`.(‘v-
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 1 of 173
`Case 1:179-cv-05434-VM-RWL Document 409 Filed 02' “M"
`
`'
`
` yLECTRONICABL
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`___________________________________ X
`
`STATE OF NEW YORK, et al.,
`
`'
`
`Plaintiffs,
`
`" against -
`
`DEUTSCHE TELEKOM AG, et al.,
`
`“{W‘m
`'7
`:134Li1LED:Aw§Ef*L'
`up 2
`,
`, 31-1-
`
`’
`3
`
`19 Civ. 5434 (VM)
`
`-
`
`DECISION AND ORDER
`
`.
`Defendants.
`___________________________________ X
`
`VICTOR MARRERO, United States District Judge.
`
`TABLE OF CONTENTS
`
`INTRODUCTION ................................................... 2
`
`I.
`
`FINDINGS OF FACT .................................... 10
`
`A.
`
`SPECTRUM AND MOBILE WIRELESS NETWORKS .......... 12
`
`1.
`
`Spectrum .................................. 12
`
`2. Mobile Wireless Network Infrastructure ....14
`
`B.
`
`GENERATIONAL STANDARDS FOR MOBILE WIRELESS
`
`SERVICES ....................................... 17
`
`C.
`
`COMPETITION IN THE RMWTS MARKET ................ 19
`
`1. Mobile Network Operators .................. 20
`
`Verizon and AT&T ..................... 20
`a.
`TnMobile ............................. 21
`b.
`Sprint ............................... 23
`c.
`2. Mobile Virtual Network Operators .......... 25
`3.
`DISH as_a Potential Market Entrant ........ 26
`THE PROPOSED MERGER ............................ 28
`
`REVIEW OF AND CHALLENGES TO THE PROPOSED
`
`MERGER ......................................... 30
`
`D.
`
`E.
`
`
`
`E
`i
`i
`i
`E
`E
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 2 of 173
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`
`1.
`
`2.
`
`Federal Regulatory Review ................. 30
`
`Plaintiff States’ Challenge ............... 33
`
`II.
`
`CONCLUSIONS OF LAW .................................. 34
`
`A.
`
`PLAINTIFF STATES' PRIMA FACIE CASE ............. 36
`
`1.
`
`2.
`
`The Relevant Product Market ............... 36
`
`The Relevant Geographic Markets ........... 46
`
`3. Market Share Analysis ..................... 52
`
`B.
`
`DEFENDANTS' REBUTTAL CASE ...................... 54
`
`1.
`
`Efficiencies of the Proposed Merger ....... 57
`
`a. Merger Specificity ................... 66
`
`b. Verifiability ........................ 72
`
`2.
`
`Sprint’s Status as a Weakened
`Competitor .; .............................. 84
`
`a.
`
`b.
`
`c.
`
`Sprint’s Network Quality and
`Customer Perception .................. 86
`
`Sprint’s Financial Difficulties ...... 91
`
`Other Competitive Means Available
`
`to Sprint ............................ 94
`
`3.
`
`Federal Agency Review and DISH as a New
`Entrant .................................. 102
`
`a.
`
`FCC and DOJ Review and Remedies ..... 102
`
`b. Market Entry by DISH ................ 106
`
`i.
`
`Sufficiency of DISH’s Entry ....109
`
`ii. Likelihood of DISH’s Entry ..... 117
`
`iii. Timeliness of DISH’s Entry ..... 123
`
`C.
`
`ADDITIONAL EVIDENCE OF ANTICOMPETITIVE
`EFFECTS ....................................... 127
`
`1.
`
`Coordinated Effects ...................... 129
`
`ii
`
`
`
`
`
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`
`2. Unilateral Effects ....................... 138
`
`D.
`
`PARTICULARITIES OF THE WIRELESS
`
`TELECOMMUNICATIONS INDUSTRY ................... 143
`
`1.
`
`The RMWTS Market is Exceptional .......... 144
`
`a.
`
`b.
`
`Complexity of the Relevant Market ...144
`
`Dynamics of the Relevant Market ..... 147
`
`c. Market Dynamics in the Courts ....... 148
`
`d.
`
`Dynamics of the Wireless
`Telecommunications Industry ......... 151
`
`e. Market—Specific Behavior in
`Complex and Dynamic Industries ...... 154
`
`f.
`
`New T—Mobile's Likely Postherger
`Behavior ............................ 159
`
`g.
