Filed by T-Mobile US, Inc.

pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934

Subject Company: Sprint Corporation

Commission File No.: 001-04721

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Before the

FEDERAL COMMUNICATIONS COMMISSION

Washington, D.C. 20554

JOINT OPPOSITION OF

T-MOBILE US, INC. AND SPRINT CORPORATION

September 17, 2018

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EXECUTIVE SUMMARY

In the Public Interest Statement (“PIS”), T-Mobile and Sprint demonstrated that the merger will produce enormous consumer benefits and intensify competition in ways that neither company could do on its own. The merged company (“New T-Mobile”) will be able to leverage a unique combination of complementary spectrum and cell sites to unlock massive synergies. This will allow New T-Mobile to invest nearly $40 billion to accelerate and deliver a more robust nationwide 5G network and next-generation services that would not be possible for either company on its own. While both T-Mobile and Sprint have standalone plans to deploy 5G networks, the New T-Mobile network will be far superior and will create expanded capacity and lower costs so that American consumers will pay less and get more. The network will produce fiber-like speeds that enable innovative mobile wireless uses; unleash an alternative to in-home, fixed broadband providers; enable disruptive video services; spark more competition for enterprise; bring better service to rural America, including high-speed broadband; create thousands of additional American jobs; and achieve accelerated 5G deployment in the United States. No petitioner seriously challenges that the proposed New T-Mobile network will deliver transformative increases in capacity, speed, and coverage to the public.

The Merger Benefits Consumers and Intensifies Competition. The PIS fully documented the pro-consumer and pro-competitive effects of the merger. A small number of petitioners nonetheless claim that the merger will lead to higher prices, lower output, and less competition. In response, the Applicants submit the following:

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The Merger Benefits All Segments of the Wireless Market for Consumers, the Country, and American Workers. Some opponents contend that the consumer benefits described in the PIS are not merger-specific or verifiable. Notably, no petitioner presents credible evidence that the network as planned will not deliver significant speed and capacity gains over the standalone networks. Instead, opponents insist either that the merger is unnecessary to build such a nationwide 5G network or that the standalone companies have alternatives to merging. They further hypothesize that the transaction will result in harmful effects on specific segments of the wireless market, rural areas, and company employment. As explained below, the documented capacity and speed gains are entirely dependent on combining the two companies and they cannot be achieved but for the merger:

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Requests That Are Unrelated to the Merger Should Be Rejected. Finally, some parties inappropriately attempt to use the merger review to extract business concessions or conditions that are unrelated to the merger. The Commission has a longstanding policy of not considering private disputes or issues of general industry applicability in the context of merger proceedings. Consistent with that well-founded precedent, the petitions filed by Atif Khan, Stanley D. Besecker, CarrierX, Voqal and Aureon should be summarily dismissed or denied.

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Before the

FEDERAL COMMUNICATIONS COMMISSION

Washington, D.C. 20554

JOINT OPPOSITION OF

T-MOBILE US, INC. AND SPRINT CORPORATION

T-Mobile US, Inc. (“T-Mobile”) and Sprint Corporation (“Sprint”) hereby submit their Joint Opposition to petitions to deny and comments in the above-captioned proceeding. On August 27, 2018, the Commission received petitions and comments concerning the transaction and its effects on consumers and competition.¹ As detailed below, the concerns expressed about the merger are ill-founded and without credible bases, while the benefits from its approval are supported by detailed engineering, business, and economic evidence. In this Joint Opposition, T-Mobile and Sprint (“Applicants”) address and answer all of the material questions raised by petitioners and commenters. In so doing, the Applicants provide the Commission with further merger-specific and verifiable bases for rapid approval of the transfer applications to effectuate the merger.

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The Applicants’ Public Interest Statement (“PIS”) provided detailed network engineering, business plan, and economic information to document the merger benefits for consumers and competition.² The network engineering information established the dramatic increases in capacity, speed, and coverage that would result from the planned 5G network.³ Mike Sievert, President and Chief Operating Officer of T-Mobile, explained that “New T-Mobile will have every incentive to grow its customer base” and increasing prices post-merger “would be economically irrational and contrary to shareholder interests.”⁴ The economic analyses concluded that building the nationwide 5G network will provoke competitive responses from Verizon and AT&T that result in as much as a 55 percent decrease in price per GB and a 120 percent increase in cellular data supply for all wireless customers⁵ and that “there is no credible basis to conclude that the merger on balance would enhance the vulnerability of the market to successful coordination.”⁶

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As documented in the PIS, the combined network will more than double 5G monthly capacity by 2021 and nearly triple 5G monthly capacity by 2024 when compared to the combined 5G capacities of the standalone networks.⁷ Further, T-Mobile Executive Vice President and Chief Technology Officer Neville Ray explained in his declaration that, by 2024, the total capacity of the new network—inclusive of LTE—will be approximately twice the combined capacity of the standalone firms.⁸ By 2024, “New T-Mobile’s 5G network will deliver average data rates above 100 Mbps to 292.3 million covered POPs, average data rates above 150 Mbps to 278.1 million covered POPs, average data rates above 300 Mbps to 252.4 million covered POPs, and average data rates above 500 Mbps to 208.7 million covered POPs.”⁹

New T-Mobile’s network, business and capital plans work in concert and are all predicated upon T-Mobile and Sprint creating a single combined network. Indeed, as discussed in Section II below, the two networks will be integrated as soon as possible, because (1) running two parallel networks makes no engineering or economic sense; (2) a combined network is needed to deliver the capacity, speed, and coverage benefits to the two companies’ customers; and (3) network efficiencies from integration account for 60 percent of the transaction’s total synergies. Integrating the networks requires the deployment of new equipment, which given the current state of technology at the time of deployment, will be 5G-capable. As such, the rapid integration of the two networks to meet business plan goals will drive accelerated 5G roll-out at low incremental cost.

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As a matter of fundamental economics, significantly increasing the supply of available capacity puts substantial downward pressure on the per unit price of capacity. New T-Mobile’s business plan tracks this fundamental economic tenet by recognizing that the optimal strategy to monetize the combined network’s additional capacity is to reduce prices. As Mike Sievert put it: “[w]e will compete aggressively with lower prices to take market share from Verizon and AT&T, allowing more customers to enjoy the benefits of our increased capacity.”¹⁰ Consistent with these economic incentives, “the [New T-Mobile] financial model projects passing scale benefits on to customers in the form of an over 6 percent reduction in average revenue per user (“ARPU”), going from              to              by 2024.” This contrasts with T-Mobile’s standalone plan, which projects                      over time^.11 The fundamentals of the proposed transaction and its massive increase in wireless capacity and output will benefit competition and consumers across all segments of the wireless market, including retail services provided on prepaid and postpaid plans as well as services sold at wholesale to MVNOs and other hybrid participants in the wireless ecosystem.¹²

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In the PIS, leading economists supported the merger’s benefits of increased output and lower costs. Dr. David Evans’ economic analysis concluded that, by 2024, by building the nationwide 5G network and provoking competitive responses from Verizon and AT&T that the transaction will result in as much as a 55 percent decrease in price per GB and a 120 percent increase in cellular data supply for all wireless customers.¹³ In addition, Prof. Steven Salop and Dr. Yianis Sarafidis found that “there is no credible basis to conclude that the merger on balance would enhance the vulnerability of the market to successful coordination.”¹⁴

Without challenging the New T-Mobile network’s ability to produce massively increased capacity, speed, and coverage, some opponents simply resort to claiming that the combination of T-Mobile and Sprint is a four-to-three merger and relying on the untenable thesis that such combinations per se harm consumers and competition. However, modern competition analysis should not be reduced to a simple shorthand exercise in unsubstantiated generalities. From an economic perspective, a merger is only anticompetitive when it leads to artificial reductions in supply, increases in price, or lower quality, thereby reducing consumer welfare. While it is true that some four-to-three mergers may result in reduced supply, increased price, or lower quality the opponents have not seriously contested Applicants’ well-supported and empirical demonstration that the combination of T-Mobile and Sprint will do just the opposite; it will result in a massive increase in the capacity of the combined network, lower prices, and higher quality service. They also have not challenged that these benefits will trigger a competitive response from Verizon and AT&T to similarly expand capacity, lower prices, and increase quality in an attempt to match the performance of New T-Mobile’s network. As discussed below, transactions and conditions in the past, in other businesses and other countries that involve different facts, circumstances and markets, are not relevant here, given the demonstrated market and consumer benefits from the transaction.

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DISH is the only opponent that has even attempted to make an economic showing addressing the T-Mobile/Sprint merger. Its petition includes merger simulations and declarations purportedly indicating risks of post-merger price increases and coordination. These submissions, however, confirm rather than refute the merger’s pro-competitive and pro-consumer effects. As detailed below, by altogether ignoring the merger’s efficiencies, including its impact on reductions of marginal costs of increasing capacity, DISH’s economists manage to predict increases in ARPUs. But once the simulation is corrected to include merger efficiencies (as required under the long-accepted standards for merger simulations) that reflect the merger’s competitive effects, the DISH-sponsored merger simulations confirm that the merger promotes consumer welfare even without accounting for considerable improvements in quality resulting from faster speeds, lower latency, and improved coverage.

To further corroborate the merger’s pro-consumer and pro-competition effects, T-Mobile and Sprint submit herewith: (1) a reply declaration from Dr. Evans responding to petitions to deny and confirming the dramatic reductions in the price/GB attributable to the merger and the likely output-enhancing competitive responses by Verizon and AT&T; (2) even more conservative merger simulations than those put forward by DISH prepared by Mark Israel, Michael Katz, and Bryan Keating of Compass Lexecon (“Compass Lexecon”) confirming that the merger promotes consumer welfare; (3) the response of Prof. Salop and Dr. Sarafidis to DISH’s criticisms of their conclusion that the merger will not result in increased risks of harmful coordination; and (4) a reply declaration of Brandon “Dow” Draper, Sprint’s Chief Commercial Officer, reiterating that Sprint in the standalone world faces challenges that refute opponents’ assumptions about Sprint’s competitive abilities.

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In his PIS declaration, Dr. David Evans demonstrated that the transaction would produce a dramatic increase in cellular data output and decrease in cellular data prices as a result of New T-Mobile’s integration of T-Mobile’s and Sprint’s networks and spectrum portfolios. The accelerated deployment of a robust 5G network will also create strong incentives for AT&T and Verizon to accelerate and intensify their own 5G deployments to remain competitive. Dr. Evans’ declaration presented a detailed, fact-based analysis of dynamic investment competition among cellular carriers, grounded in the longstanding business realities of the industry and the implications of the transaction for the prices, output, and quality for cellular data in light of these business realities. Given the merger-specific efficiencies estimated by T-Mobile’s engineering model and a projection that ARPU remains flat, which is generally consistent with T-Mobile’s contemporaneous business planning documents, Dr. Evans found that the transaction would increase GB/subscriber by 120 percent and reduce price/GB by 55 percent by 2024.

On behalf of DISH, Prof. David Sappington challenges Dr. Evans’ findings, based on alleged flaws in his study.¹⁵ In response, Dr. Evans in his reply declaration attached hereto provides a point-by-point refutation demonstrating why Prof. Sappington’s criticisms are unfounded:

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Dr. Evans thus confirms the dramatic reductions in the price/GB attributable to the merger and the likely output-enhancing competitive responses by Verizon and AT&T.

In addition to criticizing Dr. Evans’ model in its petition to deny, DISH presents the results of static merger simulations prepared by Prof. Joseph Harrington and the Brattle Group that purport to demonstrate that the transaction would result in price increases to retail customers.²⁰ The Brattle declaration also purports to show an incentive for New T-Mobile to increase wholesale prices, although it does not attempt to quantify those price increases.²¹

Mark Israel, Michael Katz and Bryan Keating from Compass Lexecon reviewed the Brattle declaration and identified “several serious shortcomings.”²² They concluded that, “[i]ncorporating the merger-specific efficiencies projected by the Parties’ network plans and their Network Build Model into the [Brattle model] leads to the conclusion that the merger will strengthen competition and raise consumer welfare,” exceeding the level of efficiencies needed to show a pro-competitive results.²³ Compass Lexecon notes that, by excluding consideration of efficiencies, the Brattle model would “necessarily find that any merger of firms competing for the same customers harms competition and consumers” and, thus the Brattle model “cannot

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support any conclusions about the net effect of the transaction on competition and consumer welfare.”²⁴ As noted in the PIS, the transaction will produce significant merger-specific efficiencies, including lowering the marginal costs to add additional network traffic,²⁵ increasing the throughput and coverage consistency,²⁶ and reducing the need for usage controls on New T-Mobile’s network relative to the standalone companies.

