CPUC plans to police Sprint merger requirements, but T-Mobile might not play along

16 March 2020 by Steve Blum
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Jack webb 625

Improved mobile broadband coverage, workforce increases and other California-specific requirements proposed in a draft California Public Utilities Commission decision as conditions for approving the T-Mobile/Sprint merger are meaningless without enforcement. The proposed decision, published last week, takes a big step towards putting real teeth behind those requirements, but that won’t guarantee compliance by the new, bulked up T-Mobile.

The conditions, which are largely intended to fix some of the worst anti-competitive effects of the deal, include hiring an “independent monitor” to closely watch T-Mobile over the next ten years. That’s a welcome change from recent practice, which left enforcement of conditions imposed on major telecoms mergers to third parties, which often have a greater interest in maintaining cash flow from the companies they’re supposedly bird dogging, or to regular CPUC procedures, which are more geared toward punishing violations rather than preventing them in the first place.

Whether this new approach will work is an open question, though. Although the CPUC’s proposed decision makes a strong case for its authority to, in effect, regulate the behavior of a mobile carrier, T-Mobile is equally adamant that no such power exists. The company has always framed its promise of the amazing wonderfulness of the Sprint deal as a voluntary commitment, rather than something it can be held accountable for by a state agency. There’s nothing preventing T-Mobile from accepting the CPUC’s permission to acquire Sprint, while ignoring everything else. Such a move would likely lead to years of litigation at the CPUC and, eventually, state and federal courts, but that’s just a cost of doing business for a big, multinational telecoms company.

The first indication of T-Mobile’s true intentions could come when (assuming the draft decision is approved by commissioners in April) the CPUC tries to hire the independent monitor. Supposedly, the cost of that person (or firm) will be paid by T-Mobile. We’ll know then if it intends to pay any attention at all to the CPUC’s requirements.

Links to arguments and exhibits filed at the CPUC and elsewhere are here.

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