Potential Presidential candidates line up to oppose T-Mobile/Sprint merger

Leading opponents of President Trump have signed a letter to the FCC condemning the proposed T-Mobile US and Sprint merger, suggesting the threat of regionalised monopolies and sky-high bills.

Signed by the likes of Massachusetts Senator Elizabeth Warren, New York Senator Kirsten Gillibrand and New Jersey Senator Cory Booker, all of whom are potential opponents of Trump in the 2020 race to the White House, the 19-page document offers a broad and deep range of reasons for the FCC to block the merger. Whether the Republican FCC Chairman Ajit Pai elects to read the letter is anybody’s guess, such is the state of US politics today.

“The two companies have proposed a four-to-three merger that is likely to raise prices for consumers, harm workers, reduce competition, exacerbate the digital divide and undermine innovation,” the letter states.

“Blocking this proposed combination is necessary to send a strong signal that our enforcement officials are vigorously protection Americans from harmful anticompetitive behaviour.”

Which way this decision will go is still very unclear, but the paperwork arguing against the merger is starting to stack up. These nine politicians are firmly standing in opposition of the transaction, while on the other side of the line, T-Mobile US and Sprint are struggling to muster support. It seems few people are pro-merger, though when has politics ever followed the glories of logic.

As many these transactions, the main crux of the argument seems to be focused around competition. The Senators not only fear there will be nefarious conversations behind closed doors to carve the US into regionalised monopolies between the three remaining players, but they also question this suggests the telcos don’t really care about poorer families and those who are living in the chasm of the digital divide.

One point which might strike a chord for those considering the proposed merger is the focus of the telcos on low- and medium-income families. The letter suggests the two parties has aggressively competed against each other for these demographics, while there is also evidence of a high diversion ratio between offerings. Combining the two would remove this market dynamic, as well as the driver to offer competitive tariffs for lower-income individuals.

Another factor to consider here would be the impact on competitiveness of the wholesale market, and the subsequent ability for MVNOs to remain competitive, another option for low income individuals.

“The proposed merger would permit the new T-Mobile to steadily racket up wholesale prices on MVNOs and block them out of the market,” the letter claims.

While screwing the poor is often considered a political no-no irrelevant as to where you are in the world, Pai is seemingly not built from the same clay. A few months back, the FCC Chairman attempted to rid the ‘Lifeline’ initiative from the books, a programme which was designed to help poorer families and communities bridge the digital divide. This is one of the reasons the House Committee on Energy and Commerce has promised to exercise more oversight on the FCC, suggesting in a letter last week, some of Pai’s actions are not in the ‘public interest’.

Another damning point to the proposed merger is that is being sold on false pretences. The T-Mobile and Sprint management teams have together been promising a newly merged business would allow scale and efficiencies to effectively deliver 5G, though the Senators argue that these are two businesses which have deployment plans which would work on a standalone basis also.

This should not be surprising, as any good business will have created a standalone 5G strategy should the merger be blocked, this is just common sense, though the Senators argue the merger would not necessarily speed up deployment or create a challenge to the leading pair of AT&T and Verizon. Back in 2011, AT&T argued it should be allowed to acquire T-Mobile as there was no feasible way the company could compete in the 4G market but fast-forward a couple of years and look at the result. The T-Mobile success might count against it from a precedent perspective.

On the investment side of things, the argument for the merger also falls apart a little. The merged business has promised to spend $40 billion over the next three years (or three years after the green light) to make 5G a reality. However, both telcos have said they spent $10 billion in CAPEX across 2018 separately. Doing basic maths, the $40 billion of the combined business would not exceed the CAPEX of the standalone business. Economics of scale and a larger network footprint would of course impact this number, but it is a point well made by the Senators.

While we are sure there are Senators who genuinely object to this merger, it is tough to look past the fact so many of these signatories are potential Presidential candidates. For T-Mobile and Sprint, this could quickly evolve into a nightmare.

