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T-Mobile Prepares for Boost Auction if Dish Network Talks Stall

(Reuters) – T-Mobile US Inc is preparing an alternative plan if a deal to sell wireless assets to Dish Network Corp falls through, according to two sources familiar with the matter.

Investment bank Goldman Sachs Group Inc., which is advising T-Mobile, the third largest U.S. wireless carrier, on selling prepaid brand Boost Mobile as part of the company’s concession to gain regulatory approval to buy Sprint Corp, is expected to send out books to prospective buyers in two weeks, one source familiar with the matter said.

While satellite television provider Dish Network remains the front-runner to acquire the Boost assets, Goldman has told prospective buyers as late as Tuesday that it is preparing for an upcoming auction of Boost.

Another source characterized the process being run by Goldman as moving slowly. Among the details holding up an auction is that Goldman is not yet clear what exactly is up for sale from the merger, one source said.

T-Mobile and Sprint did not immediately respond to requests for comment. Goldman Sachs declined to comment.

T-Mobile and Sprint have agreed to a series of deal concessions, including to sell Boost, to gain regulatory approval for the $26.5 billion merger with Sprint, but still needs the green light from the U.S. Department of Justice antitrust chief, though his staff have recommended the agency block the deal.

A source close to the discussions said T-Mobile was hopeful it would reach an agreement with the Justice Department by early next week.

The Boost assets have stirred up interest from a variety of parties, including Amazon.com and cable companies Comcast, Charter Communications, and Altice USA, according to sources.

T-Mobile and Sprint are still negotiating possible additional concessions with the Department of Justice, and Goldman Sachs is waiting for the details of the agreement before working on the terms that will be sent out to bidders, one source said.

Two potential bidders told Reuters on the condition of anonymity that they are still in the dark about critical information related to the Boost sale, such as how the Boost wireless deal with T-Mobile will be structured, or financial details about the Boost customers, which the bidders will use to determine the prepaid brand’s valuation.

Dish is also speaking with other parties on potential partnerships with Boost, sources said.

T-Mobile has agreed to negotiate a contract with Boost’s buyer that will allow the spun-off company to run on the combined T-Mobile and Sprint network, according to a regulatory filing that outlined the merger concessions. But the carriers are currently debating whether to provide the buyer an infrastructure-based mobile virtual network operator deal, which would allow the buyer more control over the wireless plans, including control of the user’s SIM card, one source said.

That could help convince the Department of Justice to approve the merger, which has held discussions on how to preserve competition in the wireless industry.

Cable provider Altice is one of the few so-called MVNO partners to have this type of wireless agreement, which it currently has with Sprint. An infrastructure-based MVNO is generally seen as more favorable than a standard deal that allows wireless providers that do not own and operate their own network to piggyback off of one of the four major wireless carriers for wholesale prices.

Other concessions being discussed include whether T-Mobile and Sprint will divest wireless spectrum, or the airwaves that carry data, and the possibility of giving up more retail customers or retail shops from either T-Mobile or Sprint’s prepaid brands, according to one source familiar with the matter.

Reporting by Sheila Dang and Angela Moon in New York and Diane Bartz in Washington; Editing by Kenneth Li and Lisa Shumaker

Charter Guilty of Sending “Untrue and Improper” Letters Inferring Windstream’s Days Were Numbered

The federal judge handling Windstream’s Chapter 11 bankruptcy reorganization has found Charter Communications culpable for mailing “untrue and improper” advertisements to Windstream customers implying the company was going out of business and abandoning its customers.

Bankruptcy Court Judge Robert Drain ruled in favor of a preliminary injunction forbidding Charter from sending any further letters of this type and requiring Charter to pay Windstream to mail clarification letters to all Windstream customers who received the false advertisements from Spectrum.

