Judge Approves $26 Billion Sprint, T-Mobile Merger

A U.S. District Court Judge Feb. 11 approved the $26 billion merger between T-Mobile and Sprint — paving the way for an empowered telecommunications partnership that includes Dish Network and is aimed at competing against AT&T and Verizon.

The deal, which was approved by the Justice Department and Federal Communications Commission, still requires a formal greenlight from the California Public Utilities Commission.

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U.S. Judge Victor Marrero, in his ruling, denied claims by several State Attorney Generals that the merger of the No. 3 and No. 4 wireless carriers would stifle competition and raise consumer rates, among other issues.

In addition, the Marrero dismissed concerns Dish Network wouldn’t be able to enter the market successfully as a wireless carrier. As part of the Sprint, T-Mobile deal, Dish agreed to acquire Boost Mobile, Virgin Mobile and other prepaid phone businesses for $5 billion.

Dish, which operates a satellite TV distribution business, has been looking to diversify its business, including launching online TV platform Sling TV.

“The resulting stalemate leaves the court lacking sufficiently impartial and objective ground on which to rely in basing a sound forecast of the likely competitive effects of a merger,” Marrero wrote in support of the deal.

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As part of the transaction, Sprint and T-Mobile said they would deploy a 5G nationwide network within three years of closing the deal.

California Attorney General Xavier Becerra, who has opposed the merger, said the deal thwarts consumer rights and fair pricing.

“We’ll stand on the side of competition over megamergers, every time,” Becerra said. “And our coalition is prepared to fight as long as necessary to protect innovation and competitive costs.”

Quibi Streaming Service Gets Pre-Launch Validation With T-Mobile Pact

Quibi, the pending short-form video streaming service launching in 2020 from DreamWorks Animation founder Jeffrey Katzenberg and former HP chief executive Meg Whitman, has reportedly inked a distribution deal with T-Mobile.

Financial terms and specifics of the deal were not disclosed. Quibi is slated to launch its $4.99 monthly service in 2020.

Quibi will deliver original video content no longer than 10 minutes in length from a variety of content sources, including directors Sam Raimi, Guillermo del Toro, Antoine Fuqua, Steven Spielberg, Lorne Michaels and producer Jason Blum, among others.

“Quibi will deliver premium video content for millennials on a technology platform that is built exclusively for mobile, so a telecommunications partner like T-Mobile, with their broad coverage today and impressive 5G road map, is the perfect fit,” Whitman told the the Los Angeles Times.

Quibi co-founders Meg Whitman and Jeffrey Katzenberg

The platform is eager to link to T-Mobile’s 83.1 million cellphone subscribers and 5G network ambitions. And T-Mobile just received FCC approval for its $26.5 billion acquisition of Sprint.

“Quibi is leading the way on how video content is made and experienced in a mobile-first world,” Mike Sievert, COO of T-Mobile, said. “That’s why our partnership makes perfect sense — two mobile-centric disrupters coming together to give customers something new and remarkable.”

 

Dish Network Entering Wireless Mobile Market

Where are those Blockbuster Video stores now?

Dish Network is becoming the nation’s fourth wireless carrier following the Department of Justice’s approval of T-Mobile’s $26.5 billion acquisition of Sprint.

In a shrewd deal hammered out by Dish co-founder/chairman Charlie Ergen, the satellite TV operator helped facilitate the merger’s anti-trust issues with regulators by getting T-Mobile and Sprint to agree to sell prepaid wireless service Boost Mobile and related spectrum assets for $5 billion.

The prepaid businesses, including Boost Mobile, serve approximately 9.3 million customers in all 50 states and Puerto Rico.

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At close, Sprint’s prepaid businesses and customers will immediately move to Dish, as will the more than 400 employees and nationwide independent retail network that supports more than 7,500 retail outlets.

Dish’s asset acquisitions from Sprint include a $1.4 billion purchase of Sprint’s prepaid businesses, and a $3.6 billion agreement to purchase Sprint’s nationwide 800 MHz wireless spectrum. The spectrum purchase is expected to be completed three years after the closing of the acquisition of the prepaid businesses.

Dish will activate all new wireless customers on the New T-Mobile network. Existing prepaid customers will be supported on the Sprint legacy network and will eventually transition to the New T-Mobile network.

“These developments are the fulfillment of more than two decades’ worth of work and more than $21 billion in spectrum investments intended to transform Dish into a connectivity company,” Ergen said in a statement. “Taken together, these opportunities will set the stage for our entry as the nation’s fourth facilities-based wireless competitor and accelerate our work to launch the country’s first standalone 5G broadband network.”