The positions have been perfectly pitched here. These are Senators who are protecting the interests of the poor, fighting to for the benefits of those in rural communities and of course, battling to make life better for families. These are all political hot buttons and excellent rhetoric to win the favour of potential voters in the run up to the next election. These are arguably the demographics which pushed Trump over the line in 2016.

T-Mobile and Sprint might now be caught between a rock and a hard place. With such politically motivated opposition and few friendlies fighting their case for the greenlight, the path forward is becoming increasingly bumpy.

AT&T claims its customers love 5GE

In response to rival US operator Sprint suing it for deception over its 5G Evolution move, AT&T has insisted it’s just thinking of the punters.

“We understand why our competitors don’t like what we are doing, but our customers love it, opened the AT&T statement. “We introduced 5G Evolution more than two years ago, clearly defining it as an evolutionary step to standards-based 5G.  5G Evolution and the 5GE indicator simply let customers know when their device is in an area where speeds up to twice as fast as standard LTE are available.  That’s what 5G Evolution is, and we are delighted to deliver it to our customers.”

Hmm. It’s hard to argue with the assumption that phone users like to know what kind of network performance they can reasonably expect at a given time and location. If you see a little ‘E’ or even ‘H’ at the top of your phone then you probably shouldn’t expect a web page to load anytime soon and video streaming is definitely out of the question. Seeing ‘4G’ up there, however, says its smartphone data party time.

AT&T seems to want to indicate to its customers when they can expect bandwidth an order of magnitude greater than regular, vanilla 4G, which is fair enough, but the way it has gone about it does seem somewhat deceptive. Why not go for ‘4G+’ or (shudder) ‘4.5G’? The decision to package faster 4G as nearly 5G feels like a reach and it’s highly debatable how ‘clearly defined’ this designation is to its customers and the wider market.

“We will fight this lawsuit while continuing to deploy 5G Evolution in addition to standards-based mobile 5G,” continued the statement.  “Customers want and deserve to know when they are getting better speeds. Sprint will have to reconcile its arguments to the FCC that it cannot deploy a widespread 5G network without T-Mobile while simultaneously claiming in this suit to be launching ‘legitimate 5G technology imminently.’”

That last bit seems to be a veiled threat that persisting with this suit may complicate Sprint’s merger with T-Mobile US. How imminent Sprint’s launch of ‘legitimate’ 5G is seems incidental to the matter of whether or not AT&T has indulged in deliberately deceptive behavior, so this feel like a FUD move. If Sprint does win this case it could set an important consumer protection precedent so it’s worth keeping an eye on.

AT&T sued by Sprint over 5G BS

US operator Sprint is so outraged by AT&T’s attempt to rebrand its LTE-A service as 5Ge that it’s taking its competitor to court over it.

Sprint has filed a suit against AT&T in New York, as first reported by Engadget. You can see the full complaint at the bottom of that report but, as ever, it’s needlessly lengthy and legalese so here’s an attempt to summarise it in words of one syllable.

AT&T is accused of numerous acts of deliberate deception around its attempt to promote its LTE Advanced service as ‘5G Evolution’. There is the outright lie involved in suggesting something is 5G when it isn’t and then there’s the damage done to Sprint competitively and the outright damage done to the US telecoms market by deceiving it into thinking 5G is already here.

The complaint notes that ‘AT&T has yet to deliver a contiguous mobile 5G network or release a 5G-enabled mobile phone or tablet capable of connecting directly to a 5G network.’ And yet is went ahead with this 5Ge marketing campaign regardless, which Sprint says is ‘false and misleading’.

It was, in fact ‘a transparent attempt to influence consumers’  purchasing decisions by deceiving them into believing that AT&T’s network—because it claims to be a 5G wireless network—is more technologically advanced and of higher quality than those of other wireless service providers, including Sprint,’ alleges the complaint.

