WASHINGTON (Reuters) – T-Mobile US Inc’s $26 billion acquisition of rival Sprint Corp won the support of the head of the Federal Communications Commission on Monday, in a big step toward the deal’s approval.

FCC Chairman Ajit Pai, a Republican, came out in favor of the combination after the companies offered concessions including selling Sprint’s Boost Mobile prepaid cell service.

Sprint shares surged 23.2% while T-Mobile shares rose 5.1%. If okayed by the FCC, the deal would still need approval from the U.S. Justice Department’s antitrust division.

If the deal is completed, the number of U.S. wireless carriers would drop to three from four, with Verizon Communications Inc and AT&T Inc leading the pack.

Some telecommunications experts have predicted that prices for cell phone service would rise as a result, and U.S. Senator Richard Blumenthal agreed.

“The FCC’s seeming abdication makes it even more important for the Department of Justice to step up to the plate to block this merger,” the Democratic senator said in a statement.

Pai will recommend that the other four FCC commissioners vote to approve the merger. Commissioner Brendan Carr, a Republican, said on Monday he will vote in favor.

The third Republican, Mike O’Rielly, did not reply to a request for comment. The Commission is made up of three Republicans and two Democrats.

Pai

FCC Commissioner Jessica Rosenworcel, a Democrat, tweeted her disapproval.

“We’ve seen this kind of consolidation in airlines and with drug companies,” she said. “It hasn’t worked out well for consumers. But now the @FCC wants to bless the same kind of consolidation for wireless carriers. I have serious doubts.”

The FCC will not formally vote on the merger on Monday but will first draft an order, two people briefed on the matter said.

The FCC move boded well for the Justice Department to also approve the deal, Citi analysts said in a note.

“While the two federal agencies have different standards of review that could lead to different outcomes, we believe the likelihood for some coordination between the agencies is encouraging for the approval prospects by the (Justice Department),” the note said.

Reviews by state attorneys general and public utility commissions could push full approval back to the third quarter of this year, the Citi note said.

CONCESSIONS

In a filing with the FCC on Monday, the companies pledged to sell prepaid wireless provider Boost Mobile.

The sale will include the brand name, any active accounts and dedicated Boost assets and staff but no wireless spectrum. The new Boost could buy network access from T-Mobile for at least six years.

One critic of the deal called the concession weak.

“I don’t understand how the mere spinning off of one of three prepaid services would satisfy (Pai), given all the evidence in the record that post-paid (wireless) prices will go up,” said Gigi Sohn, who held a senior FCC position during the Obama administration. “I just think this is very weak tea.”

The Boost sale is aimed at resolving concerns that the deal would give the combined company 54% of the prepaid market, which generally includes those with poor credit who cannot pay with a credit card.

T-Mobile, which is about 63 percent owned by Deutsche Telekom AG, also promised the new company would build a “world-leading” 5G network, which is supposed to be the next generation of wireless service. It promises to give rural Americans robust 5G broadband and enhance home broadband.

The FCC and Justice Department had been expected to make a decision in early June. They have been weighing potential a loss of competition and higher prices for consumers against the prospect of a more powerful No. 3 wireless carrier that can build a faster, better 5G network.

T-Mobile has about 80 million customers and Sprint has about 55 million customers.

Reporting by David Shepardson and Diane Bartz, additional reporting by Douglas Busvine in Frankfurt; Editing by Susan Heavey, Paul Simao and Jeffrey Benkoe

Spectrum TV subscribers are the only ones in the country that can watch Charter Communications’ first original Spectrum-exclusive production, “L.A.’s Finest,” available only on demand, on a channel somewhere in the thousands, if you or anyone else can find it.

A Variety review suggests a search to find the hour-long drama isn’t worth the effort:

“L.A.’s Finest” isn’t just a cop show. It’s a gambit — a bet placed by cable provider Spectrum that by providing not just access to HBO and HGTV but original programming of its own, it’ll stand out. The series, a Jerry Bruckheimer production set within the universe of his “Bad Boys” film franchise, is the beginning of a stream of on-demand Spectrum Originals programming that will also include, eventually, a comeback for “Mad About You.”

The idea of providing some added value to subscribers through original programming is a reasonable enough one (why not get in a game with so many players already?). But this particular show seems ill-suited to its format: Meant to live on an on-demand platform, this drama seems oddly unlikely to have been specifically demanded by anyone at all. A tonally disastrous half-comedy, half-melodrama about policing that draws in cartel politics and family angst, “L.A.’s Finest” seems designed to be vaguely, generically acceptable to have on in the background — which makes it a strange choice as the launching point for a set of programs that would seem to require viewers affirmatively choosing to tune in.

