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Sprint T-Mobile Merger Trial Ends With Flurry of Sealed Exhibits Closing Arguments Jan 15

By Matthew Russell Lee, Patreon

SDNY COURTHOUSE, Dec 20 – The two week trial against the proposed T-Mobile / Sprint merger ended on December 20 before U.S. District Court for the Southern District of New York Judge Victor Marrero. There are papers due January 8, and a final four hour argument on January 15. Inner City Press began what will be a trial-long live-tweet, here. Day 7 Patreon here.

  On December 20 Professor Shapiro testified for the second time how the merger would allow coordination and raise prices. Day's thread here.

  Then a final flurry of exhibits entered into the record, and more agreement by Judge Marrero to file many under seal. The defense team wanted no briefs, but there will be 30-page proposed findings of fact and law on January 8, before the closing arguments on January 15. Watch this site. More on Patreon here.

  On December 17 Charlie Ergen of DISH testified, saying for example that "Sprint is a laggard." Judge Marrero agreed to hear the parties in his robing room, and then and only then decide whether to release a redacted transcript. Some asked, Public interest? Here's some of how it went

OK -  @Tmobile   @Sprint  merger trial Day 7 has started back up on a delay, the T-Mobile tech Kapoor bragging about 5G - but what's the response on higher costs passed on to consumers, per what #Sprint whistleblowers say? 

Q&A has turned to the Internet of Things, DISH, Charlie Ergen: Q: Building a wireless network, you are not here to say it's easy, right? A: It's hard,  Q: So does DISH have any spectrum? A: Yes we do.

Q: Have you hired recently executives from other companies to join DISH to work on this wireless network? A: We have a strong community. But we were lacking some skills, like in R&D. We've hired, for example, the CTO of Sprint

 A: We've hired, I don't want to bore the court, a Cloud guy. Q: And these guys are already working for Sprint today? A: They better be. (Some laughter).  Charlie Ergen: At DISH, we've been able to do that with band 29, that's the 850 megahertz

Q: You've had some bumps in the road. Ergen: Not unsurmountable. We use our skills sets to work through them. We now have a team in DISH that's had to see me every day, until late at night. Yeah we've made some mistakes, that's how you learn.

 Q: You see this letter, Mr Ergen, that your company sent to the FCC? A: They had questions about our IOT network. In part because no one built one before. In the summer of 2018. This was our response.

 Q: You told the FCC and the DOJ that you didn't like this merger, right? Ergen: Not as it was structured. Q: So you met with the DOJ, head of antitrust division? Ergen: Yes. Q: You are now a divestiture buyer. Was that discussed at the first meeting? Ergen: No.

 Ergen: I told DOJ about other countries where they had gone from four to three. They asked me for a list. I was familiar, but I asked our Washington team to submit it. Q: Did you have in mind then that DISH would be the divestiture buyer? Ergen: I hoped so  Ergen: Other had spectrum but sold it to Verizon, sold it to Sprint. Q: So there was a negotiation. Ergen: That's a simplification.Q: Now there's been talk here about a conflict of interest, with  @Tmobile  with their fancy network they're trying to sell like hotcakes, and you over here, a conflict. Ergen: If they could get away with it they would. But it would be difficult with the monitor

 Q: So the monitor, he's already been approved? Ergen: Yes. Ullyot, U-L-L-Y-O-T.  He's already been approved by  @Tmobile  and by  @DISH . He was the general counsel of Facebook.

 Ergen: If people can port their phones, too, it helps us, we have 9M customers, we can get more. Q: You've got that fancy T-Mobile network, and you can sell as much on it as you can in three years, is that normal? Ergen: This agreement makes us competitive day 1Ergen: As hard as we pushed, we got to 12.5%. We traded some things away to get that. We knew it would limit our ability to get customers. But then DOJ got involved. And this is much better. [Inner City Press aside: A happy customer of government] 

Q: Now you're the divestiture buyer. Did DOJ do any due diligence on DISH? Ergen: They did. They spoke with our engineers, our marketing people. They spoke with me. Q: Do you believe DISH can be a competitor in Year One? Ergen: I do.

 Q: Mr. Ergen, do you have a view of Sprint as a competitor? Ergen: Sprint has not been in a spectrum auction in ten years. Q: How many subscribers does Sprint have? Ergen: Adding pre- & post-paid, 40 million. They have some wholesale. Let's say just north of 50M.

 Ergen line of the day: "Sprint is a laggard."  Q: I'd like to talk about commitments DISH has made. Tell me about this letter. Ergen: It's our commitments to the FCC in this transaction. Q: You know what you're supposed to do. Ergen: I definitely know. [laughter] Ergen: We've been trying to get into the wireless business for the last ten years... We've never missed a final milestone commitment. Sometimes people try to keep you from entering the marketplace, they can be sneaky. They talk to a reporter, to an analyst

 Ergen: If you're a big company in this industry, last thing you want is DISH coming in. I'm sure I'll be asked about that. I'm not sure which side will ask. Q: I certainly will. Ergen: Mr Legere called us a hoarder. That has some bad connotation. But FCC approved

 Ergen: In this letter, they are accepting our request to waive the interim milestone and accelerate toward the final milestone. There's not any controversy about this, except from our competitors.

 Ergen: With 5G, it's like your central nervous system... Architecture today, when I first started, I had a big desk top computer. Now it's all in the cloud.  When you go home tonight, you'll see a cell tower with a shed under it. That's go away, into the cloud

 Things are getting folksier and folksier over here: Ergen: It's like trying to change the wheels on your car as you're driving. It's very difficult.  Ergen: I've been dealing with the bankers, got some "highly confident" letters   Ergen: That's a high confident letter for $10 billion from Stanley Morgan.  No, sorry, Morgan Stanley. At Tennessee there use to be a football player named Stanley Morgan. I'm going back to my college days

Seems this Morgan Stanley letter was not provided in discovery. His lawyer insists he got it the first day of trial, that's why it was not provided.   Now Marrero says the states are free to cross examine about it.

Ergen: It has to go through a credit committee. If I knew the decision on this trial, and it was a favorable decision, I'd move forward on the letter.  Ergen: We have another $10 billion highly confidential letter from Deutsche Bank. And JPMorgan....

Legere's testimony culminated in Judge Victor Marrero asking him if he could remain a flower child or would instead, post merger, join the boys' club. Legere said never - but his successor Mike Sievert then looked very much the boys' club member. How will it cut with Marrero? Here's some of how it went (more on Patreon here)

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