CWA District 1 calls on NY Public Service Commission to deny T-Mobile and Sprint merger petition

The Communications Workers of America (CWA) District 1 has filed comments with the New York Public Service Commission (NY PSC) calling on the Commission to deny the joint petition of T-Mobile and Sprint to merge. Detailed economic analysis by CWA has shown that the proposed merger, as presently constructed, would eliminate 1,705 jobs in New York and 30,000 jobs nationwide (see here for a detailed New York-specific fact sheet on job losses).

In their new filing to the NY PSC, available online here, CWA District 1 highlights that the companies fail to meet the public interest standard, noting that the joint application of the companies “do not assert any net public benefit to New York, or any evidence of such” beyond an unpersuasive and insufficiently detailed argument about a 5G network. The CWA District 1 filing also details four areas of significant detriment to the public interest in New York if the merger proceeds (detailed excerpts contained at bottom of this statement on each of the following topics):

1. The merger will reduce employment in New York by 1,705 jobs.

2. The merger will reduce competition and raise rates, especially for vulnerable populations.

3. The merger will unduly concentrate ownership and control of wireless spectrum in New York.

4. T-Mobile and Sprint’s vague assertions about the future benefits of a 5G system are contradicted by their Own statements.

According to Dennis Trainor, Vice President of CWA District 1, “The proposed T-Mobile/Sprint merger is against the public interest in New York. The merger would eliminate 1,705 jobs in our state and 30,000 jobs across the country, while raising prices for consumers, especially for price-conscious pre-paid wireless customers in New York and nationwide. The NY PSC should deny the companies’ petition to merge or use its authority to convene hearings about the proposed merger’s impact on New York workers and consumers.”

The new filing also highlights questions about T-Mobile’s acquisition of Sprint’s wireline network in New York as a result of the merger that the applicants have failed to address in their joint application.

Below find additional key excerpts from the CWA District 1 filing to the NY PSC

The sole public interest assertion explicitly made by the JA’s [Joint Applicants] concern an unspecified expansion of a 5G national wireless system. CWA disputes the significance of the stated public interest benefits of the merger in New York and brings to the attention of the Commission significant public interest detriments which the JAs [Joint Applicants] have failed to acknowledge.
 

1)   The Merger Will Reduce Employment In New York By Over 1,700 Jobs

Using publicly available data and expert analysis, CWA has analyzed the impact of the proposed merger on JAs employment in New York. Summarized, the JAs currently operate 1,642 retail locations across New York, divided between pre-paid and post-paid customer service and sales stores. Elimination of purported duplicative retail outlets will likely result in the closure of 443 of these stores, with a jobs reduction of 1,705. Such job losses are a significant detriment to the economy of the state, and are an essential element of the public interest analysis required by law.
 

2)   The Merger Will Reduce Competition And Raise Rates, Especially For Vulnerable Populations

The merger will eliminate the substantial competition now occurring between Sprint and T-Mobile.  This will be felt particularly in regions throughout New York where there is head-to-head competition. As previously noted the JAs compete in two markets, post-paid and pre-paid services.  Post-paid services tend to benefit higher income consumers, while pre-paid services are heavily used by low-income New Yorkers. The increased costs and onerous conditions that are likely if the merger is approved will disproportionately affect this population.  This is a significant public interest detriment affecting a vulnerable population.
 

3)   The Merger Will Unduly Concentrate Ownership And Control Of Wireless Spectrum In New York

Overconcentration of spectrum ownership and control is widely recognized as a public interest detriment.  The FCC has created a “screen” that measures such overconcentration. That screen would be exceeded in 54 of the 62 counties in New York, where 97.5 percent of the New York population live.  Such concentration of ownership and control in New York is a clear public interest detriment.
 

4)   The JAs [Joint Applicants] Vague Assertions About The Future Benefits Of A 5G System Are Contradicted By Their Own Statements

As previously shown, the Application’s reliance on New York public benefits from a future 5G system are legally insufficient, unreliable and impermissibly vague.  A close examination of statements made by the JAs show repeated admissions and inconsistent statements that highlight the Application’s misleading and insufficient claims.

The Commission has repeatedly ruled that public interest benefits must be a consequence of the proposed merger, not of pre-existing policies and decisions.  To that end it is notable that both T-Mobile and Sprint have announced commitments to 5G buildout prior to and unrelated to the merger.
 

“T-Mobile is building out 5G in six of the Top 10 markets, including New York and Los Angeles, and hundreds of cities across the U.S. in 2018. The network will be ready for the introduction of the first 5G smartphones in 2019.” (T-Mobile Press Release, “T-Mobile Delivers Its Best Financials Ever and Strong Customer Growth in Q3,” at 5, Oct. 30, 2018.)

“Today’s move is most certainly in anticipation of T-Mobile’s plans to be the first to have nationwide 5G.  These new 5G capabilities will bring about a converged marketplace at an even more rapid pace and we will be ready.  Because we’ve been getting ready for this for years.” (Transcript, T-Mobile – Layer3 M&A Call, Dec. 13, 2017, p. 3.)
 

Sprint: “We are also preparing to launch our mobile 5G network in the first half of 2019. Our Massive MIMO radios are software upgradable to 5G NR, as you know, allowing us to fully utilize our spectrum for both LTE and 5G simultaneously while we enhance capacity even further with 5G and begin to support new 5G use cases.”  (Transcript, Sprint Corp., Q2 2018 Earnings Call, S&P Global, Oct. 31, 2018.)
 

The admission that 5G rollout has been a prior, long-term, well-planned and financed commitment of the JAs renders the inconsistent statements in the Application even more specious and unreliable.
 

Conclusion
 

CWA asserts that the Petition, and the record upon which the Commission must base its decision, are legally insufficient to justify approval of the merger.  The JAs do not assert any net public benefit to New York, or any evidence of such. General assertion of benefits flowing from a putative national 5G network do not meet the legal requirements of the Public Service Law for an affirmative showing of public benefits. Evidence contained in these and other Initial Comments establish that there are significant and provable detriments to the public interest that the Petition ignores.

On that basis CWA respectfully requests that the Petition be denied.

CWA notes that the Commission has the authority to convene an evidentiary proceeding in which parties are able to adduce evidence and argument.  This would create an evidentiary record upon which the Commission could rely. The Commission may also convene a Public Hearing to solicit public comments for inclusion in the record. CWA also respectfully requests that the Commision convene one of the other of such proceedings.  (The Commission has used both methods of assuring the adequacy of the record in merger proceedings.)