T-Mobile Courts First Responders Amid Continued Deal Skepticism

With T-Mobile buying Sprint and divestitures to Dish Network in court, T-Mobile offered additional inducements Thursday to make the deal seem sweeter to the states in the lawsuit and other opponents. Industry officials told us the FCC order approving the transaction may not do much to help T-Mobile win the case. T-Mobile promised to launch 5G Dec. 6, with 200 million POPS covered at launch and two devices immediately available. Critics told us they're not swayed.

T-Mobile received no assurances from states that the proposed sweeteners will make them drop the suit, CEO John Legere said on a call. “We’re prepared for litigation.” Meetings continue with the states, including New York where the case is, he said. States want to know “what’s going to happen to jobs, what’s going to happen to price, what’s going to happen to competition,” he said.

“Our litigation continues to move forward, with our trial scheduled for Dec. 9,” said a spokesperson for California AG Xavier Becerra (D), one of 16 AGs on the lawsuit. “Our bottom line remains: protecting consumers and competition.”

“The Un-carrier has spent nearly the last seven years changing wireless for good -- and it’s about to go next level,” T-Mobile said. If the deal is approved, T-Mobile now promises unlimited talk, text and smartphone data to every U.S. first responder for 10 years and a program designed to close the homework gap by offering free service, hot spots and reduced-price devices to 10 million families over five years. With the price of wireless service in the crosshairs of opponents, T-Mobile would offer prepaid service for $15 monthly, half the cheapest current plan.

“The deal to create a new T-Mobile has taken longer than we originally thought it would," Legere said in a webcast unveiling its new offerings. “Some people are still asking questions, the right questions” about innovation, competition and lower prices, he said: “We want what they want. We’re 100 percent aligned.”

T-Mobile President Mike Sievert told reporters all the new offerings are incumbent on deal completion. “We don’t want this to sound like a threat,” he said. Legere said the additional network capacity that will be added to T-Mobile’s network makes the offer possible. “What we’re … demonstrating is that with that capacity we’re going to do things for good and we’re going to do things for competition.”

Legere was asked about the significance of T-Mobile and Sprint not renewing their long-term agreement (see 1911040053). “It’s sort of like going month to month on your rent,” he said. "There’s no more lease.” Discussions are ongoing on renewing the date, Legere said.

Public Safety

Free 5G for public safety “sounds interesting,” but T-Mobile may be “a little late to the game” given AT&T/FirstNet and Verizon products, New York State Association of Fire Chiefs First Vice President Lee Shurtleff told us. "As a communications platform for public safety agencies, I’d want to know a lot more about the details and carrier development road map." New York firefighters would need to know more about how T-Mobile will provide pre-emption or priority access on the network, and the extent of coverage indoors and across the state, said Shurtleff. He said T-Mobile service isn’t great in his central part of the state.

The new round of concessions is designed to appeal to police and firefighters and teachers’ unions, and put pressure of Democratic state attorneys general, said Recon Analytics’ Roger Entner. “All of this is quite disruptive and focuses on the weak spots for Democratic AGs. Very clever and well done."

A public announcement is likely targeted at the judge, not the state AGs, said LightShed’s Walter Piecyk: “If this were enough to induce a settlement it would have been part of a joint announcement.”

T-Mobile continues its effort to “sweeten the deal” to peel off more state AGs before trial, said New York Public Utility Law Project Executive Director Richard Berkley in an interview. Thursday’s offers may persuade a couple of states, but T-Mobile’s latest “party favors” probably won’t be enough to convince New York AG Letitia James (D), who's leading the states’ lawsuit, said Berkley. “She has very clear concerns about the deal” including about the viability of the potential fourth carrier and job losses in economically challenged areas, he said. James is reviewing the information, a spokesperson said.

FCC, CPUC

Industry observers said the FCC approval order, now that it’s public (see 1911050055), is unlikely to help T-Mobile in the New York legal action.

“We don’t think the court is likely to accept the FCC competition analysis,” New Street’s Blair Levin told investors. The order's “at odds with the competitive analysis of the DOJ and all the states, which agreed that the deal as initially accepted by the FCC violated the Clayton Act,” Levin said. “Portraying the FCC order as a product of an expert agency is undercut by the two dissenting opinions, as well as Congressional testimony by DOJ antitrust head Makan Delrahim that the FCC uses a different standard than the one relevant to Clayton Act.”

“The most important factor in my opinion is that the FCC’s analysis conflicts with the nation’s expert antitrust agency, DOJ, and the state lawsuit is being brought under the antitrust laws,” Gigi Sohn, fellow at the Georgetown Law Institute for Technology Law & Policy, told us. "The FCC disregarded the staff’s conclusion that the merger will lead to higher prices until at least 2024, especially for price sensitive consumers," she said: “I sure hope that the states will find a way to introduce that in the trial. It would show that the majority’s decision is based more on politics … than on the record and sound economic analysis.”

“Courts that review conditioned mergers understand the DOJ’s policy is that effective remedies must quickly restore the lost competition,” said Free Press General Counsel Matt Wood. “The FCC simply ignored that precedent. The FCC’s fig leaf here is divestiture of less than 3 percent of the market's existing customers to Dish.” The approach taken by the FCC is typical of the Trump administration, Wood told us: “Ignoring unwanted facts that complicate its preferred narrative."

"Despite yet another round of promises to try to prop up this merger,” The Utility Reform Network “remains opposed emailed Managing Director-San Diego Christine Mailloux. The group is fighting the carriers in the California Public Utilities Commission review. “These most recent promises appear to be as short-term and unrealistic as the ones that have come before.”

At the California commission, Dish has until Wednesday to respond to a motion to compel by the CPUC Public Advocates Office, ruled Administrative Law Judge Karl Bemesderfer in docket A.18-07-011 Thursday. PAO filed the motion to force Dish to respond to two sets of data requests related to the California commission’s T-Mobile/Sprint review (see 1911060021).

Dish Chairman Charlie Ergen said Thursday the price war in mobile service proves the company's point about entering the industry. He said Dish will be a disruptor since it doesn't need to support legacy 2G, 3G and 4G networks (see 1911070007).