WhatsNew2Day
Latest News And Breaking Headlines

The court ordered T-Mobile to buy Sprint because Sprint is completely bad

After a lengthy trial, a federal court decided to merge T-Mobile and Sprint yesterday, along with a complex plan to turn Dish Network into the fourth national wireless provider in a few years’ time.

The decision is not necessarily surprising: although antitrust control of major technical platforms such as Google and Facebook is warming up, huge telecom mergers are still continuing. But the decision itself is extremely surprising: Judge Victor Marrero of the US District Court for the Southern District of New York has in principle decided that the various data and experts provided by the 10 advocates-general who had filed a complaint about stopping the merger were not worth taking seriously and that he would decide for himself whether T-Mobile and Dish seemed cool companies worth trusting.

And … it turns out Judge Marrero thinks CEO John Legere and the rest of the T-Mobile executives extremely cool and smart and that Dish Network is absolutely reliable and that everything will be fine.

The judge also thinks Sprint is bad. Really, if there is an important takeaway here, it is that Victor Marrero, a federal judge selected by Bill Clinton for a lifetime appointment to the federal judiciary, thinks Sprint is a bad company with a crap network run by dummies. This is now the law.

Let’s make the decision. You can download the original PDF version herebut we made it a messier searchable text version because Judge Marrero thought it was a right decision to make a monumental 173-page decision in the form of scanned images. These will be many long block quotes; I have highlighted the important points for emphasis. The court also refers to carriers as ‘the RMWTS industry’. I replaced that with [wireless] for readability everywhere.

INTRODUCTION

It is worth mentioning Judge Marrero’s introduction to this whole case, because it is … extreme emo.

In the assessment of antitrust disputes, the court almost becomes a fortune-teller. Deciding on such cases usually requires a judicial reading of the future.

Who will say what the future holds? Should we talk to experts and decide who makes a more credible argument based on data and economic models?

Accordingly, the costly and contradictory technical, economic and scientific business models of the parties, together with the incompatible visions of the competitive future, show the shades of gray of their experts, essentially cancel each other out as useful evidence, the Court could comfortably accept the fact that one side is definitely confirmed instead of the other.

Do not think so. Hey, have you ever seen a federal judge write an AIM status message for the first year?

How the future manifests itself and what it entails is a multifaceted phenomenon that is not necessarily guided by theoretical forces or mathematical models.

Okay. Look, this is a very serious telecom merger of millions of dollars, so before we go into it, we need to talk about how important it is for the judge to skip the difficult part and just go with his instinct, Look in a crystal ball .

Faced with such challenges, Courts that act as fact seekers usually turn to traditional judicial methods and guidance that are better suited to the task. Specifically, they resort to their own proven version of peering in a crystal ball.they apply the judge’s own skills and frontline experience when weighing, predicting and assessing complex and often conflicting reports of human behavior, those actions and inactivity that are derived from factual evidence.

When performing that function courts apply various behavioral measures that even the most exhausting and authoritative technical expert study could not sufficiently capture or assess as a reliable forecast indicator of likely events that are fundamentally triggered by business decisions from various live sources: relevant market competitors, other market participants, government agencies and even consumers.

Indeed, faced with the challenge of going through economic data, market history and expert testimonials, Judge Marrero decided to go all out and really look at everyone’s heart. And he really want you to know that this is what he did.

During the two-week trial of this action, the Court had ample opportunity to observe the witnesses and to assess their credibility and attitude on the witness stand, and to consider the weight of their testimony in the light of the aforementioned and formulated below Clues.

Okay, so Judge Marrero is just working on it. Let’s see if he falls for some nonsense around 5G.

Although the full impact of 5G remains to be seen, it promises a significant increase in available speeds for consumers, lower consumption of mobile device batteriesand reduced latency, or the time required for a mobile device and mobile network to communicate with each other. 5G is likely to enable consumers to use augmented reality (“AR”) or virtual reality (“VR”) applications and stream video with significantly higher image quality called 4K.

Oh dude

Because this process takes time, prominent experts in the [wireless] Industry has expressed concern that other countries such as China or South Korea can first fully implement 5G and dominate the market for innovative applications made possible through 5G.

We regret to inform you that Nilay Patel has died of shame caused by race-to-5G rhetoric. The rest of this piece is directed by his mind.

AT&T AND VERIZON

After all that, Judge Marrero continues to discuss the current state of the American wireless industry, starting with the two major providers.

The representations of both parties and the evidence developed during the trial suggest that although Verizon and AT&T have high quality networks, neither [carrier] distinguishes itself through innovation from affordable consumer services, such as unlimited data plans or bundling services such as Netflix with their mobile wireless services.