As the Department of Justice and Federal Trade Commission’s Horizontal Merger Guidelines explain, properly used, a merger simulation can be a useful tool to assess the competitive effects of a transaction.²⁷ Unlike the HHI or price pressure screens on which DISH also relies, merger simulations incorporate more data from the parties and from the industry to incorporate how merger efficiencies and competitor reactions will impact the ultimate prices charged to retail consumers. Merger simulations additionally do not rely on defining a particular relevant antitrust market, sidestepping DISH’s own market definition assertions.²⁸ Further, contrary to Brattle’s attempt to suggest that a merger simulation first calculates a price increase that the parties then attempt to “offset” with efficiencies, Compass Lexecon explains that a merger simulation properly incorporates the effect of efficiencies on New T-Mobile’s price-setting behavior, thus showing that New T-Mobile will not raise prices in the first place.²⁹

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In its modeling, Compass Lexecon used the following approach:

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Even with these changes, Compass Lexecon found that the transaction “promotes competition and benefits consumers.”³⁵

It is worth noting that even properly conducted merger simulations of the type that Brattle and Compass Lexecon conducted are not all encompassing.³⁶ There are a number of factors that are not included in typical merger simulations which, once properly accounted for, could mitigate or eliminate the harms that a merger simulation might predict. For example, a typical merger simulation will not account for the impact of a merger on dynamic investment incentives. Merger simulations also typically depend on the switching patterns that exist at the time of the merger, and so they do not generally account for product repositioning.³⁷ In a case like this one, where networks are primarily differentiated by quality and the merger lowers the cost to the merged firm of increased quality, that could substantially change the switching patterns that we might expect. Finally, merger simulations do not typically account for entry, such as the entry by cable firms that is described in the PIS.³⁸ All of these factors mean that, even if a merger

simulation were to show some residual upward pricing pressure, that would not necessarily mean that the merger would be anticompetitive.

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Compass Lexecon additionally assessed Brattle’s attempt to calculate New T-Mobile’s incentives to raise wholesale prices to MVNOs using the “vertical Gross Upward Pricing Pressure Index” or vGUPPI tool.³⁹ As described further in the declaration of Prof. Salop and Dr. Sarafidis, Brattle made errors in calculating the index and did not discuss the significance of the impact of the index on the MVNOs’ costs. The corrected index shows that, even before accounting for efficiencies, the expected retail price impact would only be about $0.03/subscriber/month.⁴⁰ After integrating the result into the merger simulation model, Compass Lexecon found that it does not change its conclusions.

Overall, the Compass Lexecon declaration demonstrates that the only basis for DISH’s assertions that the transaction would harm competition is the counter-factual assumption that the transaction would not produce any efficiencies. The strong showings made in the PIS and further supplemented in this filing thoroughly debunk this misguided and misleading assumption. Once this assumption is corrected, DISH’s own economic models demonstrate the transaction’s strong pro-competitive effects.

The PIS demonstrates that coordinated effects will not result from this merger. T-Mobile and Sprint presented business and economic declarations, including from Prof. Salop and Dr. Sarafidis, explaining that there is not a credible basis for the Commission to conclude that the

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merger would increase the risk of coordination with Verizon and AT&T.⁴¹ Simply put, the structure and dynamics of competition in the marketplace, the efficiencies flowing from the transaction, and New T-Mobile’s competitive incentives make post-transaction coordination implausible. In their declaration, Prof. Salop and Dr. Sarafidis addressed these factors and the firms’ incentives in light of those factors.

DISH, in its petition to deny, asserts that T-Mobile and Sprint are wrong about the prospects of post-merger coordination. In support of this contention, DISH submitted an analysis by Prof. Harrington and the Brattle Group arguing that the mobile voice/broadband market is suitable for coordination,⁴² that New T-Mobile will reduce incentives for a maverick strategy,⁴³ and that the merger would increase the likelihood of tacit collusion among the remaining carriers post-merger because: (1) New T-Mobile will be more willing to coordinate with AT&T and Verizon than either Sprint or T-Mobile before a merger; and (2) post-merger, it is less difficult for AT&T, Verizon, and New T-Mobile to coordinate than it would be in the premerger market.⁴⁴

When relevant industry characteristics, merger efficiencies and New T-Mobile’s incentives are taken into account, however, the analysis of Prof. Harrington and Brattle Group falls short. Prof. Salop and Dr. Sarafidis explain in their attached reply declaration that the Harrington/Brattle critique “does not properly account for three key factors that are critical to consider in a proper economic analysis of this merger and formed the basis of our analysis.”⁴⁵ These three key factors that Harrington/Brattle ignore are critical to any economic evaluation of the post-merger incentives here:

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While ignoring these three key factors, Harrington/Brattle claim that certain (selected) industry characteristics (“‘checklists’ of factors” such as higher consolidated market share of T-Mobile and Sprint, supposed transparency of pricing, alleged lack of buyer-side power, elimination of long-term contracts, and barriers to entry and expansion)⁵¹ make the mobile voice/mobile broadband market suitable for tacit collusion.⁵² Harrington/Brattle, however, fail to take into account Prof. Salop’s and Dr. Sarafidis’ further discussion of other industry characteristics.⁵³ Given the weight of the arguments by Prof. Salop and Dr. Sarafidis that Harrington/Brattle leave unaddressed, their analysis does not provide a valid basis to conclude that the merger would increase the risk of coordination in the mobile broadband marketplace.

Furthermore, Harrington/Brattle presented an economic analysis of New T-Mobile’s incentives to vertically foreclose MVNOs, using an index (“vGUPPI”) that was co-developed by Prof. Salop (with Dr. Serge Moresi). In their reply declaration, Prof. Salop and Dr. Sarafidis explain that Harrington/Brattle calculated this index incorrectly, and that after addressing these errors, the economic significance of the resulting index is trivial, in the sense that the Harrington/Brattle analysis shows that, even assuming New T-Mobile attempts to raise wholesale prices, these MVNOs’ costs will rise by a de minimis amount.⁵⁴

Finally, Harrington/Brattle misapply an index developed by Prof. Salop and Dr. Sarafidis (with co-authors) in 2011, claiming that the index calculations “show[] an increase of about 20% in the risk of coordinated effects.”⁵⁵ That index, called the Coordinated Price Pressure Index

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(“CPPI”), was developed to evaluate the proposed AT&T and T-Mobile merger in 2011.⁵⁶ Prof. Salop and Dr. Sarafidis explain, however, that the CPPI framework can only be applied to “gauge[] the incentives of two leading firms” (e.g., AT&T and Verizon) to engage in parallel accommodating conduct,” which T-Mobile and Sprint are clearly not.⁵⁷ In addition, they point out that if the Harrington/Brattle Declaration “had considered the CPPI for coordination between AT&T and Verizon, it would have found that the T-Mobile/Sprint merger would have no effect.”⁵⁸

Some petitioners cherry-pick improvements in certain recent financial metrics in an effort to suggest that Sprint has overcome its past challenges and is now on a trajectory that will enable it to exert significant competitive pressure on other nationwide wireless carriers in the absence of the merger. In the first place, the relevant comparison is whether any hypothetical improvement in Sprint’s performance would be equal to or exceed the pro-competitive impact of the massive increase in industry supply generated by the merger. The Applicants have demonstrated that combining the spectrum and network assets of T-Mobile and Sprint will yield substantially more capacity than the sum of what the two firms could achieve on their own. But, in any case, as explained at greater length in the declarations submitted by Dow Draper, the reality is that Sprint, as a standalone entity, faces business challenges that will severely limit its ability to simultaneously make necessary network investments and also maintain the same level of aggressive promotional activities, and as a consequence, Sprint will be a much less effective competitor compared to New T-Mobile.

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As described in the PIS and accompanying declarations, Sprint faces significant structural challenges stemming from its network performance difficulties, poor customer perception, low share of gross adds (“SoGA”), high churn rate, insufficient scale, and lack of free cash flow.⁵⁹ These challenges have, and will continue to, limit the degree to which Sprint will be a competitive check in the wireless industry—particularly on the two largest nationwide carriers, AT&T and Verizon.

A key reason Sprint faces these challenges is its network performance deficiencies. Sprint’s network suffers from a lack of coverage and deployed capacity, which creates a sub-par experience for many of the company’s subscribers.⁶⁰ Existing subscribers have a persistent negative perception of Sprint’s network and communicate this to other potential subscribers. As a result, it is more difficult for Sprint to attract (i.e., high SoGA) and keep subscribers (i.e., low churn)—preventing Sprint from achieving scale.⁶¹ Sprint has been largely unsuccessful in reversing this trend through promotional discounts and rates.⁶²

Sprint now needs to make significant investments in its network to improve LTE and launch 5G, but its ability to simultaneously increase network investment and offer significant

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promotional pricing is necessarily limited.⁶³ The realities facing Sprint’s business require the company to raise prices—which is already occurring—and focus its network investment in locations where the company can potentially achieve sufficient scale, forgoing broader national competition to the detriment of rural subscribers and MVNO partners.⁶⁴

Several petitioners and commenters assert that, absent the merger, Sprint will somehow overcome these challenges to exert greater pressure on its competitors. Opponents’ arguments fail to engage with the significant business obstacles that Mr. Draper described and instead envision a future for Sprint that is belied by both Sprint’s recent business performance and economic logic.

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spectrum on which Sprint plans to launch 5G as a coverage layer). Accordingly, Sprint’s standalone 5G network will be geographically limited and cover just 150 million POPs by 2020.⁶⁸ Although Sprint is significantly increasing its network investment to pursue a 5G network, much of that planned investment is actually targeted at improving the company’s LTE network.⁶⁹ In addition, as a standalone company, Sprint will need to reserve significant amounts of 2.5 GHz spectrum for LTE for the foreseeable future, whereas New T-Mobile will be able to fully unlock the value of these spectrum holdings by deploying more spectrum faster in a nationwide 5G network.

Absent the merger, the likely result of the business challenges facing Sprint, coupled with its recent performance, is a company that focuses on investment and competition in the limited geographies where it can profitably invest. This more regional focus and lack of resources would lessen Sprint’s ability to operate as a competitive constraint on the decisions of other wireless carriers, and particularly the other three nationwide carriers.

DISH and others suggest that the review of the T-Mobile and Sprint merger should be informed by the failed AT&T/T-Mobile merger, other unrelated domestic transactions, decisions by international regulators on “four to three” mergers, or experiences in countries with “three carrier” market structures. However, the details of other mergers and markets are not relevant here. As an initial matter, the Commission engages in a transaction-specific review of proposed

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mergers.⁷² The Communications Act directs the Commission to conduct review of the particular public interest benefits and harms arising from a transfer of control. Under the Commission’s broad standard of review, there is no pre-set right or wrong answer based on the number of providers in a market.⁷³ Instead, the review process solicits showings of merger-specific benefits and evaluations of merger-specific harms. The Communications Act also bars the Commission from considering alternative transactions instead of the one submitted by Applicants.⁷⁴

As detailed in the PIS and explicated further in this Opposition, the combination of T-Mobile and Sprint will produce substantial consumer benefits and intensify competition. In contrast to DISH and its economists’ analogies to mergers in the past or outside the United States, the Applicants are not opining in a generalized or abstract way about whether three-firm markets are as competitive as four-firm markets, or analogizing to other, unrelated industries or countries. Rather, the Applicants have demonstrated that this particular merger of two smaller competitors in the U.S. wireless industry enhances consumer welfare because it creates capacity gains and lower costs, while enabling robust competition against two much larger competitors.

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DISH cites to the proposed AT&T/T-Mobile merger in 2011 without acknowledging obvious differences between the transactions, most notably that this merger combines the number three and four carriers whereas in that failed merger attempt, the resulting third provider would have had only a 15 percent market share with Verizon roughly twice its size and AT&T holding nearly half the market on its own.⁷⁵ Here, the transaction is creating a stronger maverick to compete with two larger incumbents. In addition, the result of the merger would not just be significantly increased capacity at lower prices for customers on the New T-Mobile nationwide 5G network, but capacity increases with price decreases for all wireless customers flowing from the competitive responses of Verizon and AT&T. Ironically, in the context of AT&T’s proposed merger with T-Mobile, DISH’s own economist here, Coleman Bazelon, recognized the importance and benefits of capacity increases in assessing mergers as well as the positive effects of network investments for the economy and for jobs.⁷⁶

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With respect to mergers in other countries, their relevance is even more attenuated by a multiplicity of different market, regulatory and local conditions or circumstances.⁷⁷ There is little point in belaboring or rebutting the examples offered by petitioners.⁷⁸ However, it is worth noting that in looking ahead to 5G and the associated infrastructure costs, the United Kingdom’s Office of Communication recently observed that “[a]s far as the Government is concerned, there is no magic number of mobile network operators. Each merger control case should be assessed on its merits at a particular time, by the relevant authorities.”⁷⁹

As discussed in the PIS, the FCC has used a series of “screens” to identify the local geographic areas that can be excluded from its review of the competitive effects of a proposed wireless transaction.⁸⁰ The two principal screens currently employed for transaction review include: (i) a spectrum screen that assesses whether the transaction would result in the aggregation of more than one-third of the available spectrum for mobile broadband services; and (ii) a screen based on the Herfindahl-Hirschman index (“HHI”).⁸¹ Various petitioners have

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stated that the combined company would exceed the FCC’s “spectrum screen” or HHI thresholds in a large number of local markets and that, therefore, the transaction should be denied or divestiture of spectrum required as a condition of closing.⁸² The FCC should reject these unsubstantiated arguments and confirm the competitive and other public interest benefits of the proposed merger.

