T-Mobile/Sprint Might Not Get California OK Until 2020

California’s review of T-Mobile/Sprint could extend into next year, but there’s no schedule yet, stakeholders said this week. A California Public Utilities Commission administrative law judge reopened the record in dockets A.18-07-011 and A.18-07-012 Aug. 27 in light of the carriers’ settlement with DOJ and other changes to the original deal.

Meanwhile, Pennsylvania's attorney general will join New York, California and 15 other AGs suing to stop the acquisition, Pennsylvania AG Josh Shapiro (D) said Wednesday. The takeover "would severely undermine competition in the telecommunications sector, which would hurt Pennsylvanian consumers by driving up prices, limiting coverage, and diminishing quality,” he said. A multiweek trial is set for Dec. 9 at U.S. District Court for the Southern District of New York.

The California commission’s ALJ Karl Bemesderfer ordered the carriers to file an amended application reflecting changes. The ALJ said parties will get a chance to comment, and he plans to schedule a prehearing conference to revise the scope and schedule of the proceeding. The CPUC and the carriers didn’t comment now.

CPUC review will last at least another three to eight months because there will be comments and could be hearings, said former CPUC Commissioner Rachelle Chong. Commission timing “depends in part on when the parties file the documents ordered by the ruling,” emailed another former member, Santa Clara University law professor Catherine Sandoval. “Once that happens then there will likely be an opportunity for additional comments and perhaps additional discovery or hearings.” Tellus Venture Associates President Steve Blum emailed that “it's looking like a 2020 decision” for the last state commission left to OK the deal.

Commissioners might vote in January -- in a “wildly optimistic timeline,” Blum said. “Figure two or three weeks to finish rebooting it, at least two months for the back and forth, and a couple weeks to draft a” proposed decision. “Bemesderfer hasn't even scheduled the new prehearing conference yet -- its major purpose is to argue about the details and timeline of the rebooted proceeding,” Blum emailed. “Then he has to issue a ruling.”

It’s hard to gauge exactly how long it will take, said Regina Costa, telecom research director for The Utility Reform Network, in an interview. TURN opposes the deal. She noted turnover in some commissioners since the proceeding began, including Marybel Batjer replacing Michael Picker as president. The commission won’t be starting from scratch, but there have been big changes needing discussion, Costa said. The carriers in testimony said Boost Mobile is their low-income offering but later promised to spin it off to Dish Network, she said.

“The real action is the state AG lawsuit,” but investors and others following the deal should pay attention to the CPUC review, Communications Workers of America Telecom Policy Director Debbie Goldman told us. “California is a huge state and if California were to reject this transaction or require conditions that are different than the ones that the parties have committed to, then that could substantially delay if not substantially change the deal.” Even before the ALJ re-opened the record, it looked commissioners wanted to wait for the state AG trial, the CWA official said. Pennsylvania joining AGs' suit is “further evidence” the states’ suit is strong, Goldman said. The union opposes the deal.

“The biggest hurdle in getting approval for this deal was the DOJ,” emailed LightShed Partners analyst Walter Piecyk. It’s “unfortunate that T-Mobile agreed to suspend the closing of their deal until after resolving the suits by the states.”

State AGs opposed moving the New York trial up by one week to Dec. 2, as suggested Monday by the carriers to avoid running over the holidays (see 1909170035). Defendants said that could happen because the trial is likely to take three weeks, but the AGs responded (in Pacer) Tuesday it’s scheduled to last two weeks so it should be done by Dec. 20. If a third week is needed, it should happen Jan. 6 to 10, or as soon as the judge is free, they said: “Moving the trial up a week would seriously prejudice Plaintiffs’ preparation for trial,” and is “unlikely to have any material effect on how quickly the case can be resolved.”

DOJ Antitrust Chief Makan Delrahim seemed to “undercut the importance” of the expected FCC order clearing the deal in Clayton Act litigation, at a Senate Antitrust Oversight Committee hearing Tuesday (see 1909170066), New Street Research analyst Blair Levin emailed investors Wednesday note. Delrahim suggested if Dish hadn’t agreed to the transaction, it would ‘have ended up in litigation over its spectrum.’” Levin said. “He appears to be saying that DISH’s lack of adherence to a commitment to build-out would have justified the FCC bringing a lawsuit against the company.”