The three main material complaints are that:

  1. AT&T is engaged in false advertising
  2. AT&T is therefore deceiving the public
  3. AT&T is directly harming Sprint through this deception

So what does Sprint want the court to do about it? The hilarious legal jargon calls this the ‘prayer for relief’. Sprint wants AT&T to be prevented from using ‘5G’ in any of its ads until it’s proper 5G and it wants as much cash as possible in damages. Ultimately Sprint wants its complaint to result in a full-blown jury trial, which could get very interesting if it’s granted. There didn’t seem to have been any public response from AT&T at time of writing.

US operators belatedly act to protect user location data

AT&T and Verizon announced that they will terminate all remaining commercial agreements that involve sharing customer location data, following a report exposing the country’s mobile carriers’ failure to control data sharing flow.

Jim Greer, a spokesman for AT&T, said in a standard email to media: “Last year, we stopped most location aggregation services while maintaining some that protect our customers, such as roadside assistance and fraud prevention.” Referring to the Motherboard exposé, Greer continued, “In light of recent reports about the misuse of location services, we have decided to eliminate all location aggregation services — even those with clear consumer benefits.”

This is similar to the position T-Mobile’s CEO John Legere adopted when responding to the criticism from the US Senator Ron Wyden (D-Ore.). Verizon also announced that the company will sever four remaining contracts to share location data with roadside assistance services. After this Version will need to get customers’ explicit agreement to share their data with these third-party assistance companies. Sprint, which was also caught out by the Motherboard report, is the only remaining nation-wide carrier that has not announced its plan on the issue.

This is all good news for the American consumers who are concerned with the safety of their private data. On the other hand, mobile operators have hardly been the worst offenders when it comes to compromising the privacy and security of customer data. Earlier, Google was exposed to have continued tracking users’ location even after the feature had been switched off, while Facebook has been mired in endless privacy controversies.

Monetising user data is only a side and most likely insignificant “value-add” business for the mobile operators, because they live on the service fees subscrbers pay. But it is the internet heavyweights’ lifeline. This may sound fatalistic but it should not surprise anyone if the Facebooks and the Googles of the world come up with more innovative measures to finance the “free” services we have benn used to.

T-Mobile/Sprint merger heads towards final two hurdles

With the CFIUS giving a green light on the $26 billion merger of TMUS and Sprint, attention can now be turned to the final hurdles presented by the Department of Justice (JoJ) and FCC.

According to the Wall Street Journal, the CFIUS (Committee on Foreign Investment in the US), which has been assessing the security implications of the deal, has given the go ahead. There has been no official statement made just yet, the CFIUS has abruptly pointed out it has no legal requirement to do so, though attention has most likely be focused on the last two potential problem areas for some time.

What is worth noting is that while there are opportunities for failure at every turn in the road, the CFIUS was unlikely ever to be a massive problem for T-Mobile or Sprint.

As a bit of background, the CFIUS is a multi-agency committee which assesses the impact of foreign investment on a number of different factors, most notably national security. Although a relatively unknown council, the Foreign Investment Risk Review Modernization Act (passed in August) vastly expanded the powers and influence of CFIUS, meaning it could probe into a wider variety of acquisitions, allow it to take longer and finally, charge for the pleasure of doing so.

Thankfully for T-Mobile and Sprint, the national security threat was low risk here. Firstly, you have to consider there isn’t any Huawei or ZTE kit in the pair’s networks right now, secondly, the Defense Authorization Act prohibits the use of any of their equipment or software in the future, and finally, the pair’s parent companies have said they would back away from Huawei for future investments.

It seems the direct threat to US national security, if you are in the camp of believing there is a genuine one, was minimal. The confirmation from non-domestic private businesses that they would pander to political paranoia looks like it was enough to ensure the CFIUS have no objections. All ties to Huawei and ZTE have been severed so it seems its mission accomplished for Trump.

Now it’s onto the tough jobs; the Department of Justice and the FCC.

