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T-Mobile backtracks on California merger commitments after 12 weeks

It might have taken 653 days for the T-Mobile and Sprint merger to be approved in the US, but it has only taken 84 for the Magenta Army to ditch its promise to the Californian regulator.

In a filing with the California Public Utilities Commission, T-Mobile has proposed altering the wording in three separate areas. The amendments would effectively dilute any commitments made by the merged entity with regards to jobs and the deployment of a 5G network.

Although it is hardly unusual for corporations to wiggle out of reasonable commitments, perhaps this is one which we should have seen coming. After all, T-Mobile and Sprint didn’t even wait for approval from the California Public Utilities Commission before beginning the integration process.

In short, the new T-Mobile company would like three areas amended:

  • A paragraph detailing coverage and speed commitments, with new target for 93% population coverage for 300 Mbps, mistakenly says 2024, not 2026. The commitment is to meet these obligations six years after the merger approval date.
  • Eliminate the requirement to add an additional 1,000 jobs in California
  • The removal of one of the progress tests, specifically the tests which would take place between eight and nine months after the fourth anniversary of the deal being approved

Few should be surprised a corporation is backtracking on commitments, but perhaps the speed of which the moonwalking started is the most worrying sign. After only twelve weeks, the documents were filed with the authorities, suggesting the team never had any intention of honouring the commitments.

As you might imagine, the Communications Workers of America (CWA), the union representing employees in the telecoms industry, is not pleased.

“Last week T-Mobile Chief Executive Mike Sievert was telling the public that the job cuts the company was making were just part of the transition process and that T-Mobile would create 5,000 new positions in retail and engineering in the next year,” said Communications Workers of America President Chris Shelton.

“Today, we find out that behind the scenes the company is telling California regulators that it can’t meet the requirement to create 1,000 jobs in the next three years. It turns out that the new T-Mobile is a lot like the old T-Mobile – all talk, no action.”

As the CWA points out, it made a filing to the FCC in 2018 estimating the merger would result in a net loss of jobs, not a gain. It also quoted T-Mobile executives from its most recent financial results which suggested it was successfully navigating the COVID-19 pandemic, being “uniquely positioned as the growth company in telecom and has already started laying the foundation for the future”. This contradicts the T-Mobile claim that it is not able to meet the California job commitment due to the coronavirus complications.

What is worth noting is that there have been commitments made elsewhere which are now looking on shaky ground:

  • With the FCC, T-Mobile said it would not increase prices for a period of three years, to deliver 100 Mbps 5G download speeds to 90% of the population within six years and to tackle the digital divide in the rural communities
  • In Colorado, T-Mobile has committed to creating 2,000 jobs and not moving the HQ out of the city of Littleton for at least seven years
  • Over in Mississippi, an accelerated 5G deployment plan has been negotiated as part of the approval process, as has a ceiling on tariffs for consumers for a five-year period
  • In New York, Attorney General Letitia James dropped her lawsuit with the promise of jobs in Rochester and diversity initiatives, though details are yet to emerge

We suspect there would have been other commitments made, there were more many more State Attorney Generals who joined an opposition lawsuit after all, though the details have not seen the light of day. Oregon, Connecticut, Maryland, Michigan and Texas are just a few to name.

One concession which will not go away is the creation of a fourth nationwide mobile network operator. The sale of Boost, Sprint’s prepaid brand, to Dish as well as a seven-year MVNO agreement and first refusal on the purchase of redundant mobile sites, still stands and looks as interesting as ever. With Dish closely monitoring developments in Japan with Rakuten, the prospect of a greenfield, OpenRAN, software-defined network in the US is becoming a real possibility.

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