Indeed, Dish acquired bankrupt Blockbuster Video in 2011 largely to transition the home video chain’s stores into future mobile wireless retail centers. That plan never materialized after Dish shuttered all company owned Blockbuster stores in 2013.

“As a new [satellite TV] entrant [in 1995], Dish encountered many skeptics who questioned our ability to succeed,” Ergen said. “But, customers loved the disruption we brought to the marketplace with innovations such as a 100% digital experience, local-into-local broadcast, the DVR and ad-skipping. As we enter the wireless business, we will again serve customers by disrupting incumbents and their legacy networks, this time with the nation’s first standalone 5G broadband network.”

The Sprint asset transactions are subject to customary conditions, including the closing of the Sprint and T-Mobile merger, government approvals, and confirmation that Dish is able to provision customers on the New T-Mobile network.

Closing is expected within three months following the completion of the Sprint and T-Mobile merger.

Report: Amazon Eyeing Boost Mobile Pre-Paid Wireless Service

Amazon reportedly is considering acquiring Boost Mobile, the prepaid cellphone service owned by Sprint Corp.

Sprint, which is attempting to merge with T-Mobile to become “New T-Mobile” for $26 billion, is spinning off Boost in an effort to appease federal regulators.

Reuters, which first reported the story citing sources familiar with the situation, said Amazon’s interest revolves around the ability to use T-Mobile’s wireless network and access wireless spectrum for six years as part of any transaction.

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Wireless spectrum enables the flow of digital data, including sound and video. Spectrum helps deliver voice and video between cell phones, television shows from broadcasters and online information between computers.

In addition to e-commerce, SVOD and digital books and music, Amazon has become one of the world’s largest cloud-based services through its AWS (Amazon Web Services) subsidiary.

DOJ Antitrust Boss: ‘You Learn More From Losing’

Following legal rebuke at the lower federal court and subsequent appeals court level regarding efforts to block AT&T’s $84 billion acquisition of Time Warner, the Department of Justice’s Makan Delrahim, head of the agency’s antitrust unit, said more was learned in defeat than in winning the litigation.

Speaking March 20 at the American Communications Association’s confab in Washington, D.C., Delrahim said legal challenges to future corporate vertical mergers — such as Sprint’s pending merger with T-Mobile — were empowered following the AT&T/Time Warner challenge.

“There are many lessons to be learned from the U.S. v. AT&T,” Delrahim said, according to a recording released by the ACA and reported by Deadline.com. “Given the standard of review that we were facing, [the outcome] wasn’t a surprise. You learn more from losing than from winning.”

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Specifically, the executive contends future legal challenges by the DOJ will be based more on structural changes rather than behavior.

Delrahim said the government’s approval of Comcast’s $30 billion acquisition of NBC Universal in 2009 revolved around behavior/consent remedies the cable giant was beholden to follow for a number of years — including silent partnership in Hulu.

Similar regulatory approach to AT&T/Time Warner wouldn’t have been worth the compromise, according to Delrahim.

“The AT&T offer will expire in less than seven years,” he said. “The new market structure [i.e. WarnerMedia] created by the transaction will remain indefinitely. If there’s harm that the arbitration offer is necessary to solve, then there’s likely to be harm in the future that will remain after the arbitration offer expires.”

Delrahim said the silver lining from the appeals court ruling was that some vertical mergers can be harmful to consumers — provided the government proves its case.

“The [appeals court] corrected many of the District Court’s misstatements and articulated a standard that is valuable,” he said.

Sprint Calls Out AT&T Over ‘False’ 5G Claims

Next-generation 5G wireless technology continues to get a lot of attention (and hype) — notably as an enhanced distribution channel for mobile video entertainment.

AT&T and Verizon have been among the first wireless carriers offering 5G networks in the country. AT&T last December said it become the first telecom in the United States offering 5G wireless service over a commercial, standards-based mobile 5G network.

Indeed, consumer awareness of the fifth-generation wireless technology successor has reached mainstream, according to new data from The NPD Group.

Yet, 5G is still more marketing than reality. Availability of 5G-compatible phones to consumers might occur by the end of the year — with mainstream usage on par with 4G LTE years away, according to analysts.

That’s why Sprint is calling foul on AT&T regarding what it claims are false advertising and deceptive acts by the corporate parent to WarnerMedia to confuse consumers.

Sprint, which claims to have 54.5 million subscribers and is attempting merge with T-Mobile, took out a full-page ad in the March 10 edition of The New York Times accusing AT&T of allegedly deceiving consumers into believing that their existing 4G LTE network operates on a much-coveted and highly anticipated 5G network.

