Official merger announcement due next month.

Several media reports breaking this evening report Softbank/Sprint is close to a deal to acquire majority interest in Deutsche Telekom’s T-Mobile USA in a deal that will combine the two carriers under the Sprint brand.

Bloomberg News reports Sprint has offered $40 a share for Deutsche Telekom’s T-Mobile USA — 50% in cash and 50% in stock. The deal will leave the German wireless carrier with a 15% minority ownership stake in the combined company. Sprint would still dwarf both Verizon Wireless and AT&T and would continue to be hampered by significant coverage caps in suburban and rural areas that neither Sprint or T-Mobile’s home networks cover.

The deal includes a breakup fee payable by Sprint if the merger is blocked by regulators or fails to be executed. Sprint reportedly offered $1 billion in cash and assets if the deal falls through, but Deutsche Telekom is reportedly seeking as much as $3 billion.

Masayoshi Son

Bloomberg News previously reported a deal would probably be announced in June or July. It’s possible a deal announcement could slip into August, a source told Bloomberg. If no deal is reached by then, the sides are likely to stop negotiations for several years and wait for a new U.S. presidential administration more amenable to consolidation.

Billionaire Masayoshi Son, the founder of Japan-based SoftBank, which owns 80 percent of Sprint, faces skeptical regulators who are wary about eliminating one of four national wireless competitors. But in the last few days, executives at Sprint and Deutsche Telekom believe they can get the deal passed regulators preoccupied with a flurry of merger announcements, including Time Warner Cable and Comcast and AT&T and DirecTV. With a tidal wave of consolidation sweeping across the American telecommunications market, some industry insiders believe groups opposed to such deals will be overwhelmed trying to stop all of them.

More importantly, the issue of wireless spectrum was a key motivator to push the two companies towards a quick deal.

The Wall Street Journal reports the FCC originally considered barring AT&T and Verizon Wireless from bidding on airwaves that would have been set aside for smaller carriers. But a fierce lobbying effort by AT&T successfully nixed that plan and slashed the amount of spectrum available exclusively to smaller carriers. Sprint and T-Mobile believe the FCC’s decision gives them an opening to argue the government needs to allow a merger because it isn’t doing enough to help them compete.

Rosenworcel

Another welcome sign for Sprint and T-Mobile is Democratic FCC commissioner Jessica Rosenworcel, who saw nothing wrong with holding private meetings with Wall Street insiders, telling them she would keep “an open mind” when considering the merger. With both Republican commissioners almost certain to approve a merger and Thomas Wheeler and Mignon Clyburn — both Democrats — likely opposed, Rosenworcel may have signaled she holds the deciding vote.

Prior to 2011, wireless consolidation was rampant, with an FCC predisposed to almost rubber stamping approval of buyouts and mergers. That changed in 2011 when AT&T tried to buy T-Mobile. It was the U.S. Justice Department, not the FCC, that led the charge against the deal, calling it anti-competitive. The Justice Department was vindicated when T-Mobile promptly launched new competitive service plans and pricing that forced price reductions and plan improvements from its competitors. T-Mobile has seen dramatic growth since launching its aggressively competitive service plans.

Sprint will likely claim T-Mobile’s competitive gains are illusory and will never offer a real competitive challenge to AT&T and Verizon’s market dominance. Despite the fact the combined company would still be far smaller than either AT&T or Verizon Wireless, Sprint is expected to argue it will be better positioned to fiercely compete for customers.

That argument is tempered by the fact that competition in the prepaid wireless market — already diminished by AT&T’s acquisition of Leap Wireless’ Cricket — will suffer even more if Sprint and T-Mobile, both major competitors in the prepaid market, are combined.

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Sprint is nearing an agreement on the price, capital structure and termination fee of an acquisition for T-Mobile US that could value the wireless carrier at almost $40 a share, people with knowledge of the matter said. Alex Sherman has more on Bloomberg Television’s “Taking Stock.” (2:34)

Toy Alarm: No peace of mind here.

A Houston couple paid Comcast $30 a month over seven years for Comcast’s home security system they believed would help keep them safe. But the alarm system hadn’t worked right from the day Comcast’s technicians installed it, and the cable company’s final offer of compensation was a $20 service credit.

Understandably, the couple wasn’t happy paying for Comcast’s pretend peace of mind.

“I’m a loyal customer and my thing is I don’t mind paying for a service if you’re providing the service,” Lisa Leeson told KPRC-TV, “but they weren’t.”

Comcast’s Insecurity System finally revealed its true self one windy February day. The Leeson family had left to do some errands and just as they had done more than 2,500 times before over the past 80 months, they armed Comcast’s home security system from its control panel before heading out.

“We would set it,” explained Leeson. “It would make the little noise that it makes like it was activating.”

When they arrived home, the family was surprised to find their back door wide open. Fearing a break-in, they wondered why Comcast’s alarm wasn’t blaring, with notified authorities standing by to investigate.

Despite more than 26,000 burglaries in Houston every year, the Leeson family was lucky. A wind gust had blown the door open and their possessions were safe. The revelation the family was robbed anyway only came after calling Comcast to ask why their alarm never went off.

