TR Daily T-Mobile Suggests Planned Offerings Show Value of Merger
Thursday, November 7, 2019

T-Mobile Suggests Planned Offerings Show Value of Merger

T-Mobile US, Inc. today announced three new offerings that it plans to roll out if its acquisition of Sprint Corp. is approved, and company executives said that the services provides an example to state attorneys general challenging the deal of the benefits of allowing the No. 3 and No. 4 wireless carriers to merge.

T-Mobile announced that it would provide, through a new Connecting Heroes Initiative, free, unlimited talk, text, and data – including 5G access – to every first responder and public and non-profit public safety agency nationwide for 10 years. It also said it would aim, through Project 10Million, to eliminate the homework gap and provide broadband to 10 million homes with school-age children via a $10 billion commitment to provide free Internet access for the next five years to eligible low-income families, who would also receive a free mobile Wi-Fi hot spot and could purchase certain Wi-Fi-enabled devices at cost. And it said it would, through a T-Mobile Connect offering, cut in half its lowest prepaid plan for anyone to $15 a month for 2 gigabytes a month of data, with monthly data allowances increasing by 500 megabytes each year over five years. T-Mobile said that the new plan would likely spur other carriers to also lower prices.

T-Mobile also announced that it plans to activate nationwide 5G service on Dec. 6, covering more than 200 million Americans in more than 5,000 cities and towns. T-Mobile had originally said it would deploy nationwide 5G services next year, but last month it said it would launch this year.

The Department of Justice and some states have reached a settlement with T-Mobile and Sprint that would allow the merger to proceed (TR Daily, July 26), and the FCC released an order this week signing off on the deal on a 3-2 vote (TR Daily, Nov. 5).

But the carriers face a federal lawsuit brought by a number of state attorneys general and the District of Columbia AG seeking to block the transaction (TR Daily, June 11). A trial is scheduled to start next month. Also, a court has yet to approve the settlement with DoJ and the states and the California Public Utilities Commission hasn’t signed off on the deal.

During a conference call today on the offerings that T-Mobile plans to deploy if its acquisition of Sprint is approved, T-Mobile Chief Executive Officer John Legere said that the carriers and state AGs trying to block the deal are in agreement more than people may assume.

“I’ll be candid: This deal to create the new T-Mobile has taken longer than we originally thought it would to close. And some people are still asking questions – the right questions. They want to ensure this deal will drive more innovation, stronger competition, and lower prices. But these people have yet to realize that we want what they want. We are 100% aligned,” Mr. Legere said.

T-Mobile President and Chief Operating Officer Mike Sievert echoed the same theme in a news release.

“We know some still have questions about why we need the New T-Mobile—and have said they need to see certain things in order to agree that it should move forward, like more innovation and lower prices,” he said. “What’s amazing is that we are actually aligned. Today’s moves show once again how the New T-Mobile will change wireless for GOOD, with more competition, lower prices, and innovative solutions. And the best part is that this is just the beginning of what’s possible.”

Mr. Legere was asked if today’s announcement was designed to incentivize state AGs to settle their lawsuit.

“We’re prepared for litigation on December 9th,” he replied. But he also said that “we’ve been meeting with many, many states, including New York … and hearing what’s important for them.” State AGs are concerned about jobs, prices, competition, and the impact of the deal on low-income residents, he said.

“I’m sure the attorney generals are watching because [these are] the kind of things that they’re worrying about,” he said of today’s announcement.

But Mr. Legere also said that “if you think this is a settlement announcement, it’s not. We are this close to the new T-Mobile. If we go trial on Dec. 9th, we’re going to win.”

However, he added, “The things that we want are the exact same things that the states want.”

Mr. Legere also said that discussions are ongoing with state AGs about dropping out of the lawsuit against the merger.

Mississippi and Colorado dropped out of the state lawsuit to join the DoJ settlement. Florida, which had not been in the state lawsuit, also joined the DoJ settlement after it was originally filed.

