Leading Observers Assess and Criticize T-Mobile “Un-Carrier” Announcements

Wednesday, November 13, 2019

Washington, D.C. - Leading observers and analysts are assessing - and criticizing - the recent “un-carrier” announcements from T-Mobile as a transparent attempt to garner good publicity ahead of the December trial for the state lawsuit seeking to block its merger with Sprint, rather than a meaningful set of developments that address the substantive antitrust issues that are the subject of the state litigation.

Last week, T-Mobile announced three new “un-carrier moves,” including a new prepaid pricing announcement, a new student-connectivity program, and a new first responders initiative, and reiterated several previously announced pledges, including a jobs-related claim. But the announcements, each contingent on the approval of the merger, don’t hold up to close scrutiny. Instead, these announcements are merely T-Mobile’s latest attempt to misdirect the public and antitrust enforcers and focus attention away from the evidence that shows a combined T-Mobile/Sprint will hurt consumers; significantly reduce competition, innovation, and quality; and kill tens-of-thousands of jobs.

Below, find assessments of the new announcements from the Communications Workers of America (CWA), Free Press, and the Rural Wireless Association:

Pricing Commitment - T-Mobile Connect

The T-Mobile Connect announcement of a new $15 per month prepaid option for customers is an attempt to paper over the very real fears of what this anti-competitive merger would mean for price conscious customers. According to Derek Turner, Free Press Research Director:

“Today, there are wireless resellers who exclusively use wholesale capacity on the T-Mobile network, and who already offer more data than T-Mobile dangles here at the same $15 price point. That demonstrates that of course T-Mobile itself could offer this level of service at this price point if it wanted to, without needing the merger. That it is only promising to do so if the market becomes more concentrated shows that T-Mobile’s overall profitability would massively increase post-merger, when it would face less pressure to compete on pricing for high quality wireless plans including the market’s most-popular unlimited services.

“Today’s level of competition in the wireless market is not optimal, but it is enough to keep pushing the quality-adjusted price down, as carriers increase data allotments for plans at the same or similar price points. Just in the past year alone, some resellers have increased their monthly data allotments by 50% for their $15 plans. T-Mobile is trying to fool people into thinking that their merger is the only path to progress and price competition for the wireless market and its customers. But it's the presence of four independent competitors, and Sprint competing directly with T-Mobile, that has and will continue to drive price competition in the U.S. wireless market.

“Even if the merging parties kept this promise in its entirety -- which merging parties almost never do -- we can't accept T-Mobile's latest raft of empty claims to be helping value-conscious customers instead of hurting them."

 

Jobs

In its new “un-carrier” announcement, T-Mobile rehashed the same debunked claims about jobs that it has been making for the last twenty months (“being a job creator from day one”). According to Debbie Goldman, Research and Telecommunications Policy Director for the Communications Workers of America (CWA):

“The so-called un-carrier’s commitments to workers affected by this merger are certainly un-something – they are un-enforceable and un-believable.

CWA’s modeling of post-merger employment by the combined T-Mobile and Sprint projects the loss of up to 30,000 jobs, predominantly through headquarters consolidation and store closures.

In the FCC’s recent formal approval Order, issued last week, the Commission noted significant deficiencies in the information that the companies provided to justify their job creation claims, saying that T-Mobile and Sprint “have not provided enough information for us to fully quantify the inputs, and thus we cannot rely heavily on the model to draw conclusions about the likely effect of the transaction on jobs. We are therefore unable to quantitatively verify the Applicants’ claims…” (see p.146 of FCC Order)

T-Mobile is careful to use the term ‘employee’ when making vague promises about future employment levels. This leaves out the nearly 70 percent of wireless retail workers who sell T-Mobile and Sprint services via branded authorized dealer locations, and whose jobs are equally in jeopardy as a result of this destructive merger.”

Project 10Million “Homework Gap” Program

T-Mobile’s “Project 10Million” program promises free wireless service, free hotspots, and reduced cost wireless devices over five years to 10 million American households, but the “Un-carrier” faces no legal repercussions if it fails to deliver on these promises and, as with the other programs they announced, the details are TBD. According to Carri Bennet, General Counsel of the Rural Wireless Association (RWA):

“This is yet another promise from T-Mobile that sounds good in a tweet, but is completely unenforceable and raises key questions. T-Mobile claims that at least 5.25 million American households with school-age children living at home lack Internet service. While making internet access affordable for low-income families is an admirable goal, many providers already make low-cost plans available to qualifying households and the federal government’s Lifeline program provides subsidies through participating providers.

What this plan doesn’t address is access for families due to coverage gaps, especially in rural areas. The plan for the new T-Mobile still leaves over 40 million Americans without access to the company’s high-capacity network.

As with the other announcements, the details of Project10 million are sparse. T-Mobile does not mention what households in particular will qualify as ‘eligible’ for the Project 10Million Program. And finally, do any of the commitments contained in these Uncarrier announcements - - whether Connecting Heroes, Project 10Million, or T-Mobile Connect - - become legal commitments or are they merely empty promises by a CEO who apparently has one foot out the door looking for his next gig?”

T-Mobile’s “Connecting Heroes” Initiative

T-Mobile’s “Connecting Heroes” initiative - an announcement contingent on merger approval to provide free 5G access to first responders at police, fire, and EMS agencies - is a transparent effort to garner positive press in an attempt to secure its merger with Sprint. According to Debbie Goldman of CWA:

“The ‘Connecting Heroes’ initiative is too little, too late and too saddled with outstanding questions for the public safety community to take seriously.

First responders fought for years to give law enforcement, fire, and EMS personnel their own network. That now exists as FirstNet with backing from the federal government. T-Mobile was noticeably absent in 2016 when the First Responder Network Authority asked for bids to build out the national public-safety broadband network.

Now, T-Mobile is disingenuously pandering to first responders, but failing to provide key details on how the initiative will work over the long-term. For example:

  • If T-Mobile merges with Sprint, who will make sure that the company follows through on its 10-year commitment to public safety? Are there penalties if T-Mobile does not deliver on its 10-year commitment?
  • As soon as possible is not a legitimate timeframe for rollout. When exactly can first responders expect access to this plan?
  • What are the network build-out requirements?
  • Firefighters in California saw the vital importance of a dedicated network for first responders when they experienced throttling from Verizon during the Mendocino wildfire in 2018. Will first responders experience throttling under this plan?
  • Does T-Mobile’s plan include features offered by FirstNet such as priority and preemption, exclusive network core with end-to-end encryption, on- the-ground disaster response support, and an exclusive application ecosystem?”

T-Mobile’s lack of forethought is apparent on its website touting the initiative. In the section about “Connecting Heroes” the fine print reads, “Service may be impacted by emergency situations.” Emergency situations are, obviously, exactly when first responders need reliable service. See here for a screenshot from website.

Vivek Stalam of New Street Research assessed what T-Mobile’s announcements mean in the context of the state lawsuit:

“Fundamentally, the moves, while consumer- and regulator-friendly on the margins, do not address the competition harms that the State AGs have alleged in their complaint which argues that the deal violates the Clayton Act … we expect the lawsuit to move forward and these kind of public interest benefits are unlikely to play any role in the Judge’s thinking.”

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