WASHINGTON—FCC Chairman Ajit Pai has made his official position on the proposed merger between T-Mobile and Sprint known to his colleagues, saying in a draft Order that he would approve the merger, subject to certain conditions.

Following a comprehensive review of the proposed merger and public interest claims of T-Mobile, Sprint and third parties, the draft Order was created and is now being circulated for the FCC’s consideration.

According to the draft Order, a merger between T-Mobile and Sprint will help to accelerate the deployment of a 5G wireless network, improve the quality of mobile broadband services for consumers and increase 5G infrastructure deployment in the U.S. The improved network quality and coverage will not only benefit consumers, but the report says it will also foster innovation in different sectors and services. It is also expected to help close the digital divide for rural areas, with one of the conditions subjected in the order being that there be 5G coverage of at 99% of Americans within six years.

The draft Order also attempts to review concerns that were raised in the record regarding competitive effectiveness of the transaction, including the potential for competitive harm. The Order stipulates that as long as there is a divestiture of Boost Mobile, as well as other conditions, price-sensitive customers in densely-populated areas will not be harmed.

The Order also addresses Dish’s planned acquisition of Boost Mobile, saying that the acquisition, in connection with its planned 5G deployment, would be in the best interest of the public. Associated extensions, commitments and modifications has been delegated to the Wireless Telecommunications Bureau for processing and implementation with procedures set forth in the Communications Act and the draft Order.

“After one of the most exhaustive merger reviews in Commission history, the evidence conclusively demonstrates that this transaction will bring fast 5G wireless service to many more Americans and help close the digital divide in rural areas,” said Pai. “Moreover, with the conditions included in this draft Order, the merger will promote robust competition in mobile broadband, put critical mid-band spectrum to use and bring new competition to the fixed broadband market.”

OpenSignal, a U.K.-based researcher that measures video networking performance, has released a new report that cites Verizon as having the best mobile video streaming experience among the four major U.S. telcos, narrowly beating out T-Mobile, with Sprint following and AT&T at #4.

Out of a possible score of 100, all of the carriers rated “fair,” which means that they couldn’t handle high-resolution video without some hiccups, but were able to handle standard definition video with few problems.

The report notes that each carrier is placing increasing emphasis on video. AT&T’s recent acquisition of Time Warner was done partly with the goal of launching its own streaming service based around  its flagship network HBO next year. Likewise, Verizon, with its recent content acquisitions of AOL and Yahoo, as well as Sprint’s bundling of the Hulu OTT network and T-Mobile’s complementary Netflix subscriptions to new subscribers all illustrate the importance U.S. telcos are placing on streaming video.

Last month, OpenSignal reported that all four telcos support mobile streaming rates of an average 14 Mbps, with Verizon and T-Mobile both offering up to 20 Mpbs streaming, which is enough to support ultra high definition resolution. 

WASHINGTON—As policy-makers and analysts absorbed the potential ramification of T-Mobile's plan to acquire Sprint, questions arose about the $26.5 billion deal's impact on other ongoing spectrum issues—including the broadcast TV repack. Some observers expect that T-Mobile will quickly temper its challenges to broadcast spectrum assignments in an effort to lower its profile as it seeks regulatory approval of the merger. Others conjectured about the ripple effects of the deal, including what it means to tower construction and operations if the combined wireless carrier consolidates or reduces its buildout—possibly by reducing its tower count by about 15 percent initially.

Still others point to T-Mobile's funding of translators in rural areas for public TV stations in an effort to accelerate their spectrum moves so that T-Mobile can more quickly use the 600 MHz spectrum it acquired during the incentive auction.

The merger also highlights an irony of sorts since Sprint had its own dealings with broadcasters over a decade ago when it spent approximately $750 million to move the broadcast auxiliary services for ENG of nearly 1,000 TV stations after being allotted the spectrum in the 2 GHz band those operations occupied. The project commenced in 2005 and was completed in 2010.

OBSTACLES TO COMPLETION

Review of the merger plan at the Federal Communications Commission and Department of Justice may also involve issues such as labor relations. T-Mobile has had a "challenging time" with unions, a Washington attorney (who formerly staffed a Capitol Hill committee) told TV Technology. He noted that the White House is paying close attention to the opinions of labor, which may affect its decision—although he expects the merger to be approved by early next year.

Several law firms and trade associations (including the National Association of Broadcasters and CTIA: the Wireless Association) plus regulators (the FCC and DoJ) declined to speak on the record about the T-mobile deal, which surfaced on Sunday.

Legal and financial analysts are split on the likelihood of the merger receiving FCC and DoJ approval, often citing three previous attempts for the companies to join forces plus the failed attempt in 2011 by AT&T to acquire T-Mobile USA for $39 billion from Deutsche Telekom.

BTIG’s Walter Piecyk on Monday gave approval a 40 percent likelihood. Media analysts at MoffettNathanson put the odds at 50-50, while Wells Fargo savants concluded that the deal "won't be easy," noting that "the numbers become harder when looked at purely from a market concentration standpoint.”

"The market seems to be ascribing very low odds to approval," according to New Street Research analyst Jonathan Chaplin. Jeffries & Co. concluded that the FCC "seems open to evaluating the deal on its merits, though the DoJ could be an obstacle.”

A Washington attorney (who like others would only speak on background because of possible client conflicts) told TV Technology that he believes both DoJ and the FCC will approve the merger by 2019; he also expects the companies will push for an even quicker approval before the November elections, which could affect the policy landscape.

Michael Calabrese, director of the Wireless Future Project at New America, a non-profit think tank, called the merger "both tentative and relatively far off." Nonetheless, he cited reasons why the deal makes sense in light of T-Mobile's $8 billion purchase of 600 MHz spectrum, which it picked up in the broadcast incentive auction.