`
`The Posture of Sprint .............. '.163
`
`CONCLUSION ................................................... 167
`
`ORDER ........................................................ 170
`
`iii
`
`
`
`
`
`
`
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`
`Plaintiffs,
`
`the States
`
`of
`
`New York, California,
`
`Connecticut,
`
`Hawaii,
`
`Illinois,
`
`Maryland,
`
`Michigan,
`
`Minnesota, Oregon,
`
`and Wisconsin,
`
`the Commonwealths
`
`of
`
`Massachusetts, Pennsylvania, and Virginia, and the District
`
`of Columbia
`
`(collectively, “Plaintiff States”), acting by
`
`and
`
`through the
`
`respective Offices
`
`of
`
`their Attorneys
`
`General, brought
`
`this action against Deutsche Telekonl AG
`
`(“DT”),
`
`T—Mobile US,
`
`Inc.
`
`(“T—Mobile”),
`
`Softbank Group
`
`Corp.
`
`(“Softbank”),
`
`and Sprint Corporation (“Sprint,” and
`
`collectively with DT, TwMobile, and Softbank, “Defendants”)
`
`seeking to enjoin the proposed acquisition of Sprint by T—
`
`Mobile (the “Proposed Merger”). Plaintiff States claim that
`
`the effect of the Proposed Merger would be to substantially
`
`lessen competition in the market for retail mobile wireless
`
`telecommunications services
`
`(the “RMWTS Market” or
`
`“RMWTS
`
`Markets”),
`
`in violation of Section '7 of
`
`the Clayton Act,
`
`codified at 15 U.S.C. Section l8 (“Section 7”). Defendants
`
`counter
`
`that
`
`the Proposed Merger would in fact
`
`increase
`
`competition in the RMWTS Market and that Plaintiff States
`
`have thus failed to state a claim for relief.
`
`The Court held a bench trial to adjudicate Plaintiff
`
`States’
`
`claim from December
`
`9
`
`to December 20,
`
`2019 and
`
`heard post—trial
`
`closing arguments
`
`from both
`
`sides
`
`on
`
`January 15, 2020. The Court now sets forth its findings of
`
`
`
`
`
`
`
`
`
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`
`fact and conclusions of
`
`law pursuant
`
`to Rule 52(a) of
`
`the
`
`Federal Rules of Civil Procedure.
`
`INTRODUCT I ON
`
`Adjudication of antitrust disputes virtually turns the
`
`judge into a fortuneteller. Deciding such cases typically
`
`calls for a judicial reading of the future.
`
`In particular,
`
`it
`
`asks
`
`the
`
`court
`
`to
`
`predict whether
`
`the
`
`business
`
`arrangement or conduct at
`
`issue may substantially lessen
`
`competition in a given geographical
`
`and product market,
`
`thus likely to cause price increases and harm consumers. To
`
`aid the
`
`courts perform that murky
`
`function demands
`
`a
`
`massive enterprise.
`
`In most cases,
`
`the litigation consumes
`
`years
`
`at
`
`costs
`
`running
`
`into millions
`
`of dollars.
`
`In
`
`furtherance of their enterprise,
`
`the parties to the dispute
`
`retain battalions of
`
`the most
`
`skilled and highest—paid
`
`attorneys in the nation.
`
`In turn,
`
`the lawyers enlist
`
`the
`
`services of other professionals —— engineers,
`
`economists,
`
`business
`
`executives,
`
`academics —~ all ybrought
`
`into the
`
`dispute to render expert opinions regarding the potential
`
`procompetitive
`
`or
`
`anticompetitive
`
`effects
`
`of
`
`the
`
`transaction.
`
`The
`
`qualifications
`
`of
`
`litigants’
`
`specialists,
`
`impressive by the titles they have held and the tomes their
`
`CVs
`
`fill,
`
`can be humbling and
`
`intimidating. And
`
`those
`
`
`
`
`
`
`
`i
`
`
`
`
`
`
`
`‘
`
`
`
`
`
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`
`witnesses’ authoritative views stated on the stand under
`
`oath in open court
`
`can leave
`
`the lay person wondering
`
`whether word so expertly crafted and credentialed can admit
`
`room for error or even doubt. Together, counsel and experts
`
`amass documentary and ‘testimonial
`
`records
`
`for
`
`trial
`
`that
`
`can occupy entire storage rooms to capacity.
`
`Multiplying the complexity of antitrust proceedings,
`
`while also adding to the outlay of
`
`time and resources they
`
`demand,
`
`is the role of
`
`the federal government.
`
`In many
`
`cases, as occurred in the action at hand,
`
`the United States
`
`of America steps into the fray. Acting through the United
`
`States Department
`
`of
`
`Justice
`
`(“DOJ”)
`
`or
`
`regulatory
`
`agencies, or both,
`
`the government
`
`intervenes to express its
`
`interest
`
`for or against
`
`the underlying transaction,
`
`filing
`
`objections or support, or
`
`imposing conditions
`
`that could
`
`affect its viability.
