FCC Democrats Raise Process Concerns on T-Mobile/Sprint/Dish Order
The FCC released its order Tuesday approving the T-Mobile/Sprint/Dish Network deal, approved by commissioners 3-2 Oct. 16 (see 1910160058). Democrats Jessica Rosenworcel and Geoffrey Starks raised objections, as did other critics, including on the process the FCC followed in developing the order. Rosenworcel said the FCC should also release the initial order circulated by Chairman Ajit Pai.
“What is most troubling is that … changes were made after no less than nine ex parte meetings between FCC leadership and the merging companies that took place after the agency denied other parties a further public comment period and after the Department of Justice expert that had been tapped to lead our review had left the building,” Rosenworcel said in a blistering 17-page dissent. “Sunlight is the best disinfectant. ... The FCC should make public the initial draft of this decision that was prepared by our expert staff and circulated for review in the agency in addition to the decision we release today,” she said: “Congress, the courts, and the public should know what was changed and why.”
Rosenworcel noted the companies are turning over to the states thousands of pages of documents that were “improperly withheld” in the federal court case in New York challenging the transaction. “We should have these documents too. In fact, I don’t think our review is complete without them,” she said. The FCC should also “investigate whether the companies’ failure to turn over these documents to the FCC violated our rules,” she said.
How the FCC handled the case undermined how the public views the FCC, Rosenworcel said: “So many people already think that Washington is rigged against them. It saddens me when on too many occasions this agency proved them right.”
Starks also slammed the FCC process in developing the final order. “This proceeding has been characterized by unprecedented procedural irregularities,” he said: “We’ve departed from agency practice by failing to solicit public comment on two rounds of significant changes to one of the largest wireless transactions in FCC history.” Starks said the FCC approved the deal “even though we are currently investigating Sprint for possible violations that could pose hundreds of millions of dollars in liability and raise questions about the company’s fitness to hold Commission authorizations.”
The dissenting statements “raise troubling issues about the process undertaken at the FCC for drafting this approval order,” House Commerce Chairman Frank Pallone, D-N.J., said in a statement: “I plan to follow up with the Commission to get to the bottom of these allegations and better understand whether -- and to what extent -- the underlying analysis of the expert staff at the FCC was overruled during the FCC’s review of this transaction.”
Commissioner Mike O’Rielly, who early on expressed support for the deal but has declined further comment since, defended the process. “Contrary to some accusations, I did not vote or indicate my vote without doing the accompanying, and necessary, review,” he said: “Substantively, combining spectrum holdings and networks, along with the efficiencies resulting from the combined company, will lead to improved quality, faster deployment of 5G and other new, innovative offerings, and cost savings that will benefit American consumers through greater choice, better service, and lower prices.”
Some deal with Sprint was all but inevitable given that company’s problems keeping pace with its peers (see 1911040053). “For a multitude of reasons, Sprint has struggled to keep pace with its competitors, and the record contains strong evidence that, going forward, Sprint would have been extremely unlikely to be able to compete on its own,” said O'Rielly.
“By approving this merger, a true third national competitor can be created, pressing the two market leaders in wireless like they have not been pressed before,” said Commissioner Brendan Carr. “It prepares the wireless industry to advance not two but three contenders in the battle with other companies from other industries to serve Americans’ connectivity needs.” Carr explained at length the economic rationale for the order approving the deal, though, unusual for a commissioner statement, many competitive details were redacted.
Carr Quibbles
Carr said the FCC falls short in that the initial screen used the market definition of “mobile telephony/broadband services” came from 2008, before carriers had even deployed 4G. “By sticking with a pre-4G market definition, we miss an essential feature of 5G: the blurring of wired and wireless networks and the enhanced competition that results,” he said.
Some claim the transaction will harm competition, “arguing that it would reduce the number of national wireless carriers from four to three,” Pai said. “The record makes clear that is a simplistic, backward-looking claim that doesn’t capture the reality of today or tomorrow.” In many rural areas, customers will now be able to choose from three instead of two “meaningful competitors in the market,” he said.
“New T-Mobile officially has FCC regulatory approval!” tweeted T-Mobile CEO John Legere: “Thanks to the @FCC for diligent review & for seeing the benefits.”
“The framework established by the FCC will facilitate and accelerate DISH’s entry as a new nationwide facilities-based provider,” emailed Jeff Blum, Dish senior vice president-public policy and government affairs. “We share the Commission’s 5G goals and are prepared to transform the U.S. wireless market by building the nation’s first virtualized standalone 5G network. This will spark investment, deliver value to consumers and enable the technologies of tomorrow.” Chairman Charles Ergen said Tuesday Dish welcomes the challenge (see 1911050016).
State attorneys general suing to block the deal should “reconsider their opposition in light of the public interest benefits confirmed by the FCC, especially the new company's commitments to helping to close the digital divide for underserved communities across America,” emailed Mignon Clyburn, former FCC commissioner and advisor to T-Mobile.
Concerns Raised
But critics denounced the order. “This order is the culmination of one of the most irregular and opaque processes in FCC history,” emailed Gigi Sohn, fellow at the Georgetown Law Institute for Technology Law & Policy: “The FCC majority announced their votes three months before an order was circulated. Despite major changes to the original application, the Chairman refused to seek public comment on them.” Sohn, who was an aide to former Chairman Tom Wheeler, told us it's "weird" that parts of a commissioner's statement were redacted.
“Not only did Republican commissioners convey full support for the merger before they’d even read the DOJ’s settlement, but the FCC also didn’t put out the settlement for public comment,” the Open Markets Institute said: “Nor did the FCC even stop to think that it should pause its review after news broke that Sprint may have defrauded the government out of tens of millions of dollars by exaggerating how many low-income people it served.”
“The data and evidence in the FCC’s merger docket, the lived experience of countries that have consolidated down to three wireless providers, and common sense all indicate that allowing more consolidation in the wireless market is extremely likely to lead to higher prices for consumers, less aggressive competition, reduced levels of innovation in the wireless market, and lower service quality for customers,” said Phillip Berenbroick, Public Knowledge policy director.