The FCC is digging its heels in for the moment, extending the 180-day shot clock for approval, as it searches for justification for the deal. This is where the issue may lie for T-Mobile and Sprint, as while the FCC is looking to determine whether a proposed transaction will serve the public interest, convenience and necessity, the evidence and support seems to be stacking up against the pair.

The Department of Justice on the other hand will be looking to assess whether the proposed merger would have a material impact on competition. Too much of a sway in the negative and this deal will head straight to the bin. The four to three operators shift could create monopolies in certain localities which will not be viewed favourably.

The finish line is now in sight, but it is still unclear which direction this will go. While the signs have been positive, the FCC has proven to be a surprise package while there are certainly warranted competition concerns for the DoJ to ponder.

T-Mobile/Sprint edge towards finish line following Huawei snub

T-Mobile US and Sprint are reportedly rubbing regulators the right way, in the continued effort to get the prolonged merger approved, by overtly shunning Chinese kit vendor Huawei.

The statement should be viewed as more symbolic than anything else, as considering the clauses which have been inserted into the Defense Authorization Act during August, it would have been highly unlikely the pair would have considered Huawei for any meaningful work in US networks. What this could be viewed as is a PR move from the pair, allowing the US to demonstrate to the world how serious it is about the espionage claims.

According to Reuters, Deutsche Telekom and Softbank, parent companies of T-Mobile US and Sprint respectively, have confirmed they will not be working with Huawei moving forward. Neither US telco currently has any Huawei kit in its network, though it is hoped this statement from the international telcos will have the bureaucrats hand edging closer to the green button for the $26 billion merger.

For the US government, this is somewhat of a PR win. The Trump administration has been incredibly aggressive in making moves against the Chinese, and this could be viewed as a medal credited to the crusade. Not only can the US government effect change in its own telcos and other governments around the world, it can also influence non-domestic private firms. The long arm of the Oval Office is tickling opinion in places it really shouldn’t be able to.

Unfortunately for the US, each incremental step taken in the trade war against China seems to question how dearly the White House holds principles and values. All of these individual circumstances are starting to look like pawns in President Trump’s game of chess against Beijing. Trump is living up to his reputation as a deal-maker, with the promise of aiding the battle against the Chinese enough for the President to make concessions elsewhere.

The evidence being stacked up against the T-Mobile/Sprint merger was starting to climb pretty high, though perhaps this might be enough of a ‘concession’ to twist the White House’s perspective on the transaction. Trump has already shown he is capable of looking at the big picture, with the recent arrest of Huawei’s CFO another excellent example.

Having been arrested in Canada while in transit back to China, Trump promised to intervene in the court case should it help his pursuit of a more favourable trade relationship with China. This statement from Trump makes somewhat of a mockery of the whole arrest and demonstrates how little he thinks of the Canadian judicial system. If there is a benefit to the US economy, Trump can talk to the right people and make the whole saga disappear. It questions the validity of the arrest in the first place, but also the credibility of the Canadian courts; why does Trump believe they can be convinced to drop the case so easily?

Trump is starting to show his heritage; anything for the deal. This is a businessman in control of the White House, and his ability to ignore small print give the impression of a wheeler-dealer.

Sprint partners with Qualcomm and HTC on new 5G device

Sprint has announced a new partnership with Qualcomm and HTC to develop a mobile ‘smart hub’ that will run on 5G next year.

Details are relatively thin for the moment, though the term ‘smart hub’ perhaps suggests it will be some form of mobile hot spot. This is the second 5G-specific partnership Sprint has announced in the devices realm, after partnering with LG to develop a 5G-compatible smartphone for its in-progress network. This device might be one of the first to reach the market next year.

“We’re excited to continue building our 5G device portfolio and announce another way our customers can be among the first to experience Sprint 5G next year,” said John Saw, Sprint CTO. “This innovative product will allow customers on the go, at work or at home to enjoy Sprint 5G on multiple devices with incredibly fast connectivity for content sharing, mobile gaming, entertainment and so much more.”