`
`Perhaps most
`
`remarkable about antitrust
`
`litigation is
`
`the blurry product
`
`that not
`
`infrequently emerges
`
`from the
`
`parties'
`
`huge expenditures
`
`and correspondingly exhaustive
`
`efforts. Each side, bolstered by the mega records of fact
`
`discovery and expert reports it generates, as supplemented
`
`by
`
`the
`
`product
`
`of
`
`any
`
`governmental
`
`investigation and
`
`resulting action,
`
`offers
`
`the
`
`court
`
`evidence
`
`the party
`
`declares should guide the judge in reaching ea compelling
`
`
`
`
`
`
`
`
`
`i
`
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`
`and irrefutable decision in the declarant’s favor.
`
`In fact,
`
`however, quite often what
`
`the
`
`litigants propound sheds
`
`little light on a clear path to resolving the dispute.
`
`In
`
`the final analysis, at
`
`the point of sharpest
`
`focus
`
`and
`
`highest clarity and reliability,
`
`the adversaries’
`
`toil and
`
`trouble reduces
`
`to imprecise
`
`and somewhat
`
`suspect aids:
`
`competing crystal balls.
`
`The case now before the Court
`
`follows
`
`the pattern.
`
`Plaintiff States contend that T-Mobile’s merger with Sprint
`
`will likely stifle competition in the RMWTS Market, even in
`
`the short
`
`term,
`
`forcing consumers to pay higher prices for
`
`use of their cell phones.
`
`In support,
`
`they cite the results
`
`of
`
`their experts’ spectral efficiency studies, engineering
`
`modeling,
`
`and
`
`computer—run
`
`data
`
`analytics. Defendants,
`
`similarly reinforced by their stellar cast of authorities,
`
`proclaim with equal conviction and no less intensity that
`
`after the merger, under a market newly energized by New T—
`
`Mobile’s more vigorous competition,
`
`the prices
`
`consumers
`
`will pay for wireless services likely will not only not
`
`increase,
`
`but
`
`actually will
`
`decline. Accordingly,
`
`the
`
`parties’ costly and conflicting engineering,
`
`economic,
`
`and
`
`scholarly business models,
`
`along with
`
`the
`
`incompatible
`
`visions of the competitive future their experts’
`
`shades—of—
`
`gray forecasts portray, essentially cancel each other out
`
`
`
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`
`as helpful evidence the Court could comfortably endorse as
`
`decidedly affirming one side rather than the other.1
`
`The
`
`resulting stalemate
`
`leaves
`
`the Court
`
`lacking
`
`sufficiently impartial
`
`and objective ground. on which,
`
`to
`
`rely in basing a
`
`sound forecast of
`
`the likely competitive
`
`effects of a merger. But
`
`the expert witnesses’
`
`reports and
`
`testimony, however, do not constitute the only or even the
`
`primary source of
`
`support
`
`for
`
`the Court’s assessment of
`
`that question. There is another evidentiary foundation more
`
`compelling in this Court’s assessment
`
`than the abstract or
`
`hypothetical versions of
`
`the relevant market’s competitive
`
`future that
`
`the adversaries
`
`and.
`
`their experts
`
`advocate.
`
`Conceptually,
`
`that underpinning supports
`
`a projection of
`
`what will happen to competition post—merger
`
`that emerges
`
`from the evidence in the trial record that the Court heard,
`
`admitted through the
`
`testimony of
`
`fact witnesses,
`
`and
`
`1 This outcome recalls the heated conflicts over what the Founders meant
`
`in framing particular provisions of the Constitution, often engendering
`unproductive textual, historical,
`and doctrinal debates
`about which
`Justice Robert
`Jackson,
`remarked:
`“A century and.
`a half of partisan
`debate and scholarly speculation yields no net result but only supplies
`more or less apt quotations from respected sources on each side of any
`question. They largely cancel each other.” Youngstown Sheet
`& Tube Co.
`v.
`Sawyer,
`343 U.S.
`579,
`634—35
`(1952)
`(Jackson,
`J.,
`concurring).
`Nonetheless,
`in the discussion below the Court
`thoroughly considers the
`trial
`testimony and related. documentation. offered by all
`the expert
`witnesses
`and
`explains where
`and why
`it
`found the presentations
`convincing in some respects, but
`in others unconvincing and on balance
`not sufficiently creditable.
`
`
`
`
`
`1
`
`
`
`
`
`
`
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`
`evaluated with respect to its credibility and the weight it
`
`deserves.