The petitioners misstate the function and import of the competitive screens. The FCC spectrum screen rule provides only that proponents of spectrum transactions “must demonstrate that the public interest, convenience, and necessity will be served [by the spectrum acquisition],” noting that “[t]he Commission will evaluate any such license application consistent with the

Holdings Corp., 31 FCC Rcd 3631, 3639 ¶ 17 (2017). The FCC also employs a millimeter wave screen that is triggered if applicants aggregate more than one-third of the available millimeter wave spectrum; that screen is not relevant to the proposed transaction. Use of Spectrum Bands Above 24 GHz For Mobile Radio Services, GN Docket No. 14-177 at ¶ 35-36 (rel. June 8, 2018). The FCC additionally has indicated that it will “treat certain further concentration of below-1-GHz spectrum as an enhanced factor in our case-by-case analysis of the potential competitive harms posed by individual transactions.” Policies Regarding Mobile Spectrum Holdings, 29 FCC Rcd 6133, 6239 ¶ 283 (2014) (“Mobile Spectrum Holdings Order”). The Applicants provided an exhibit addressing those enhanced factors in their original filing. See PIS, Appx. J.

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policies set forth in [the Mobile Spectrum Holdings Order].”⁸³ The Commission has been clear that the spectrum and HHI screens are simply tools to “identify those local markets in which no competitive harm clearly arises from the transaction.”⁸⁴ In other words, the fact that a screen is exceeded does not result in a presumption of harm, but merely means that the Applicants do not qualify for a streamlined process exempting that local market from standard competitive review. Local markets where a screen is triggered, therefore, are not markets where the proposed aggregation is presumptively anticompetitive, but rather markets where case-by-case review is warranted. And while petitioners note that the proposed transaction triggers this routine competitive review in a large number of local markets, the number of markets subject to review is not a factor in the competitive analysis, much less dispositive to that review. The FCC conducts its post-screen competitive analysis on a local-market-by-local-market basis, considering a variety of competitive factors in those triggered markets.

Consistent with the Commission’s framework, the Applicants explain below the absence of local competitive harms and why review of the transaction’s effects on local markets demonstrates that the merger will affirmatively stimulate competition, not harm it. The Applicants also describe why the Commission’s preliminary screens overstate the potential for competitive harm (which is not surprising given their purpose). Finally, Applicants demonstrate that, in the absence of any evidence of anticompetitive harm in any local market, spectrum divestitures would not serve any legitimate competitive purpose.

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While the spectrum screen figures prominently in a number of petitions and comments, none of the opponents have provided evidence suggesting that any triggered local market has specific characteristics that would create the potential for anticompetitive harm. Instead, they wrongly argue that the screen is effectively a cap,⁸⁵ that specific spectrum bands are “markets” being monopolized by the Applicants,⁸⁶ or that the Applicants are “liberalizing” the screen in some manner.⁸⁷ Some of these arguments are not even transaction-specific. For example, T-Mobile has no 2.5 GHz spectrum and therefore will not contribute to any perceived “concentration” in that band, but petitioners somehow claim otherwise. Other commenters assert

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that the Applicants have tried to obfuscate or make it difficult for filers to analyze the aggregation data, an allegation already rejected by the FCC,⁸⁸ or completely misapply the relevant screens.⁸⁹ Mostly, however, the opponents simply refer to purportedly relevant catalogs of screen overages⁹⁰ and suggest that the existence of an overage by itself is a presumptive harm that must be remedied, making circular arguments such as “[t]he most apparent and detrimental competitive harm will be Sprint/T-Mobile’s increased spectrum aggregation.”⁹¹ Under unequivocal FCC policy, however, aggregation of spectrum above the screen is not itself presumptively anticompetitive; it merely means those markets are not exempted from local competitive review.

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The few commenters that cite any local competitive factors clearly miss the mark. The Rural Wireless Association (“RWA”) provides coverage maps of Alpine County, California, and Benton County, Mississippi. However, neither mapping exercise shows that a competitive issue exists. The FCC has repeatedly held that the relevant geographic markets for its local competitive analysis are CMAs,⁹² so a county-based focus is too narrow. In both the California 3 CMA (which contains Alpine County) and the Mississippi 2 CMA (which contains Benton County), Applicants are a distant third and fourth by market share and would have less than ten percent combined market share. It is not credible to suggest that the merger would enhance the potential for competitive harm in a local market when the post-merger entity would have only single digit market share in that CMA.

The only other commenter to raise specific local market concerns was Liberty Cablevision of Puerto Rico LLC (“Liberty”). Liberty, which holds a monopoly on cable service in Puerto Rico, emerges to complain about threats to wireless competition. Liberty, of course, has no wireless business and has never sought to acquire spectrum or become a wireless company. In the face of merger-related plans to bring broadband and cable competition to Puerto Rico, Liberty seeks to block or impair broadband and cable choice for consumers in those local markets. Notwithstanding Liberty’s self-serving comments, the wireless marketplace in Puerto Rico is plainly competitive, and Liberty’s “there is no Verizon” argument ignores the presence of the Puerto Rico Telephone Company (“PRTC”), which has a significant share of the Puerto Rico CMAs and is part of the largest wireless operation in Latin America.⁹³

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In the PIS, Applicants extensively documented the pro-competitive benefits of the merger, which will enhance wireless and broadband competition and benefit consumers on both a national and local basis.⁹⁴ These competitive benefits are further underpinned by the merger simulation and the accompanying declaration of Compass Lexecon.⁹⁵ The empirical modeling demonstrates that the merger will result in substantial increases in New T-Mobile’s network capacity, as compared to the sum of the standalone companies, with incentives for New T-Mobile to price that capacity to provide greater value to consumers.⁹⁶ Significantly, the transaction will generate these competitive benefits even in local areas in which spectrum aggregation would be above the FCC’s screen threshold.

In deploying its nationwide 5G network, New T-Mobile will deliver improved speeds, capacity, and capabilities to almost every local market in the country and bring increased competition to Verizon (or PRTC), AT&T, and other competitors. In so doing, New T-Mobile will fully utilize the combined and complementary spectrum resulting from the merger to accelerate the transition to the delivery of spectrally efficient and advanced 5G services. To the extent that foreclosure is one of the policy concerns the spectrum screen attempts to address, the engineering model⁹⁷ shows that New T-Mobile will intensively use its spectrum and this

PIS, Appx. J at 5-10. As noted in that Appendix, AT&T and PRTC, or their predecessors-in-interest, were the original 850 MHz cellular licensees on the islands, and their current market share reflects the advantages of long-time incumbents.

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demonstrates that it is not acquiring the spectrum for the purpose of denying assets to competitors. The engineering model also documents the particular synergies that arise from combining the spectrum of these two companies, and how the full use of the spectrum is necessary to deliver a 5G network with the consumer benefits documented in the PIS. These compelling public interest benefits easily overshadow any speculative concerns about local competition advanced by petitioners.

The PIS specifically addressed the local market review undertaken by the FCC. The FCC has said that local-market-by-local-market analysis “consider[s] variables that ... are important for predicting the incentive and ability of service providers to successfully restrict competition on price or non-price terms.”⁹⁸ These variables include a wide range of factors, including “the total number of rival service providers,” “the coverage of the firms’ respective networks,” and “the spectrum holdings of each of the rival service providers,” among many other factors.⁹⁹ The FCC has added that, “[i]n reaching determinations [under this analysis], we balance these factors on a market-specific basis, and consider the totality of the circumstances in each market.”¹⁰⁰

The Applicants have provided extensive data in their initial filing addressing factors relevant to competitive review.¹⁰¹ While the context of that discussion was the national market, the unilateral and coordinated effects discussions in the PIS are equally compelling with respect to a local market review.¹⁰² The PIS also discussed the results of the Applicants’ analysis of

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local market coverage effects, which were conservatively based on the FCC Form 477 mobile coverage data for the end of 2016.¹⁰³ Applicants calculated the number of “genuine” competitors in each CMA and found that, with only one exception, there were no markets where both T-Mobile and Sprint were considered competitors, but where Verizon and AT&T were not also considered competitors.¹⁰⁴ The sole exception was in Puerto Rico, where, as noted, Verizon does not have a presence but PRTC is a strong wireless competitor.¹⁰⁵ Accordingly, the transaction would not cause the number of genuine competitors to be reduced below three in any local market.

New T-Mobile will have the incentive to compete aggressively against its larger, more diversified rivals. As explained in the PIS, New T-Mobile will have incentives to monetize the added capacity of its network through the broadest possible base of customers.¹⁰⁶ New T-Mobile will use merger efficiencies to create further competitive inducements for potential customers by delivering more value for less money. New T-Mobile will also be motivated to enhance its ability to compete more effectively in areas where it has a lower customer share and where greater growth in SoGA is possible, such as in rural areas.¹⁰⁷ There is no credible threat of harmful unilateral conduct by New T-Mobile.

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Further, in addition to traditional wireless market participants, a number of large telecom and media companies are entering the wireless industry and will have increasing competitive impact, particularly with respect to 5G. Comcast and Charter are now each offering a wireless service and DISH has announced near-term plans for both a narrowband IoT network and a 5G network.¹⁰⁸ These companies are well-established, well-capitalized and have widely recognized brands. They operate over competitively significant regions, have millions of customers for cross-selling wireless services, and have access to the necessary spectrum, equipment, network facilities and programming to offer an attractive competitive service. Significantly, any post-merger attempt at coordinated conduct by the traditional wireless carriers would disproportionately favor these new wireless service providers, a fact that further reduces the already remote likelihood of such coordination.

While the FCC’s spectrum screen is formulaic in application, the FCC’s competitive review in local markets triggered by the screen considers a broad variety of factors, as discussed above. Despite the flexible nature of this analysis, some petitioners suggest that the spectrum screen rigidly compels the FCC to mandate spectrum divestitures, or that the size or scope of the screen variances require denial of the transaction.¹⁰⁹ This flawed argument is undercut not only by the evidence of competitive benefits in the merger simulation and the accompanying declaration of Compass Lexecon, but also by the characteristics of the spectrum that would be aggregated by the proposed transaction. As the Applicants discuss below, a rational evaluation of New T-Mobile’s prospective spectrum holdings supports a finding that the proposed combination will not create anticompetitive problems.

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Local competition analysis in the mobile broadband market cannot be reduced to a simple, one-dimensional proxy, such as the extent of wireless operators’ spectrum holdings. As has been repeatedly pointed out, the FCC’s spectrum screen currently has limited utility in assessing wireless competition, because the screen does not recognize that different spectrum bands have different characteristics and values for wireless carriers. In fact, there have been recurring suggestions that this key defect be addressed, including requests by both T-Mobile and Sprint that pre-date this transaction.¹¹⁰ The FCC has explicitly considered mechanisms to adjust for differential spectrum values, and even recognized that “there are significant differences in deployment costs between low-band and high-band spectrum.”¹¹¹ Indeed, the Commission has recognized that “in principal, spectrum weighting has the potential to enhance the ... competitive analysis of proposed spectrum acquisitions.”¹¹² Rather than adopting a “weighted screen” that accords varying weights to different bands, however, the FCC ultimately concluded that it would, rather than adjust the screen, “consider those differences as a key factor in its case

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by-case review of proposed secondary market transactions moving forward.”¹¹³ The FCC, in effect found that it was unnecessary to take on the administrative complexity of a weighted screen, since “the revised screen would not ‘prevent’ any transactions because ‘it is a screen, not a cap’ and the Commission retains the authority to approve transactions that trigger the screen.”¹¹⁴ Thus, even though the FCC did not apply a weighted screen in identifying local markets deserving of streamlined processing, it found that spectrum weighting was prima facie relevant to the FCC’s competitive analysis in local markets triggered by the screen.

If value-weighting were applied to the aggregation of spectrum contemplated in this transaction, the Commission would have to consider the inherent differences between higher band “capacity” spectrum and lower band “coverage” spectrum. Indeed, in adopting a separate screen for millimeter wave spectrum, the Commission has already acknowledged that not all megahertz are, in fact, equal. Millimeter wave spectrum is plainly being deployed for 5G wireless services, and is viewed by the Commission as a primary band for 5G.¹¹⁵ And, as shown in Appendix L-2 of the PIS, Verizon and AT&T hold far more spectrum in the millimeter wave bands than T-Mobile and Sprint combined, and have aggressively touted the usefulness and value of this spectrum.¹¹⁶ In fact, Verizon and AT&T largely base their 5G strategies on this spectrum. In that regard, as shown in Figure 1 below, Verizon has heavily emphasized the benefits of its “[i]ndustry leading spectrum assets for 5G” when talking to investors:

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Figure I: Verizon Investor Presentation Slide¹¹⁷

Simply put, the Commission should not overemphasize the importance of its one-dimensional, band-insensitive screen mechanism as it undertakes a comprehensive competitive analysis of this transaction.