Mr. Legere added that T-Mobile and Sprint are discussing an extension of a provision in its merger agreement that prevents the parties from unilaterally pulling out of the deal. That provision expired last Friday. Mr. Legere said hopefully an agreement can be reached soon.

“It’s a positive conversation” that would include a number of factors mentioned in reporters’ questions today, including whether the purchase price of the deal should be modified, he said.

Blair Levin, an adviser to New Street Research LLP and a former FCC chief of staff, said of today’s T-Mobile announcement, “It offers what one might think of as public interest benefits but does not do anything to address the competitive harms alleged in the states' complaint. I don't think it materially changes the odds at settlement, nor do I think it will change the odds at trial. It is interesting, however, in the way that it elevates concerns about public interest benefits above competitive impact, which is consistent with the FCC and a very odd thing to be happening during a Republican Administration.”

But Lynnette Luna, principal analyst at GlobalData, a data and analytics company, said, “T-Mobile [has] made very bold promises that can only come to fruition with the vast wireless spectrum holdings, the combined T-Mobile and Sprint will have. State attorneys general who oppose the merger on antitrust grounds are concerned about its potential impact on competition and wireless service prices. However, the promises T-Mobile made today make it difficult for any regulator to continue contesting the merger.”

Dish Network Corp. co-founder and Chairman Charlie Ergen said today that he gives state AGs “a lot of credit” for incentivizing T-Mobile to look for offerings to help low-income people. “That’s a big step forward that T-Mobile’s committed to,” Mr. Ergen added during a conference to call to announce the company’s third-quarter financial results (see separate story). Dish would acquire Boost Mobile and other assets as part of the DoJ settlement with T-Mobile and Sprint.

New York AG General Letitia James (D.), who is co-leading the lawsuit against the carriers, is reviewing today’s announcement, according to a spokesman.

As for T-Mobile’s proposed first responder initiative, T-Mobile officials said they want to compete with AT&T, Inc., which is building a nationwide public safety broadband network for the First Responder Network Authority (FirstNet), and Verizon Communications, Inc., which also offers a public safety service that, like AT&T, includes priority access and preemption. AT&T is building a physically separate core, while Verizon’s core is virtual. Mr. Legere called on AT&T and Verizon to also offer their service free to public safety.

T-Mobile said in a news release that it would give first responders “the highest priority of any plan on T-Mobile’s network no matter how much data they use” and the company said on today’s call that public safety would also get preemption. However, a T-Mobile spokesman told TR Daily later, “There is no plan for preemption. We don’t have preemption now, as standalone T-Mobile, because we’ve had sufficient capacity. So going forward with New T-Mobile, we’ll have even more capacity, so there will be even less need for preemption.”

A public safety veteran told TR Daily that “while this move is laudable, I still don’t see how this will dramatically change the landscape since preemption does not seem to be part of this rollout. Without preemption, the proposal will not compare or compete in my view with FirstNet.”

“This is another example of how FirstNet is transforming the marketplace to focus on public safety like never before,” said a FirstNet spokesperson. “While we can’t comment on hypothetical service offerings, we can say with certainty that we developed FirstNet based on public safety’s needs and requirements – not merger needs. FirstNet is the only network built for and by public safety to meet their need for a reliable, secure connection that they can rely on in every emergency with guaranteed priority, preemption, and other features, such as the FirstNet dedicated core and deployables fleet.”

AT&T had no comment by TR Daily’s deadline, while Verizon did not respond to a request for comment.

T-Mobile provided details of the offering on its website.

“This plan will include unlimited smartphone talk text and data with 1GB of 4G LTE mobile hotspot with 3G speeds thereafter,” it said. “For $15 customer[s] can upgrade to a plan with 20GB of mobile hotspot, unlimited texting and up to 256 kbps data in 210+ countries and destinations, plus free texting & unlimited in-flight Wi-Fi with Gogo.” —Paul Kirby, [email protected]

MainStory: FCC FederalNews MergersAntitrust WirelessDeployment PublicSafety Courts

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