As cord-cutting grows epidemic, cable companies are looking for ways to keep you hooked to your cable TV package, and after watching Netflix and Hulu produce original series, why can’t cable companies do it too? Charter’s first original production stars Gabrielle Union and Jessica Alba as two female cops that sometimes take matters into their own hands in the cause of justice, while balancing family and relationships. Sometimes a drama, sometimes a comedy, the show feels like a network series reject from 20 years ago. It’s not the traditional police procedural that de-emphasizes the home life and character development of its stars, a-la Law & Order. Instead, it occasionally reminds viewers of the interwoven drama of NYPD Blue, a series now long gone.

Spectrum’s effort rubs against the grain in another way: although offering the first three episodes for immediate viewing, future episodes will be rationed out a little at a time, defeating today’s streaming reality of binge watching. The next two episodes are due May 20. Spreading out the nine episodes of season one could be a dangerous idea for a mediocre show that will require viewers to come back again and again to catch up. Many won’t. Others may never find the show in the first place, lost in cable TV Channel Siberia. Your best bet is to find the On Demand channel on your Spectrum lineup and it probably will be there. If you fall in love with the show, bookmark its streaming home page. You will get regular updates about future episodes.

If you do not have a Spectrum TV subscription, tough luck — no L.A.’s Finest for you. But considering the caliber of Spectrum’s first foray into original productions, that probably is not much of a loss.

A trailer for Spectrum TV’s original production, L.A.’s Finest. (1:48)

Back in April, Charter Communications and staffers from the New York Department of Public Service (Public Service Commission) reached a tentative settlement to resolve a dispute over whether Charter violated the terms of the 2016 Merger Order granting approval of the acquisition of Time Warner Cable.

Most of the contention came over Charter’s ability to meet the timeline for expanding cable service to an additional 145,000 unserved address in New York State and whether the company counted ineligible addresses towards their target.

Under the terms of the settlement, which still requires approval by the Commission, Charter agrees to:

1. Continue to invest in network expansion to bring high speed broadband to 145,000 unserved addresses in New York outside of the New York City metropolitan area.
2. Complete expansion no later than September 30, 2021, under a schedule that will be closely monitored by state regulators to ensure compliance.
3. Agree, over and above the original merger conditions, to spend an additional $12 million for broadband expansion projects to be selected by the PSC and the New York State Broadband Program Office (including some addresses previously assigned HughesNet satellite broadband.)

The PSC now wants to receive comments from interested parties about the proposed settlement. If the agreement is approved, Charter Spectrum will remain in New York as the state’s largest cable operator.

How to Comment:

Make sure to reference: “Case 15-M-0388 – Settlement Agreement” in your written comments.

Website

Comments may be entered directly into the case file by clicking here. Then click on the “Post Comments” button at the top of the page and input your comments using the form provided.

E-Mail

Send comments to: Hon. Kathleen H. Burgess, Secretary, at [email protected]

Mail

Hon. Kathleen H. Burgess
Secretary
Public Service Commission
Three Empire State Plaza
Albany, NY 12223-1350

All comments must be received by July 8, 2019.

Stephenson

AT&T CEO Randall Stephenson on Tuesday told investors that AT&T will deploy a combination of fiber optics and 5G wireless and be able to sell a “true, high-speed internet network throughout the United States” within the next three to five years.

“In three to five years out, there will be a crossover point,” Stephenson told investors. “We go through this all the time in industry. 5G will cross over, performance wise, with what you’re seeing in home broadband. We’re seeing it in business now over our millimeter-wave spectrum. And there will be a place, it may be in five years, I think it could be as early as three, where 5G begins to actually have a crossover point in terms of performance with fiber. 5G can become the deployment mechanism for a lot of the broadband that we’re trying to hit today with fiber.”

Although the remarks sound like a broadband game changer, Stephenson has made this prediction before, most recently during an AT&T earnings call in January, 2019. Stephenson told investors he believed 5G will increasingly offer AT&T a choice of technology to deploy when offering broadband service to consumers and businesses. In high-cost scenarios, 5G could be that choice. In areas where fiber is already ubiquitous, fiber to the home service would be preferred.

Stephenson’s predictions about nationwide service will depend in part on the commercial success of millimeter wave 5G fixed home broadband, which will be required to satisfy broadband speed and capacity demands. Verizon Wireless has been offering fixed 5G in several markets with mixed results. The company’s early claims of robust coverage have been countered by Verizon’s own cautious customer qualification portal, which is more likely to deny availability of service to interested customers than offer it.

But Stephenson remains bullish about expanding broadband.

“So all things considered, over the next three to five years, [with a] continued push on fiber, 5G begins to scale in millimeter-wave, and my expectation is that we have a nationwide, true, high-speed internet network throughout the United States, [using] 5G or fiber,” Stephenson said.