Like the spectrum screen, the HHI screen is a crude proxy for competition. Indeed, the Department of Justice and the Federal Trade Commission’s Horizontal Merger Guidelines state explicitly that “[t]he purpose of these thresholds is not to provide a rigid screen to separate competitively benign mergers from anticompetitive ones,” and that the HHIs “provide one way to identify some mergers unlikely to raise competitive concerns and some others for which it is particularly important to examine whether other competitive factors confirm, reinforce, or counteract the potentially harmful effects of increased concentration.”¹¹⁸ Thus, like the spectrum screen, application of the HHI screen represents the beginning of a competitive analysis, not the end. As the Applicants have demonstrated, this merger is pro-competitive, it will result in substantial increases in capacity, improved service quality, and decreases in per gigabyte prices. Whether or not local market reviewed is triggered, the Applicants have met their burden of demonstrating that this particular transaction in the public interest.

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As discussed above, petitioners have not shown anticompetitive harms in any local markets. Significantly, the existence of screen overages in local markets does not mean that the merger will harm competition in those markets. In urging the Commission to mandate spectrum divestitures or take the even more draconian step of denying the Applicants’ applications, petitioners are insisting on a “solution” without demonstrating any problem, or even how this “solution” would enhance consumer welfare. In this circumstance, an FCC decision to force arbitrary divestitures of spectrum would be counterproductive because such divestitures would limit the pro-competitive benefits of the transaction. The engineering model demonstrates not only that New T-Mobile will intensively use the spectrum licensed to the company, but also that removing specific bands or decreasing its volume of spectrum will adversely impact the company’s capacity, speed, and/or coverage. Fundamentally, as discussed above, any concerns regarding local markets are far outweighed by the enormous benefits to competition and consumers from the merger. If the Commission grants these divestiture requests, such action would be arbitrary and capricious and would cause substantial harm both to the Applicants and the public interest.

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In the PIS, T-Mobile and Sprint established that the merger will accelerate the arrival of a 5G network with capabilities beyond what each company could provide on its own.¹¹⁹ No party in opposition argues that the combination of resources as contemplated by the transaction will not be capable of providing these benefits. Instead, opponents of the transaction have erroneously argued that: (1) T-Mobile and Sprint individually have plans to deploy robust 5G services;¹²⁰ (2) each of the two companies has more spectrum than needed to accomplish this outcome;¹²¹ (3) network integration would adversely affect consumers;¹²² and (4) there are other alternatives available (e.g., new spectrum from auctions, roaming agreements, network sharing).¹²³

Although Sprint and T-Mobile will offer 5G on their own, both have limitations in what they can offer—i.e., T-Mobile lacks capacity and Sprint lacks coverage. The Applicants have demonstrated that only the combined cell site and spectrum resources of the two companies will enable New T-Mobile to create a robust 5G network that can deliver the broad coverage, deep capacity, high data rates, and the first truly robust nationwide mobile 5G network. In addition to these direct benefits to wireless customers, this network—which cannot be developed on a standalone basis by either company—also will enable device designers and app developers to create platforms with capabilities that are not possible on the 5G network that Sprint or T-Mobile (or AT&T or Verizon) could offer on their own.

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Petitioners and opposing commenters mistakenly insist that T-Mobile and Sprint each have all the spectrum and cell site resources they need to deploy robust standalone 5G networks and, therefore, that the merger is not needed. In particular, DISH, Public Knowledge et al., Free Press, CWA, AAI, AT&T, Console, and C Spire all wrongly argue that T-Mobile and Sprint are each individually deploying 5G comparable to what New T-Mobile could achieve and therefore do not require the merger to compete against Verizon and AT&T for 5G services.¹²⁴ Free Press takes this argument further, inaccurately arguing that the capacity calculations contained in the PIS showed that the standalone companies will have sufficient capacity on their 5G systems to meet customer demands.¹²⁵ Public Knowledge et al. add incorrect assertions that the merged network’s 5G capacity would improve by only 19 to 52 percent compared to LTE.¹²⁶ Based on these fundamental errors, opponents wrongly assert that the proposed merger is unnecessary to enable a robust and competitive 5G network deployment.¹²⁷

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The PIS showed that only by combining resources to optimize sites and spectrum can New T-Mobile expeditiously deploy a 5G network with sufficient coverage and capacity to compete for customers across all sectors of the economy and to do so without compromising service to existing 4G LTE customers.¹²⁸ As demonstrated in Neville Ray’s declaration, aggregating the two companies’ spectrum and site portfolios will dramatically increase capacity, reduce costs, and decrease the need to split existing spectrum between LTE and 5G.¹²⁹ By themselves, neither company has the resources—spectrum, cell sites, or capital—to build a 5G network on a scale comparable to New T-Mobile.¹³⁰ This point is buttressed by a recent filing by Nokia suggesting that the merger will allow New T-Mobile to offer “a more fulsome, capable, and rapid 5G deployment than it could without the addition of the Sprint assets.”¹³¹ Similarly, the declaration of John Saw explains the limitations of Sprint’s standalone 5G network and the benefits of combining Sprint’s and T-Mobile’s network assets.¹³²

Contrary to the claims of Free Press, simply having more available capacity than carried capacity does not mean that a network has “leftover” capacity to provide enhanced services to subscribers.¹³³ Carried capacity will always be less than the available capacity in a wireless network.¹³⁴ As was described in extensive detail in the Ray Declaration, offered/available capacity is necessarily greater than carried capacity because:

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Furthermore, as detailed in the Ewens Reply declaration, under T-Mobile’s projections of increased subscriber data usage,¹³⁶ standalone T-Mobile’s current planned OpEx and CapEx levels for 2021-2024 would be insufficient to allow the company to meet 5G customer data demands while minimizing congestion on the network and maintaining an acceptable user experience.¹³⁷ Absent the merger, T-Mobile’s financial constraints would limit the standalone company’s ability to sufficiently increase OpEx and CapEx so as to meet growing data demands.¹³⁸ With respect to CapEx, standalone T-Mobile would be unable to significantly increase expenditure levels without also sacrificing the technology upgrades and expansion of coverage necessary for long term growth and service improvement. ¹³⁹

Therefore, in attempting to manage the pressures of increased subscriber data demands without compromising user experience in a way that would be harmful to its business, standalone T-Mobile would be forced to choose some combination of increased network expenditures (OpEx and CapEx) and/or network management to restrict usage (e.g., constraints on video

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throughput, data limits on mobile hotspot usage, and deprioritization of traffic in congested cells).¹⁴⁰ Although managing network resources to restrict traffic in this way would likely be the best course of action open to standalone T-Mobile, it could still significantly impair the company’s ability to compete effectively with other providers that would be capable of offering less restrictive data usage.¹⁴¹ The fact that standalone T-Mobile would have to pursue such a course reflects the competitive challenges it would face absent the merger.

Additionally, Public Knowledge’s suggestion of a 19 to 52 percent capacity improvement for 5G compared to LTE is inaccurate.¹⁴² Spectral efficiency, as carefully explained in the Ray Declaration, is only one component of capacity.¹⁴³ The full formula for determining wireless network capacity is actually:

Number of cell sites x Spectrum (MHz)Deployed Per Site x Spectral Efficiency = Capacity

When the increased number of cell sites, amount of spectrum deployed per cell site and improvement in spectral efficiency are multiplied together—the actual capacity of the combined 5G New T-Mobile network will improve by much more than 19 to 52 percent.¹⁴⁴ In fact, the combined network will more than double 5G monthly capacity by 2021 and nearly triple 5G monthly capacity by 2024 when compared to the combined 5G capacities of the standalone networks, as demonstrated in the tables below:¹⁴⁵

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Arguments that the standalone companies can produce the level of subscriber benefits demonstrated by the tables above ignore the multiplicative effect of combining the two companies’ spectrum and network assets, as well as the merger’s substantial synergies to support investment in a significant expansion of the reach of this 5G network. The transaction also allows New T-Mobile to create a network well-grounded in low-, mid-, and high-band spectrum with depth and breadth to accommodate all 5G use cases, including in rural and underserved areas. This spectrum diversity cannot be matched by either standalone company.¹⁴⁷

Petitioners also fail to recognize that the merger will not only provide necessary sites and spectrum, but will also create cost savings that are indispensable to New T-Mobile’s business plan and network plan. New T-Mobile’s financials identify approximately $43.6 billion net present value (“NPV”) in synergies generated by the merger. Of the $43.6 billion, the network synergies gained by eliminating the duplication of T-Mobile’s and Sprint’s existing networks constitute the largest share, approximately                 , or             , of the massive cost

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savings. Unleashing these synergies requires investment and has a cost to achieve of                  (                 to decommission Sprint sites;                  in incremental network investment for integration). These synergies are critical to New T-Mobile’s future growth and investment. As noted by Mike Sievert, the synergies “will free up financial resources that can be invested back in new network technology, innovation, and operations.”¹⁴⁸ None of these cost savings would be available under the non-merger alternatives that petitioners propose.

Some opponents have incorrectly argued that T-Mobile and Sprint do not require all of their current spectrum to serve existing customer requirements because each company has fewer subscribers per megahertz and per cell site than either AT&T or Verizon.¹⁴⁹ These opponents ignore the effects of refarming on existing customers and have provided no technical analysis or other basis to demonstrate that the standalone companies could successfully refarm their spectrum to 5G without degrading LTE network performance for existing subscribers. T-Mobile and Sprint have provided their network plans, including refarming estimates, which pale in comparison to those of New T-Mobile and the resulting increases in capacity and throughput.¹⁵⁰

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Spectrum refarming requires considerable care as an overly aggressive approach would adversely affect existing subscribers, leading to increased churn.¹⁵¹ Refarming depends upon two critical factors: (1) new technology device penetration levels and (2) the ability to provide service continuity to existing customers with legacy devices.¹⁵² In the ordinary course, both T-Mobile and Sprint have developed refarming plans that migrate spectrum from LTE to 5G technology over time, carefully ensuring that the LTE performance will not degrade for existing customers.¹⁵³ If either company embarked upon a more aggressive refarming approach, its current LTE customers’ user experience would degrade—which in turn would lead to lower customer satisfaction and customer defections to competitors.¹⁵⁴

In addition, assertions that a smaller subscriber base produces benefits for T-Mobile and Sprint are wholly inaccurate. In reality, rather than providing any inherent benefit, the standalone companies’ smaller subscriber bases actually inhibit them from rapidly driving technology device penetration for new 5G-compatible devices.¹⁵⁵ While T-Mobile would rely upon 600 MHz spectrum for its 5G build and Sprint would utilize 2.5 GHz spectrum, no other wireless providers domestically are pushing the development of 5G devices for these spectrum bands.¹⁵⁶ With this market fragmentation, it is difficult to incentivize equipment vendors to expedite the design and sale of 5G devices or obtain significant scale discounts for the devices.¹⁵⁷

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In contrast, New T-Mobile will have the spectrum resources and subscriber base to more rapidly refarm from LTE to 5G without sacrificing the existing LTE network performance.¹⁵⁸ Network modeling projections demonstrate that there will be no negative effects on LTE performance during the refarming process, while the 5G network will vastly exceed the standalone capabilities of either T-Mobile or Sprint.¹⁵⁹ Furthermore, the size and scale of New T-Mobile will drive its 5G-capable device penetration rates up by 10 percent, year over year, because New T-Mobile will be able to offer a better value proposition to equipment manufacturers as a result of its expanded customer base.¹⁶⁰ In turn, this more rapid transition to new 5G devices will enable New T-Mobile to refarm spectrum from LTE to 5G in a much more expeditious fashion.¹⁶¹ The spectrum efficiency gains from expeditious refarming are possible only through this merger.¹⁶²

Furthermore, T-Mobile has extensive experience in refarming spectrum, and refarming spectrum from old to new technology has been instrumental to T-Mobile’s network deployment strategy. Early in its transition to LTE, T-Mobile embarked upon an ambitious process of deploying a nationwide LTE network using the AWS-1, and later PCS, spectrum bands.¹⁶³ This refarming process consisted of turning off some of T-Mobile’s UMTS/HSPA and GSM carriers while simultaneously activating an LTE carrier.¹⁶⁴ T-Mobile was the first carrier to use the same band of spectrum for both LTE and UMTS in the United States.

