TR Daily Groups Reiterate Criticism of T-Mobile-Sprint Transaction
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Wednesday, October 31, 2018

Groups Reiterate Criticism of T-Mobile-Sprint Transaction

Some critics of T-Mobile US, Inc.’s proposed acquisition of Sprint Corp. reiterated their complaints today and suggested that no conditions would address their concerns with the deal.

Critics held a call for reporters this afternoon as parties filed reply comments on the deal at the FCC.

The FCC extended the comment for reply comments earlier this month (TR Daily, Oct. 2) after stopping the clock on its review of the transaction “in order to permit review of the Applicants’ newly submitted economic, engineering, and efficiencies modeling” (TR Daily, Sept. 11).

During today’s call and in reply comments, transaction critics reiterated complaints they voiced in petitions to deny and initial comments, and some said they would address issues raised in applicants’ newly submitted in the unredacted versions of their reply comments.

“The record compiled by the FCC clearly demonstrates that the proposed Sprint-T-Mobile transaction will substantially reduce competition in the wireless market and harm consumers,” said Phillip Berenbroick, senior policy counsel for Public Knowledge.

Most of Public Knowledge’s reply comment would be redacted, he said. He said the additional information supplied by T-Mobile and Sprint confirms what the group has said about the carriers – that they compete vigorously against each other, Mr. Berenbroick said.

He said that no conditions could address problems with the deal. For example, he said, if the FCC ordered the divestiture of spectrum, no other entity would have the scale that Sprint does to be a significant player in the market. He also stressed that unlike what T-Mobile has said, “Sprint is not a failing firm.”

Gaurav Laroia, policy counsel for Free Press, stressed that T-Mobile and Sprint have the lion’s share of the pre-paid market and said that a deal could negatively impact minorities and lower-income people who use those services.

Debbie Goldman, research director and telecommunications policy director for the Communications Workers of America, noted that CWA has updated its estimate of job losses from the merger. The updated analysis projects 30,000 jobs would be lost, despite the contention of the carriers that the deal would result in overall higher employment numbers. In its initial comments, CWA said the job loss would total more than 28,000.

As many as 25,500 employees would lose their jobs at retail stores, while about 4,500 people would find themselves out of work due to merging headquarters functions, Ms. Goldman said. She also cited national security concerns due to relationships that the companies and their parents have with Chinese equipment manufacturers Huawei Technologies Co. Ltd. and ZTE Corp.

“The Commission should not approve the merger without verifiable and enforceable commitments by the Applicants to ensure that the transaction does not cause a reduction in U.S. employment, that no employees of T-Mobile or Sprint will lose a job as a result of this transaction, that the Applicants will return all overseas customer call center jobs to the U.S., and that the Applicants commit to abide by all labor and employment laws and to maintain neutrality in allowing their employees to form a union of their own choosing, free from any interference by the employer,” CWA said in the redacted version of its reply comments in WT docket 18-197.

Ms. Goldman said CWA’s unredacted filing addresses the companies’ additional information, including the argument that Sprint is a failing firm. On economics, CWA found “internal contradictions and inconsistences” with the companies’ submission, she said.

She also said that the economic analysis provided by T-Mobile economists rests on “very speculative efficiencies” three and six years out.

CWA has launched a website, TMobileSprintfacts.org, against the deal.

Rural Wireless Association General Counsel Carri Bennet expressed concern about the impact on rural carriers of losing a reliable roaming partner — Sprint — and what she complained was T-Mobile’s poor record on rural call completion.

She said the problem with conditions is that they could be targeted at the new T-Mobile’s behavior.

“We don’t trust the current T-Mobile behavior, and we don’t … trust that they would keep to their conditions,” she said. “You spend a lot of time in court post-merger trying to enforce those kinds of things.”

In its reply comments, RWA said, “Applicants’ rural buildout claims are not supported in the record. Applicants’ own filings show that the New T-Mobile would only provide marginally better broadband options than standalone T-Mobile in much of rural America. In fact, for the great majority of rural Americans, the level of coverage and capacity would be similar for New T-Mobile as it would be for standalone T-Mobile. Further, the data in the Transaction Description demonstrates that even six years after a T-Mobile/Sprint merger, most of New T-Mobile’s rural customers would be forced to settle for a service that has significantly lower performance than the urban and suburban parts of the network. As such, the digital divide is likely to worsen, not improve, post-merger.”

In another reply comment filed today, C Spire said, “The Applicants have chosen to file a Joint Opposition that merely repeats the unsubstantiated claims that the Proposed Transaction will produce enormous consumer benefits and intensify competition. In the process, they barely acknowledge the well-pled objections of a broad cross-section of local, regional and rural carriers (collectively referred to herein as ‘competitive carriers’) who have demonstrated the significant harmful effects that this merger would have on essential wholesale services. The Applicants also have failed to address or distinguish the binding precedents cited by competitive carriers – precedents that T-Mobile itself has invoked and endorsed in the past – showing that the conditions sought by the competitive carriers are necessary and appropriate. C Spire simply is asking the Commission to follow its own precedent by putting concrete conditions in place to guarantee that the vague assurances New T-Mobile offers to competitive carriers will be realized if the Commission permits the Proposed Transaction. As noted previously by C Spire, ‘Trust us!’ is not an adequate public interest showing.”

C Spire is seeking the following conditions: “(1) New T-Mobile must commit to maintain any and all existing roaming and MVNO agreements with every competitive carrier with which it has such an arrangement (and to apply that agreement to all traffic exchanged with the New T-Mobile on any network that New T-Mobile provides services over) through the term of the agreement, or four years after the close of the Proposed Transaction, whichever is later; (2) New T-Mobile must commit to maintain and operate Sprint’s CDMA network, in substantially the same manner in which it now operates, for a minimum of five years after consummation of the Proposed Transaction; and (3) New T-Mobile must commit to enable requesting carriers to roam or resell on the combined Sprint/T-Mobile network using new technologies.”

In a redacted joint opposition filed last month, T-Mobile and Sprint said the FCC should reject petitions to deny T-Mobile’s proposed acquisition of Sprint and other concerns about the deal, arguing that contentions that the transaction would result in higher prices and less competition are off the mark (TR Daily, Sept. 18).

A supporter of the merger blasted the deal’s critics today.

“It is no surprise that opponents of the Sprint and T-Mobile merger picked Halloween to try and instill unwarranted fear in the public,” Consumer Action for a Strong Economy said in a statement. “The reality is a new T-Mobile has been widely heralded by analysts and observers across the industry as a true game-changer, one that will bring a strong third national competitor to the world of wireless. Accompanying this new company’s formation is over $40 billion in additional investment into new technologies and digital infrastructure that will create thousands of new jobs, transform the landscape for consumers with faster data at lower costs, and boost America’s national interest as a global leader in innovation.”

Meanwhile, T-Mobile announced today that it has received shareholder approval related to the deal. —Paul Kirby, [email protected]

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