Whether anything actually comes of this expansion project will depend entirely on how much money AT&T proposes to spend on it. Recently, AT&T has told investors to expect significant cuts in future investments as AT&T winds down its government-mandated fiber expansion to 14 million new locations as part of approval of the DirecTV merger-acquisition. In fact, AT&T’s biggest recent investments in home broadband are a result of those government mandates. AT&T has traditionally focused much of its spending on its wireless network, which is more profitable. For AT&T to deliver millimeter wave 5G, the company will need to spend billions on fiber optic expansion into neighborhoods where it will place many thousands of small cell antennas to deliver the service over the short distances millimeter waves propagate.

AT&T could sell a fixed 5G broadband service similar to Verizon Wireless, confine its network to mobile applications, or offer fixed wireless service to commercial and manufacturing users in selected areas. Or it could offer a combination of all the above. AT&T will also need to consider the implications of a fiber buildout outside of its current landline service area. Building fiber optic networks to provide backhaul connectivity to AT&T’s mobile network would not antagonize its competitors nearly as much as the introduction of residential fixed 5G wireless as a home broadband replacement. The competitive implications of that would be dramatic, especially in communities skipped by Verizon FiOS or stuck with DSL from under-investing independent telephone companies like CenturyLink, Frontier, and Windstream. Should AT&T start selling 300+ Mbps fixed 5G wireless in these territories, it would cause significant financial distress for the big three independent phone companies, and could trigger a competitive war with Verizon.

Wall Street is unlikely to be happy about AT&T proposing multi-billion dollar investments to launch a full-scale price war with other phone and cable companies. So do not be surprised if AT&T’s soaring rhetoric is replaced with limited, targeted deployments in urban areas, new housing developments, and business parks. It remains highly unlikely rural areas will benefit from AT&T’s definition of “nationwide,” because there is no Return on Investment formula that is likely to work deploying millimeter wave spectrum in rural areas without heavy government subsidies.

For now, AT&T may concentrate on its fiber buildout beyond the 14 million locations mandated by the DirecTV merger agreement. As Stephenson himself said, “When we put people on fiber, they do not churn.” AT&T has plenty of runway to grow its fiber to the home business because it attracts only about a 25 percent market share at present. Stephenson believes he can get that number closer to 50%. He can succeed by offering better service, at a lower price than what his cable competitors charge. Since 5G requires a massive fiber network to deploy small cells, there is nothing wrong with getting started early and then see where 5G shakes out in the months and years ahead.

Cable One has the highest average revenue per customer of any publicly traded cable company in the United States, with the average customer paying Cable One $70.80 a month, mostly for internet access.

The company’s first quarter earnings growth of 5.5% reflect the company’s recent price increases and regime of low-allowance data caps, which have pushed 10 percent of its customers to pay an extra $40 a month to bring back unlimited access. Others are upgrading to costlier, faster tiers with more generous usage allowances.

“During the first quarter, we saw roughly 50% of our new customers choose our 200 Mbps or higher speed service and nearly 10% of our new customers opted to purchase our unlimited data plan,” said Julia Laulis, Cable One CEO.

Laulis

Cable One’s 200 Mbps plan (with a 600 GB data cap) costs $65 a month after promotions expire. A DOCSIS 3.0 modem lease fee of $10.50 applies. A $2.75 monthly internet service surcharge may apply. If a customer wants unlimited access to avoid overlimit fees, there is an additional charge of $40 a month (a 5 TB cap applies to the “unlimited plan”). Customers choosing a 200 Mbps broadband-only package with unlimited data will pay up to $118.25 a month.

Cable One’s broadband customers are concerned about staying within the data caps to avoid overlimit fees. While Comcast and Charter Spectrum customers consume over 300-400 GB of data per month (Comcast has a 1 TB cap, Spectrum only sells unlimited service), Cable One customers use an average of 290 GB, with usage growing at a 30-35% annual rate. Many Cable One customers have little choice either. Laulis noted that Cable One’s DSL competition is not very relevant when customers want to watch streaming video. Speeds are often so slow, customers do not have a good experience streaming HD video over DSL.

Cable One is also shedding its video customers in record numbers, with just 305,000 of its cable TV customers left. More than 29,000 departed year over year, and that number continues to rise as consumers rebel against the company’s high prices and unwillingness to negotiate.

MoffettNathanson warned that Cable One’s high pricing may eventually price itself out of broadband growth, as consumers elect to sign up with telephone companies instead. But many of its service areas are still served by low-speed DSL, and despite Cable One’s high cost, the company added 10,600 new internet customers in the last quarter.

In addition to raising prices, the company also plans to spend between $9-11 million to change its name from Cable One to Sparklight over the next two years.