A recent survey commissioned by Sprint found 54% of consumers mistakenly believed, based on AT&T’s claims, that the company’s 5G E network is the same as or better than a true 5G network. Another 43% of consumers wrongly believed that if they were to purchase an AT&T phone today, it would be capable of running on a 5G network.

“AT&T is not offering its customers 5G but is delighted by the confusion they’ve caused with their deceptive ‘5G E’ marketing and attempt to convince consumers that they’ve already won the 5G race,” David Tovar, SVP, corporate communications, at Sprint said in a statement. “We’re not standing for this kind of deception, and neither should consumers.”

Indeed, Sprint filed a federal lawsuit asking that AT&T’s ads be stopped.

“Every carrier – every company – should tell consumers the truth and be held accountable for the promises they make,” Tovar said.

An AT&T representative wasn’t immediately available for comment.

 

 

 

 

Comcast Throttling Mobile Hotspot Speeds, Lowering Video Resolution

Comcast has begun informing Xfinity Mobile subscribers that it plans to drop video resolution from 720p HD to 480p (DVD quality), including subs on unlimited data plans. Subs seeking to maintain 720p resolution, are advised to use one of Comcast’s 19 million Wi-Fi hotspots nationwide.

The media giant launched Xfinity Mobile in May 2017 and ended the first quarter (ended March 31) with more than 577,000 subscribers.

With over-the-top video services such as Netflix, Amazon Prime Video and Hulu pushing for greater mobile viewing, data usage on mobile networks is soaring.

Two years ago, Netflix began throttling its video streams to subscribers using Verizon Wireless and AT&T mobile networks to 600kbps to help users stay within their data caps. Sprint and T-Mobile offer unlimited data plans that reduce streaming speed when subscribers exceed their data caps.

“We believe restrictive data caps are bad for consumers and the Internet in general, creating a dilemma for those who increasingly rely on their mobile devices for entertainment, work and more,” Netflix wrote in a blog post at the time.

Comcast said the new restrictions would help it reduce the cost of delivering mobile video to subscribers. It also offers subs the option to pay “By the Gig” ($15 per GB), that drops streaming speeds to 1.5Mbps when usage exceeds 20GB per month.

“Starting July 16, you can call us at (888) 936-4968 to enable HD streaming on an interim basis. In the future, HD-quality video will be available as a fee-based option with your service,” Comcast said.

T-Mobile, Sprint Agree to Merge

As expected, wireless telecom carriers T-Mobile and Sprint April 29 announced entering into a definitive merger agreement. The $26.5 billion all-stock transaction values the combined companies – to be known as T-Mobile – around $146 billion with about 100 million subscribers.

The new company will be headquartered in Bellevue, Wash., and led by current T-Mobile CEO John Legere, with current T-Mobile COO Mike Sievert assuming the same position in the new operation.  Masayoshi Son, CEO of SoftBank Group, which owns Sprint, and Marcelo Claure, CEO of Sprint, will serve on the board of the new company.

“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses … and do it all so much faster than either company could on its own,” Legere said in a statement. “As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf.”

Driving the oft-rumored merger is growing nationwide rollout of 5G wireless technology. With Comcast, Verizon, AT&T and Charter all launching the new technology, which claims to deliver faster mobile broadband networks, which claims video download speeds up to 10 gigabits per second.

5G is expected to create 3 million jobs in the United States and $500 billion in economic growth by 2024, according to a report from CTIA, a wireless technology trade group.

Faster video access is key to Netflix, which last year entered into a marketing deal with T-Mobile giving new data subscribers free access to the subscription video-on-demand behemoth.

“Going from 4G to 5G is like going from black and white to color TV,” Claure said. “It’s a seismic shift – one that only the combined company can unlock nationwide to fuel the next wave of mobile innovation.”

Like any major corporate merger, federal regulators have to sign off on it – no certainty into today’s M&A landscape as the Justice Department wages a legal battle against the merger of AT&T and Time Warner.

T-Mobile claims the combined company will employ more than 200,000 people, generate lower operating costs, greater economies of scale and network capacity, which it claims should make wireless, and adjacent industries like cable and broadband, more affordable for everyone.

Five years ago, T-Mobile merged with MetroPCS to better compete in the 4G market – a transaction it claimed resulted in substantial job growth. Three times the number of people work at MetroPCS today compared to the time of the acquisition in 2013.

The new T-Mobile claims it would accelerate long-term economic stimulus for the U.S. in 5G, leading to the creation of thousands of domestic jobs and supporting business opportunities for the U.S. economy.

“We’re confident that, once regulators see the compelling benefits, they’ll agree this is the right move at the right time for consumers and the country,” said Legere.