T-Mobile/Sprint Cleared by California, 2 Weeks After Transaction's Closing

The regulators unanimously cleared a COVID-19 resolution to retroactively apply emergency customer protection measures from March 4 until the emergency ends (see 2004060061). The CPUC will hold a broadband workshop April 23 about changes to the California Advanced Services Fund, the agency said Wednesday as it received comments and replies on CASF issues including coronavirus response in docket R.12-10-012.

T-Mobile is pleased CPUC decided, said a spokesperson who didn’t comment otherwise. “As we consider today’s action, we are moving forward to deliver the benefits of the merger.”

T-Mobile and Sprint closed April 1 but later agreed to pause consolidating California operations until commissioners voted. The carriers claimed CPUC couldn’t rule on or condition the deal because it lacks authority over wireless transactions and Sprint had moved wireline customers to VoIP. “We very fundamentally disagree on this point,” Commissioner Cliff Rechtschaffen said at Thursday’s webcast meeting. He and other commissioners mostly held fire on early completion.

The commission didn’t “go far enough to send a message to other providers that such bad faith will not be tolerated or allowed to hold back the Commission from doing its job,” emailed TURN Managing Director-San Diego Christine Mailloux. The group sought fines for closing early (see 2004100011) but is glad the state commission exercised authority to review wireless deals, said Mailloux.

It's a “tough case” for Rechtschaffen, who led the agency's review, he said. The commissioner ultimately decided benefits would outweigh possible harms given added enforceable conditions to federal requirements. "Fewer companies generally mean less competition,” and the Herfindahl-Hirschman Index showed the deal as presumptively anti-competitive in Los Angeles and 17 other California markets, he said. But the new company will have spectrum and other assets to compete on 5G with Verizon and AT&T, giving it incentive to compete on price and quality, said Rechtschaffen, questioning whether Sprint would survive otherwise.

“Basic economic theory” says “competition is violated with the consolidation of providers,” said Commissioner Martha Guzman Aceves. Conditions and strong enforcement language mitigated her concerns, she said. Conditions haven’t always been effective in previous transactions, so the enforcement language is critical, she said. Agreeing that conditions aren’t always followed, Commissioner Liane Randolph praised how the decision handles enforcement.

The CPUC tweaked or removed some T-Mobile commitments to the California Emerging Technology Fund, Rechtschaffen noted. T-Mobile told CETF it would add 332,500 low-income customers to state LifeLine, but the CPUC reduced the number to 300,000; and the agency left out a pledge that the company spend $41 million on digital inclusion, said CETF President Sunne Wright McPeak. “These obligations will be met by T-Mobile because CETF has a strong track record of ensuring enforcement of public benefit commitments derived from corporate consolidations.”

Communications Workers of America "remains very concerned" about possible job losses and wage reductions, a spokesperson emailed. "Hold the new T-Mobile accountable for the promises that they have made."

CASF Overhaul

Revamp CASF, the Greenlining Institute commented Wednesday. “The broadband landscape has changed significantly since 2012, and CASF’s goal of universal connectivity is more important than ever.” CETF agreed: “The same sense of urgency needed to respond to the COVID-19 pandemic should be brought to the ongoing administration of CASF.”

Cable disagreed with consumer and local advocates on the merits of combining state and federal support for California broadband projects.

“CASF funding should not be awarded in areas where infrastructure already is funded by federal or any other public programs,” the California Cable & Telecommunications Association commented. “CASF should be carefully targeted to support the build out of infrastructure only in areas that remain unserved.” CCTA complained that CASF's mapping and its challenge process sometimes lead to flagging served areas as unserved. The CPUC “has denied challenges where there is clearly deployment present, simply because the provider has been unable to show that a customer currently purchases service in a census block,” it said.

Don't stop matching support with "other grants, loans, local government bonds or private contributions for broadband projects,” countered the Rural County Representatives of California. TURN agreed applications should be able to combine state and federal funding. California’s public utilities code “explicitly encourages the leveraging of CASF grants with other sources of funds, especially and specifically federal monies,” and the agency should prefer such projects, said CETF. The Central Coast Broadband Consortium local government group said there’s “no blanket prohibition” on combining grant sources, though there’s “properly a prohibition on a grantee receiving payment from one grant source for an eligible expense that has already been paid by another.”

“The COVID-19 pandemic has brought to the forefront glaring gaps in digital equity -- broadband availability and affordability and digital literacy,” the state library replied on CASF and the virus (see 2004140013). “Augmenting, as we are now, is a powerful stopgap, but it is only part of the long-term solution.”