T-Mobile, Sprint Seek February Decision in California Deal Review

The California Public Utilities Commission received final arguments for and against the T-Mobile/Sprint deal, before a possible vote in early February. T-Mobile and Sprint said FCC and DOJ orders add to the deal’s public-interest benefits. That pact's plan to add Dish Network as a fourth national carrier didn’t persuade consumer advocates or the Communications Workers of America to support the deal, though they appeared open to strict CPUC conditions. The California commission is the last state agency OK the carriers need.

The CPUC should issue a proposed decision by Jan. 7 so state commissioners can vote on a final order at their Feb. 6 meeting, said the carriers’ brief Friday in docket A.18-07-011. "A final Commission decision no later than the February 6 meeting is critical to mitigate the possibility that the Commission’s review in this matter extends beyond the conclusion of the remaining proceedings that are ongoing at the federal level.” They slammed opponents’ “continued and unrelenting attempts to delay or otherwise undermine the merger” as depriving consumers of deal benefits.

Neither FCC commitments nor the Dish divestiture adversely affects any benefits to consumers from the deal or existing California commitments, including to LifeLine and the Boost pilot program, T-Mobile and Sprint said. Dish “has the tools to be a viable competitor in the wireless market,” including a “very favorable” mobile virtual network operator agreement, much spectrum and strong incentives to honor federal commitments,” the carriers said. Dish mostly deferred argument on that case to the carriers’ brief but commented that "intervenors’ speculative disparagement of DISH’s financial, technical, and operational readiness to provide low-cost, high-quality service to consumers, deploy a 5G network and become a vibrant competitor in the wireless market is without merit."

CWA wants the CPUC to require Dish and the carriers “to make verifiable, enforceable commitments that no T-Mobile or Sprint employee (including those of dealers and contractors) loses a job or wages as a result of the transaction, and to ensure the complete protection of employees’ right to form a union of their own choosing free from any interference by the New T-Mobile,” the union said. “Divesting some T-Mobile assets to Dish under the DOJ pact “would not remedy the merger’s job losses, store closures or downward pressure on wages. With or without the DISH divestiture, the merger would result in a loss of more than 3,000 retail jobs in California. Post-merger, the annual earnings of retail wireless workers in California’s major metropolitan areas would decline by $2,319 to $2,953.”

"If the Commission moves forward with this transaction, it must include clarification and accountability for the many conditions and commitments that the record contains, including as to the DISH divestiture and facilities-based commitments,” the Greenlining Institute and The Utility Reform Network said. They said DOJ and FCC conditions don't mitigate harms: “Current market factors such as churn, roaming contracts, insufficient coverage, investment, bundling advantages, retail store presence, and incumbency, will likely line up to serve as barriers to entry for DISH. This complicated market dance with many potential dance partners, scheduled to take place over the course of at least five to seven years, cannot and should not serve as the basis for this Commission to find that this transaction is in the public interest.”

Dish entry doesn't remove or diminish concerns about wireless consolidation, which will likely lead to higher prices, worse service quality, reduced privacy and the death of California LifeLine, said the CPUC Public Advocates Office. Dish won’t have "market presence or power” to pressure the other three carriers, it said.

The Dish pact "will assist in alleviating some competitive harms of the proposed merger," including the loss of Sprint as a fourth carrier, and provides public benefits to Californians, said California Emerging Technology Fund, which earlier settled with carriers to support the transaction. “The addition of DISH will ensure competition to New T-Mobile in the prepaid market, and will generally assist in driving prices down as to all wireless providers.”

It's "highly unlikely" CPUC will block a deal that would otherwise close, New Street Research’s Blair Levin emailed Monday. If companies win against states in the U.S. District Court for the Southern District of New York, he said, “the CPUC might cause a delay but that's about it. If the judge rules for the states, then what the CPUC decides is not material." The court wrapped witness testimony Friday with analysts split on who won (see 1912200043).