Hi. A few remarks here: both Verizon and AT&T offer unlimited data plans. Verizon bundles Disney Plus, and AT&T bought a small company called Time Warner and makes HBO a sort of teen-oriented streaming service with an interface that looks like Snapchat.

To the extent that Verizon and AT&T have implemented such measures, those movements were often responses to innovations made for the first time by T-Mobile or Sprint.

That “or Sprint” is actually quite important because it happens. It implies that Sprint was a competitor of AT&T and Verizon. More competitors are generally good. But Judge Marrero is much more interested in the fact that T-Mobile is run by John Legere. And Judge Marrero thinks John Legere is simply the best.

The success of T-Mobile can be largely attributed to the negotiation of a “break fee” it would receive if AT&T did not acquire it during a proposed merger in 2011. Because regulatory challenges prevented AT&T from completing the merger, T acquired -Mobile approximately $ 3 billion in cash, $ 3 billion in spectrum and a roaming agreement that allowed T-Mobile customers to use the AT&T network in areas that the T-Mobile network did not reach at the time.

At about the same time, in 2012, T-Mobile has hired a new executive team led by current Chief Executive Officer John Legere and current Chief Operating Officer Michael Sievert. This new leadership team has established an innovative strategy and culture that is called ‘Un-carrier’. According to this strategy, T-Mobile would feature the [wireless industry] relationship between carriers and consumers who did not like consumers and then remove those features from his offer to distinguish himself from other major carriers such as AT&T and Verizon.

So T-Mobile did not merge with AT&T, received an infusion of cash and spectrum and then engaged new management to compete more effectively, resulting in better offers for consumers from all major providers. It seems that Sprint could probably try a similar approach – mainly because it is owned by SoftBank, which … is not shy to spend money, to express the light.

SPRINT: DOES IT SUCK OR DO IT SUCK THE MOST? A LEGAL CONCLUSION

There is only one problem with the idea that Sprint can turn things around himself, according to Judge Marrero: he thinks Sprint is bad. I mean, man really thinks Sprint is bad. This whole thing is already too long and I had to cut a number of random Sprint dunks that cut through this opinion because there were too many to fit. And these are deep cuts – I mean, here’s a joke about choosing WiMAX via LTE. WiMAX!

Partly due to various dubious technological choices, Sprint’s network is worse in quality than that of its competitors and the brand image is accordingly poor. Sprint has also had a difficult financial year and was unable to earn a net income until 2017.

Hello Judge Marrero: what do you think about the Sprint network?

Sprint is struggling to retain the customers it initially attracted with its aggressive offers, largely due to the underlying poor network quality.

Hm, can you add something to that?

The mobile wireless network is the basis of mobile wireless telecommunication services, and Sprint’s network and product offering has been distinguished for years due to poor operational quality and negative customer perception.

I get it. Do you want to dunk on WiMAX again?

About the past 15 years, Sprint has made several poorly advised technological and business decisions that have resulted in a chronically underdeveloped network that is inconvenient for consumers to use.

And let’s pour some salt into that Nextel wound, shall we?

Sprint also did not realize the expected technological and financial benefits of its merger with market competitor Nextel, which further halted its efforts to build a strong network.

And what do you think of the efforts made by former Sprint CEO Marcelo Claure to resolve things before he left for WeWork?

Claure to propose a cheaper, non-traditional plan to increase Sprint’s network coverage at minimal cost through the deployment of numerous small cells hanging from utility poles and inexpensive alternatives to cell towers called monopoles. This plan failed massively; Sprint installed only 2,000 of its projected 75,000 small cells and only one of its projected 35,000 monopoles, which was also removed in a short time.

Moreover, half of Sprint’s offer was designed to increase the price after one or two years, and many customers were initially attracted by the offer and switched shortly after realizing that they eventually had to pay higher prices for a network of lesser quality.

I cannot emphasize how much Judge Marrero thinks Sprint sucks. Even his compliments are confirmed by the fact that Sprint sucks.

The offers from Sprint deserve some attention for their attitude towards the consumer. But in retrospect they reflect a desperate and ultimately unsuccessful attempt to remain relevant instead of a long-term sustainable business strategy.

If Sprint’s ability to achieve short returns deserves some recognition, the company is struggling at its best to even enter water while its competitors continue to increase the revenue with which they can keep pace in the race for the next generation of wireless networks.

Ultimately, Judge Marrero says, he is convinced that Sprint sucks.

