T-Mobile/Sprint Skeptics Cite 2018 iWireless Deal as Rural 'Cautionary Tale'

T-Mobile's purchase of iWireless from Aureon poorly served the former carrier's approximately 75,000 customers and should “serve as a cautionary tale” for the FCC and DOJ Antitrust Division as they review the Sprint deal, Communications Workers of America Telecom Policy Director Debbie Goldman said during a conference call with reporters. CWA's report on T-Mobile/iWireless cited a negative effect on small businesses that served as authorized iWireless retailers. CWA is a member of the anti-deal 4Competition Coalition.

The Rural Wireless Association, also a 4Competition member, believes the deal will be “bad for rural consumers” because of the prospect it will make it more difficult for rural carriers to get favorable roaming agreements with T-Mobile, General Counsel Carri Bennet told journalists. T-Mobile and Sprint didn't comment.

The iWireless acquisition has been “most detrimental” to those in the most rural parts of Iowa, western Illinois and eastern Nebraska that iWireless served before the transaction because T-Mobile chose to either close or end its relationship with the vast majority of the former carrier's 103 full-service company stores and authorized dealers, Goldman said. T-Mobile hasn't expanded its retail presence in the former iWireless territory outside of urban areas, making it more difficult for rural customers to access those facilities for activities like swapping out SIM cards amid the transition to T-Mobile, she said.

The National Wireless Independent Dealers Association isn't opposing T-Mobile/Sprint but is seeking a “definitive statement” about the combined carrier's position on the future of Sprint-affiliated independent retailers, said President Adam Wolf. “We fear a repeat” of T-Mobile's actions post-iWireless “on a larger scale.”

CWA hopes the pending House Communications and Judiciary Antitrust subcommittees' hearings on T-Mobile/Sprint will sort through the “information that has come out over the past month that challenges the assertions” the two carriers made “that this is going to be the best merger since sliced bread,” Goldman said. That information shows the transaction “will result in higher prices, that it's not necessary in order to deploy next-generation 5G services, that Sprint has turned the corner and can survive on its own.”

CWA President Chris Shelton will testify at the House Communications hearing Wednesday, a spokesperson confirmed. Shelton may also testify at the House Antitrust hearing, but the timing of that panel is uncertain, the spokesperson said. The Antitrust hearing is set to begin at 10 a.m. Thursday but may be rescheduled because of the funeral of ex-House Commerce Committee Chairman John Dingell, D-Mich. He died last week (see 1902080010). House Judiciary didn't comment. The Communications hearing is to begin at 10 a.m. in 2123 Rayburn.

Deal Handicapping

It remains tough to predict if T-Mobile/Sprint gets federal OK, and the next few weeks are critical, said Wells Fargo analysts on a Monday panel at the NARUC conference (see 1902110004).

“I felt really good about it until the government shut down” and momentum seemed to slow, said Jennifer Fritzsche. It will come down to DOJ, which is a “walled garden,” she said. “I do believe they will lean into pricing for consumer[s].” Helping the deal’s chances, federal regulators seem to be looking at competition with a wider lens that considers cable and wireless companies in one market, she said. There’s a 60 percent chance the deal gets done, said Davis Hebert. Rather than looking at it as four carriers to three, it should be seen as going from two to three, because currently only AT&T and Verizon are able to make significant 5G investment, he said.

Ex-House Commerce Chairmen Billy Tauzin, R-La., and Henry Waxman, D-Calif., both advising T-Mobile, called on their House Communications colleagues Monday to support the deal. T-Mobile and Sprint “bring a compelling case that together, they can better serve the public and create a more robust telecommunications sector overall,” they wrote for Morning Consult. The combined carrier “will enable the creation of a broad and deep nationwide 5G network more efficiently and more quickly than otherwise possible, opening it up to a greater number of communities.”

New Street’s Blair Levin now predicts a late March to June time frame for a federal T-Mobile/Sprint decision. “Timing is always tricky as the DOJ sends no public messages and the FCC clock (which would put the decision by early May) is a problematic metric,” Levin wrote investors. “There are plenty of examples of decisions being delayed months beyond what was anticipated or ending abruptly.” Levin said T-Mobile executives staying repeatedly in a Washington, D.C., hotel owned by President Donald Trump could make Democratic attorneys general more likely to bring an action against the deal: “That is small thing; the potential for price increases as suggested by porting data would be a boring but much bigger thing.”

T-Mobile CEO John Legere released an episode of his "Slow Cooker Sunday" video blog over the weekend from the Mandarin Oriental here, the hotel closest to the FCC. Legere said he's in town for meetings on the deal and predicted victory. Legere and Sprint Executive Chairman Marcelo Claure are to testify at the House hearings.