`
`How the future Amanifests
`
`itself and brings
`
`to pass
`
`what
`
`it holds
`
`is a multifaceted phenomenon that
`
`is not
`
`- necessarily guided by theoretical
`
`forces or mathematical
`
`models.
`
`Instead,
`
`causal agents
`
`that engender knowing' and
`
`purposeful
`
`human
`
`behavior,
`
`individual
`
`and
`
`collective,
`
`fundamentally shape
`
`that narrative. Confronted by
`
`such
`
`challenges, courts acting as
`
`fact—finders ordinarily turn
`
`to traditional
`
`judicial methods
`
`and guidance more aptly
`
`fitted for the task. Specifically,
`
`they resort to their own
`
`tried and tested version of peering into a crystal ball.
`
`Reading what
`
`the major players involved in the dispute have
`
`credibly said or not said and done or not done,
`
`and what
`
`they commit
`
`to do or not
`
`do concerning the merger,
`
`the
`
`courts are then equipped to interpret whatever
`
`formative
`
`conduct and decisive events they can reasonably foresee as
`
`likely to occur.
`
`For this purpose, however,
`
`the courts rely less on the
`
`equipoise
`
`of mathematical
`
`computations,
`
`technical data,
`
`analytical modeling, and adversarial scientific assumptions
`
`that the litigants proffer. Rather,
`
`they apply the judge’s
`
`own
`
`skills
`
`and
`
`frontline
`
`experience
`
`in
`
`weighing,
`
`predicting,
`
`and
`
`judging
`
`complex
`
`and often
`
`conflicting
`
`
`
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`
`accounts of
`
`human
`
`conduct,
`
`those actions
`
`and
`
`inactions
`
`drawn
`
`from the
`
`factual
`
`evidence.
`
`In
`
`performing.
`
`that
`
`function,
`
`courts
`
`employ various behavioral. measures
`
`that
`
`even the most exhaustive and authoritative technical expert
`
`study could not adequately capture or gauge as a reliable
`
`prognosticator of likely events set
`
`in motion fundamentally
`
`by
`
`business
`
`decisions made
`
`by
`
`various
`
`live
`
`sources:
`
`relevant market
`
`competitors,
`
`other market participants,
`
`public agencies, and even consumers.
`
`Evaluation of
`
`the
`
`likely competitive effects of
`
`a
`
`prospective business merger
`
`implicates these observations.
`
`The
`
`task provides the Court occasion to engage in such a
`
`prophetic role. To this end,
`
`the Court weighs what actions
`
`taken by the parties to the merger and other proponents
`
`could substantially influence
`
`consumer
`
`choices
`
`and
`
`thus
`
`affect
`
`competition and product pricing in the
`
`relevant
`
`markets.
`
`In this context,
`
`several considerations
`
`emerge
`
`from
`
`the evidentiary record that the Court regards as especially
`
`relevant
`
`and
`
`compelling.
`
`Foremost
`
`among
`
`them is
`
`the
`
`plausibility and persuasiveness of particular witnesses’
`
`trial presentations based on various behavioral guideposts
`
`that the Court details in Section II.D.
`
`
`
`
`
`
`
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`
`During the two"week trial of this action the Court had
`
`ample occasion to observe the witnesses and assess their
`
`credibility and demeanor
`
`on
`
`the witness
`
`stand,
`
`and to
`
`consider the weight
`
`their testimony warranted in the light
`
`of the pointers referred to here and articulated below.
`
`As
`
`elaborated,
`
`in crafting the framework for its decision, and
`
`applying the evidence and governing legal principles,
`
`the
`
`Court
`
`took those considerations
`
`into account. The Court
`
`adopted
`
`this
`
`course
`
`because
`
`it
`
`regards
`
`as
`
`a
`
`guiding
`
`principle
`
`the
`
`proposition
`
`that
`
`behavioral
`
`drives
`
`and
`
`motivational
`
`forces
`
`such
`
`as
`
`those
`
`suggested
`
`serve
`
`to
`
`actuate
`
`as well
`
`as
`
`to restrain personal
`
`and business
`
`practices. Hence,
`
`they
`
`can
`
`function
`
`as
`
`a
`
`forecasting
`
`device, providing the Court substantial guidance about how
`
`the corporate officers and companies
`
`involved in the case
`
`are likely to conduct
`
`themselves under particular market
`
`conditions prevailing after a merger.
`
`The
`
`approach
`
`detailed above
`
`assists
`
`the Court’s
`
`adjudication
`
`by
`
`shedding
`
`light
`
`on
`
`a
`
`basic
`
`question
`
`presented here that was
`
`intensely debated by the parties,
`
`and that
`
`is central
`
`to a
`
`resolution, of
`
`their dispute:
`
`whether
`
`a deeply embedded, pattern, of
`
`commercial
`
`conduct
`
`closely and publicly associated with a company or executive
`
`is likely to be abandoned or substantially altered after a
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 12 of 173
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`
`merger
`
`so as
`
`to openly embrace
`
`a materially conflicting
`
`course, eSpecially in the short term.