The Court is therefore essentially convinced that Sprint does not have a sustainable long-term competition strategy and in fact is really [wireless carrier].

DISH NETWORK: DEFINITELY GOING TO BUILD A NETWORK, WE THINK

A major part of the argument for the merger is that the Ministry of Justice has concluded a deal whereby Dish Network will take control of Sprint’s Boost Wireless along with some spectrum and then use those assets together with its current spectrum stock to newly to be built 5G network. While doing that, it has access to the T-Mobile network so that it can immediately start registering customers.

This is a complicated plan, and one of the arguments in the case was that Dish would not really continue. It is a lot cheaper to collect the spectrum and later sell it at a premium to one of the larger players. But Judge Marrero looked at Dish president Charlie Ergen’s “vibes” and decided to throw the dice on the ol’s maverick.

The track record of DISH and the many awards for innovation and customer experience, as well as evidence of the currently confidential and creative strategic partnerships that DISH is planning, suggest that DISH would compete as a disruptive “maverick” in the [wireless] Markets, with low prices for innovative, high-quality services.

But what if Dish does not keep its promises or T-Mobile does some dark tricks to limit access to its network? Don’t worry, Judge Marrero says. A monitor designated by DOJ keeps everyone in line!

The DOJ has already prepared several means to reduce this potential conflict. It has appointed a monitor to ensure that New T-Mobile does not limit DISH’s ability to use the New T-Mobile network, and it has established a formula that offers the wholesale price to DISH, which will never rise … Moreover, DOJ remedies offer that New T-Mobile cannot limit the extent to which DISH uses its network during the first three years.

It is frankly a little cute and heartwarming that Judge Marrero thinks that a government lawyer will be able to check how well T-Mobile Dish Network treats as an MVNO customer.

These arrangements all ensure that DISH can compete with New T Mobile and other market participants at very advantageous conditions upon entry, and that the MVNO agreement will yield much more in favor of DISH than the benefits of New T-Mobile.

This is the purest example of the judge that simply falls for it: does anyone really think that John Legere has made a deal that works more to Dish’s advantage than T-Mobile’s? Or that T-Mobile is not working at the edge of the deal to protect itself? It’s weird.

Judge Marrero also seemed impressed by Dish Network’s 5G buildout plan, which he says does not require “large amounts of hardware” because Amazon will be involved.

The innovative network plans from DISH also show that the construction of its mobile wireless network will be less expensive and time-consuming than would normally be expected. While the mobile cores of traditional networks require large amounts of hardware that are expensive to install and maintain, DISH plans to build a “virtualized network” that relies heavily on software and cloud hosting services offered by potential partners such as Amazon.

It is true that Dish has big plans for a software-defined network that has long been a holy grail. But it is also true that at present there are literally no suppliers for such a network, and the strategy is so unproven that experts in wireless pubs in the industry say Dish’s plan can actually cost more money to convert because so many new and dissimilar pieces have to be integrated. And dish president Charlie Ergen has certainly admitted that this approach can fail completely because it’s so new. It is mystifying why the court decided to just accept the hype as a reality here, except that Judge Marrero was taken by Somewhere confidence in the state.

It is the same with Dish’s plan to use something called ORAN, an open standard that gains power as the tension around Huawei providing 5G equipment warms up. ORAN is designed to have multiple suppliers deliver radio equipment for wireless networks, and Judge Marrero simply thinks that is great:

DISH also plans to operate an Open Radio Access Network (“ORAN”), which refers to an RAN that does not require its own hardware and software from a supplier in the network. Because this scheme would allow DISH to request bids from competing suppliers for different aspects of the network, construction costs could also fall correspondingly. Even traditional RAN suppliers indicated to DISH that they could support an ORAN within eighteen months.

But again, Judge Marrero simply accepts the hype without criticism. ORANES sound great, but they only exist in the “we formed an industry committee” phase. The entire ORAN plan is so blurry that Attorney General William Barr has suggested that the US government take a majority stake in Nokia and / or Ericsson to control a traditional RAN seller. Why? Because Barr finds ORAN stupid:

“This is just pie in the air,” he said. “This approach has not been fully tested and would take many years to get off the ground, and would not be ready for prime time for a decade, or ever.”

I like an open standard, and I hope ORAN works, but I think it is a big mistake for Judge Marrero to just assume that it will all work. And what’s more difficult is that the judge simply ignored all the evidence and arguments that Dish is not going to make every effort to build a network.