“We are thrilled to be working closely with Sprint on this innovative new design,” said Cher Wang, HTC CEO. “This collaboration brought our cutting-edge technology together with Sprint’s industry-leading 5G network to create the next generation smart devices.”

With Sprint’s 5G network set to launch in the first half of 2019, we might not have to wait long to find out more details. What we do know right now is the data device will be powered using Qualcomm’s Snapdragon X50 5G modem, allowing it Gigabit LTE and 5G capabilities.

Mobile data could get even costlier after T-Mobile and Sprint merger

Report by Rewheel showed Americans already have the most expensive mobile data among all four-operator markets. A move to reduce the number of them could make it worse.

According to the 2H2018 release of its mobile data price monitoring report, the Finland-based research firm Rewheel focused on the US market, which is likely to see the proposed merger of T-Mobile and Sprint closing in the first half of 2019. The report showed that among the 41 countries it analysed (OECD34 + EU28, with seven EU countries not being OECD members), the median gigabyte price of a smartphone deal (nominal price + VAT) in the US is among the highest. Rewheel told Telecoms.com that Greece and Cyprus topped the table, followed by Korea and Canada. The median gigabyte price of a mobile broadband deal in the US is the most expensive among all.

Rewheel mobile data prices

The research compared two groups of markets, those with effectively four mobile operators and those with three. The mobile data price in the four-MNO markets is shown to be about half as expensive as the three-MNO markets, but the US is an outlier. The median US mobile data price per gigabyte is four times higher than the EU four-MNO markets, and sixteen times higher than the big EU markets with four MNOs.

To look at it from another angle, a 30€ monthly deal comes with unlimited data plans (and at least 1000-minute talk time) on smartphones in 13 markets (Korea, Mexico, and 11 EU countries) but can only buy 6GB in the US. Similarly, a 30€ monthly wireless broadband deal can buy unlimited data in 11 EU markets but can only get 40GB in the US.

The effect of the “magic four” driving price down is most telling in Italy: after Iliad launched its mobile service, the price per gigabyte fell by 70% in half a year. On the other hand, the research showed data price stopped falling in the Dutch market after the announced merger of T-Mobile and Tele2, and the price drop has visibly slowed down in Austria after it became a three-MNO market.

The researcher therefore argued that the Americans are already paying more than other four-MNO market users, it could get even worse if the US market became a three-horse race. However we can see in the data that North America is generally more expensive, with Canada, a four-MNO market, is as expensive as the US. Admittedly though, Freedom Mobile is still weak.

An additional angle to examine data price is to look at what is offered to contract users vs. prepaid users, which is excluded from the Rewheel research. The discrepancy is probably most obvious in Africa. According to the analysis published by the research firm Ovum, South Africa’s mobile data is among the highest in the world. This is largely down to the high prices PAYG users face when buying smaller data packages. Rob Shuter, the CEO of MTN, corroborated with his comments at the recent AfricaCom that, despite the average price per gigabyte for postpaid users in Africa is comparable to that of the US (around $3), data prices for prepaid users are prohibitive. The large majority of mobile users in Africa and other emerging markets are on prepaid services.

T-Mobile/Sprint merger finds a new enemy in mysterious lobby group

A new non-profit organization called ‘Protect America’s Wireless’ has emerged, seemingly with the sole objective of hurling spanners at the T-Mobile US and Sprint merger.

Details on the group are relatively thin at the moment, it was only founded last month, though a press call introducing the group and its mission statement on the website both seem to give the same message; the T-Mobile US and Sprint merger will be bad for the national security of the US.

“We must protect our networks from foreign spying,” the team announces on the websites homepage. “Our greatest concern is the pending Sprint T-Mobile merger, which could give countries like Saudi Arabia, China, Germany, and Japan direct access to our networks through the use of foreign-made networking equipment and billions of foreign money. We call on President Trump, Congress, and the FCC to protect American national security by denying these foreign interests access to America’s wireless communications.”