`
`More
`
`significant
`
`for
`
`the purposes
`
`of deciding the
`
`issues before
`
`the Court
`
`is
`
`another
`
`salient point.
`
`The
`
`considerations
`
`the Court
`
`references
`
`here
`
`as
`
`supplying
`
`persuasive guidance also figure as judicial stock-in—trade,
`
`encompassing
`
`things
`
`courts
`
`commonly weigh
`
`in rendering
`
`predictive rulings
`
`such as,
`
`for
`
`instance,
`
`the
`
`judgment
`
`calls they routinely make in determining whether a rational
`
`person would or would not behave in a particular way, or
`
`whether
`
`'to grant
`
`(n: deny bail, or
`
`11)
`
`impose ea custodial
`
`sentence, where
`
`in
`
`each
`
`case
`
`the
`
`likelihood
`
`of
`
`the
`
`defendant’s reoffending if released comes into question.
`
`Weighing the evidence in the trial record, and mindful
`
`of
`
`the considerations described here,
`
`the Court
`
`rejects
`
`Plaintiff States’ objections
`
`on
`
`three essential points.
`
`First,
`
`the Court
`
`is not persuaded that Plaintiff States’
`
`prediction of
`
`the future after the merger of T—Mobile and
`
`Sprint
`
`is sufficiently compelling insofar as it holds that
`
`New T—Mobile would pursue anticompetitive behavior
`
`that,
`
`soon after the merger, directly or
`
`indirectly, will yield
`
`higher
`
`prices
`
`or
`
`lower
`
`quality
`
`for
`
`wireless
`
`telecommunications
`
`services,
`
`thus
`
`likely to substantially
`
`lessen competition in a nationwide market.
`
`Second,
`
`the
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 13 of 173
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 13 of 173
`
`Court also disagrees with the projection Plaintiff States
`
`present contending that Sprint,
`
`absent
`
`the merger, would
`
`continue operating as a strong competitor in the nationwide
`
`market for wireless services. Similarly,
`
`the Court does not
`
`credit Plaintiff States’
`
`evidence
`
`in arguing that DISH
`
`would not enter
`
`the wireless services market as
`
`a viable
`
`competitor nor
`
`live up
`
`to its
`
`commitments
`
`to build a
`
`national wireless network,
`
`so as
`
`to provide services that
`
`would fill
`
`the competitive gap left by Sprint's demise.
`
`Accordingly,
`
`the Court concludes
`
`that
`
`judgment
`
`should. be
`
`entered
`
`in
`
`favor
`
`of Defendants
`
`and Plaintiff States’
`
`request to enjoin the Proposed Merger should be denied.
`
`I.
`
`FINDINGS OF FACT2
`
`This is a case about competition in the retail market
`
`for mobile wireless
`
`telecommunications
`
`services.
`
`The
`
`significance of
`
`these services,
`
`as described in greater
`
`detail
`
`in Section II.D. below, has increased greatly since
`
`their inception roughly four decades ago,
`
`transforming from
`
`solely a method of voice communication to a critical means
`
`for consumers
`
`to manage countless
`
`facets of
`
`their daily
`
`lives. Among the variety of consumer uses enabled by these
`
`2 While the Court has reviewed and considered all of the live testimony
`and accompanying exhibits admitted in evidence in connection with the
`trial in this matter,
`the Court addresses only those portions of
`the
`evidence relevant to its legal conclusions.
`
`10
`
`
`
`L
`
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 14 of 173
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 14 of 173
`
`services are transportation applications such as Uber and
`
`Lyft, applications enabling mobile banking and transactions
`
`with various
`
`retail outlets,
`
`and personal entertainment
`
`uses such as streaming audio, video, and high—speed gaming.
`
`As mobile wireless
`
`telecommunications
`
`services
`
`now also
`
`enable
`
`consumers
`
`to communicate with each other
`
`through
`
`voice, video,
`
`and text
`
`in various ways,
`
`the importance of
`
`such services is hard to overstate.
`
`Consumers
`
`choose
`
`retail
`
`mobile
`
`wireless
`
`telecommunications
`
`services
`
`(“RMWTS”)
`
`providers,
`
`or
`
`“carriers,” based on several considerations. These include
`
`the nominal price of
`
`the services, whether
`
`those services
`
`are bundled with consumer services in other retail markets,
`
`and the terms on which those services can be extended to
`
`consumers’
`
`families.
