With Pennsylvania Saying Yes and FCC Likely to, T-Mobile/Sprint Foes Look to California

The Pennsylvania Public Utility Commission split 3-2 to clear T-Mobile's buy of Sprint. At the PUC’s livestreamed Thursday hearing, Chairman Gladys Brown Dutrieuille and Commissioner David Sweet opposed approval without strong Pennsylvania-specific conditions on jobs and rural broadband. With FCC Chairman Ajit Pai supporting the deal Monday (see 1905200051), deal opponents see California’s pending review and possible intervention by state attorneys general as key remaining ways to try to stop the big wireless deal. While an FCC majority is poised to approve the takeover, DOJ's decision is less certain (see 1905220071).

Sweet and Dutrieuille couldn’t “conclude that sufficient evidence supports applicants' touted benefits in Pennsylvania,” Sweet said. They presented a motion to add conditions including an 18-month moratorium on job losses. Another requirement would be that no less than 5 percent of additional wireless sites expected to be deployed in Pennsylvania through 2024 be located in unserved or underserved areas using the FCC Mobility Fund II map, with deployment to be confirmed by independent mapping.

There’s no way to be sure Pennsylvania would get any employment benefits or that service would be extended, Sweet said. The record shows the new company plans to deploy “several hundred less wireless sites after the merger compared to what would be deployed if there was no merger,” said Dutrieuille.

Andrew Place and two other commissioners rejected that motion but supported a Place motion. There’s no need to build on the carrier’s voluntary commitments on 5G wireless deployment and carriers should be “relieved from the obligation from providing notice or offering conditions that may have been committed to in other states in relation to the merger transaction,” he said. Due to discrepancies found in Sprint’s annual financial reporting, Place asked for an audit covering 2009-2017 records.

Approving the acquisition is a “no brainer” because it’s a “clear case of a company trying to compete,” said Commissioner John Coleman, adding it will bring a “clear public benefit.” Pennsylvania doesn’t regulate wireless, he noted.

Now with 17 of 19 required state OKs, T-Mobile is "positive about the ongoing regulatory review process and continuing to move forward," a spokesperson said.

California

The carriers still need OKs from California and Hawaii utility regulators. The Hawaii Public Utilities Commission says it will act soon, while CPUC review could extend into August or longer if the state agency decides changes to the application like Boost divestiture require additional review (see 1905200051).

Promises at the FCC haven’t changed minds of deal opponents at the CPUC, they told us. Pai’s support “makes the CPUC review even more important,” though FCC approval might make conditional OK from the CPUC more likely, said Paul Goodman, technology equity director for the Greenlining Institute.

DOJ, CPUC and state AGs “should not be reassured by the very flawed conditions that have been negotiated at the FCC,” said Communications Workers of America Telecom Policy Director Debbie Goldman.

The Utility Reform Network is working with the CPUC Public Advocates Office and other intervenors to decide how to proceed at the CPUC following the new commitments at the FCC, with their position still evolving, emailed TURN Managing Director-San Diego Christine Mailloux. “Without a substantive opportunity to comment and possibly cross examine witnesses to understand the impacts of these new conditions on California consumers, this new material should not come into the record and should not be considered by the Commission in its decision making.”

DOJ’s view may be more important to the CPUC than that of the FCC because public advocates’ main challenge is on anti-competitive grounds and “leans heavily” on Justice's methodology for measuring market concentration, emailed Tellus Venture Associates President Steve Blum, a consultant to local governments. If the carriers’ new concessions satisfy DOJ, “it will be a lot harder to convince the CPUC otherwise,” said Blum.

Proposed FCC conditions alleviated none of CWA’s jobs, anticompetitive and other concerns, Goldman said. Prepaid wireless wholesalers like Tracfone sell services through third-party retailers and have very few branded retail stores, but the Boost divestiture will likely result in Boost closing its retail stores, which will lead to “massive job loss,” she said. That would disproportionately affect minority communities where many stores are, she said.

Mailloux said that “the loss of Sprint as a facilities based competitor and the over-promising that it appears T-Mobile has had to do to get this merger through, suggests to TURN that consumers, especially low income consumers, will not benefit from this merger. We chose not to negotiate directly with the companies as part of the Commission process because we just couldn’t think of a set of conditions that would allow us to support this mega-merger in today’s market and technology climate. These last ditch efforts confirm our thinking.”

Some commitments like a detailed network buildout schedule “may mitigate” but don’t remove TURN’s concerns, Mailloux said. The promised schedule sounds unrealistically short, she said.

State AGs

Some state AGs have been monitoring the deal, with California and New York offices reportedly leading the effort. About 16 sought access to confidential numbering resource utilization and forecast reports filed by wireless carriers and disaggregated, carrier-specific local number portability data (see 1904250065).

The deal doesn’t require state AG sign-off, but AGs have the same Clayton Act right as any private party to challenge a transaction in court. Historically, state AGs partner with DOJ or the FTC in a challenge, or -- if state AGs disagree with the federal bodies -- they can sue on their own. California AG Xavier Becerra (D), New York AG Letitia James (D) and the National Association of Attorneys General didn’t comment.

Carriers should worry about possible state AG action, Goodman said. Becerra may be taking the deal seriously, he said. If carriers tried to close without CPUC approval, it could force Becerra’s hand to intervene, he said. Carriers’ argument that CPUC should split review into wireline and wireless transactions, opposed by Greenlining and other intervenors, may be a sign that T-Mobile might move ahead to close the deal without CPUC approving the wireless transaction that the carrier would claim isn’t in the agency's jurisdiction, he said.

FCC

On the federal front, Thursday was quiet relative to the first three days of the week.

Kathleen Ham, T-Mobile senior vice president-government affairs, and others from the company said in a filing in docket 18-197 that they met with FCC Commissioner Brendan Carr. They discussed the concessions T-Mobile and Sprint offered in recent days that prompted Pai and two other commissioners to signal they would OK the takeover.

FCC Chief of Staff Matthew Berry, meanwhile, said on Twitter the deal will mean deployment on long-underused spectrum. “A combined T-Mobile/Sprint will be able to deploy Sprint's mid-band 2.5 GHz spectrum far deeper into the rural U.S. than Sprint will alone,” Berry said: “This will mean faster 5G for more of rural America and is one reason why so many working to close the digital divide support the transaction.” If Chairman Ajit Pai and Commissioners Mike O’Rielly and Carr are “endorsing a merger decision they haven’t seen was weird … look at the Chief of Staff playing cheerleader 4 a merger weeks or months before the vote,” Benton Foundation Senior Fellow Gigi Sohn tweeted in response to Berry.

C Spire withdrew its objections to the deal last month, a spokesperson emailed now. The company had been a member of the 4Competition Coalition. “Our advocacy was limited to a narrow set of issues, and we are no longer concerned that those issues should prevent the transaction from being approved,” said Ben Moncrief, C Spire vice president-government relations.