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In SDNY T-Mobile and Sprint Trial Hottges Denies Dissing DISH and Cites 5G of China

By Matthew Russell Lee, Patreon

SDNY COURTHOUSE, Dec 10 – After more states lining up against the proposed T-Mobile / Sprint merger, on which a two week trial to begin December 9 before U.S. District Court for the Southern District of New York Judge Victor Marrero. Inner City Press began what will be a trial-long live-tweet, here. Day II morning here. More on Patreon here.

On the morning of December 10 Deutsche Telekom's Timotheus Höttges was confronted with deposition testimony in which he expressed doubt that DISH could be a real competitor.

  Hottges insisted he had been referring to DISH as it was in 2014. It is not clear what Judge Marrero thought; his questions to Hottges were about whether under the deal with DOJ the merger would still benefit Deutsche Telekom and T-Mobile. (Hottges' answer was yes). Here's more of how it went:

Q: The first time you heard the term 'Rule of Three' was when Deutsche Telekom was considering merging T-Mobile and Sprint, correct?"

A (Deutsche Telekom's Hottges) ... there are other competitors... Google... DISH... Q: Please look at your deposition

 Q: And one of those who referred to this as a four to three merger was Mister John Legere, correct? A: You'd have to ask him. Q: And you recall Mr. Legere saying that the regulatory environment would never be better than now to get approval of a 4-to-3 merger?

Q: When you said over 100 million customers, you meant AT&T and Verizon, correct? A: Yes. Q: And you meant that with 80 million customers, you couldn't compete? A: Correct

Q: The DOJ deal is designed to make DISH a meaningful 4th competitor, right? A: Yes. Q: But within Deutsche Telekom you had discussions about DISH's real ability to compete, right? Fair to say there was no consensus in DT? A: There were different positions.

 Now the Deutsche Telekom witness insists that his dissing of DISH was referring to DISH  as it was in 2014, not now. But here's directed back to his deposition: Q: Does that refresh your recollection, Line 24, that you were referring to DISH today and not in 2014?

 Q: Since you have never seen DISH compete in the retail mobile wireless business, you have no basis to say they can compete, correct? A: With all respect, in my 20 years, I have seen many companies come into this market and compete. So we always thought DISH could

 Q: When you say "He had to" this, or you could merge with "him," you mean Mister Ergen, right? A: Yes, I am sorry. Q: Because Mr. Ergen has made commitments to the FCC he will abide by them? A: He has to. Q: But he has failed before. A: You have to ask him.  Q: C band spectrum is coming for up auction, correct? A: That's what we need. Q: And T-Mobile could win that auction without eliminating a competitor, correct? A: Yes. But AT&T and Verizon, they show up with deep pockets. They always get what they want.

 Q: At the October board meeting you started thinking about a Plan B, correct? A: Correct. This is not our first strategic review. Q: I now offer into evidence Exhibit 370, 375, 1007, 1034, and 8112.  [Presumably these won't be sealed like so many in this case.]

 Objection! This is a Morgan Stanley document. The witness who commissioned it will be a witness later...  "We want Mr. Höttges to be able to go back to Germany so I will expedite things."  Judge Marrero calls a break.

 Now under friendly questioning, Deutsche Telekom's Höttges says "We want to build secure infrastructure... In 6 years, 97% of people will be covered by 5G service." Q: Glenn Pomerantz was talking about all the other ways you could do it. A: We need over 20% share

 Hottges: "Who is leading on 5G services? It is Korea, it is China." 

Wag: from the cheap seats, or the overflow courtroom on the 15th floor with the free lunch for some outside, comes this call: why not a Huawei witness in this trial?

 Q: Will you look everyone in this courtroom in the face and say you will have the number one network?  Hottges: Yes. These is no question we will [would] be better that AT&T and Verizon, or "Dumb and Dumber."

 Hottges: We have a lot of experience, like with MetroPCS in the US. We are building 5G service on the fly. We are increasing spending in the US. This is only possible because of the synergies. If we are not getting this deal I am not seeing how this can happen

Q: Do you know Mr. Ergen personally, sir? Did you try to reach a merger with him? A: It never worked. Q: What's your impression of him? A: Mr Ergen is perceived as tough, not easy to deal with. Q: Does that explain the colored works in your texts? Forced laughter

 Now Judge Marrero is putting his own questions to Deutsche Telekom's Hottges. Judge Marrero: Were the DOJ conditions a monkey wrench into the deal? Hottges: There was certain thresholds we couldn't go beyond. Q: Is the deal still beneficial to you? A: Yes.

Judge Marrero: Will the 9 million pre-paid customers make it possible for DISH to really compete? Hottges: I would not distinguish between pre-paid and post-paid. It is just a way of paying...

Hottges: If he [Ergen of DISH] cannot go beyond 9 million customers, it will be tough. But he has seven years. There is no reason he cannot do it....

Judge Marrero adjourned the trial for 45 minutes, "so you can have a telephone conference with Magistrate Judge Lehrburger." More on Patreon here.

On December 9 Judge Marrero began the trial by saying that opening statements are unnecessary, asking, Are they for me? For the witnesses?   Then the first witness was not here and they took a break. Inner City Press checked out "overflow" room 15B - corporate lawyers everywhere.

The plaintiffs / States play a mobile plan advertisement, very loud. Now presents press release "after Project Samurai was gone." Q: So Project Samurai put significant pressure on T-Mobile? A: Well, we retired the plan. Q: But only after extending it...

 Q: So T-Mobile responded to Project Samurai with its Metro pre-paid, right?

A: In 2015? I'm not sure. They cannot know what T-Mobile is really thinking. They assume. Q: Let me show you this Competitive Alert...

  Outside overflow courtroom 15B, full of a corporate lawyers, they put out a lunch spread not seen before in SDNY hallways. Money talks. But what about the merger?

  The docket does not say much. Other than an order allowing the lawyers to bring into court their laptops, the last letter was filed entirely under seal, here.  Inner City Press will have more on this, and on the CEO witnesses when they appear. More on Patreon here.

 Back on December a final pre-trial conference was held.

 Inner City Press was there, and will cover the trial. On December 6 the plaintiff states' lawyer Glenn D. Pomerantz dominated the conference, going through each of the four points in his letter to Judge Merrero and more.

  T-Mobile or Deutsche Telekom's lawyer David I. Gelfan of Cleary Gottlieb wanted more than 50% of the time alloted. Judge Marrero shot that down, saying that to him equitable means cut in half. Judge Marrero largely tried to avoid the disputes, urging the lawyers to settle their conflicts and try their cases.

 Where Judge Marrero drew the line was on timing and exhibits. He still aims at a two week bench trial, saying he's willing to go to six pm to accomplish that. He urged exhibits to be agreed in advance. He said one of the questions will be DISH.  There will be a Comcast witness. Inner City Press will cover the trial. The case is State of New York, et al., v. Deutsche Telekom AG, et al., 19-cv-5434 (Marrero).


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