A representative promptly told the family it had monitored the status of the Leeson’s alarm 24/7 for the last seven years and it was offline for almost the entire time. Comcast knew about its non-security system since 2007, but never bothered to tell the family. A follow-up visit from a Comcast technician this month quickly revealed the alarm was installed improperly by the cable company.

“It was unable, even if wanted to, to actually call the police and or Comcast once it was activated,” explained Leeson.

So ultimately whose fault is it that Comcast’s home security system never worked? The company that improperly installed it and knew it wasn’t working for the duration of 80 monthly payments it faithfully collected for service never rendered, or the customer?

In the corporate world of Comcast, it’s absolutely the customer’s fault — exactly what both a customer service representative and a corporate spokesman told the Leeson family.

A Comcast customer service representative was only willing to offer a one-time $20 “inconvenience credit” and the corporate spokesman apologized but pointed to a line in Leeson’s alarm agreement where she agreed to “test her system on a regular basis.”

It simply wasn’t good enough to trust Comcast’s alarm control panel notifying the family the alarm was armed and security monitoring was enabled. She’d have to trigger the system, potentially annoying the neighbors and first responders to prove the system worked properly.

Houston police and fire officials beg to differ.

In an ongoing effort to reduce costly and unnecessary false alarms, the city has implemented alarm permit and penalty fees for wasting the time of emergency personnel.

A residential burglar alarm in the city of Houston requires an annual permit ranging in cost from $37-50. A fire alarm permit costs $80.29 the first year, $53.52 each year thereafter. Three false burglar alarm calls are allowed without a charge with a burglar alarm permit per year. The 4th and 5th false alarm call is chargeable at $50.00 each and the 6th and 7th call is chargeable at $75.00 each. Thereafter each false alarm call is chargeable at $100.00 each. Permits are subject to revocation after the 7th false call. Burglar alarm systems without a permit are chargeable at $107.05 per response and/or no response.

Hold-up/panic alarm systems are allowed one false call without charge with a hold-up/panic permit. Thereafter the 2nd call is chargeable at $128.45, the 3rd false call at $256.92 and the 4th false call is chargeable at $385.37. Thereafter the 5th false alarm and above are chargeable at $513.84 (each). Panic alarm systems without a permit are chargeable at $282.61 per response and/or no response.

False fire alarms carry penalties up to $385.37 per incident with a $115.61 collection fee.

After a local television station got involved in the dispute, Comcast softened their hard-line and refunded every penny Leeson paid for the home security system that had left the family vulnerable since the day Comcast incorrectly installed it.

But after what the Leeson family endured, other alarm system customers should check their contracts and make sure they verify their system is working properly. Don’t depend on the alarm provider to notify you.

Most modern alarm systems alert the monitoring company when activated. That company in turn notifies the police, fire department or ambulance. All three agencies recommend using a monitoring company to reduce the instances of false alarms. Older systems often used a built-in message tape recorded by the homeowner. When the alarm triggered, the system would phone 911 and play back the recorded message. Those systems are responsible for the largest percentage of false alarms.

Comcast says customers with its XFINITY alarm can test their systems using the My Account app on their smartphones. The Leeson family uses an older model Comcast security system that doesn’t work with the app.

[flv]http://www.phillipdampier.com/video/KPRC Houston Comcast Insecurity System 5-28-14.flv[/flv]

KPRC in Houston has words of wisdom for Comcast security system owners. Are you really protected? (2:07)

Oliver points out President Obama is very close to Comcast’s top lobbyist (and Democratic fundraiser) David Cohen.

John Oliver, host of HBO’s “Last Week Tonight,” took nearly 15 minutes out of his show last night to present a detailed and unusually apt explanation of why Net Neutrality should matter to Americans.

Using a timely chart depicting Comcast’s Al Capone-like Internet protection racket, Oliver showed how Netflix performance rapidly deteriorated for Comcast customers until Netflix agreed to pay Comcast for a direct connection in February. Within days, performance rebounded to new highs.

In essence, Oliver explains, Net Neutrality is about the controversy of allowing Internet toll lanes.

Oliver shows an industry mouthpiece defending the concept as a “fast lane for everybody and a hyper speed lane for others,” to which Oliver responds, “Bullsh*t!”

“If we let cable companies offer two speeds of service, they won’t be [Jamaican sprinter] Usain Bolt and Usain Bolt on a motor bike,” Oliver warns. “They’ll be Usain Bolt and Usain Bolted to an anchor.”

Oliver added he was concerned most Americans were not paying attention to the issue, proclaiming it “boring.”

“And that’s the problem. The cable companies have figured out the great truth of America: if you want to do something evil, put it inside something boring,” he said. “Advocates should not be talking about protecting Net Neutrality. They shouldn’t even use that phrase. They should call it preventing cable company fuc*ery. Because that is what it is.”

Comcast’s Internet protection racket. Netflix watched customer streaming performance degrade on Comcast’s network until it signed a paid peering agreement with the cable company in February.

