PRESS RELEASE: FSF Files Opposition to Petitions to Deny on the Proposed T-Mobile - UScellular Transaction

Below are the first four paragraphs in the Free State Foundation’s Opposition to Petitions to Deny the proposed T-Mobile - UScellular transaction. A PDF of the complete FCC filing, with footnotes, is here.

I.                   Introduction and Summary

This Opposition to Petitions to Deny is filed in the Commission’s review of the transfer control of spectrum licenses pursuant to the proposed acquisition of UScellular operations and assets by T-Mobile US, Inc. Consistent with its past practice, the Free State Foundation does not specifically endorse or oppose the proposed T-Mobile/UScellular merger but examines it in light of basic merger review and competition principles. This Opposition to Petitions to Deny also responds to arguments contained in petitions to deny that are unsupported by evidence or not transaction-specific.

The weight of evidence indicates that the proposed T-Mobile/UScellular merger, if approved, would produce pro-competitive benefits. The merger would benefit UScellular subscribers by giving them access to 5G services with faster speeds and higher data capacity. It also would expand fixed wireless access (FWA) services in UScellular's service regions, especially in rural areas. Moreover, given the existing competition in the traditional wireless marketplace, as well as in the broader broadband marketplace in which T-Mobile and UScellular participate, the transaction does not appear to pose any significant harm to competition or consumers that would outweigh the likely positive benefits.

II.                 The Market’s Competitiveness Should Dictate the Commission’s Analysis

The proposed transaction should be analyzed in light of the competitive conditions of the wireless marketplace. Today’s “mobile telephony/broadband services” product market is characterized by strong competition among three nationwide mobile wireless providers – T-Mobile, AT&T, and Verizon, an emergent fourth nationwide provider in EchoStar, local wireless providers, and regional hybrid cellular-cable mobile virtual network operators (MVNOs) Xfinity Mobile and Spectrum Mobile. Wireless providers are rapidly expanding 5G networks and upgrading their bandwidth capacity and speeds to supply increasing consumer demands. Indeed, the “mobile telephony/broadband services” product market exists within a broader broadband marketplace that is characterized by convergence and cross-platform competition between traditional mobile wireless services and substitutable or potentially substitutable fixed wireless (FWA), cable, fiber, and satellite services.

Ongoing service capability improvements and competition are backed by strong annual private market investment of $30 billion in 2023 and a total of $190 billion since 2018. Given the pro-competitive conditions for wireless services, the Commission’s merger review should incorporate a forward-looking analysis. Static market indicators fail to capture the critical role of future investment and innovation in driving competition and benefitting consumers.

 

BEAD Program Softens Stance on "Alternative" Technologies

In final guidance released on January 2, 2025, the National Telecommunications and Information Administration (NTIA) opened the door, ever so slightly, to Broadband Equity, Access, and Deployment (BEAD) Program projects utilizing unlicensed fixed wireless and low Earth orbit (LEO) satellites. By no means a course correction to a true technology neutral approach – end-to-end fiber proposals continue to be heavily favored without adequate regard for cost – at least providers using these so-called "alternative technologies" are no longer barred outright from participating in the $42.45 billion BEAD Program.

In the Public Notice, NTIA reiterated its position that states "must seek the most robust technology feasible at each location." Prior to this policy change, that meant (a) end-to-end fiber first ("Priority Broadband Projects"), and (b) cable broadband, digital subscriber line (DSL), or fixed wireless – using either licensed spectrum or a combination of licensed and unlicensed spectrum – second ("Reliable Broadband Service"). Projects using unlicensed spectrum only do not fall within the definition of "Reliable Broadband Service." Nor do LEO satellite-based offerings.

With this final guidance, NTIA will allow states to consider grant applications utilizing distribution technologies that meet the speed (100 Mbps downstream and 20 Mbps upstream) and latency (less than or equal to 100 milliseconds) requirements for "Reliable Broadband Service" but (in my view, at least) arbitrarily remain excluded from that category. Specifically, unlicensed fixed wireless and LEO satellite-based offerings now will be treated as quasi-eligible "Alternative Technologies."

However, and as I highlighted in "BEAD Program Technological Neutrality 'Fix' Falls Short," an August 2024 Perspectives from FSF Scholars, states may consider non-fiber "Reliable Broadband Service" technologies only where the cost to deploy fiber exceeds the "Extremely High Cost Per Location Threshold" (EHCPLT), an often unreasonably high bar that disregards the amount of time it will take to deploy fiber versus other technologies.

"Alternative Technologies," meanwhile, become eligible only after states "demonstrate that no ["Reliable Broadband Service"] was deployable for less than the EHCPLT by leveraging multiple strategies to obtain bids for Priority Broadband Projects and other ["Reliable Broadband Service"] projects that fall under the EHCPLT."

