Sprint, T-Mobile get some good news and some bad news from FCC on merger

The FCC said it would pause its informal 180-day transaction “shot clock” on its review of the proposed merger between Sprint and T-Mobile. The agency said that it needed more time in part to review new documents the companies submitted outlining their network merger plan.

“The Applicants submitted a substantially revised network engineering model,” the agency wrote in a letter detailing the delay (PDF). “The newly-provided network engineering model is significantly larger and more complex than the engineering submissions already in the record. It appears to incorporate new logic, methodologies, facts, and assumptions, on a subject central to the Applications-the transaction's claimed network benefits. Accordingly, the Commission and third parties will require additional time to review it.”

The FCC said it would also pause the shot clock to review other documents submitted by T-Mobile and Sprint related to their merger proposal.

In a subsequent filing, T-Mobile explained that "Counsel explained that the model submitted on August 1 was used to support the Applicants’ Public Interest Statement (“PIS”) and supporting Declaration of Neville Ray. This model calculates offered traffic and throughput as a function of spectrum assets, sites, and spectral efficiency. Since the submission of the PIS, the Applicants have expanded the model to incorporate functionality that measures congestion as a function of network traffic, projects incremental builds necessary to satisfy the Parties’ ordinary-course planning criteria, and measures network performance from a user experience perspective, accounting for network load. Further detail on the differences between the August 1 and September 5 models is contained in the Parties’ September 5 filing. This additional functionality supports ongoing work of the Applicants’ economists, including economic modeling of the effects of the merger."

As The Wall Street Journal noted, the action represents a slight setback to the companies’ merger process, but is by no means a significant issue. Sprint and T-Mobile have said they don’t expect to close their merger until next year, and the FCC sometimes extends its self-imposed review deadline in order to review complex transactions. And the merger between the nation’s third- and fourth-largest wireless network operators is certainly complex, considering it involves 5G technology, jobs, foreign ownership and other such issues.

RELATED: T-Mobile says it won’t team with Sprint to bid in mmWave spectrum auction

While Sprint and T-Mobile executives digest the FCC’s pause of the review, the agency’s Wireless Bureau did offer some good news: It said both Sprint and T-Mobile can participate in the FCC’s upcoming millimeter-wave spectrum auctions starting in November, despite their plans to merge.

“The public interest is served by enabling T-Mobile and Sprint to both apply and participate in both auctions, notwithstanding their proposed transaction,” the agency wrote in its decision (PDF).

Typically, companies bidding in FCC auctions are prohibited from engaging in business transactions with each other for fear that they will coordinate unfair bidding strategies. But T-Mobile and Sprint had urged the FCC to allow them to separately participate in the auction despite their agreement to merge. T-Mobile specifically has said that it is very keen to acquire millimeter-wave spectrum for its 5G network.

Article updated Sept. 12 with additional information from T-Mobile.