During the trial, plaintiffs expressed doubts about DISH’s intention to seriously compete in the [wireless] Sell ​​or in good faith to its obligations to the DOJ and FCC. They quoted several statements from defendants in the course of time for the broad point that building a mobile wireless network would be one of Ergen’s many “stupid bluffs,” and that he would only build a “meaninglessly thin network” so he didn’t get problems with the FCC. “

The combination of these statements about the behavior and history of DISH with the fact that the development of a mobile wireless network is generally a time and capital intensive effort, Plaintiffs suggested that the network of DISH, in the words of one DT officer, “is something that lawyers can use, but not something that customers can use.”

The Court is not convinced that this evidence carries the weight that plaintiffs attribute to it. On the contrary, the DOJ and FCC have strongly supported DISH’s entry into the market, although they were fully aware of these concerns.

Again, it seems that Judge Marrero was more convinced of Charlie Ergen’s charisma in the gallery than anything else – a pattern that we will see in the decision when it comes to T-Mobile.

Unlike Sprint, DISH acquires spectrum at an auction, hires staff and invests significantly in its network. And while Sprint would probably decrease from a national competitor to a regional competitor, DISH is required to expand from a regional competitor to a national competitor. As the chairman of DISH rightly stated during the process: “Sprint does not want to be in the business. We do.”

T-MOBILE IS THE BEST AND JOHN LEGERE IS A DREAM BOAT

This brings us to Judge Marrero of T-Mobile, where things really enter the realm of essential oils and crystal energy pyramids. Judge Marrero thinks T-Mobile is excellent. So big that even facing emails and text messages from T-Mobile, Sprint and Deutsche Telekom managers discussing the idea of ​​raising prices after a merger, he ignores it because he just doesn’t want to believe it.

The most important evidence that plaintiffs point to the potential for coordination is sDT managers suggested that they supported a “4-to-3” merger of MNOs in the United States because they thought a consolidated market would be more profitable.

Plaintiff also cite some Sprint evidence suggesting this potential; For example, Sprint’s Chief Marketing Officer Roger Sole-Rafols suggested to Claure that the proposed merger “could eventually capture $ 5 ARPU in a three-player scenario [including AT&T and Verizon]”And that this demonstrated” the benefit of a consolidated market. ” The plaintiffs also cite multiple T-Mobile and Sprint communications for the proposition that there is already anti-competitive price signaling in the [wireless] Market.

No, this cannot be true, the judge says. Why? Because T-Mobile is so edgy and cool!

T-Mobile has based its identity and business strategy on insulting, thwarting and otherwise challenging AT&T and Verizon to offer pro-consumer packages and lower prices, and the Court considers it highly unlikely that New T-Mobile will continue to be satisfied with its increased market share following the intensive regulation and public control of this transaction. As Legere and other T-Mobile executives noted during the trial, this would essentially reject the entire public image of T-Mobile.

The evidence showed that the same executive team that brought T-Mobile successfully will continue to lead New T-Mobile, and the merger will provide T-Mobile with the increased capacity that enabled it to follow the Un-carrier strategy in the first place. Having heard the defendants emphasize the asymmetrical capacity advantage that New T-Mobile would have over AT&T and Verizon, the court concludes that New T-Mobile would probably take advantage of that advantage by lowering prices to gain market share from its main competitors.

This is really remarkable. The judge has decided that T-Mobile will remain aggressive and keep prices low to gain market share, although his own executives have discussed the merger about raising prices. And this is all because the judge looked at Legere and the other T-Mobile execs and decided that he loved them. Serious! Here is Judge Marrero about how he evaluated Legere at the stand to see if he would do anti-competitive things:

During the trial, the court heard and read testimonials from various business leaders from various telecommunications companies. The Court has focused attention on that evidence and assessed the credibility of the witnesses. From this evaluation, the Court has derived a number of clear behavioral patterns that business managers manifest that can serve as convincing predictors or commercial companies are likely to take anti-competitive actions that can lead to higher prices or lower quality under certain market conditions.

More specifically, the list of codes of conduct that the Court has collected and examined contains: manifested personal and commercial ambition and aggressiveness by business leaders in the pursuit of business goals; concerns about the reputation of the individual and company in the industry; responsiveness to professional and business group pressure; strength of character exercised on the policies and activities of the company; degree of involvement in business objectives and resourcefulness and creativity in securing and managing the means to implement them; impulse to overcome in competitive institutions and to exert targeted willpower to that end; motivation to achieve marketing goals that outperform competitors; incentive to strive harder under the impetus of the prospect of promotion and the emergence of a company or industry; resort to disruptive or opposite ways to achieve competitive goals and demonstrable success; and patterns of past behavior and duration and consistency of publicly known identification with and compliance with a recognized professional or business culture.

