With a $35 million side deal, CETF tells CPUC it backs T-Mobile’s takeover of Sprint

by Steve Blum • , , , ,

T-Mobile is getting a little help from a new Californian friend. In addition to a steady trickle of support letters sent to the California Public Utilities Commission by groups that are not well known for broadband advocacy or telecoms expertise, T-Mobile now has the California Emerging Technology Fund (CETF) on its side as it tries to gain approval for its takeover of Sprint.

CETF will leave its seat on the opposition side of the table and “enthusiastically and wholeheartedly support” the merger. In exchange, T-Mobile will pay CETF $35 million over five years “to sustain its core mission to close the digital divide in California and to promote digital inclusion policy and programs”. $22 million of that is earmarked for grants to schools, non-profit organisations and local governments to run various “digital inclusion” programs. The remaining $13 million – better than $2.5 million a year – goes into CETF’s “core” budget – if the T-Mobile-Sprint merger is eventually completed.

There’s more to the deal, but once it’s boiled down, it’s not a lot more. In the contract, T-Mobile repeats commitments already made to the Federal Communications Commission, the CPUC and, it seems, “other intervenors in the CPUC” review of the merger. Other deal points, such as continuing Sprint’s lifeline program for low income households and spending a modest amount advertising it, sound a lot like business as usual for a mobile carrier.

There are a few spiffs, like a wooly promise to add 5G capability at ten county fairgrounds around the state and to make “good faith efforts” toward a “goal” of signing up hundreds of low income households to broadband and telephone service. For the most part, though, the final say in when, where and how anything will be done rests with T-Mobile. They’ll mostly have to “consult” with CETF and others, and file periodic reports that, mostly, won’t be made public.

This kind of agreement is a common feature of CPUC telecoms merger reviews. CETF raised objections to Charter’s takeover of Time Warner Cable’s systems and Frontier’s acquisition of Verizon’s wireline territory in California, and reached megabuck settlements. The Frontier agreement had similarly vague language, leading to a public spat with CETF, which was eventually ironed out.

Whether CETF’s support and T-Mobile’s cash will make any difference to the CPUC is not a sure thing. Much of the ongoing review has focused on the microeconomic impact of reducing mobile broadband competition in California, which this agreement doesn’t address.

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