`
`Of
`
`equal
`
`or potentially greater
`
`importance,
`
`consumers also choose carriers based on
`
`the
`
`quality
`
`of
`
`the
`
`carriers’ wireless
`
`telecommunications
`
`networks,
`
`including the speeds and consistency of coverage
`
`provided
`
`by
`
`those
`
`networks
`
`as well
`
`as
`
`the mobile
`
`applications
`
`that
`
`can be used given the quality of
`
`the
`
`networks. Because carriers compete on these dimensions of
`
`network quality, and because it is important
`
`to understand
`
`how these dimensions of network quality are determined,
`
`the
`
`11
`
`
`
`
`
`
`
`
`
`
`
`
`
`Es‘4‘
`
`
`
`
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 15 of 173
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 15 of 173
`
`Court provides below 2a brief overview of nmbile wireless
`
`network design and mobile wireless technological standards.
`
`A.
`
`SPECTRUM AND MOBILE WIRELESS NETWORKS
`
`1.
`
`Spectrum
`
`Mobile wireless telecommunications services basically
`
`entail voice or data transmission via radio waves, which
`
`are generally referred to as spectrum. Because spectrum is
`
`necessary for the transmission of data,
`
`it is potentially
`
`the most critical resource for any aspiring RMWTS provider.
`
`Tr. 1152:3—9. Spectrum is a fixed resource that
`
`is limited
`
`in quantity, and its availability and use is thus regulated
`
`by the Federal Communications Commission
`
`(“FCC”). The
`
`FCC
`
`licenses spectrum in order to ensure the unique use of each
`
`radio
`
`frequency, without which
`
`there would
`
`be
`
`signal
`
`interference
`
`that
`
`would
`
`render
`
`mobile
`
`wireless
`
`telecommunications
`
`incomprehensible. Tr.
`
`1152:l0—21.
`
`The
`
`FCC also determines which frequencies of spectrum will be
`
`dedicated to specific communications
`
`industries,
`
`such as
`
`wireless
`
`telecommunications,
`
`cable
`
`television,
`
`and
`
`satellite services, as well as to other users such as the
`
`United States Department of Defense. The
`
`FCC occasionally
`
`reapportions
`
`certain spectrum frequencies
`
`to different
`
`industries based on their relative importance to consumers,
`
`and
`
`it may
`
`then auction the
`
`reapportioned spectrum.
`
`to
`
`12
`
`
`
`
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 16 of 173
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 16 of 173
`
`service
`
`providers
`
`in
`
`the
`
`relevant
`
`industry.
`
`Service
`
`providers may also privately transact
`
`in spectrum among
`
`themselves,
`
`although the
`
`FCC may
`
`need
`
`to approve
`
`the
`
`transfer of the relevant Spectrum licenses.
`
`The
`
`radio
`
`frequencies
`
`used
`
`for mobile wireless
`
`telecommunications
`
`services
`
`can be broadly divided into
`
`three categories of
`
`spectrum:
`
`“low—band,”
`
`“mid—band,” and
`
`“millimeter' wave”
`
`(“mmWave”)
`
`spectrum.
`
`Low—band
`
`spectrum,
`
`defined
`
`as
`
`covering
`
`frequencies
`
`below one
`
`gigahertz
`
`(“GHZ”),
`
`can cover broad distances of up to 18 miles and
`
`penetrate into buildings effectively.
`
`It may thus be used
`
`to effectively provide mobile wireless telecommunications
`
`services in both urban environments with many buildings and
`
`less
`
`densely
`
`populated
`
`rural
`
`areas. However,
`
`low—band
`
`spectrum is in scarce supply because it is also used for
`
`television and radio broadcasting,
`
`and because the mobile
`
`wireless telecommunications networks that were built in the
`
`industry’s infancy primarily used low—band spectrum. Def.
`
`Ex. 8180 at 3; Tr. 1153:8w20.
`
`Mid—band spectrum covers
`
`frequencies between one and
`
`six GHz and has a maximum effective range of between two to
`
`six miles. While it does not have the same broad coverage
`
`or
`
`in—building
`
`penetration
`
`capabilities
`
`of
`
`low—band
`
`spectrum,
`
`it
`
`is plentiful
`
`in comparison
`
`and currently
`
`13
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 17 of 173
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 17 of 173
`
`supports the majority of mobile wireless network traffic in
`
`the United States. Although,
`
`5G,
`
`the latest
`
`technological
`
`standard for mobile wireless
`
`telecommunications
`
`services,
`
`is primarily being deployed across
`
`the Had—band
`
`spectrum
`
`worldwide,
`
`this
`
`type of deployment has been
`
`relatively
`
`difficult
`
`in
`
`the United
`
`States
`
`because
`
`additional
`
`undeployed midwband spectrum is not readily available. Def.