After reviewing the presentations of T-Mobile executives during the process, viewing their behavior, evaluating their credibility and weighing their testimony in the light of the conduct guidelines formulated above by the Court, the Court is of the opinion that the representation of the likely competitive position after the merger would assume New T-Mobile warrants credit as credible and consistent with the reality of competition in the [wireless] market.

I know that’s a lot, but in the end the judge put together a list of things a cool CEO would do and John Legere decided to do those things. And he really believes it, to the point that he writes in his decision what is in fact T-Mobile’s own marketing copy.

What the court noted during the trial in the testimonials and evidence credibly presented by T-Mobile executives revealed a different picture: a company enhanced with a massive infusion of spectrum, capacity, capital and other resources, and chomping to its new market to conquer peers and rivals in frontal competition.

And what about the idea that T-Mobile will raise prices as soon as it doesn’t have a cheaper national competitor in Sprint? Judge Marrero simply does not see it, because he thinks that telecom managers are wise, rational decision makers.

As the court discussed above, against the background of the long-standing business strategy of T-Mobile as the self-proclaimed non-carrier and disruptive Un-carrier, it would be counterproductive and even self-destructive for New T-Mobile shortly after the merger for omission invest, innovate and improve network speed, capacity and quality, or refrain from offering products that contain the most advanced technologies, improved content and service plans, and ultimately to lower prices, as market dynamics would require and be more reliable to predict. By starting with the polar course that plaintiffs anticipate, New T-Mobile would effectively endanger its own future.

The court cannot accept the assumption that, under the competitive conditions presented here, responsible managers of large listed companies are likely to act irrationally in managing the business of the company they manage.

A reminder that the former Sprint CEO is now in charge of WeWork.

Marrero’s love letter to T-Mobile goes further:

T Mobile has redefined itself over the past decade as a non-conformist who has urged the two largest players in its industry to make many pro-consumer changes. The proposed merger would allow the merged company to continue T-Mobile’s undeniably successful business strategy in the near future.

If you remember, Marrero started this whole decision with a lot of emo-poetry about how the future is unknowable and the testimony of competing experts cancels itself. He ends by saying that he has looked into the soul of T-Mobile’s executives and believes them. And maybe he’s right! But it is also true that federal judges often do not just admit that they go with the cool kids because they are so cool.

(Nice fact: Marrero uses the word “maverick” 16 times in his decision.)

That is the core of the decision, but I want to end with something that I find important: Judge Marrero about why he thinks the wireless broadband industry is so different from other markets. He starts comparing with, um, milk:

To buy a container of milk, the retail consumer does not have to buy a cow, and therefore also has to pay for the full value and the beef content of the cattle.

Mobile wireless telecommunications services for the retail sector, on the other hand, illustrate a prototypically complex market. As delivered to and acquired by consumers, wireless service does not stand alone, but is integrally connected with various goods and services provided by other interconnected industries. In particular, the product is inextricably linked to the electronic hardware devices provided by the mobile telephone and computer industry that consumers use for voice and non-voice communication, as well as for imaging, messages, data transfer and storage, and internet access. In addition, the mobile hardware carries the operational material created by software content providers such as video and audio programming and data accessed by telephones and similar devices.

Simply put, this is a deep nonsense that broadband providers want you to believe but is absolutely not true.

Consumers do not like carrier bloatware. T-Mobile did not invent the iPhone or Pixel cameras. Verizon did not invent Instagram. There is no greater red flag in technology than “the providers have made software.”

Major suppliers of mobile phones such as Apple and Samsung like to sell unlocked phones that work over networks, and most of the greatest successes in mobile software have happened despite interference from carriers. They are not even good at things they do Should be good at it: it has been ten years since WhatsApp and iMessage revolutionized telephone messages and providers still geen betrouwbare upgrade voor sms hebben bedacht. Deze bedrijven zijn verschrikkelijk op iets anders dan service verlenen en uit de weg gaan. Het is bizar dat dit op dit moment niet voor iedereen duidelijk is.

Alle rotzooi die mobiel is verbonden met hun netwerken en prijsplannen sinds de afschaffing van de netneutraliteit heeft alleen maar een puinhoop gecreëerd die afleidt van een simpele waarheid: internettoegang is een handelsartikel en moet als een voorziening worden aangeboden en geprijsd. Het is eigenlijk precies zoals melk.

Laten we hopen dat de rechtbanken daar ooit achter komen.

Comments
Loading...