CPUC tries to correct past merger mistakes as it approves T-Mobile/Sprint deal

17 April 2020 by Steve Blum
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Tmobile billboard

Two weeks after the fact, T-Mobile gained California’s blessing to take over Sprint yesterday, as the California Public Utilities Commission unanimously approved a decision that imposes a long list of requirements that the newly combined company is expected to meet in California.

Expected, but not guaranteed.

As he presented the decision, Clifford Rechtschaffen, the commissioner in charge of the CPUC’s review, said that “the applicants continue to dispute our jurisdiction to review wireless mergers. We very fundamentally disagree on this point and the decision rejects their challenge to our jurisdiction”. Unless one side or the other backs down – unlikely – that sets up a dispute that’ll land in federal court.

It’s something to worry about later, and it’s largely out of the CPUC’s hands. And it’s not the only problem with CPUC merger reviews that the decision addresses.

The chronic weakness of CPUC decisions of this sort is that enforcement of merger conditions ranges from non-existent to late and sporadic. Commissioner Martha Guzman-Aceves, who assisted Rechtschaffen with the review, said it was on their minds because the covid–19 emergency has highlighted how many merger promises haven’t been kept…

The merger agreements tend to be never monitored or enforced. We sit here today during the covid crisis, we see many of the merger commitments that were made in previous agreements, particularly regarding the affordable plan offerings that had been made under those agreements, to be not fully implemented…

Things like, you know, little elements like those that we’re facing today with the covid response of…verifying eligibility through these programs and how difficult some of the carriers are making this right now, or how easy some of the carriers have stepped up to make it right now.

The solution, at least for the T-Mobile/Sprint merger, is to define a process for enforcing requirements such as service coverage and speed, job creation and programs for low income Californians. It includes verification of T-Mobile’s progress reports through independent testing, hiring an outside monitor responsible to the CPUC at T-Mobile’s expense and issuing enforceable citations that’ll impose penalties if T-Mobile doesn’t perform, even on relatively minor matters. CPUC citations are appealable, but don’t involve the months – sometimes years – that formal enforcement procedures entail.

Unlike Frontier Communication’s purchase of Verizon’s wireline systems or Charter’s acquisition of Time Warner’s cable system, where the CPUC imposed conditions without defining oversight or enforcement responsibility, there’s reason to hope that T-Mobile can be held to account. Whether it will or not is all but certainly in the hands of federal judges.

Links to arguments, exhibits and other paperwork 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.