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DISH") Submits the Enclosed Public, Redacted Version of Its Petition to Deny, Including Supporting Exhibits

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DISH Panlelis Michalopoulos 202 4296494 Steptoe [email protected] S f[~T OE & JOHNSON U~ 1330 Connecticut Avenue, tw'rI Washington. DC 2oo36-1795 202 429 3000 main .WWW.steptoe.com REDACTED-FOR I'UBLIC INSPECTION August 27, 20 18 By ECFS Marlene H. Dortch Secretary Federal Communicati ons Commission 445 12th Street, SW Washington, DC 20554 Rc: Applications of T -Mobile US, Inc. and Sprint Corporation for Conscnt to Transfer Control of Liccnses and Authorizations, WT Docket No. 18-197 Dear Ms. Dortch: [n accordance wit h the Protective Order and NRUFILNP Proteclive Order in the above­ captioned proceeding, I DISI-I Network Corporation (" DISH") submits the enclosed public, redacted version of its Petition to Deny, including supporting exhibits. DISH has denoted with {{BEGIN HCI END HCI)) and {{BEGIN NRUF/LNP HCI END NRUF/LNP HCI)) where High[ y Confidentiallnfonnation has been redacted. A Highly Confidential version of thi s filing is being simultaneously filed with the Commission and will be made avail able pursuant to the terms of the Protective Order and the NRUFILNP ProJective Order. Please contact me wi th any questions. Respectfull y submitted, Pantel is Michalopoulos Christopher Bjornson Counsel jar DISH Ne twork Corporation Enclosure I Applications ofT-Mobile US, Inc. and Sprint Corporation for Consent to Transfer Control of Licenses and Authorizations, Proteclive Order, WT Docket No. 18-197, DA 18-624 (June 15, 2018) ("Proleclive Order"); Applications ofT-Mobile US, [n co and Sprint Corporation for Consent to Transfer Control of Licenses and Authorizations, NRUFILNP Proleclive Order, WT Docket No. 18-197, DA 18-777 (July 26, 2018) ("NRUFILNP Proleelive Order"). REDACTED—FOR PUBLIC INSPECTION Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 In the Matter of ) ) Applications of T-Mobile US, Inc. ) WT Docket No. 18-197 ) and ) ) Sprint Corporation ) ) Consolidated Applications for Consent to ) Transfer Control of Licenses and ) Authorizations ) ) PETITION TO DENY OF DISH NETWORK CORPORATION Pantelis Michalopoulos Jeffrey H. Blum, Senior Vice President, Christopher Bjornson Public Policy and Government Affairs Andrew M. Golodny Mariam Sorond, Vice President, Technology STEPTOE & JOHNSON LLP Development 1330 Connecticut Avenue, N.W. Hadass Kogan, Corporate Counsel Washington, D.C. 20036 DISH NETWORK CORPORATION (202) 429-3000 1110 Vermont Avenue, N.W., Suite 750 Washington, D.C. 20005 Counsel for DISH Network Corporation (202) 463-3702 August 27, 2018 REDACTED—FOR PUBLIC INSPECTION Table of Contents I. INTRODUCTION AND SUMMARY ............................................................................... 2 II. STANDARD OF REVIEW .............................................................................................. 10 III. BOTH SPRINT AND T-MOBILE ARE POTENTIAL 5G COMPETITORS THAT LIKELY CAN SUCCEED WITHOUT MERGING ........................................................ 12 A. T-Mobile Likely Does Not Need to Merge with a Competitor to Continue Its Outstanding Market Performance ......................................................................... 12 B. Sprint Has Plenty of Spectrum and Expertise to Challenge T-Mobile and the Other Incumbents as a Standalone Competitor ..................................................... 15 C. Merging T-Mobile and Sprint Means Customers Lose Out on Years of the Two Companies Competing Head-to-Head with Each Other and the Incumbents ....... 16 IV. THE APPLICANTS HAVE NOT YET MET THE BURDEN OF PROVING THE TRANSACTION WILL PRODUCE PUBLIC BENEFITS THAT OUTWEIGH THE LIKELY HARMS ............................................................................................................. 22 A. 5G Deployment Likely Would Happen With or Without the Proposed Transaction, and Should Not Be Credited as the Transaction’s But/For Benefit . 22 B. Dr. Evans’ Analysis Is Flawed .............................................................................. 35 C. The Other Synergies and Benefits Claimed by the Applicants Are Speculative, Unsupported, and Not Merger-Specific ................................................................ 38 V. THE APPLICANTS DEFINE THE RELEVANT MARKETS TOO BROADLY .......... 43 A. Only Facilities-Based Carriers Discipline Competition ....................................... 45 1. TracFone ................................................................................................... 47 2. Comcast and Charter ................................................................................. 48 3. DISH ......................................................................................................... 