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DISH argues, wrongly, that the transaction will not provide near term consumer benefits that would exceed the standalone plans of T-Mobile and Sprint.¹⁶⁵ DISH and AAI also incorrectly assert that the integration of New T-Mobile will create adverse effects on the user experience and that the radio build/tower improvement process will be impractical or impossible.¹⁶⁶ These arguments ignore the significant improvements in coverage and capacity that will be delivered to T-Mobile and Sprint customers early in the transition. They also overlook that the customer migration process to be used is virtually identical to one that T-Mobile implemented with great success when it acquired MetroPCS.¹⁶⁷

As verified in great detail in the Ray Reply Declaration, benefits to customers on the New T-Mobile network will accrue rapidly.¹⁶⁸ MOCN technology will allow for the T-Mobile and Sprint core networks to be virtually merged. Sprint estimates that there are more than 37 million compatible Sprint devices capable of accessing at least one T-Mobile LTE spectrum band, including more than 26 million Sprint postpaid devices.¹⁶⁹ Every single market in the New T-Mobile network will see customer migration from Sprint’s network within the first year of the merger.¹⁷⁰ Sprint customers without compatible devices will be transitioned through regular handset upgrade cycles and dedicated handset promotions.¹⁷¹ This transition will be completed three years after the deal closes—and is consistent with the highly successful process used to migrate MetroPCS customers, including use of MOCN and anchoring to the T-Mobile wireless network.¹⁷²

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Customers utilizing the New T-Mobile network will have access to greatly improved data throughput and capacity capabilities.¹⁷³ These consumer benefits are due to the increased cell site and spectrum resources that result from combining the two companies and cannot be matched by either company on a standalone basis.¹⁷⁴ DISH erroneously asserts that the gains in speed and capacity for New T-Mobile are based on deploying Sprint’s 2.5 GHz spectrum on all 61,000 T-Mobile sites and adding T-Mobile’s AWS-3 spectrum on all 11,000 retained Sprint sites by 2021.¹⁷⁵ In fact, the spectrum resources will be applied based upon network coverage, traffic and subscriber distribution of each standalone network, to select the best sites to retain or improve for New T-Mobile.¹⁷⁶ The table below demonstrates how spectrum resources from T-Mobile and Sprint will be applied to the New T-Mobile cell site infrastructure.

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Table 6: 5G Site and Spectrum Comparison (Year 2021-2024)¹⁷⁷

DISH’s misstatements lead to an overstatement of the expense associated with combining the cell sites and spectrum of the standalone companies, while simultaneously understating the efficiencies and benefits to subscribers. Contrary to the assertions made by DISH, the 2.5 GHz spectrum will be deployed for 5G at          sites by 2021 (not 61,000) and AWS spectrum will be deployed at          sites (which is predominantly AWS-1, not AWS-3 spectrum as suggested by DISH).¹⁷⁸ For the retained Sprint cell sites, 600 MHz radios will be added to nearly         

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cell sites and 2.5 GHz radios will be added to more sites than were projected by the Sprint standalone plans (nearly          more cell sites will have 2.5 GHz by 2021; approximately          more by 2024).¹⁷⁹ The existing 2.5 GHz radio equipment installed on the retained Sprint cell sites will require electronics replacement to ensure compatibility with the New T-Mobile network.¹⁸⁰ For the existing T-Mobile cell sites, 2.5 GHz radios will be added to the majority of sites to boost capacity (          cell sites by 2021,          by 2024).¹⁸¹ For all retained sites, the AWS and PCS radio base will be upgraded (as needed) to add radios capable of supporting both LTE and 5G.¹⁸² As this cell site retention and radio base improvement will be completed on a market-by-market basis, the improvements in capacity and coverage for existing T-Mobile and Sprint customers that are in upgraded markets will occur much sooner than 2021.

DISH challenges the appropriateness of the MetroPCS transaction as a predictive model for this merger, inaccurately arguing that the MetroPCS integration into the T-Mobile network was strictly regional and included much less spectrum and fewer tower changes than transitioning the Sprint customer base.¹⁸³ In fact, as was true for the MetroPCS transition, New T-Mobile will migrate customers on a market-by-market basis. Moreover, in many markets the

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migration of MetroPCS customers to T-Mobile was of similar magnitude. As an example, the table below shows the number of subscribers moved from MetroPCS to T-Mobile in Florida, Los Angeles, and New York compared to Sprint subscribers in those markets.

Table 7: Subscriber Migration Comparison

The number of subscribers that were moved from MetroPCS to T-Mobile in these areas is comparable to (and in Florida larger than) the number of subscribers to be relocated from Sprint to New T-Mobile. More importantly, the entire MetroPCS subscriber base utilized CDMA devices—meaning that most subscribers transferred to the T-Mobile GSM/LTE network needed new handsets.¹⁸⁴ In contrast, a substantial portion of the Sprint subscriber base has devices that will be compatible with the New T-Mobile network following an over-the-air software update.¹⁸⁵

In addition, the Sprint transition will be easier than the MetroPCS transition since the timing for updating the New T-Mobile radio network is well aligned with the plans for deploying 5G-capable radios. T-Mobile (the anchor network) has been deploying radio resources that are software upgradeable to 5G at many of its existing cell sites—and will continue to do so during the transition process.¹⁸⁶ These new radios are much more capable of managing broader spectrum bands for 4G and 5G and make inclusion of new spectrum resources into cell sites

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more cost effective and efficient than prior 4G-only equipment.¹⁸⁷ Moreover, effects on existing cell sites will be minimized as New T-Mobile can replace existing antennas and radio equipment that can handle more spectrum bands and capacity without increasing the physical space or mass (weight of equipment) used at a site.¹⁸⁸ Deploying extensive new radio equipment would therefore potentially avoid new zoning approvals and likely incur only minor adjustments to existing lease payments.¹⁸⁹

Most importantly for assessing the potential impact on Sprint customers, the customer experience for both MetroPCS and T-Mobile subscribers was maintained (and in many cases improved) during that prior transaction’s transition process. In fact, MetroPCS’s customer base doubled over the 4.5 years following the close of the transaction, customer churn was reduced, and speed and quality was greatly improved for subscribers.¹⁹⁰ As will be the case in the Sprint customer migration, MetroPCS sites were not decommissioned until subscribers could be fully accommodated on the T-Mobile network. The integration playbook for New T-Mobile will be similar and utilize the expertise gained from the MetroPCS transition. In contrast to other less successful transitions mentioned by petitioners,¹⁹¹ this process will be built upon a proven methodology that delivered cost savings ahead of schedule, with synergies better than expected and without any customer disruption.¹⁹²

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Petitioners are wrong that there are a number of alternatives to a merger available to both T-Mobile and Sprint that would provide the same benefits. Specifically, parties argue that the companies could: (1) obtain additional spectrum from the Commission;¹⁹³ (2) use technology such as massive MIMO to enhance coverage and capacity;¹⁹⁴ (3) enter into a roaming agreement;¹⁹⁵ or (4) enter into a network sharing arrangement.¹⁹⁶ Opponents have misconstrued the New T-Mobile network plan and failed to understand the fundamental assumptions associated with it. None of the proposed options raised by the petitioners would result in the same depth and breadth of capacity and coverage that will be delivered by New T-Mobile within the same timeframe.

Some petitioners argue that T-Mobile and Sprint could simply participate in the upcoming millimeter wave band spectrum auctions or other not-yet-scheduled mid-band spectrum auctions to access the spectrum resources needed for 5G.¹⁹⁷ DISH goes even further, erroneously asserting that the New T-Mobile model is flawed because it does not include these additional spectrum bands,¹⁹⁸ despite those bands not being available within any defined time period. The millimeter wave band spectrum auction, while representing a valuable influx of

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needed spectrum for dense urban deployments, would not remedy the spectrum deficits faced by either standalone company. Moreover, speculative mid-band spectrum auctions, which have not been scheduled and would not be available in the 2019 timeframe during which New T-Mobile will initiate deployment of its nationwide, wide scale 5G network, are not practical substitutions for the spectrum resources available in the transaction. The Commission should reject these flawed arguments regarding the use of alternative spectrum bands. Such bands are not viable spectrum solutions and would not enable the standalone companies to increase network capacity in the near term (or potentially ever, as the availability of almost all of this spectrum is uncertain).

For T-Mobile, viable mid-band spectrum is the missing spectrum resource it needs to meet consumer demands for more capacity.¹⁹⁹ For its part, Sprint lacks sufficient low-band spectrum needed to provide the robust, nationwide 5G coverage demanded by customers.²⁰⁰ The upcoming millimeter wave band spectrum auctions,²⁰¹ while representing a valuable influx of needed spectrum for dense urban deployments, would not remedy the spectrum deficits faced by either standalone company. While high-band spectrum will be invaluable for enhancing the capacity for 5G networks in discrete areas, and both standalone companies will consider auction participation,²⁰² this spectrum alone will not support the robust, nationwide 5G network that New

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T-Mobile intends to deliver.²⁰³ Millimeter wave band spectrum can be used for short range, high capacity services, but will not serve users that require more wide-area wireless offerings—the short range associated with this spectrum makes it cost prohibitive to cover large geographic areas.²⁰⁴ In addition, there can be no assurance that either standalone company would be successful in obtaining needed spectrum in this (or any other future) auction.

Other parties suggest that there are a number of alternative mid-band spectrum bands for 5G that could be used by either company on a standalone basis to provide a comparable customer experience.²⁰⁵ Future mid-band spectrum auctions have not been scheduled, however, and such mid-band spectrum would not be available in the 2019 timeframe during which New T-Mobile will initiate deployment of its nationwide, wide scale 5G network. Accordingly, these bands are not practical substitutes for the spectrum resources involved in the transaction and cannot be relied upon for standalone development of a robust 5G network. In fact, the lack of available mid-band spectrum for 5G was highlighted by FCC Chairman Ajit Pai in testimony before the House Energy and Commerce Committee: “As you are well aware, there are no greenfield mid-

https://www.fiercewireless.com/5g/sprint-millimeter-wave-spectrum-important-part-our-strategy-going-forward.

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band frequencies available for 5G.”²⁰⁶ This mid-band shortage is further demonstrated by the table that DISH provided in its petition:²⁰⁷

Table 6: Spectrum Pipeline

At the earliest, there may be an auction of 70 megahertz of 3.5 GHz CBRS spectrum in late 2019, but the Commission has set no date and this auction might not occur until well after that.²⁰⁸ Assuming arguendo that the auction occurs in late 2019, which it may not, the auction itself is likely to take weeks or even months to complete. Following completion of the auction, winning bidders would be required to file applications and participate in a lengthy licensing process before receiving authority to operate. In a very best case scenario, the 3.5 GHz CBRS spectrum might be available in the mid- to late-2020 timeframe. Standardization and handset development will also require time, further delaying use of this spectrum. As Applicants explained in the PIS, assuming the transaction closes sometime in 2019, New T-Mobile would initiate operations in its mid-band spectrum (and in other spectrum bands) shortly thereafter, well before any 3.5 GHz CBRS spectrum would be available.

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More importantly, the 3.5 GHz CBRS spectrum suffers from a number of significant drawbacks: (1) this band has significant power restrictions that will inhibit a wireless provider from deploying this spectrum for a wide scale 5G coverage layer;²⁰⁹ (2) there are substantial sharing requirements with Federal and commercial incumbents that inhibit full deployment of the spectrum for 5G;²¹⁰ (3) the small geographic license areas limit 5G deployment;²¹¹ (4) there is no ability for a licensee to have a sufficient license term with a settled renewal expectancy under the current rules;²¹² (5) the technology development for this band has been focused on LTE, not 5G;²¹³ and (6) there is only 70 megahertz of total spectrum available for licensing (with only 40 megahertz available to a single licensee in a license area).²¹⁴ Therefore, the 3.5 GHz CBRS band is not a near-term viable spectrum alternative option for T-Mobile or Sprint for 5G network operations in the near term (or likely at any time, given the limitations of the spectrum band).

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The remaining spectrum bands identified by petitioners, including the 3700-4200 MHz band, the EBS band, and the 3450-3550 MHz band, are all in preliminary stages of consideration for repurposing to 5G services.²¹⁵ DISH makes this abundantly clear in its helpful table. It estimates that the earliest any Commission auction could occur in these bands would be sometime in 2020, but also notes that such auctions could occur well “beyond” that date.²¹⁶ In contrast, New T-Mobile will deploy a substantial portion of its 5G network in advance of this 2020 timeframe, assuming the transaction is approved.²¹⁷ If the Commission wants a cutting-edge, nationwide, robust 5G mobile network deployed in the United States before in other countries, it should not rely upon the speculative availability of other mid-band spectrum. Nor could T-Mobile and Sprint assume the availability of this additional spectrum into their ordinary course business plans, given the uncertain availability of that spectrum.

The best way to provide a robust 5G network is to utilize spectrum across all bands—low - , mid-, and high—with sufficient cell site density to deliver the multiplicative capacity increase needed for a robust 5G deployment.²¹⁸ This spectrum combination ensures a comprehensive band portfolio that accommodates all use cases, supporting full coverage and mobility on low-band spectrum and high or extremely high throughput and low latency on mid-or high-band spectrum.²¹⁹ By combining T-Mobile’s low- and high-band spectrum with Sprint’s mid-band spectrum, along with access to a dense cell site infrastructure,²²⁰ the transaction will enable New T-Mobile to deploy a robust, nationwide 5G network with the full array of features and improvements promised by that standard.²²¹

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DISH incorrectly suggests that massive MIMO technology could significantly enhance capacity and coverage for Sprint in a manner sufficient to close existing gaps.²²² However, DISH appears to have ignored the extensive discussion by Sprint’s Chief Technology Officer, John Saw, on this precise subject.²²³ Dr. Saw provided detailed background on Sprint’s intention to deploy this technology on a standalone basis, but simultaneously explained the inherent limitations of its massive MIMO deployment.²²⁴ While areas with massive MIMO deployed will have markedly improved network performance, Sprint would still have coverage gaps and a less consistent data experience than a similar network built with low-band spectrum.²²⁵ Building out 2.5 GHz alone densely enough to support a ubiquitous nationwide 5G network would be financially impractical for Sprint or any other wireless company.²²⁶ And, without sufficient customer scale or population density to justify investment, the 2.5 GHz spectrum also cannot adequately provide for a ubiquitous 5G network coverage layer.²²⁷ Dr. Saw also explains in his Reply Declaration why potentially utilizing both 1.9 GHz and 2.5 GHz spectrum in Sprint’s massive MIMO deployment, as suggested by DISH, would not be a practical solution and would

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not achieve the benefits of the transaction.²²⁸ Moreover, the network engineering model utilized to model both the standalone performance of Sprint as well as New T-Mobile fully considered the use of massive MIMO—and still produced an overwhelmingly better result for New T- Mobile’s 5G network as compared to the capacity and throughput for Sprint’s standalone 5G network.²²⁹ Therefore, massive MIMO, while an important part of 5G deployment, would not enable Sprint to match the coverage and capacity of New T-Mobile.

