California Regulators Say T-Mobile Lied To Gain Sprint Merger Approval
from the synergies dept
To gain regulatory approval for its $26 billion merger with Sprint, T-Mobile made numerous promises. One was that the deal would immediately create jobs (there’ve been 5,000 layoffs so far). Another was that the company would work closely with Dish Network to help them build a fourth wireless network that would replace Sprint, theoretically “fixing” the reduction in competition the deal created. As predicted, that plan isn’t working out well either.
Dish and T-Mobile have been fighting like cats and dogs since the deal was finalized. Instead of helping Dish Network grow, T-Mobile has been poaching Dish customers with promotions specifically targeting Dish. T-Mobile also promised to keep its older 3G, CDMA network operational for Dish to use until 2023 (giving it time to build out its own 5G network), but Dish has been accusing T-Mobile of turning that network off on January 1, 2022, far earlier than originally promised. Dish argues that millions of its Boost Mobile branded wireless subscribers could lose access to service in the new year.
This week California regulators sided with Dish and effectively accused T-Mobile of lying to gain merger approval:
“T-Mobile’s false and misleading statements under oath indicated, among other things, that T-Mobile would make its CDMA network “available to Boost customers until they were migrated to Dish Network Corporation’s LTE or 5G services” and that Dish would have up to three years to complete the migration, the ruling said. The CPUC can impose penalties against T-Mobile of up to $100,000 for each offense.”
In short Dish says T-Mobile simply isn’t living up to its merger commitments. In turn, a T-Mobile blog post effectively accuses Dish is just making everything up, and insists Dish is simply too cheap to give its wireless users discounted 4G and 5G phones to avoid problems when T-Mobile’s 3G network shuts down. California regulators, including Administrative Law Judge Karl Bemesderfer and a CPUC commissioner, appear inclined to believe Dish Network based on their review of T-Mobile’s pre-merger promises:
“Their ruling said there is “a reasonable basis to conclude that T-Mobile… misrepresented material facts and misled the commission” with statements under oath. The ruling said that when the CPUC allowed the merger, it “relied on the specific false statements, omissions, and/or misleading assurances T-Mobile gave regarding its use of [Sprint’s] PCS spectrum and its repeated references to a three-year customer migration period without a degraded experience… it appears that these false statements, omissions and/or misleading assurances and the related time references were intended to induce the commission to approve the merger.”
Again, simply blocking this deal and finding some other way to prop up Sprint (without eliminating a direct competitor) was always the simpler, cleaner, option. Instead, the Trump DOJ and FCC constructed this elaborate and likely doomed alternative which (ironically for a party with a purportedly “hands off” and “government never works” mindset), involves having government try to nanny a cumbersome arrangement to fruition for the better part of a decade. With Dish consistently losing both wireless and TV subscribers, it’s not clear Dish will even remain viable enough for that to work.
Dish is a company with no experience in wireless, with a history of being cheap and difficult to work with, that has to not only build out a world class 5G network in a few years, but has to make a network so popular with consumers it successfully leeches subscribers from AT&T, Verizon, and T-Mobile. And it has to do it without financially imploding as it continues to hemorrhage wireless and TV subscribers. And US regulators, not exactly the model of consistent oversight, would need to hold all companies involved meaningfully accountable should they miss build-out metrics.
I still tend to think the entire deal was performative theater providing flimsy justification to approval a deal experts made very clear would reduce competition, raise prices, and harm jobs. It was pushed by folks whose only real interest was reducing competition so the remaining three players could inevitably jack up prices. And while I do think Dish is making a good show of it (because they have to), I still tend to think this could end with Dish selling its trove of valuable spectrum (once deal restrictions end), making tens of billions, then throwing a few peanuts at any flimsy regulatory penalties on their way to the exit.