Judge Drain also ruled:

  • Charter must pay all costs to restore Windstream service for former customers who switched to Spectrum based on their understanding that Windstream was discontinuing service.
  • Charter may not imply Windstream is going out of business in any future solicitations, or suggest that its current financial difficulties will have any negative impact on service.
  • Charter is forbidden from using advertising messages including “Goodbye, Windstream, Hello Spectrum,” or “Windstream Customer, Don’t Risk Losing your TV and Internet Service” in either direct mail or door-to-door marketing campaigns.

Windstream complained to the bankruptcy court about Charter’s mailings, which it claimed were designed to mislead customers into thinking Windstream’s days were numbered.

Cable Infrastructure Suppliers Hurting After Cable Industry Slashes Investment, CapEx Spending

Despite claims from Republican FCC commissioners that cable companies are boosting investment in their networks as a result of the FCC’s repeal of net neutrality, cable infrastructure suppliers reported first quarter 2019 revenues nosedived 38%, reflecting an “extreme” cutback in cable industry spending not seen in over five years.

ARRIS/CommScope and Casa Systems, two major suppliers of cable system infrastructure, saw a broad decline in orders starting this year as companies like Comcast and Charter Communications slashed investment in broadband upgrades. Executives at both cable companies informed investors they expected significant spending cutbacks after completing their DOCSIS 3.1 upgrades, which have made gigabit download speeds available in large portions of the country. Comcast and Charter executives also told investors that large-scale spending is not planned in the near future.

The spending cuts were acknowledged by CommScope CEO Eddie Edwards in a conference call with investors.

“The ARRIS business is off to a challenging start to the year, driven largely by the significant reduction in CapEx spend by certain large cable companies, many of whom have commented publicly on 2019 network and capital priorities,” Edwards said.

The nation’s top two cable operators spent $1.1 billion in the third quarter and $1.4 billion in the fourth quarter of 2018 on system upgrades and investments. But during the first quarter of this year, spending plummeted to $600 million. Jeff Heynen, Dell’Oro’s research director, told Light Reading he has not seen revenues in the cable access network sector drop to such a low level since 2013.

“We’re talking about a significant decline sequentially just for CapEx for two of the largest cable operators in the world,” Heynen told the trade journal. “But this isn’t just one or two operators cutting their CapEx. It’s quite a few of them, and the big ones, too. This was bound to have a significant impact on the infrastructure market.”

Analysts expect cable industry spending will remain sluggish for much of 2019, with a possible turnaround sometime late this year, but more likely in 2020.

Supreme Court Will Hear Comcast Appeal Over Accusations Its Channel Lineup is Racially Biased

WASHINGTON (Reuters) – The U.S. Supreme Court on Monday agreed to hear cable television operator Comcast Corp’s bid to throw out comedian and producer Byron Allen’s racial bias lawsuit accusing the company of discriminating against black-owned channels.

The justices will review a decision by the San Francisco-based 9th U.S. Circuit Court of Appeals that cleared the way for a $20 billion civil rights lawsuit against Comcast to proceed. At issue in the litigation is the refusal by Comcast to carry channels operated by Entertainment Studios Networks, owned by Byron Allen, who is black.

The justices did not act on a similar appeal by Charter Communications involving claims by Allen after the company also declined to carry his channels. That case likely will be guided by the outcome in Comcast’s appeal.

Comcast and Charter have said their business decisions were based on capacity constraints, not race, and that Allen’s channels, including JusticeCentral.TV, Cars.TV, Pets.TV and Comedy.TV, did not show sufficient promise or customer demand to merit distribution. Other television distributors, including Verizon, AT&T and DirecTV, carry some of Allen’s programming, court papers said.

“Comcast has an outstanding record of supporting and fostering diverse programming, including programming from African-American owned channels, two more of which we launched earlier this year,” the company said in a statement, adding that it hopes the Supreme Court will bring the case to an end.

Allen

Allen disputed the statement, saying the channels Comcast mentioned are not wholly owned by African Americans. Comcast, Allen said, “will continue to lose this case, and the American people who stand against racial discrimination will win.”