DISH suggests wrongly that roaming arrangements, either transitional or long-term, could maximize the use of the total capacity offered across the two networks.²³⁰ Roaming agreements have significant inherent technical and business limitations and are not a substitute that could accomplish the benefits of the transaction.

First, the customer experience cannot be guaranteed to be consistent for a roaming subscriber. This is because roaming would require handoffs to another network provider that may or may not support the features that are on the home network and these handoffs (from one network to another) may not always occur seamlessly. The data throughput experience would likely be different as there are significant costs associated with allowing a subscriber to roam on another network. And, such costs will increase based on the amount of data used. Furthermore, customers may suffer from being blocked from or throttled on the network on which they are roaming if traffic reached certain congestion thresholds.

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Second, a roaming agreement would not achieve the network efficiencies of a transaction like the proposed merger. Most importantly, it would not achieve the multiplicative effect from combining the spectrum and sites of the Applicants and increasing the amount of spectrum deployed per site. Because of the continued separate interests of roaming partners, there would also be no incentive to invest in upgraded radios, as is necessary in the case of network integration following a merger. In addition, a roaming agreement does not allow for carrier aggregation or core network efficiencies, and does not offer the prospect of improved spectral efficiency because of the continued inability to refarm spectrum to new technology (like 5G) due to the need to avoid disruption of prior technology service (like LTE).

Third, a roaming agreement would not achieve the non-network efficiencies of a transaction like the proposed merger (e.g., lower dealer commissions and equipment cost savings, which require increased scale). T-Mobile and Sprint have already entered into a limited roaming agreement that allows compatible Sprint devices to roam on T-Mobile’s network.²³¹ This agreement illustrates the shortcomings of a roaming agreement as compared to network integration. The roaming agreement limits the amount of traffic Sprint can put on the T-Mobile network based on congestion.²³² The roaming agreement includes LTE data only (i.e., no voice, VoLTE or 5G).²³³ Moreover, because the standalone companies are both limited in their spectrum resources for 5G,²³⁴ the roaming agreement between the two entities does not allow for an expansion of coverage and capacity. It also does not deliver the synergies that the transaction will provide, which will allow for additional investment in more capacity and coverage. In sum, a roaming arrangement cannot replicate the benefits that the merger will produce

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Some petitioners argue erroneously that T-Mobile and Sprint could simply enter into a network sharing agreement to provide the same benefits as a merger.²³⁵ Some merger opponents argue that the companies can simply share network facilities and infrastructure to generate synergies and save 5G buildout costs, achieving a better 5G network than the standalones could, but without having to merge.²³⁶ These arguments fail to recognize the practical limitations, costs, and inadequacies of network sharing arrangements.

As discussed in detail in the Ewens Reply Declaration, network sharing would preclude the network-specific and non-network synergies associated with the transaction, eliminating many of the potential benefits created by the deal.²³⁷ In particular, network sharing agreement participants must maintain existing infrastructure because the potential for unwinding limits the incentive to permanently refarm spectrum or become overly dependent on shared facilities. The necessary maintenance of redundant assets translates into significant additional costs. In addition, network sharing would require the parties to invest in ensuring equipment interoperability and carrier integration.²³⁸ In other words, a substantial amount of the costs of combining two networks (and possibly more) would be incurred, without fully realizing the efficiencies that could be achieved through a merger. Network sharing would introduce

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additional inefficiencies because capacity is allocated on a prearranged basis instead of based on user requirements.²³⁹ Moreover, it would inhibit the ability of the sharing companies to respond to market changes in an expeditious fashion.²⁴⁰ Additionally, network sharing would introduce substantial administrative issues that are unwieldy and costly.²⁴¹ Finally, given that the benefits of a network sharing agreement are shared by a competing carrier, network sharing agreements reduce the incentive to invest, and coordination of the best technology path going forward may be difficult.²⁴² The consequence of such reduced and slower paced innovation is a comparatively lower ability to challenge market leaders in the dynamic wireless market.

Merger opponents do not provide any compelling evidence for how network sharing would overcome its many drawbacks, and not be detrimental to T-Mobile or Sprint on a standalone basis, or come close to providing network performance comparable to what New T- Mobile will deliver. The merger of T-Mobile and Sprint will not suffer from the limitations of network sharing. Instead, it will create massive efficiencies and position the combined company to significantly invest in rolling out the first robust, nationwide 5G network. Indeed, it will allow New T-Mobile to make business decisions in its own interest, not limited by a pre-negotiated operating structure that may not anticipate futuretechno logical or market changes, or permit each party to execute its own business and marketing strategies.

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The PIS demonstrates that New T-Mobile will provide a bona fide alternative to current broadband choices—both as a new, in-home broadband option for millions of households and as a genuine wireless alternative to traditional in-home broadband providers-and that the resulting broadband competition will create significant benefits and savings for consumers. A few opponents ask the Commission to ignore these benefits and savings, incorrectly arguing that they are too speculative for the Commission to consider or are not merger—specific.²⁴³ As discussed more fully below, the Commission must reject these arguments as the consumer benefits are tangible and directly related to consummation of the transaction.

In addition, Dr. Harold Furchtgott-Roth has quantified the benefits from: (1) customers purchasing New T-Mobile’s in-home wireless broadband offering; (2) customers who “cord cut” and substitute New T-Mobile mobile 5G broadband service for fixed broadband providers; (3) new broadband customers taking service; and (4) competitive responses of incumbent fixed broadband providers. The cumulative consumer welfare benefits will be as much as $13.65 billion in 2024.

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The uncompetitive in-home, wired broadband marketplace is in need of disruption by an aggressive and consumer-friendly broadband provider. The Commission itself has noted the lack of true broadband competition in many geographic areas. According to a recent study of FCC data, 48 percent of U.S. households lack any competitive choice for in-home broadband service exceeding 25 Mbps.²⁴⁴ Approximately 79 percent of U.S. households lack a competitive choice in service providers delivering high-speed broadband with speeds exceeding 100 Mbps.²⁴⁵ The lack of competitive alternatives is also reflected in the poor customer satisfaction rates for broadband providers. The sector ranks the lowest out of 43 industries for customer satisfaction as most consumers remain extremely dissatisfied with its high prices and terrible customer service.²⁴⁶ New T-Mobile’s 5G network will allow it to offer in-home and mobile broadband offerings that will change this competitive dynamic, providing customers with consumer-friendly services and high-quality customer care.

As noted in the declaration of Mike Sievert, executives of both T-Mobile and Sprint have dedicated significant effort to analyzing the competitive nature of the combined company’s in-home wireless broadband offering and reviewing anticipated customer subscription rates. This effort has confirmed the huge market that will exist for the new offering at the anticipated pricing

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and service levels. The wireless in-home broadband service will be deployed where the available capacity exceeds mobile requirements and is sufficient to support the in-home services. Based on these criteria, New T-Mobile is expected to offer this service in over 52 percent of zip codes across the county. By 2024, New T-Mobile is expected to cover 64 percent of Charter’s territory and 68 percent of Comcast territory with its in-home broadband services.²⁴⁷ In addition, New T-Mobile will use caching and other network optimization techniques to increase the number of households that can be served.

In total, the Applicants expect that New T-Mobile will acquire 1.9 million customers for its in-home wireless broadband service by 2021 and 9.5 million customers by 2024.²⁴⁸ Based on current customer figures, this would make New T-Mobile the fourth largest in-home Internet service provider (“ISP”) in the United States in 2024. Of particular importance, T-Mobile estimates that 20-25 percent of these customers will be located in rural areas where there is currently limited broadband availability.²⁴⁹ Rural consumers should be particularly attracted to New T-Mobile’s broadband offerings, given the high prices and limited competition for broadband services in rural areas today.²⁵⁰

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New T-Mobile also will provide its in-home wireless broadband offering consistent with T-Mobile’s Un-carrier approach, which eliminated extended service contracts and strict monthly data caps for mobile wireless services. Unlike other in-home broadband offerings, the wireless nature of the offering will empower customers to avoid installation appointments and related charges as they will be able to self-provision the necessary in-home equipment. New T-Mobile will extend the Un-carrier customer care model to in-home fixed wireless broadband services, providing consumers with high-quality 24-7 customer support.²⁵¹ This care model should force traditional providers to improve the poor customer service that has plagued the in-home broadband marketplace for many years.

New T-Mobile’s in-home wireless broadband offering will provide consumers across the country with average in-home download speeds of 100 Mbps. By 2024, New T-Mobile will be able to cover more than 250 million people with data rates greater than 300 Mbps and more than 200 million people at greater than 500 Mbps.²⁵² As noted in the PIS, these speeds far exceed those contemplated by Verizon or AT&T for their proposed 5G services and match or exceed the offerings of most traditional ISPs.²⁵³ The planned service area of New T-Mobile’s broadband services will also dwarf the limited service areas of wired broadband providers. These speeds and coverage areas will be offered at a significant discount to the prices of traditional broadband providers, with monthly prices planned to be generally                  lower than traditional

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services.²⁵⁴ When coupled with the anticipated market penetration by 2021, Dr. Furchtgott-Roth estimates that these prices will result in                                   in monthly consumer savings and                                           in annual savings. By 2024, New T-Mobile’s in-home offering will result in                                               in monthly consumer savings and                                           in annual savings.²⁵⁵

Substantial consumer savings will also result from the millions of consumers who eliminate their in-home wireline or cable broadband service altogether and rely exclusively on New T-Mobile’s broadband wireless services for their in-home needs. T-Mobile has estimated that 5.8 million households will eliminate their traditional wireline in-home broadband service in favor of New T-Mobile’s 5G mobile services by 2021 and a total of 6.3 million households by 2024.²⁵⁶ Many of these subscribers will be value-conscious consumers who would recognize the benefit of saving the significant costs of their monthly in-home broadband service. Dr. Furchtgott-Roth conservatively estimates this amount to be                  per month, resulting in aggregate monthly savings of                                       million by 2024.²⁵⁷ In terms of annual savings, the substitution of New T-Mobile’s broadband services will save consumers                                           in the aggregate by 2024.²⁵⁸ Those are substantial numbers that will make a significant difference to millions of consumers.

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Merger opponents incorrectly claim that the parties have overestimated the competitive threat of customers who will substitute 5G wireless services for traditional in-home broadband.²⁵⁹ These opponents cite recent studies, including one by New Street Research that purportedly found a declining rate of wireless substitution, to argue that New T-Mobile’s 5G mobile services will have a more limited impact on traditional wired offerings than the companies project.²⁶⁰ As discussed below, these arguments misconstrue the competitive dynamics of the broadband marketplace and the nature of New T-Mobile’s broadband offerings.

Contrary to the claims of some merger opponents, consumers are increasingly turning to mobile broadband services for high-speed Internet access. A recent report by the Internet Innovation Alliance (“IIA”) found that most consumers have no clear preference for how they access the Internet. Almost as many consumers prefer mobile wireless Internet services (23 percent) to wired services (26 percent)—and 20 percent of consumers have no preference for the technology they use to access the Internet.²⁶¹ IIA’s research confirms that service infrastructure distinctions no longer matter to U. S. consumers, and mobile and fixed broadband services are viewed as “functional substitutes” for each other.²⁶²

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The consumer savings produced by New T-Mobile’s broadband services will not be limited to consumers who subscribe to the combined company’s offerings. Savings will also flow to customers of traditional wireline broadband providers. As detailed in the Furchtgott-Roth Declaration, large traditional broadband providers are likely to respond to New T-Mobile’s market entry by lowering their prices and improving their services to meet this new competitive threat. Because New T-Mobile will offer its in-home and mobile broadband offerings in many areas across the country, these providers would need to lower prices in all markets. The Furchtgott-Roth Declaration notes that there will be 82 million U.S. households that subscribe to in-home broadband services in a few years.²⁶³ If the 66.2 million households not using New T-Mobile’s in-home broadband offering or its mobile 5G service for their in-home broadband needs see an average price reduction of $10, it would lead to $662 million in monthly savings and $7.9 billion annually across these households.²⁶⁴

In addition to price reductions, the availability of New T-Mobile’s fixed wireless broadband services will force traditional ISPs to invest in their networks and improve their services to keep up with New T-Mobile. As noted above, New T-Mobile will be able to cover more than 250 million people with data rates greater than 300 Mbps and more than 200 million people with data rates in excess of 500 Mbps.²⁶⁵ Wired broadband providers, particularly those in rural areas, thus will need to increase significantly the speeds they offer to customers to compete against the in-home broadband services offered by New T-Mobile. These providers will also need to increase their Wi-Fi and burgeoning wireless deployments to compete against the ubiquitous wireless broadband coverage that New T-Mobile will provide.