`
`Ex. 8180 at 3; Tr. 1153:21—1154le.
`
`MmWave spectrum covers frequencies above 20 GHz and is
`
`relatively new to mobile wireless
`
`networks.
`
`It
`
`is
`
`in
`
`plentiful
`
`supply and
`
`can be used to create additional
`
`capacity and higher
`
`speeds
`
`for consumers, but
`
`it has
`
`the
`
`least
`
`capability to penetrate buildings
`
`and
`
`the most
`
`limited range of all
`
`three spectrum bands,
`
`reaching only
`
`300 yards at best._Def. Ex. 8180 at 3; Tr.
`
`llS4:l4—ll55:4.
`
`2. Mobile Wireless Network Infrastructure
`
`Data and voice communications are transmitted between
`
`consumers’ mobile phones, or “handsets,” through a complex
`
`and
`
`expensive
`
`set
`
`of
`
`infrastructure
`
`developed
`
`and
`
`maintained by certain RMWTS providers. Consumers’ handsets
`
`transmit and receive data through radios that are hosted on
`
`“cell sites," which are either large steel
`
`lattice towers
`
`l4
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 18 of 173
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 18 of 173
`
`or antennas and related equipment mounted on rooftops.3 Cell
`
`sites connect
`
`to each other
`
`through,
`
`fiber cables called
`
`“backhaul,” which also connect
`
`the cell sites to a central
`
`set of computing hardware called either the “mobile core”
`
`or “core network.” The mobile core serves as a centralized
`
`station
`
`that
`
`manages
`
`network
`
`traffic
`
`and
`
`directs
`
`communications between handsets through the interconnected
`
`network of cell sites. Def. Ex.
`
`8180 at 2; Tr.
`
`504:14—
`
`505:15, 1150:8—1151:21.4
`
`The
`
`reliability and quality of
`
`a
`
`consumer’s mobile
`
`wireless telecommunications services depend largely on the
`
`coverage and capacity of the underlying mobile network. Tr.
`
`505:22—506213, 1143:16—25. Coverage refers to the range in
`
`which a carrier’s customers can use their mobile wireless
`
`services;
`
`it
`
`is a
`
`function of both the location of
`
`the
`
`carrier’s
`
`cell
`
`sites
`
`and
`
`the
`
`effective
`
`range
`
`of
`
`the
`
`spectrum. deployed. at
`
`'those cell sites. Because consumers
`
`generally desire Hmbile services that do not
`
`limit
`
`their
`
`freedonl of movement,
`
`the ideal netw0rk will have
`
`enough
`
`\\
`n
`can be supplemented by
`sometimes called macros,
`3 These large towers,
`smaller devices called “small cells, which cover smaller distances but
`are less expensive to install. Radio equipment may also vary based on
`the type of cell site and the radio frequencies that it will
`receive
`and transmit.
`
`If
`
`4 The portions of_this network infrastructure that specifically relate
`to radio transmission are sometimes
`referred to as
`the Radio Access
`Network (“RAN”).
`
`15
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 19 of 173
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 19 of 173
`
`cell
`
`sites
`
`and
`
`spectrum to ensure
`
`consistent
`
`coverage
`
`wherever a carrier’s customers are likely to travel.
`
`Capacity refers to the amount of traffic that a mobile
`
`wireless network can support. Capacity is a Hmltiplicative
`
`function of
`
`the number of cell sites in a network,
`
`the
`
`amount of
`
`spectrum deployed per cell site,
`
`and “spectral
`
`efficiency,” which determines the amount of data that can
`
`be transmitted over a given quantity of spectrum. “Traffic"
`
`is a function of both the number of consumers
`
`that use a
`
`particular
`
`amount of
`
`spectrum and
`
`how much data
`
`those
`
`consumers' applications require.
`
`In other words,
`
`the more
`
`consumers who use a given amount of spectrum,
`
`the less data
`
`each consumer will be able to use at any given'point
`
`in
`
`time. Consumers experience these data limitations either in
`
`the form of caps on how muCh data they can use or
`
`in the
`
`form of
`
`lower
`
`speeds
`
`that may
`
`limit
`
`or prohibit _the
`
`consumers’ ability to use data—intensive applications such
`
`as streaming video.
`
`RMWTS carriers seek to avoid exceeding
`
`their maximum capacity,
`
`and consequently dOanrading the
`
`quality of
`
`their service,
`
`by acquiring‘ more
`
`spectrum or
`
`building more
`
`cell
`
`sites
`
`to utilize
`
`their
`
`existing
`
`spectrum, either of which increases the carriers’ capacity
`
`to carry additional network traffic. Def. Ex. 8180 at
`
`6—7;
`
`Tr. 1163:2—15, 1165le~1l66:3,
`
`ll67:2—ll68:l7.
