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T-Mobile seeks swift Sprint decision from Calif. regulators, but timing unclear

T-Mobile US Inc. recently asked the California Public Utilities Commission to wrap up its state-level review of the carrier's proposed merger with Sprint Corp., but the timing on a commission decision remains opaque.

In a filing with the CPUC, T-Mobile lawyers argued that the July 26 proposed settlement from the U.S. Department of Justice conditionally approving the deal, coupled with support from the U.S. Federal Communications Commission, should be sufficient evidence for the commission to issue a judgment on the application. However, experts closely following the state's proceeding say there is no indication that a decision is coming anytime soon and that the CPUC does not have any unalterable deadlines to issue a decision.

The CPUC is the only outstanding state PUC approval remaining for the deal, and the commission's decision will determine what happens to the proposed merger in California, technology law experts previously told S&P Global Market Intelligence.

SNL Image
T-Mobile CEO John Legere and Sprint Chairman Marcelo Claure
Source: T-Mobile

Sunne Wright McPeak, president and CEO of the nonprofit group California Emerging Technology Fund, said in an interview that timing around a decision remains a huge question mark and that anyone who claims to have a sense of timing is "really guessing."

CETF recently reached an agreement with T-Mobile on "public benefits" for the Sprint deal, including a commitment that the combined entity will ultimately provide 5G coverage for 99% of California households. The agreement only becomes effective if the CPUC approves the Sprint/T-Mobile transaction.

While T-Mobile cited the Justice Department settlement as among the reasons the CPUC should "promptly conclude" its review of Sprint wireless deal, lawyers for the Public Advocates Office at the CPUC and the Communications Workers of America, a communications industry labor union, argued in a July 31 filing that the proposed DOJ settlement includes many provisions, such as proposed divestitures to DISH Network Corp., not contained within the original application.

To incorporate the terms of the proposed settlement, they said the CPUC should re-open its record for the application so that additional information can be added and thoroughly investigated, which could add significant time to the CPUC's consideration of the deal.

"If … the Joint Applicants want the Commission to base its decision on their just-announced plan to divest Sprint of Boost and Virgin Mobile and create Dish Network as a fourth wireless carrier, Joint Applicants should amend their Application and give parties the opportunity to fully understand the details of the newly proposed transaction and the effect on the public interest," wrote the attorneys.

T-Mobile, meanwhile, noted the proceeding has now been pending before the CPUC for more than a year, and the commission's schedule previously called for a proposed decision by June 30.

Indeed, a scoping memo submitted by CPUC Commissioner Clifford Rechtschaffen in late 2018 said a proposed decision was expected by the end of the second quarter of 2019.

But Steve Blum — president of Tellus Venture Associates, a management and business development consultancy specializing in broadband and telecommunications — said the proposed decision date was never binding.

"That's not a deadline," he said of the date cited in the scoping memo. "It's an estimated timeline and CPUC doesn't pay a lot of attention to its own deadlines."

Blum adds that the commission has a statutory deadline of 18 months from the point of when the applications are filed, but says that can also be adjusted by commission action.

"If this takes more than a year and a half, then the commission will pass a resolution saying we're going to extend the deadline on this by … X months," he said. "Any perceived deadline based on the scoping memo is long gone and not really relevant."

Thus far, the CPUC's administrative law judge on the application, Karl Bemesderfer, has not given any recent indications about when he might issue a proposed decision. And even after Bemesderfer does act, there is a mandatory 30-day waiting period for a final vote on the proposal, according to Blum. The commissioners at the CPUC will also have the opportunity to offer changes to the proposed decision from Bemesderfer, and then a majority of the five-member commission will need to vote to approve the judge's decision for it to go through.

"Given everything that's on the table, I don't see a [proposed] decision coming from the PUC … in the next couple of weeks," Blum said. Given the 30-day waiting period, he said a resolution would not be likely before October at the earliest.

Beyond the CPUC, a state-level challenge in which more than a dozen state attorneys general sued in federal court in New York to block the deal, remains unresolved. The trial date in that case was recently pushed back from October to early December.