Oliver’s prescription for change is somewhat more dubious, however. He wants Internet trolls to overwhelm the FCC’s Net Neutrality comment mailbox:

I would like to address the Internet commenters out there directly. Good evening monsters, this may be the moment you spent your whole lives training for.

You’ve been out there ferociously commenting on dance videos of adorable 3-years-olds, saying things like, “Every child could dance like this little loser after one week of practice.” Or you’d be polluting Frozen’s Let It Go with comments like, “Ice Castle would give her hypothermia and she dead in an hour.” Or, and I know you’ve done this one commenting on this show: “F*ck this a**hole anchor […] ur just friends with terrorists xD.”

This is the moment you were made for commenters. Like Ralph Macchio, you’ve been honing your skills waxing cars and painting fences, well guess what? Now it’s time to do some f*king karate.

For once in your life we need you to channel that anger.

[flv]http://www.phillipdampier.com/video/HBO Last Week Tonight with John Oliver Net Neutrality 6-1-14.flv[/flv]

John Oliver’s Last Week Tonight addresses Net Neutrality to viewers who probably don’t understand a thing about it. Warning: Strong language.  (13:17)

Comcast is using an offline console game that misrepresents the speed and performance of its Internet service in its latest advertising.

Eagle-eyed game fans were annoyed to find Comcast promoting its speedy Internet service with a mall demo of Ubisoft’s Trials Fusion, a game that has no online multiplayer mode.

“If you’re a real gamer then you need the speed of XFINITY Internet,” advises a Comcast spokesman in the 30-second ad.

“Do you find that when you’re playing games online with your current service that it’s slow, a Comcast representative asks gamers.

“Yes,” says one, they do! “I get some lag,” says another.

“Do you want to try XFINITY Internet,” asks the employee.

“Sure.”

“Do you notice any buffering,” asks the employee.

“No sir.” “There is certainly no lag at all.”

The smooth game play and responsiveness looks impressive, until one realizes the game was never connected to XFINITY Internet. Without an online mode, there is no Internet connection with slow speeds and lag to worry about while playing. The game would work just as well in the middle of a Kansas wheat field, 50 miles from the nearest DSL connection.

But Comcast’s Internet service does eventually come into play when game enthusiasts want to download software updates, which can be enormous for many titles.

XFINITY Internet does not come with infinite usage. The company is now testing a return of usage allowances tied to overlimit fees in several cities and a senior vice-president predicted Comcast will be limiting how much Internet usage customers get without paying more within five years. So while you may not notice any buffering issues when using your offline content with XFINITY Internet, the more you do go online, the closer you get to Comcast’s arbitrary usage allowance.

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False Advertising: Comcast uses offline game play to prove the speed and responsiveness of their Internet service. Your Keurig coffeemaker is also 50% faster when inside a home powered by XFINITY Internet. So are your cats. (0:30)

And then there were three?

Deutsche Telekom has agreed to sell T-Mobile USA to the Japanese parent company of Sprint in a deal that would combine the third and fourth largest wireless companies in the United States under the Sprint brand.

Japan’s Kyodo News Agency said they learned about the buyout agreement from industry sources, but did not reveal any further details.

SoftBank CEO and Sprint chairman Masayoshi Son and his lobbyists have been promoting such a merger for weeks, so the outlines of a deal between the two companies come as no surprise.

Softbank CEO Masayoshi Son

U.S. regulators have repeatedly signaled their discomfort with any merger between Sprint and T-Mobile, however. Both the heads of the Federal Communications Commission and the U.S. Justice Department have repeatedly raised concerns about the emergence of just three national wireless competitors in the U.S.

AT&T is largely responsible for that perception after its failed attempt to buy T-Mobile in 2011. The large breakup fee and spectrum T-Mobile received after the deal collapsed helped T-Mobile relaunch as a feisty competitor that has forced competitors to cut prices. To regulators, it demonstrated the importance of having at least four national competitors, if only to check the dominance of leaders AT&T and Verizon Wireless. Both the FCC and Justice Department fear any additional mergers would lead to increased prices for U.S. consumers.

Son has argued that the four-competitor policy has left AT&T and Verizon dominant against their two much-weaker competitors. An enlarged Sprint would force broadband speeds upwards as a combined Sprint and T-Mobile launch a massive network upgrade that would force prices down.

Both Softbank and Deutsche Telekom seem eager to close a deal. Softbank is already arranging financing for the estimated $50 billion Deutsche Telekom is expected to ask for T-Mobile USA and the German owner of T-Mobile has sought to exit the U.S. market for at least two years, with the proceeds of any sale used to improve its operations in Germany and eastern Europe, where the company has been more profitable.

So far, Wall Street has had only a muted reaction to the merger news. Many analysts still expect U.S. regulators to shoot down any deal that proposes merging any of the four current large wireless carriers.

SoftBank CEO and Sprint chairman Masayoshi Son was interviewed at this week’s Code Conference. On the current state of wireless: “Oh my god, how can Americans live like this?” (1:23)