In other words, with this change the funding eligibility priority order has been expanded, somewhat, from two categories – end-to-end fiber followed by other "Reliable Broadband Service" – to three, with unlicensed fixed wireless and LEO satellite at the end of the line.

While in theory an improvement over the exclusionary approach originally set forth in the BEAD Program Notice of Funding Opportunity, the final guidance's creation of a third-place "Alternative Technology" category – well short of a full embrace of the concept of technological neutrality – may not have that much of practical impact.

Court Sets Aside FCC's New Title II Order

On January 2, the U.S. Court of Appeals for the Sixth Circuit issued a decision on the merits in MCP No. 185. The three-judge panel's decision set aside the FCC's 2024 Securing and Safeguarding the Open Internet Order. The court wrote:   

Using "the traditional tools of statutory construction," id., we hold that Broadband Internet Service Providers offer only an "information service" under 47 U.S.C. § 153(24), and therefore, the FCC lacks the statutory authority to impose its desired net-neutrality policies through the "telecommunications service" provision of the Communications Act, id. § 153(51).

The Sixth Circuit's decision in MCP No. 185 presents a straightforward reading of the Communications Act. It thus reaches a relatively easy conclusion that broadband Internet access services are best understood as fitting the definition of lightly regulated "information services" under Title I of the Act. This decision is welcome because it means that innovative broadband networks will remain free from unjustifiable public utility regulation that Congress never authorized. 

The Sixth Circuit's opinion is refreshing because it shows how the traditional tools of statutory interpretation can be used to resolve even seemingly technical questions like the regulatory classification of broadband. It's the type of decision that eluded us so long as lower courts were subject to the "Chevron doctrine" and effectively required to rationalize even far-fetched agency interpretations or re-interpretations of supposed ambiguous statutory provisions. 

The Sixth Circuit's commendable decision was made possible by the Supreme Court's overruling of the "Chevron doctrine" in its 2025 Loper Bright Enterprises v. Raimondo decision, which signaled a return to principles of judicial review based on the best reading of statutes rather than elastic deference to regulatory agencies. 

 

The August 2024 stay order issued by a different Sixth Circuit panel in an earlier stage of the litigation presented a persuasive analysis that the FCC's order is contrary to the Supreme Court's Major Questions Doctrine. However, the merits panel's decision that was issued on January 2 rightly takes a first-things-first approach by concluding the FCC's order exceeded the terms of the Communication Act. Recourse to the Major Questions Doctrine is unnecessary to reach that conclusion. 

 

P.S. In December 2023, the Free State Foundation filed public comments with the FCC opposing the agency's proposed Title II reclassification decision. And in January 2024, the Free State Foundation filed reply comments in the Commission's Securing and Safeguarding the Open Internet proceeding. Those comments and reply comments predated the Supreme Court's decision in Loper Bright. For a defense of the Loper Bright decision, see FSF President Randolph May's July 2024 Perspectives from FSF Scholars, "Chevron's Demise Re-Aligns Administrative State With Founders' Vision."

Chevron Undermined Legal Stability, Loper Bright Will Help Restore It

On December 27, Free State Foundation President Randolph May published "Demise of Chevron Deference Promotes Regulatory Certainty," a Perspectives from FSF Scholars. In the Perspectives, President May defended the Supreme Court’s June 2024 decision in Loper Bright Enterprises v. Raimondo – which overturned the "Chevron doctrine" – against the claim that the decision would undermine stability or certainty in the law and undermine economic activity such as that private investment. 

In reality, the "Chevron doctrine" that required courts to defer to agency interpretations of statutory terms claimed to be ambiguous created a tremendous lack of stability and uncertainty in the law. 

 

To reinforce the points made in President May's Perspectives, the opinion of the court in Loper Bright is worth quoting: 

Nor has Chevron been the sort of "'stable background' rule" that fosters meaningful reliance. Post, at 8, n. 1 (opinion of KAGAN, J.) (quoting Morrison v. National Australia Bank Ltd., 561 U.S. 247, 261 (2010)). Given our constant tinkering with and eventual turn away from Chevron, and its inconsistent application by the lower courts, it instead is hard to see how anyone-Congress included-could reasonably expect a court to rely on Chevron in any particular case. And even if it were possible to predict accurately when courts will apply Chevron, the doctrine "does not provide 'a clear or easily applicable standard, so arguments for reliance based on its clarity are misplaced.'" Janus, 585 U.S., at 927 (quoting South Dakota v. Wayfair, Inc., 585 U.S. 162, 186 (2018)). To plan on Chevron yielding a particular result is to gamble not only that the doctrine will be invoked, but also that it will produce readily foreseeable outcomes and the stability that comes with them. History has proved neither bet to be a winning proposition.