Entertainment Studios Networks sued in Los Angeles federal court, accusing the cable companies of violating the Civil Rights Act of 1866, a post-Civil War law that forbids racial discrimination in business contracts.

The suits brought by Allen pinned the rejections primarily on racial discrimination, accusing cable executives of giving insincere or invalid excuses and granting contracts to carry white-owned networks during the same period.

The lawsuits also alleged that the companies’ commitments to diversity are a sham and that they have used outside civil rights groups, such as Reverend Al Sharpton’s National Action Network, to provide cover for empty promises. Comcast called those accusations “outlandish.”

Both Comcast and Charter called the lawsuits a “scam” and sought to have the cases dismissed. But the 9th Circuit last year allowed the litigation to proceed.

At the heart of the case is the question of whether individuals who are refused a business contract can sue under the civil rights law without ruling out reasons other than discrimination for the denial. The 9th Circuit said lawsuits can proceed to trial if plaintiffs can show that discriminatory intent was one factor among others in the denial of a contract.

Reporting by Andrew Chung; Editing by Will Dunham

Charter Refuses to Cooperate in Audit of Its Merger Commitments in California

Charter Communications has refused to cooperate in a review to determine if the company is meeting its merger obligations to customers in California.

The Public Advocates Office of the California Public Utilities Commission reports that Spectrum was required to offer at least 300 Mbps internet service to all households in its California service area by December 31, 2019. It was a key condition required of the cable company to win approval of its 2016 merger with Time Warner Cable. But after getting its merger, Charter officials have stopped cooperating with the Public Advocates Office, which is required to submit annual progress reports on Charter’s compliance.

“Charter’s reports thus far have consisted only of bald assertions, without any supporting household data, that it is providing download speeds of up to 300 Mbps to a certain percentage of households and, as stated in its 2017 report, 400 Mbps to a certain percentage of households,” the Public Advocates Office wrote in a Notice of Ex Parte Communication.

“Charter has refused to provide all data requested by the Public Advocates Office, making it impossible for the Public Advocates Office and the Commission to verify whether Charter is, in fact, in compliance with [its merger obligations},” the Office stated. “[I]f Charter fails to comply with merger conditions, the Commission may pursue appropriate enforcement remedies, including the imposition of fines.”

The Public Advocates Office won the granting of a motion to compel Charter Communications to provide the information, signed by Administrative Law Judge Karl J. Bemesderfer.

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  • Ian Littman: The Cox thing doesn't sound like LLD at all. It instead sounds like something similar to the WTFast service that Asus bundles with some of their route...
  • Suzanne: Jane, I did that same thing, so very fed up with Spectrum and their rates, and their (lack of any) customer service to keep a customer. It's going fi...
  • Alison: I just got offered 85 for choice for 12 months. Set up disconnect date. Hoping to get a better offer before then so I don’t have to switch to streamin...
  • Alison: When is/was your disconnect date? Did they ever call?...
  • Alison: Let me know how it goes when you call back...how long you wait. Just set up my disconnect date but will try calling one time before then!...
  • Jane: I'm now retired with Social Security as my income. I worked from home full-time and needed hi speed internet and phone service. I don't have cable tv ...
  • Larry Lee Moniz: More lLike Full Stream Ahead... I am dumping Comcast....
  • Debebe Gebeyehu: I am a senior retired with a very low monthly benefit. Thanks to the food stamp program which is very helpful. I hope the Internet Essential will ke...
  • Ian Littman: The spectrum Starry has won't really work for rural broadband; service only covers a couple miles from the access point. You need something < 6 GHz...
  • Ian Littman: Those are Canadian dollars. CAD 75/95/125 are $56.64/$71.74/$94.40. The more expensive plans are definitely pricier than, say, T-Mobile, but they aren...
  • Ian Littman: I doubt Charter or Comcast would buy Boost. They might pretend to look at it to get better rates from VZW, but that's about it. Altice or Amazon look...
  • Pissedoff: Ya, not investing in it's employees and at the same time he took away their pay raises. Shame shame!!...

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