51 4. Google ....................................................................................................... 53 B. Prepaid Voice and Broadband Is a Separate Market ............................................ 53 C. The Commission Should Analyze the Markets for Roaming and Wholesale Services ................................................................................................................. 57 i REDACTED—FOR PUBLIC INSPECTION VI. THE DEAL WILL RESULT IN EXCESSIVE INCREASES IN CONCENTRATION IN THE RELEVANT MARKETS......................................................................................... 58 A. The Mobile Broadband Industry Has Reached a Tipping Point in Concentration 58 B. Four-to-Three Mergers Are Disfavored at Home and Abroad ............................. 59 C. The Merger Will Result in Spectrum Holdings Substantially in Excess of the Spectrum Screen ................................................................................................... 68 D. The Merger Triggers a Dramatic Increase in HHI, Indicating Significant Threats to Competition ...................................................................................................... 74 VII. THE LIKELY OUTCOME OF THE MERGER IS HIGHER PRICES ........................... 76 A. The Price Pressure Test Shows New T-Mobile Would Likely Increase Prices .... 76 B. Merger Simulations Demonstrate New T-Mobile Would Likely Increase Prices 77 C. The Economic Predictions Are in Sync with Empirical Evidence of Other Four- to-Three Mergers in the Mobile Voice/Broadband Market .................................. 78 VIII. THE TRANSACTION WILL SIGNIFICANTLY INCREASE THE RISK OF COORDINATION ............................................................................................................ 81 A. The Industry Is Suitable for Tacit Collusion, but Collusion Remains Difficult in the Current Market ................................................................................................ 82 B. The Merger Will Make Tacit Collusion Easier ..................................................... 84 C. Salop and Sarafidis’ Own Model Shows an Increase of About 20% in the Risk of Coordinated Effects .............................................................................................. 85 IX. CONCLUSION ................................................................................................................. 86 Exhibit A: Declaration of David E. M. Sappington Exhibit B: Declaration of Joseph Harrington, Coleman Bazelon, Jeremy Verlinda, and William Zarakas Exhbit C: Declaration of Stephen Wilkus ii REDACTED—FOR PUBLIC INSPECTION Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 In the Matter of ) ) Applications of T-Mobile US, Inc. ) WT Docket No. 18-197 ) and ) ) Sprint Corporation ) ) Consolidated Applications for Consent to ) Transfer Control of Licenses and ) Authorizations ) ) PETITION TO DENY OF DISH NETWORK CORPORATION DISH Network Corporation (“DISH”)1 respectfully petitions the Commission to deny the proposed merger of T-Mobile US, Inc. (“T-Mobile”) and Sprint Corporation (“Sprint”) (together, the “Applicants”) as currently constructed.2 The transaction will create a four-to-three national mobile voice/broadband market, lead to excessive concentration in other relevant markets, and likely increase prices for consumers. The Applicants have not yet demonstrated that the merger, as currently proposed, would serve the public interest. 1 Subsidiaries of DISH include entities that hold licenses suitable for the provision of commercial wireless service, including AWS-4, AWS H Block, Lower 700 MHz E Block, and 600 MHz licenses. DISH’s subsidiaries also include a multichannel video programming distributor and an online video distributor, both of which compete with T-Mobile, which recently purchased Layer 3. For these and other reasons described herein, DISH is a party in interest under Section 309(d)(l) of the Communications Act. See 47 U.S.C. § 309(d)(l). 2 See Public Notice, WT Docket No. 18-197, T-Mobile US, Inc., and Sprint Corporation Seek FCC Consent to the Transfer of Control of the Licenses, Authorizations, and Spectrum Leases Held by Sprint Corporation and Its Subsidiaries to T-Mobile US, Inc., and the Pro Forma Transfer of Control of the Licenses, Authorizations, and Spectrum Leases Held by T-Mobile US, Inc., and Its Subsidiaries, DA 18-740 (July 18, 2018). 1 REDACTED—FOR PUBLIC INSPECTION I. INTRODUCTION AND SUMMARY The Applicants seek to consolidate the national mobile voice/broadband market from four to three players. Economic analysis and empirical evidence demonstrate that, instead of enhancing competition, such consolidation is apt to thwart it. In seeking approval for this transaction, the Applicants must show that the proposed merger will not have anti-competitive effects, or that any such effects will be
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