[Read: T-Mobile Takes The Most TV Spectrum For $8 Billion]

"I have no reason to believe they would change course," Calabrese told TV Technology. "The combined company would still need 600 MHz spectrum as soon as possible for indoor propagation; the lack of low-band spectrum has undermined T-Mobile’s quality-of-service for many years."

Calabrese also looked toward the emerging Fifth Generation (5G) ecosystems, noting that, "some degree of building penetration and economical coverage in sparsely populated areas is a competitive necessity."

T-Mobile's funding , much of it channeled through PBS, has helped PBS relocate 48 translators as of late April, with 144 more in progress, according to a report this week in a public TV periodical.

LOOKING FOR A BELLWETHER

Some analysts contend that the pending AT&T acquisition of Time Warner may affect approval of the T-Mobile/Sprint alliance. To their eyes, if AT&T beefs up its content armory, it will be appropriate for it to have another formidable carrier competitor rather than two smaller wireless providers. Together T-Mobile and Sprint have a total of 126 million customers, compared to Verizon's 150 million and AT&T's 142 million, according to Strategy Analytics.

[Read: T-Mobile, Fox TV Stations Partner On Repack]

Initial proponents of the merger point out that T-Mobile's extensive 600 MHz holdings and Sprint's collection of 2.5GHz spectrum plus both companies' mid-band spectrum assets will generate efficiencies for a variety of opportunities, including Internet of Things and other services, some of which are also envisioned for ATSC 3.0 features.

Another looming challenge is the FCC's auction of millimeter wave spectrum, scheduled to begin in November. According to analysts, T-Mobile may not have to bid extensively in that auction if (via the merger) it has control of Sprint's 2.5 GHz spectrum for capacity and propagation. T-Mobile President/CEO John Legere, who would head the merged company, said that he may ask the FCC for a waiver for T-Mobile and Sprint to coordinate their bidding strategies in that auction.

Towers are another factor in the merger proposal. According to the MoffettNathanson analysis, the merger could trigger the decommissioning of up to 35,000 towers and construction of 10,000 new towers. T-Mobile's current infrastructure would form the basis of the new facilities. Today the two companies operate a total of 110,000 towers, the analysts said, adding that 50,000 more towers may go up "over the coming years" if the merger is approved.

Depending on timing, that construction binge could affect the repack tower timetable, given the demand for building crews. Wells Fargo's analysis predicted that the combined tower construction budget of T-Mobile and Sprint could reach $40 billion in capital investment over three years.

Legere's focus on 5G as a strength of the combined company also poses a challenge to cable companies such as Comcast and Charter, which have put an emphasis on their wireless capabilities as their legacy cable video operations have lost subscribers.

As for the proposed merger's impact on the broadcast repack, most analysts have largely overlooked the potential connection so far, as they focus on more urgent competitive and financial aspects of the deal. One thing is certain: the tumultuous shifts in the airwaves will ripple through the many sectors of the digital eco-system during the next few years. 

For comprehensive news and information on the repack, visit TV Technology's repack silo.

OVERLAND PARK, KAN.—Wireless provider Sprint is using spectrum valued at $16.4 billion for collateral for a $3.5 billion loan.

Sprint Corp. said that three of its “wholly owned, special-purpose subsidiaries have commenced an offer of up to $3.5 billion of wireless spectrum-backed notes in three series, with varying maturities, in a private transaction that is exempt from the registration requirements of the Securities Act of 1933.”

The Sprint subsidiaries will take over a portfolio of FCC licenses and third-party leased license agreements comprising “a portion of Sprint’s 2.5 GHz and 1.9 GHz spectrum holdings, representing approximately 14 percent of Sprint’s total spectrum holdings on a MHz-pops basis.”

Sprint said its spectrum is currently used by 77 percent of its 2.5 GHz-enabled sites and approximately 33 percent of Sprint’s 1.9 GHz enabled sites. The airwaves will be leased back to Sprint pursuant to a long-term lease agreement, with rent payments servicing the $3.5 billion infusion.

Sprint said that based on an independent third-party valuation, its spectrum portfolio would be valued at $16.4 billion as of June 30, 2017.

The $3.5 billion notes are being issued pursuant to a $7 billion program consisting of this and potentially future issuances, subject to certain conditions. The notes are expected to be rated investment grade by both Moody’s and Fitch. Should all conditions remain stable, the deal is expected to close in November.

See thisReuters reportfor more.

Jeffery Maddox in 2006

ALEXANDRIA, VA.—Jeffery Maddox, 58, was killed in a traffic accident on July 4, 2015.

Maddox worked on the Sprint Nextel Broadcast Auxiliary Spectrum (BAS) relocation project from 2005 to 2010, as a program manager responsible for contracts and documents. He was assigned to the West region, which covered the territory from the Mississippi to the Rocky Mountains, and included such cities as Denver, St. Louis, Kansas City and Omaha.

During the BAS relocation project, Sprint Nextel replaced virtually all the 2 GHz microwave gear used by broadcasters for remote programming and news feeds. Affecting more than 1,200 TV stations nationwide, the project supplied $750 million in new equipment and installation services at both broadcasters and equipment rental companies. The last broadcast markets relocated under the project were in Alaska in the summer of 2010.

Maddox, a U.S. Air Force retiree who lived in Gastonia, N.C., went for a motorcycle ride on July 4, stopping under an overpass when a sudden downpour caught him on the road. An out-of-control car hit him — he died as he was being airlifted to the Carolinas Medical Center in Charlotte. The driver who struck Maddox has been charged with misdemeanor death by motor vehicle and exceeding a safe speed.

You can read more about the accident on the Shelby Star newspaper’s web site.