’ll be in a much better position.

Braxton’s focus is on regulatory approval from the federal justice department and the Federal Communications Commission – he didn’t mention state-level reviews at all – so he might or might not be factoring the CPUC’s process into his estimate. The timeline for the CPUC’s review calls for a decision to be reached in the second quarter of next year, too, but earlier indications were that means sometime in the summer of 2019, perhaps June.

The CPUC’s review potentially includes a wide range of issue – no particular limits were set on the extent of the inquiry – but big question is the impact the merger will have on competition in California’s mobile marketplace. Overall, U.S. consumers already pay the highest prices for mobile bandwidth in the developed world. Going from four national competitors down to three would mean a significantly less competitive environment for mobile customers. T-Mobile’s counter argument, according to Braxton, is that it’s really about “two going to three, the creation of a third, more-scaled national player to compete against a predatory duopoly that controls 85% of the cash flows in the marketplace”.

U.S. mobile bandwidth is rich world’s most expensive, and it could get worse

by Steve Blum • , , , ,

Mobile broadband prices in the U.S. are the highest in the developed world, according to a report just published by a Finnish research company. A study by Rewheel concluded that even though there are four seemingly competitive mobile operators in the U.S., “gigabyte prices are not competitive”, and “the US has the 5th highest gigabyte prices in smartphone plans and is the most expensive market in mobile broadband among the 41” European Union and other developed countries (i.e. those that belong to the Organisation for Economic Cooperation and Development).

One gigabyte of mobile data in the U.S. costs $6.77 on average. That’s higher than any other country, although perhaps there’s some comfort in knowing that Canada is second highest, at $6.18 per gigabyte. The European Union average is $2.33 per gigabyte, and the overall OECD average is $3.03 per gigabyte. (I’ve converted Rewheel’s cost figures from euros to dollars, using its benchmark rate of €30 equals approximately $35).

The story gets even bleaker when competition is factored in. Like many developed countries, the U.S. has four competing mobile operators, but that doesn’t translate into competitive prices. The average mobile broadband price in countries with four carriers is $2.97 per gigabyte, less than half the cost in the U.S. Countries with only three mobile operators have an average per gigabyte price of $3.73, which is still three bucks cheaper than in the U.S. market, which is theoretically more competitive.

Theoretically. And maybe not for long.

T-Mobile is trying to get permission from federal authorities and the California Public Utilities Commission to buy Sprint. Rewheel concludes that “the 4 to 3 US merger, if approved without the upfront entry of a new 4th [mobile network operator] will lessen the already weak competition”.

Despite the Alice in Wonderland claims made by the two companies, competition will not intensify if there are fewer mobile carriers in the U.S. market. Fewer competitors equals less competition. If that wasn’t obvious to the Federal Communications Commission, the federal justice department and the CPUC before Rewheel’s report came out, it should be now.

T-Mobile Sprint merger will eliminate thousands of California jobs, union says

by Steve Blum • , , , ,

The Communications Workers of America (CWA), which is the largest telecoms union in California, asked to join the California Public Utilities Commission’s inquiry into T-Mobile’s proposed takeover of Sprint yesterday. In its “motion for party status”, CWA said it represents wireless industry workers at AT&T and “as members of T-Mobile Workers United, an organisation of T-Mobile and MetroPCS employees”.

Many could lose their jobs, according to the union’s motion…

The T-Mobile/Sprint merger will have a significant impact on CWA members, both as workers in the industry and as consumers of wireless services. CWA’s research shows that the merger will result in the loss of 3,185 retail jobs in California due to store closures and consolidation. In addition, the proposed transaction could increase concentration in the wireless industry labor market with negative impact on industry-wide wages…

CWA District 9 intends to actively participate in this proceeding.

It’ll be up to the CPUC administrative law judge handling the case to decide whether CWA can jump into the proceeding at this point, but such requests are typically granted. The commissioner in charge, Clifford Rechtschaffen, didn’t call out employment issues as a particular focus of the inquiry in the “scoping memo” he issued a couple of weeks ago, but he also stated that the list was “non-exhaustive”.

Reviewing labor implications would be completely consistent with past practice and California’s public utility law, which directs that utility mergers must “be fair and reasonable to affected public utility employees, including both union and nonunion employees”. It’s not 100% clear whether the T-Mobile Sprint transaction is big enough to require that kind of review, but there’s little doubt the CPUC can choose to do so.

Two other groups that are protesting the merger – TURN and the Greenlining Institute – also filed paperwork, saying they expect to ask to be compensated by the companies for their efforts, as California law also allows. They estimate that they’ll run up a combined bill of $152,000.