CWA Report: T-Mobile’s iWireless takeover undercuts claims that T-Mobile-Sprint merger would benefit rural America

According to a new Communications Workers of America report, Disrupting Rural Wireless, T-Mobile’s 2018 acquisition of regional carrier Iowa Wireless (“iWireless”) harmed customers, workers, and small business owners, especially in rural parts of Iowa.

Ahead of scheduled Capitol Hill hearings this week on the T-Mobile-Sprint merger, the iWireless story undercuts the companies’ claims that their merger would benefit rural America and the small businesses that serve as authorized dealers for T-Mobile and Sprint services.

Prior to T-Mobile’s acquisition, iWireless had one of the largest retail footprints of any wireless carrier in Iowa, with 129 corporate and authorized dealer locations, and was notable for its rural presence and for its affordable and flexible prepaid plans. Following the acquisition, T-Mobile retired the iWireless brand and discontinued the iWireless network in October 2018, and closed iWireless’ two Iowa customer service call centers and 86 percent of the iWireless retail locations.

On a press conference call held this afternoon, experts on rural access, labor issues, and small businesses in the wireless industry discussed the report.

Shelia Hall, a former iWireless authorized dealer from Iowa Falls featured in the report said: “T-Mobile left iWireless authorized dealers and our customers out in the cold. In reading the new report, it’s clear I was not the only iWireless dealer that felt the transition to T-Mobile was done poorly. Now that T-Mobile wants to take over another company and is saying it will be good for small towns and rural areas, I think that the experiences of the iWireless customers and authorized dealers should matter.”

Carri Bennet, General Counsel for the Rural Wireless Association said, “The iWireless story offers a real-world reminder why the proposed T-Mobile-Sprint merger would be harmful to consumers, especially those in rural markets, and should be denied as anticompetitive. Eliminating Sprint will drive roaming rates up, making it impossible for many rural carriers to provide affordable service to their rural customers.”

Adam Wolf, President of the National Wireless Independent Dealers Association said, “Our concern is and always has been the independent dealer. We fear a repeat of this story on a much larger scale if the merger happens without a clear and defined plan from the ‘new T-Mobile’ - whether that be a commitment to the Boost, Sprint, and Metro dealers or a decision to divest one or more of those brands and dealers.”

Debbie Goldman, CWA’s Research and Telecommunications Policy Director, said: “T-Mobile doesn’t like to talk about its takeover of iWireless, but it is important to understand what happened since it provides a cautionary tale for regulators who are reviewing the T-Mobile-Sprint merger. Instead of improving service in rural Iowa, T-Mobile gutted a carrier that had provided convenience and choice to thousands of rural customers.”

Several other former iWireless authorized dealers featured in the new CWA report also shared their experiences after T-Mobile acquired iWireless and offered concerns about the proposed merger with Sprint:

Jason Chase, a former iWireless authorized dealer and mayor of Rock Rapids, Iowa, said, “I think the T-Mobile acquisition of Iowa Wireless was the worst transition I’ve ever been a part of. There was no support on the side that built the business. The agent locations are what grew Iowa Wireless to where it was. There was no thought put into maintaining the distribution channel that was there. They were just buying it solely for the footprint and really felt that they didn’t have any cares for [iWireless’] distribution network.”

Christopher Shumaker, former owner of authorized dealers in Davenport, Iowa, and Moline, Ill., predicted that reducing the number of prepaid carriers could reduce the number of “port-in specials,” which allow customers to get equipment at discounted prices. Said Shumaker, “all three of the major prepaid carriers are doing those specials. If three of them become two after a merger, now there’s less competition, there’s less requirement for them to run those sorts of specials.”

• Read the new report Disrupting Rural Wireless here

• Read a summary of the report here

Key Background and Findings from Disrupting Rural Wireless

T-Mobile and Sprint claim that their proposed merger will benefit rural communities and argue that this is a key reason for regulators to approve the deal. However, CWA conducted an in-depth analysis of the iWireless acquisition, including interviews with people who experienced its eff­ects directly, finding that T-Mobile’s acquisition of iWireless was particularly detrimental to the following groups:

Rural customers:

• iWireless’ rural retail locations provided convenient access to sales and basic technical support to customers who now have to drive more than an hour to the nearest T-Mobile store, on average.

• iWireless operated approximately 38 percent of all wireless stores in Iowa’s FCC Rural Service Areas (RSAs) and 67 percent of stores in places with a population of fewer than 2,500 residents.

• As of January 2019, T-Mobile has yet to open a single T-Mobile-branded store outside of Iowa’s urban areas.

• There are an estimated 550,000 Iowans living in RSA counties that were previously served by at least one iWireless location and now have zero T-Mobile or Metro by T-Mobile stores

Prepaid customers:

• iWireless’ prepaid plans were more flexible than those off­ered by other prepaid carriers because they allowed customers to purchase plans at less than 30-day intervals. In contrast, Metro by T-Mobile only off­ers 30-day prepaid plans.

• As part of the transition from iWireless, T-Mobile prioritized the retention of postpaid over prepaid customers. Most iWireless dealers interviewed by CWA reported that prepaid customers made up a majority of their businesses.

Small business owners:

• T-Mobile closed 90 percent of all iWireless locations operated by authorized dealers.

• Some of the authorized dealers contacted by CWA reported that they had just a few days’ notice before they had to cease sales and surrender their iWireless inventory and that they continued to assist customers who had di­fficulty transitioning to T-Mobile but received no compensation.

• Most of the iWireless authorized dealers contacted by CWA reported that they would have wanted to remain as a T-Mobile or Metro authorized dealer after the transaction, but T-Mobile did not give them the opportunity to do so.

Postpaid customers:

• iWireless’ least expensive unlimited plan for a single line was approximately 23 percent less expensive than T-Mobile’s ONE plans. Unlike T-Mobile, iWireless’ unlimited plans did not throttle high-speed data or limit video streaming quality.