`
`16
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 20 of 173
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 20 of 173
`
`The preceding summary indicates
`
`that
`
`RMWTS carriers
`
`would like as much
`
`spectrum and as many cell sites as
`
`possible
`
`in
`
`order
`
`to
`
`have
`
`consistent
`
`coverage
`
`and
`
`sufficient
`
`capacity
`
`to
`
`ensure
`
`reliable,
`
`high—quality
`
`services. However,
`
`as noted above,
`
`spectrunl
`
`is a
`
`scarce
`
`resource and consequently costly to acquire. Cell sites are
`
`similarly expensive to construct
`
`and connect
`
`to network
`
`infrastructure,
`
`and they can take months or even years to
`
`build because of the time—consuming process of securing the
`
`permitting and
`
`licenses necessary to build and operate
`
`them. Tr. 1144:13—22, 1167:2—1168217.
`
`B.
`
`GENERATIONAL STANDARDS FOR MOBILE WIRELESS SERVICES
`
`The applications
`
`that
`
`RMWTS
`
`consumers
`
`can use also
`
`depend upon the technological standards that apply to the
`
`spectrum deployed on
`
`the mobile wireless network. There
`
`have
`
`been
`
`five
`
`generations
`
`of wireless
`
`technology
`
`standards,
`
`each
`
`of which
`
`has
`
`significantly increased
`
`spectral efficiency and thus facilitated increasingly data—
`
`intensive consumer uses.
`
`The first generation of wireless technology standards
`
`governed the first mobile phones, which could only provide
`
`voice services, during a period that corresponds roughly to
`
`the 19805. The second generation,
`
`referred to as 2G,
`
`came
`
`into operation,
`
`in the 19905
`
`and saw the development of
`
`17
`
`
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 21 of 173
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 21 of 173
`
`basic non—voice data, services;
`
`the archetypal
`
`ZG service
`
`was
`
`text messaging.
`
`BG developed in the 20008 and featured
`
`a more comprehensive rollout of data services that allowed
`
`users of mobile devices
`
`to access
`
`
`and, browse
`
`the
`
`internet.
`
`4G, also called LTE (for “long term evolution”),
`
`developed in the last decade. Coupled with the advent of
`
`smartphones,
`
`4G has enabled data services far beyond basic
`
`internet browsing,
`
`including the creation of applications
`
`for
`
`varied
`
`consumer
`
`uses
`
`such
`
`as
`
`personal
`
`finance,
`
`entertainment,
`
`health and
`
`fitness,
`
`and much more. Tr.
`
`1155:5—1157:4.
`
`The
`
`RMWTS
`
`industry is currently in a
`
`transitional
`
`period,
`
`as providers begin to roll out
`
`5G,
`
`the fifth—
`
`generation wireless
`
`technological
`
`standard, Although the
`
`full
`
`impact
`
`of
`
`SG
`
`remains
`
`to
`
`be
`
`seen,
`
`it
`
`promises
`
`significant increases in the speeds available to consumers,
`
`lower consumption of mobile devices’ batteries, and reduced
`
`latency,
`
`or
`
`the time
`
`required for
`
`a mobile device
`
`and
`
`mobile network to communicate with each other.
`
`5G will
`
`likely enable consumers to use augmented reality (“AR”) or
`
`virtual reality (“VR”) applications and to stream video at
`
`a significantly higher picture quality referred to as
`
`4K.
`
`SG may
`
`also
`
`facilitate
`
`the
`
`development
`
`of
`
`various
`
`applications that may not strictly fall under the umbrella
`
`18
`
`
`
`
`
`
`
`
`
`
`
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 22 of 173
`Case 1:19-cv-05434-VM-RWL Document 409 Filed 02/11/20 Page 22 of 173
`
`of
`
`retail
`
`services,
`
`such
`
`as
`
`autonomous driving,
`
`near—
`
`simultaneous translation,
`
`and healthcare applications that
`
`require minimal delays in networkwto—device communication.
`
`Tr.
`
`927:11—928z6, 1157:20~1159:2.
`
`In total,
`
`consumers are
`
`projected to demand more than five times as much data for
`
`5G services as they currently demand for 4G services. Def.
`
`Ex. 8l80 at 4.
`
`The
`
`implementation of
`
`such a significant
`
`change
`
`in
`
`technological
`
`standards
`
`is
`
`costly
`
`and
`
`timewconsuming.
`
`Industry estimates place the cost of deploying