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The substantial and widespread consumer savings resulting from New T-Mobile’s broadband services will promote the broader consumer welfare by leading to increased adoption of broadband services across the country. According to the Furchtgott-Roth Declaration, reduced prices for in-home broadband services will attract new customers—some for New T-Mobile, some for other providers—who previously had found broadband unaffordable. Other customers will be attracted to the higher quality broadband services that result from the increased marketplace competition. Overall, the Furchtgott-Roth Declaration concludes that the merger will attract millions of new broadband customers to the marketplace.²⁶⁶ The merger and the broadband services that New T-Mobile will deploy thus present a unique opportunity. The combined company will help close the digital divide by driving further adoption of broadband services to ensure that all Americans experience the transformational benefits of broadband technology.

To assist with the quantification of the consumer benefits and savings, Dr. Harold Furchtgott-Roth conducted a study based on the following assumptions: (1) customers purchasing New T-Mobile’s in-home wireless broadband offering are generally expected to pay

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                      less per month than they would have absent the proposed merger;²⁶⁷ (2) customers who substitute New T-Mobile mobile 5G broadband service for the in-home fixed broadband services of other providers will save up to $50 per month though elimination of in-home broadband service altogether;²⁶⁸ and (3) other in-home broadband customers who do not switch to either the in-home New T-Mobile broadband offering or cord cut to use the New T-Mobile wireless service will pay $5-$10 less per month than they would have absent the proposed merger.²⁶⁹ As discussed below, Dr. Furchtgott-Roth’s assumptions are supported by the companies’ actual business plans.

Based on these assumptions, his study concludes that the annual consumer savings by 2024 could be as high as:

Dr. Furchtgott-Roth thus estimates that these consumer surplus combined values are between $7.197-$13.65 billion annually.²⁷¹

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As discussed in the PIS and more fully below, all customers of New T-Mobile—whether on prepaid or postpaid plans—will benefit from the transaction. All customers will be on the same network and all customers will benefit from the massive increase in network capacity though broader coverage, higher speeds and lower costs. Customers on prepaid plans stand to benefit as much as, if not more than, those on postpaid plans from this capacity increase through lower costs and more innovative service features. In fact, the capacity increases resulting from the transaction thus will further blur any remaining distinctions between prepaid and postpaid services.

A number of petitioners ignore these facts and suggest that the Commission should consider prepaid and postpaid plans as separate product markets when analyzing the merger.²⁷² Yet, the petitioners fail to provide any concrete factual support or serious economic analysis to support these requests, which are contrary to long-standing Commission precedent.²⁷³ The Commission has consistently found that both prepaid and postpaid wireless services fall within a

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combined mobile telephony/broadband services product market.²⁷⁴ An “all wireless” analysis is also consistent with judicial decisions that have repeatedly rejected efforts to define markets by price variances or product quality variances.”²⁷⁵ Because the Petitioners failed to provide any support for their claims, the Commission should disregard these arguments without any further review.

But even if the Commission were to consider the petitioners’ claims, it should reject them as contrary to recent marketplace developments. Prepaid plans now offer many of the same features as postpaid plans, such as smartphones, high-speed data, and advanced functionality. Many prepaid service plans include unlimited usage and multi-line family features, with the ability to share minutes and data across members of the family. Economist Dr. Glenn Woroch observes in his attached declaration that postpaid service plans have also adopted characteristics of prepaid services—most notably, the elimination of long-term service contracts. As Dr. Woroch explains, “[t]he disappearance of the long-term contract not only makes postpaid and prepaid plans more similar to a consumer signing up for the first time, but it also makes it easier

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for an existing subscriber to switch from a postpaid plan.²⁷⁶ Finally, the pricing gap between prepaid and postpaid plans—one of the traditional differentiators between the services—has narrowed in recent years.²⁷⁷ Dr. Woroch confirms in his declaration that “the ARPU of prepaid and postpaid subscriptions are converging because the features of the two plan types are converging.”²⁷⁸ These converging ARPUs are not the result of prepaid rate increases but, instead, result from the features implemented for prepaid plans that traditionally were a hallmark of postpaid plans (e.g., unlimited data, etc.).²⁷⁹

Much of the narrowing between the features and prices of prepaid and postpaid plans has been due to T-Mobile’s industry-leading Un-carrier approach, which takes the best features from prepaid and postpaid models. T-Mobile’s introduction of “Contract Freedom” eliminated long-term service contracts for postpaid plans and replaced them with a transparent pricing model, spurring other providers to do the same. T-Mobile also borrowed a successful attribute of its prepaid plans to improve the value proposition of its postpaid plans. Its “Taxes and Fees Included” program introduced “what you see is what you pay” plans that bundle all monthly taxes, surcharges, and fees up front, giving subscribers consistent bill certainty comparable to prepaid offerings. Finally, T-Mobile pioneered separation of phone subsidies and phone payment plans from mobile rate plans to create greater bill certainty for customers on postpaid plans. Dr. Woroch concludes in his declaration that these Un-carrier initiatives helped make prepaid and postpaid offerings “more similar” and eroded the distinctions between traditional prepaid and postpaid plans.²⁸⁰

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Sprint also has been part of the movement to greater substitutability between prepaid and postpaid pricing plans. Boost launched the BoostUP! program last year to provide postpaid phone loans to Boost’s existing prepaid customers as a way of fostering higher consumer satisfaction and reducing Boost’s churn rate.²⁸¹ Obtaining the offered loan does not require a credit check because the customer’s own history of on-time payments is the only criterion used in deciding whether to allow the customer to participate in the plan.²⁸² Also, last year the Sprint postpaid brand began offering rate plans with free lines 3/4/5 at a price point around $100.²⁸³ This is similar to many current prepaid offers by Boost, MetroPCS, and Cricket, which have recently offered plans at 3/$100 and 4/$100.²⁸⁴ This has the effect of blurring the pricing distinction that once existed between prepaid and postpaid plans, even though the individual plan features may be different.

As a result of the convergence in service features and pricing, consumers now largely view prepaid and postpaid offerings as substitutable.²⁸⁵ These perceptions have been

“[a]s postpaid offerings have shifted away from term contracts and equipment subsidies, service providers have adopted pricing plans and promotions for their high-end prepaid monthly service offerings that are similar to those they have for postpaid offerings.” See e.g., Annual Report and Analysis of Competitive Market Conditions with Respect to Mobile Wireless, Including Commercial Mobile Services, Twentieth Report, 32 FCC Rcd 8968, 9005 ¶54 (2017) (“Twentieth Mobile Wireless Competition Report”).

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underscored by the ease with which consumers can change services. Because manufacturers have removed device features that traditionally limited changing carriers, customers can now easily switch between plans or carriers without getting a new phone. Most carriers also have eliminated phone locking restrictions, enabling a customer to purchase a handset from one carrier and continue to use it when they switch to a new carrier. These developments have led to significant switching between services. In the fourth quarter of 2017, the wireless industry saw a total of almost two million retail postpaid subscriber additions, while experiencing a decline of over 400,000 retail prepaid additions from the previous year.²⁸⁶ Several analysts attributed this decrease to “a significant shift from prepaid to postpaid,”²⁸⁷ recognizing the “unusually outsized prepaid to postpaid migration.”²⁸⁸ This trend continued in 2018, with 135,000 T-Mobile prepaid subscribers migrating to postpaid plans, 71,000 Sprint prepaid subscribers moving to postpaid plans, and 41,000 AT&T prepaid subscribers transitioning to postpaid plans.²⁸⁹

As explained in the PIS and above, customers electing to receive service through prepaid plans will benefit significantly from the merger in the same ways as postpaid customers. Prepaid customers of both T-Mobile and Sprint will enjoy lower costs, higher speeds, and expanded coverage from the combined company’s nationwide 5G network. More broadly, prepaid customers of other carriers will benefit from the increased competition facilitated by the merger as Verizon, AT&T, TracFone, and others respond to New T-Mobile with lower prices, increased investment, and enhanced service offerings.

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A few petitioners question the merger’s benefits for prepaid consumers, incorrectly claiming that prepaid users will have fewer competitive plan options following the merger.²⁹⁰ Public Knowledge argues that the merger will diminish competition among prepaid offerings because New T-Mobile allegedly will consolidate Boost Mobile, Virgin Mobile USA, and MetroPCS into a single brand, effectively eliminating two aggressive challengers.²⁹¹ According to petitioners, this reduction in competition and the number of challengers will lead to consumer harm and higher prices.

As an initial matter, T-Mobile has stated publicly that the merged company will maintain the Boost Mobile, Virgin Mobile USA, and MetroPCS brands as separate brands post-consummation.²⁹² Petitioners’ claims also ignore the massive capacity gains that will result from deployment of New T-Mobile’s 5G network. Rather than decreasing supply as petitioners claim, the merger actually will increase the supply of network capacity. The significant increase in network capacity will put substantial downward pressure on prices for all wireless services, including for prepaid services.

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More broadly, petitioners’ arguments fail to recognize the substantial competition that will continue to exist among prepaid plans after the transaction from a host of MVNOs and facilities-based carriers. Dr. Woroch concludes in his declaration that “any attempt by New T-Mobile to raise prepaid prices would be defeated by consumer behavior and competitors’ responses.”²⁹³ Petitioners disregard the intense competitive pressure from MVNOs—many of whom offer highly attractive prepaid plans—by wrongly attributing MVNO subscriber numbers to their underlying wholesale carriers. As explained in the PIS, the Commission itself has rejected this approach by assessing “the competitive effect of [MVNOs] and resellers.”²⁹⁴ MVNOs generally are able to offer prepaid wireless plans at highly competitive prices because they can avoid many of the costs associated with facilities-based service. Further, the flexibility they enjoy “makes it easier for them to mark down prices, and it allows them to offer convenience and a more enhanced customer experience.”²⁹⁵

MVNOs offering prepaid will exert significant competitive pressure in the marketplace after the transaction. TracFone currently operates as the nation’s largest provider of prepaid plans, accounting for approximately 31 percent of total prepaid customers. As an MVNO, TracFone holds wholesale agreements with AT&T, Verizon, T-Mobile, Sprint, and U.S. Cellular and offers wireless services under multiple prepaid brands, including TracFone, NET10 Wireless, Total Wireless, Straight Talk, SafeLink Wireless, Telcel América, SIMPLE Mobile,

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Page Plus, GoSmart Mobile, and Walmart Family Mobile.²⁹⁶ Dozens of additional MVNOs offering prepaid plans also compete across multiple value propositions and in every conceivable channel, accounting for over six million prepaid subscribers.²⁹⁷ For example, Google Project Fi and Republic Wireless reduce customer costs by automatically offloading traffic to free WiFi hot spots, where possible, while carriers like Mint Mobile, FreedomPop, and PagePlus appeal to extremely value conscious consumers.

Petitioners also incorrectly discount competition for prepaid plans from large facilities-based carriers such as AT&T and Verizon. These companies have taken on an important and growing role in the competitive prepaid offerings, and will need to respond to the massive capacity gains and lower prices offered by New T-Mobile. AT&T’s prepaid offerings, and, in particular those of its Cricket brand, have been a significant driver of growth over the past few years. Since the beginning of 2016, AT&T’s branded prepaid wireless customer base has increased almost 50 percent, jumping from 11.5 million²⁹⁸ to 16.2 million subscribers.²⁹⁹ Cricket alone has more than doubled its subscriber base over the past four years, now accounting for over nine million subscribers.³⁰⁰ In the second quarter of 2018, AT&T reported 453,000 net

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prepaid adds for its strongest quarter in over two years.³⁰¹ This growth has been the result of AT&T’s renewed focus on the segment and the steady improvements it has made to its prepaid offerings, including offering unlimited data and HD video streaming, developments that have largely eliminated the differences between the carrier’s prepaid and postpaid offerings.³⁰²

Verizon historically has outsourced its prepaid offering to TracFone’s StraightTalk brand.³⁰³ However, that appears to be changing as Verizon added a net total of 158,000 prepaid customers in the second and third quarters of 2017 and has rekindled its interest in the prepaid segment.³⁰⁴ Verizon has increased its promotional offerings to current prepaid customers, recently offering twice the data at the same price point,³⁰⁵ and also launched a no-contract prepaid option called Visible. Under this offering, subscribers can receive unlimited calls, texts, and data on Verizon’s 4G LTE network for $40 a month.³⁰⁶ While currently offered only on a limited basis, Visible has stated that it will be “a true blurring of the lines between prepaid and postpaid,” by approaching prepaid “from a completely different angle,” and not “fit[ting] into the

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strict and traditional model of prepaid.”³⁰⁷ Thus, Verizon, like AT&T, will provide competition in the prepaid sectors, preventing New T-Mobile from increasing prices or reducing services for prepaid customers.