 

Rather than safeguarding reliance interests, Chevron affirmatively destroys them. Under Chevron, a statutory ambiguity, no matter why it is there, becomes a license authorizing an agency to change positions as much as it likes, with "[u]nexplained inconsistency" being "at most . . . a reason for holding an interpretation to be . . . arbitrary and capricious." Brand X, 545 U.S., at 981. But statutory ambiguity, as we have explained, is not a reliable indicator of actual delegation of discretionary authority to agencies. Chevron thus allows agencies to change course even when Congress has given them no power to do so. By its sheer breadth, Chevron fosters unwarranted instability in the law, leaving those attempting to plan around agency action in an eternal fog of uncertainty. Chevron accordingly has undermined the very "rule of law" values that stare decisis exists to secure. Michigan v. Bay Mills Indian Community, 572 U.S. 782, 798 (2014).

In his Perspectives, President May included a brief quotation from Justice Neil Gorsuch's concurring opinion in Loper Bright. A fuller quotation is also worth reading:  

Far from engendering reliance interests, the whole point of Chevron deference is to upset them. Under Chevron, executive officials can replace one "reasonable" interpretation with another at any time, all without any change in the law itself. The result: Affected individuals "can never be sure of their legal rights and duties." Buffington, 598 U.S., at__ (slip op., at 12).

 

How bad is the problem? Take just one example. Brand X concerned a law regulating broadband internet services. There, the Court upheld an agency rule adopted by the administration of President George W. Bush because it was premised on a "reasonable" interpretation of the statute. Later, President Barack Obama's administration rescinded the rule and replaced it with another. Later still, during President Donald J. Trump's administration, officials replaced that rule with a different one, all before President Joseph R. Biden, Jr.'s administration declared its intention to reverse course for yet a fourth time. See Safeguarding and Securing the Open Internet, 88 Fed.Reg. 76048 (2023); Brand X, 545 U.S., at 981-982. Each time, the government claimed its new rule was just as "reasonable" as the last. Rather than promoting reliance by fixing the meaning of the law, Chevron deference engenders constant uncertainty and convulsive change even when the statute at issue itself remains unchanged.

 

Nor are these antireliance harms distributed equally. Sophisticated entities and their lawyers may be able to keep pace with rule changes affecting their rights and responsibilities. They may be able to lobby for new "'reasonable'" agency interpretations and even capture the agencies that issue them. Buffington, 598 U.S., at__,__ (slip op., at 8, 13). But ordinary people can do none of those things. They are the ones who suffer the worst kind of regulatory whiplash Chevron invites.

Notably, Justice Gorsuch's concurring opinion in Loper Bright identified the FCC's flip-flopping on the regulatory classification status of broadband Internet access service under the Court's 2005 NCTA v. Brand X Internet Services decision as a prime example of how the “Chevron doctrine” warped the rule of law and undermined legal certainty.  The legal challenge to the FCC's decision to reclassify broadband Internet services as a Title II "telecommunications service" and subject it to public utility regulation is presently before the Sixth Circuit, and a decision is expected in 2025.

Chevron enabled Administrations to twist and abuse the law. Thankfully, the decision in Loper Bright ends the Court's runaway experiment with regulatory agency supremacy in statutory interpretation and brings those issues back within the wheelhouse of the judicial branch.  

Save the Date! March 25 - FSF Annual Policy Conference!

 Seventeenth Annual Policy Conference

MARK YOUR CALENDAR!

 

WHAT: FSF's Seventeenth Annual Policy Conference

 

WHERE: National Press Club, Washington, DC

 

WHEN: Tuesday, March 25, 2025

 

The Free State Foundation will hold its Seventeenth Annual Policy Conference on March 25, 2025, at the National Press Club in Washington, DC. This annual conference is acknowledged to be one of the nation's premier law and policy events.

 

As always, a truly outstanding lineup of senior officials and prominent experts from the FCC and Congress, and from other government agencies, industry, academia, and think tanks will discuss and debate the most important communications and Internet policy issues of the day, as well as other topical law and policy issues involving free market competition, free speech, and the rule of law.

 

PLEASE MARK YOUR CALENDAR FOR MARCH 25, 2025!