On the press call, David Wade, Founder of Greenlight Strategies, suggested a merger of the two telcos would open up the US to a Chinese ecosystem, while also suggesting any business working closely with Chinese vendors would effectively handover data to the Chinese government. While it is true Sprint owner Softbank has collaborated closely with Huawei and ZTE in the 5G R&D journey, this seems to be taking the conspiracy theory up another level. Deutsche Telekom, parent company of T-Mobile US, also has ties to Chinese vendors, but there aren’t many telcos who don’t.

The theory here is a merger between the two telcos would be bad for national security, effectively handing China a key to the backdoor. There have certainly been objections from a competition perspective, but this is the first we’ve seen with this angle. It’s difficult not to be suspicious about who the puppet master actually is.

Interestingly enough, the group has declined to discuss where funding is emerging from. As a 501c4 non-profit, the team do not have to disclose funding or ownership details, though they are permitted to attempt to influence politics as long as it isn’t their main area of focus. While the groups attempt to tackle US security is a thinly veiled attempt to demonstrate ‘social welfare’, as long as the group isn’t spending more than half of its funds on political-related activities, it can continue to operate half-hidden by shadows.

Finding out who is funding this organization is key to figure out what the angle is and whether this is yet another example of propaganda, though it is not necessarily a simple task. 501c4 non-profits have to complete a Form 990 for the IRS, on which any donations above $5,000 have to be disclosed. Unfortunately, due to the efficiency of the IRS, there is usually a 12-18 month lag on this information being made publicly available.

Until the influencers and donors of this group have been identified, this could be a very dangerous source of misinformation. Statements being made might very well be true, but without transparency it would be safe to be suspicious.

New York wades in to the T-Mobile/Sprint debate

New York Attorney General Barbara Underwood could prove to be another hurdle for T-Mobile and Sprint to overcome in their headache-inducing merger.

The problem for the pair is there seem to be a lot more objections surrounding the tie-up than there has been support. After T-Mobile CEO John Legere seemingly got little response from his appeal to MVNOs to support the transaction, the wild-eyed leader has opened up to opinions from staff; a dangerous move considering some would certainly be under threat of redundancy.

Perhaps what the duo didn’t need are objections from the New York Attorney General Office over fears the consumer might get screwed. According to the New York Post, the objection is relatively simple. T-Mobile runs a prepaid service called MetroPCS, while Sprint has Boost and Virgin Mobile. Bringing all three into the same business could lead to one or more being scrapped, reducing competition. Secondly, all three are incredibly aggressive on pricing, but again, bringing all three into the same business could end this trend of undercutting, and an increase in price. The New Yorkers are concerned tariffs could become too expensive for some.

While objections from a few lawyers might not be the worst thing in the world for T-Mobile and Sprint, it seems there is a queue forming. In fact, the FCC released a notice last week which stated the Attorney General Offices of Alabama, Connecticut, Florida, Hawaii, Mississippi, Tennessee, Virginia, Washington, Wisconsin and the District of Columbia have all requested information to assist their own investigations into the merger. The lawyers are lurking, and the more who gather around the fire, the less pleasing the situation appears for T-Mobile and Sprint.

This of course might mean nothing. All major parties in the US are perfectly entitled to do their own due diligence surrounding the deal as transitioning from a market with four major telcos down to three is a massive move. Considering there will be regions across the country where this transaction effectively creates a communications monopoly, every chance to scrutinise the deal should be taken.

As it stands, the self-appointed shot-clock on approving the deal at the FCC is on hold. This again is simply down to the magnitude and the potentially significant consequences of the deal, and should not be surprising at all, but the longer it stands still, we suspect the more nervous executives will become. Mergers of this nature have already been shot down in the US, and this deal does seem to be hanging in the balance.