As documented in the PIS, all New T-Mobile customers—whether on prepaid or postpaid plans—will enjoy the increased capacity, higher speeds and service improvements of the combined company’s network. Sprint customers with compatible handsets, including many on the Boost Mobile and Virgin Mobile USA brands, will see immediate, significant benefits in network quality. More than 7 million Boost devices are compatible with the T-Mobile LTE network. These subscribers will quickly experience significant improvements in coverage on the New T-Mobile network, as Sprint’s prepaid customers with compatible handsets will for the first time enjoy domestic data roaming that fills in coverage gaps.³⁰⁸ Finally, Boost subscribers will benefit from access to a deeper and much larger (approaching ten times greater) handset ecosystem that will provide better functionality at the same price, or the same functionality at the same or lower prices.

In addition, the massive increase in capacity of the New T-Mobile network will provide significant benefits for all customers, including those on prepaid plans. The increased capacity will reduce substantially the cost per GB of delivering service to consumers. This will allow

https://www.fiercewireless.com/wireless/verizon-s-visible-hints-at-strategy-and-direction-

expect-a-completely-different-angle.

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New T-Mobile to price services more aggressively to attract customers, regardless of whether they are using prepaid or postpaid offerings. The merger is expected to create a number of other non-network efficiencies that will reduce New T-Mobile’s marginal costs by generating cost savings that could not be realized absent the transaction, likely resulting in an additional savings for prepaid customers.³⁰⁹ Customers on prepaid plans thus stand to benefit as much as, if not more than, those on postpaid plans from this capacity increase and corresponding lower cost. As prepaid carrier Mint Mobile recently noted, the merger will allow it to “get more data for less money and pass the savings on to” its subscribers.³¹⁰

Petitioners’ additional claim that New T-Mobile could raise prices indiscriminately exhibits a fundamental misunderstanding of the prepaid segment.³¹¹ Raising prepaid plan prices is a recipe for rapidly losing customers, given the ease by which prepaid customers can switch providers. CTIA has calculated an annual industry-wide voluntary churn rate of 57.5 percent for customers on prepaid plans and a monthly churn rate of 4.79 percent, compared to 26.3 percent annually and a 2.21 percent monthly across all plans.³¹² More recently, Verizon reported monthly prepaid churn of 5.9 percent, and AT&T of 5.24 percent.³¹³ Conversely, T-Mobile’s

https://twitter.com/MintMobile/status/1022540191989420032 (“How can Mint Mobile keep offering wireless plans as f*!ing low as $15/month (we said foxing)? By crushing better deals in the market! If @TMobile and @Sprint merge, Mint Mobile can get more data for less money and pass the savings on to you. #MintMobile #ShopClever #mvno.”).

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approach to prepaid offerings has limited churn among its prepaid subscribers, evidenced by a low monthly churn rate of 3.81 percent in the second quarter of 2018.³¹⁴ As Peter Ewens has noted,

[t]he Un-carrier movement is one of T-Mobile’s core assets. Actions that consumers view as reneging on the consumer-centric tenets of T-Mobile’s brand promise will greatly diminish the value of the Un-carrier brand. . . . Simply put, squandering such a successful Un-carrier business strategy for small incremental profits would be a financial and business disaster for the long-term success of New T-Mobile.³¹⁵

If New T-Mobile were to raise the price of its prepaid plans, other carriers would aggressively pursue and could easily handle the migration of prepaid customers.³¹⁶ As noted above, AT&T and Verizon have already increased their focus on the prepaid segment, and will have an even greater incentive to do so when they expand capacity in their networks to maintain pace with New T-Mobile. Dr. Woroch explains in his declaration that “AT&T and Verizon have the ability and incentive to accommodate the prepaid customers who leave New T-Mobile in response to a price hike.”³¹⁷ MVNOs that focus on prepaid offerings would be sure to compete aggressively for these customers as well and some already have begun to gain prepaid customers from T-Mobile. Given the low barriers to entry, other competitors such as the new wireless entrants from the cable industry could easily enter the prepaid segment if New T-Mobile were to raise prices.³¹⁸ As Dr. Woroch notes, “newcomers Comcast’s Xfinity Mobile and Charter’s

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Spectrum Mobile are also in position to accommodate switchers from New T-Mobile.”³¹⁹ To that end, from an economic and business perspective, it will be in New T-Mobile’s business interest to offer all of its prepaid subscribers more access to a variety of service plans and options at attractive prices.

The merger will benefit MVNOs and their subscribers by creating a new, nationwide 5G network with massive capacity and lower operational costs that will allow New T-Mobile to lower wholesale prices. New T-Mobile’s combination of coverage and capacity also will provide a significantly more attractive mobile network operator (“MNO”) option for MVNOs,³²⁰ intensifying competition for wholesale services. The increased competition for the provision of wholesale services will spur Verizon and AT&T—currently the predominant wholesale providers for MVNOs—to lower prices to maintain MVNO relationships and further invest in their networks to keep pace with New T-Mobile. Ultimately, MVNO subscribers across the industry will benefit from improved service quality and lower prices.

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While T-Mobile and Sprint enjoy mutually beneficial partnerships with a wide range of MVNOs today, neither company individually possesses the extensive network necessary to fully compete for partnerships with MVNOs. As demonstrated by Dr. Woroch’s research, most MVNOs acquire some or all of their wholesale services from AT&T and Verizon.³²¹ The current standalone networks of T-Mobile and Sprint, as well as their future 5G deployment plans, do not have the combination of coverage and capacity to respond to changing consumer preferences for greater speeds and data in all areas of the country. Naturally, these limitations render T-Mobile and Sprint less attractive MNO partners for MVNOs.

As explained in the PIS and above, T-Mobile has already begun deploying a standalone nationwide 5G network using its 600 MHz spectrum. However, this spectrum will only be able to provide a thin layer of 5G, as it lacks the bandwidth to deliver the full data rate and capacity gains possible for 5G that New T-Mobile will be able to provide.³²² Thus, even after completing deployment of this network, T-Mobile would not have the same capacity incentives to enable MVNOs, particularly in rural areas. T-Mobile’s near-term lack of access to significant, unused mid-band spectrum and large amounts of high-band millimeter wave spectrum across the entire U.S. will continue to limit its ability to support the most demanding, high-capacity 5G applications.³²³

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Sprint, for its part, has a 5G standalone plan that does not include extending network services to large parts of the country, as its lack of sufficient low-band spectrum inhibits its ability to provide widespread geographic coverage.³²⁴ Sprint’s current coverage is particularly limited in rural areas where it is difficult to justify incremental network investment due to limited population density and challenges associated with building out 2.5 GHz spectrum.³²⁵

Thus, both T-Mobile and Sprint on a standalone basis lack the network to deliver the combination of coverage and quality of service that New T-Mobile could provide. Moreover, T-Mobile and Sprint’s reliance on roaming in certain parts of the country makes them less attractive options for MVNOs looking to offer their customers nationwide coverage. As Dr. Woroch observes, “[t]oday, it is essential that MVNOs offer their customers a national service footprint.”³²⁶

MVNOs have expressly highlighted the shortcomings of the T-Mobile and Sprint networks. Ultra Mobile and Mint Mobile observe that “[n]either T-Mobile nor Sprint can compete as effectively as standalone companies as New T-Mobile could, and their 5G networks would not have . . . nearly the same coverage, throughput, capacity, or latency without the combination.”³²⁷ Additionally, TracFone explains that it “[i]n rural areas, T-Mobile and Sprint historically have not offered sufficient coverage and/or speeds in these geographic pockets of the United States. Comparatively, AT&T and Verizon have bene the primary suppliers for these wholesale market segments.”³²⁸ By way of example, StraightTalk, TracFone’s flagship brand, is largely distributed by Walmart, which has an extensive network of stores in rural and small communities.³²⁹ T-Mobile has historically been unable to compete for StraightTalk business due to its lack of coverage in these areas, particularly since Walmart desires a single, national solution that it can retail in all its stores.³³⁰

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Some petitioners express concern that the transaction will lead to higher prices for wholesale access.³³¹ However, build-out of the New T-Mobile 5G network will create significant capacity gains—approximately triple the total 5G capacity of standalone T-Mobile and Sprint combined by 2024.³³² As mentioned above, no petitioner challenges this enormous capacity expansion resulting from the merger. The same basic economic principles of supply and demand that apply to the retail context also apply to wholesale prices and MVNOs—New T-Mobile’s additional network capacity and lower per unit costs will create an incentive for the combined company to lower wholesale prices to MVNOs in order to ensure that the new network capacity is not wasted by sitting idle. Thus, MVNOs will benefit not only from the capabilities of the New T-Mobile network, but also the unprecedented capacity and lower cost per GB, which will translate into lower wholesale costs, and, ultimately, lower prices for MVNO subscribers.

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As outlined in the PIS, an economic analysis conducted by Dr. Evans shows that the transaction would substantially lower the price per GB of data. Dr. Evans’ findings are further supported by the merger simulation conducted by Compass Lexecon. This analysis indicates that the merger will enable New T-Mobile to achieve lower marginal costs of providing services and offer higher quality services than would either party operating on its own.³³³ Because of the lower marginal costs and higher product quality, customers—including wholesale customers—will benefit from New T-Mobile’s economic incentives to offer better and cheaper services, as well as from the competitive pressures created for rival service providers to reduce prices and improve their services in response.³³⁴

Dr. Woroch similarly underscores that MVNO wholesale rates will not increase as a result of the merger. He notes that New T-Mobile will initially have limited flexibility to raise rates because T-Mobile and Sprint have existing multi-year wholesale agreements with MVNOs that must be honored after the merger.³³⁵ New T-Mobile will continue T-Mobile and Sprint’s positive relationships and contractual commitments with MVNOs, including Altice, and, as described above, will be motivated to do so due to the massive capacity gains resulting from the merger. Dr. Woroch further observes that when these agreements expire New T-Mobile will continue to be constrained in its ability to raise wholesale prices.³³⁶

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Consequently, the existing fundamental, mutually beneficial nature of the MNO/MVNO relationship will remain after the merger—and, in fact, will be made even stronger. As economist Dr. Woroch explains, wholesale agreements are a positive-sum transaction for both MNOs and MVNOs. For example, the opportunity cost for a MNO to supply a MVNO with wholesale services is particularly small when the MNO has idle capacity on its network, as will be the case for New T-Mobile.³³⁷ Additionally,

[w]hen capacity is leased to an MVNO, the MVNO must contribute the necessary retail services to support the business. Those services include billing and collections, customer care, technical support, advertising, sales commissions, and retail stores or distributor payments. When the carrier uses the capacity internally, it must do the retailing and incur these expenses.³³⁸

While the resulting massive capacity gains from the merger will lower wholesale costs and incentivize New T-Mobile to partner with MVNOs, MVNOs also will benefit from the decreased roaming costs made possible by the New T-Mobile network. Rural areas—where Verizon and AT&T are the only meaningful wholesale options today—will specifically benefit from the extensive coverage of the New T-Mobile network, rendering roaming agreements to reach these areas unnecessary. TracFone underscores this point, observing that “[t]he resulting excess capacity would be available for MVNOs in [rural] areas as a third option that has not been available in the current marketplace.”³³⁹ MVNO subscribers will further benefit by not having roaming costs passed along in the form of higher rates, enabling them to enjoy the full capabilities of the New T-Mobile network without having their service throttled as a cost-savings measure. Moreover, pricing for many MVNOs, including TracFone’s Simple Mobile brand and GoogleFi, are benchmarked off of retail prices.³⁴⁰ Thus, as T-Mobile branded subscribers benefit from lower pricing enabled by the merger’s capacity gains, subscribers of many MVNOs also will benefit from lower pricing. ³⁴¹

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Petitioners are wrong that the transaction will decrease wholesale competition.³⁴² To the contrary, the merger will provide a robust MNO option for MVNOs seeking wholesale services. The reality today is that many MNVOs that want high-quality network options can only partner with Verizon and AT&T in many parts of the country, particularly in rural areas. As TracFone highlights, “the existing four nationwide MNO’s from which TracFone can purchase network capacity are not equivalent in all markets.”³⁴³

With New T-Mobile’s combination of coverage and capacity allowing it to go toe-to-toe with Verizon and AT&T, MVNOs and their subscribers will benefit not only from the increased capabilities and lower costs offered by New T-Mobile, but also from more competition among MNOs.³⁴⁴ New T-Mobile’s network will deliver immediate benefits in the form of broader national coverage to MVNOs that have a wholesale agreement with either or both carriers. Moreover, MVNOs that do not currently partner with T-Mobile or Sprint due to coverage or quality concerns will now look to New T-Mobile as a new competitive option. Thus, not only will the transaction expand network choices for MVNOs, but Verizon and AT&T are likely to respond by making attractive offers to MVNO partners.³⁴⁵ Indeed, AT&T and Verizon already have the contracts in place to undercut any price increases by New T-Mobile.³⁴⁶ As such, MVNOs relying on the Verizon and AT&T networks will benefit from the transaction as well, and overall competition for MVNOs will increase, not decrease.