TR Daily California AG Becerra Reaches Settlement With T-Mobile, Sprint
Wednesday, March 11, 2020

California AG Becerra Reaches Settlement With T-Mobile, Sprint

California Attorney General Xavier Becerra (D.) today announced a settlement agreement with T-Mobile US, Inc., and Sprint Corp. that includes protections for low-income subscribers, an extension of access to underserved communities, the creation of new jobs, and job protection for current Sprint and T-Mobile employees. In connection with the settlement, AG Becerra said that California will not appeal the district court’s decision denying the challenge to the merger brought by California and other state attorneys general, or take any other action related to the case. He said other AGs that had sued to block the deal—13 states and the District of Columbia joined in that suit—will sign onto the settlement.

“This settlement ends the legal challenge brought by Attorney General Becerra leading a multistate coalition, which alleged that the merger was unlawful and would lead to reduced competition and increased prices for consumers,” the attorney general said. He added that the settlement includes “many of the elements that we would have fought for in court and had we prevailed would have expected to see in a court decision. While we didn’t prevail in court, this settlement secures many elements of competition that we need to see to believe that our consumers will have an opportunity to get a good service or product at a good price because there is competition.”

Under the terms of the agreement, the post-merger company will make two new low-cost plans available to Californians for at least five years, freeze current rate plans for at least five years, offer free mobile broadband service for five years and free Wi-Fi hotspot devices to 10 million low-income households that are not currently connected, and offer certain families the option to purchase tables and devices at cost. The attorney general said that T-Mobile will make more than $700 million worth of hardware available for purchase by qualifying families.

In addition, all current California T-Mobile and Sprint retail employees will be offered substantially similar employment. And three years after the closing date of the merger, T-Mobile agrees that the number of employees of the new merged company will be equal to or greater than the total number of the unmerged Sprint and T-Mobile companies. The new T-Mobile also agrees to open a new call center in Kingsburg, Calif., which will create about 1,000 new jobs, AG Becerra said.

Mr. Becerra said that the settlement proves that you despite the acrimony of litigation you “can really come to terms even with those you go to battle with in court.” In this case, “we didn’t see eye to eye, but we saw we saw eye to eye enough to reach a settlement that included protections for California’s market and California’s people,” he said.

He also noted that the new T-Mobile will reimburse the state of California for the costs of its investigation and litigation within 30 days of the closing date of the merger.

The other states which are part of our coalition, which will be signing this settlement, will also be reimbursed for their costs,” AG Becerra said. “We expect the total of those costs will be about $15 million.”

In response to the settlement, the Rural Wireless Association, Inc., said that the “prospect of new jobs for Californians and the availability of low-cost wireless broadband plans nationwide is certainly a step in the right direction.” However, “from a rural consumer perspective, the proposed settlement between the State AGs and the two wireless carriers is short on tangible benefits.”

“RWA hopes that the State AGs will enforce all of the terms entered into by New T-Mobile, and that they individually and collectively monitor the carrier’s progress month-by-month, quarter-by-quarter, and year-by-year,” it said. “More importantly, the State AGs should actively enforce any missed deadlines or failed commitments and impose financial or other penalties on New T-Mobile, if warranted. In the meantime, RWA will continue to monitor all of New T-Mobile’s rural coverage promises made since April 2018—promises that the carriers used to get FCC and DOJ approval of this merger—and bring any deployment or coverage failures to the attention of regulators, antitrust officials, and lawmakers if they do not materialize.”

FCC Chief of Staff Matthew Berry said in a tweet today, “Very disappointing the T-Mobile & Sprint agreed to pay some of the California AG’s expenses for his failed lawsuit against the merger. This lawsuit only served to delay 5G deployment and closing the digital divide in rural America. California’s AG shouldn’t have gotten a cent!”

Sprint and T-Mobile did not respond to requests for comment on the settlement.

The proposed merger, meanwhile, remains subject to approval by the California Public Utilities Commission. The commission earlier today released a draft order approving the deal and is expected to vote on the proposed order on April 16 (see separate story). —Carrie DeLeon, [email protected]

MainStory: MergersAntitrust CaliforniaNews Courts

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