 

#FSFConf17

2025 Will Be a Big Year for the FCC in the Courts

On December 16, the Federalist Society hosted a webinar panel event, "Is FTC Administrative Litigation Unconstitutional?" The webinar's panelists discussed the future of Federal Trade Commission's (FTC) litigation and enforcement in light of the Supreme Court's decisions in Axon Enterprise, Inc. v. FTC (2023) and SEC v. Jarkesy (2024) as well as in light of the Court's openness to revisit the contours of administrative power as reflected by decisions such as West Virginia v. EPA (2022) and Loper Bright Enterprises v. Raimondo (2024).

In Jarkesy, the court held that the Seventh Amendment entitles a defendant to a jury trial when the Securities and Exchange Commission (SEC) seeks civil penalties for securities fraud. The court determined that the SEC's antifraud provisions replicate common law fraud claims that must be heard by a jury. 

 

Although the Supreme Court's holding in Jarkesy was limited to the Seventh Amendment, the FedSoc webinar panel's discussion touched on two facets of the Fifth Circuit's holding in an earlier stage of the case. The Fifth Circuit held that Congress unconstitutionally delegated legislative power to the SEC by failing to provide an intelligible principle by which the SEC would exercise delegated power, thereby violating the U.S. Constitution's Article I Legislative Vesting Clause. Additionally, the Fifth Circuit held that statutory removal restrictions on SEC Administrative Law Judges (ALJs) violate the Take Care Clause of Article II. Shortly, the Supreme Court will likely tackle nondelegation claims, presidential removal power claims, and other claims brought in other cases against the FTC or other agencies – including the FCC.

 

Indeed, in 2025, the Supreme Court will review the Fifth Circuit's July 2024 en banc decision in Consumers' Research v. FCC. The Fifth Circuit concluded that the universal service contribution system violates the Article I Legislative Vesting Clause. The Court's grant of a writ of certiorari in Consumers' Research v. FCC is noted briefly in my blog postfrom November 26, 2024. The lower court's decision in the case, which was based on nondelegation principles and precedents, is the subject of my August 2024 Perspectives from FSF Perspectives, "Fifth Circuit Rules USF Contribution Scheme Violates Legislative Vesting Clause."

 

Furthermore, lower courts are likely to weigh in next year on Jarkesy implications for the FCC's enforcement authority. In April 2024, the FCC fined the three nationwide wireless providers for the sale of consumer location-related information. Legal challenges to the Commission's authority to levy those fines are now pending before the D.C. Circuit, the Second Circuit, and the Fifth Circuit. 

 

Added to all of these pending cases are anticipated judicial decisions about the legal fate of the FCC's Safeguarding and Securing the Open Internet Order regulating broadband Internet services as public utilities and the Commission'sDigital Discrimination Order subjecting broadband providers to liability for unintentional disparate impacts. Oral arguments in those respective cases have been held before the Sixth Circuit and the Eighth Circuit. 

 

In all, it looks like 2025 will be a big year for the FCC in the courts.   

House Passes Bills to Improve Broadband Infrastructure Siting on Federal Property

On December 16, the U.S. House of Representatives, by voice votes, passed the Expediting Federal Broadband Deployment Act (H.R. 3293) and the Federal Broadband Deployment Tracking Act (H.R. 3343). Both bills are now in the Senate. Although there do not appear to be any companion bills in the House, perhaps the unanimous passage in the House will prompt the final passage of both measures by the end of the 118th Congress or early in the 119th Congress.  

My May 30, 2023, blog post noted the unanimous passage of both bills by the House Energy and Commerce Committee. That post summarized H.R. 3293 and H.R. 3343:

The Expediting Federal Broadband Deployment Reviews Act [H.R. 3293] would authorize the NTIA to establish an interagency "strike force" to ensure that each Federal land management agency "prioritizes the review of requests for communications use authorizations." The strike force would conduct periodic calls among those agencies and monitor their progress. And within 270 days after the Act becomes law, the NTIA would be required to submit to Congress a report on "the effectiveness of the strike force in ensuring that Federal land management agencies prioritize reviews of requests for communications use authorizations. 

 

The Federal Broadband Deployment Tracking Act [H.R. 3343] would require the NTIA to submit to Congress a plan for the agency to track requests for communications use authorizations on federal property and provide transparency to applications regarding the status of their applications. 

The FCC has long recognized that slow and cumbersome permitting processes can be a major impediment to market entry for communications services, and broadband Internet service providers frequently identify delays and costs associated with obtaining approvals to construct infrastructure on rights-of-way and government property as an impediment to timely and efficient network deployment. If passed into law, H.R. 3293 and H.R. 3343 could help streamline permit approvals and help prevent avoidable delays for infrastructure construction and major upgrades on federal property. Credit is due to the House for passing the bills. Hopefully, the Senate will give H.R. 3293 and H.R. 3343 prompt consideration.