Appendix B

HOW A T-MOBILE TAKEOVER

HARMED CONSUMERS AND

SMALL BUSINESSES IN IOWA

A REPORT BY

CWA-UNION.ORG

FEBRUARY 2019

Appendix B

Executive Summary

IN JANUARY 2018, T-MOBILE ACQUIRED IOWA

Wireless Services (iWireless), a regional carrier

that provided postpaid and prepaid wireless

service to approximately 75,000 customers in

Iowa, western Illinois, and eastern Nebraska.

Prior to the acquisition, iWireless had one of the

largest retail footprints of any wireless carrier in

Iowa, with 129 corporate and authorized dealer

locations.

iWireless was notable for its rural

presence and for its aordable and flexible

prepaid plans. Following the acquisition, T-Mo-

bile retired the iWireless brand and discontinued

the iWireless network in October 2018.

T-Mobile

also closed iWireless’ two customer service call

centers and 86 percent of iWireless’ retail

locations.

Understanding T-Mobile’s takeover of iWireless

is especially important given its proposed

merger with Sprint. T-Mobile and Sprint claim

the proposed merger will benefit rural commu-

nities and argue that this is a key reason for regu-

lators to approve the deal.

In this context, the

iWireless case provides a recent natural experi-

ment that demonstrates T-Mobile’s strategy with

regard to rural business partners and customers.

CWA conducted an in-depth analysis of the

iWireless acquisition, including interviews with

people who experienced its eects directly. Our

conclusion is that T-Mobile’s takeover of iWire-

less had negative eects on small businesses

and wireless customers, especially those in rural

areas and small towns.

Our analysis found adverse eects for the follow-

ing key groups of stakeholders:

Rural customers: T-Mobile’s decision to close

most of iWireless’ retail locations impacted rural

customers the most. iWireless’ rural retail locations

provided convenient access to sales and basic

technical support to customers who would other-

wise have to drive long distances to the nearest

wireless store. Physical retail is important in the

wireless industry where, as of 2017, close to 90

percent of mobile phones were purchased at brick

and mortar stores.

Prior to the acquisition, iWire-

less operated approximately 38 percent of all

wireless retail locations in Iowa’s FCC Rural Service

Areas (RSAs) and 67 percent of locations in places

with a population of fewer than 2,500 residents.

Despite having a year to prepare for the transition,

T-Mobile has yet to open a single T-Mobile-brand-

ed store outside of Iowa’s urban areas.

Prepaid customers: T-Mobile prioritized the

retention of postpaid over prepaid customers. As

part of the transition, T-Mobile did not provide any

incentives to iWireless’ prepaid customers to

become T-Mobile or Metro customers.

T-Mobile

projected that it would retain only 17,000 out of

75,000 iWireless customers, of whom 4,000 would

be prepaid.

The small number of prepaid

subscribers is notable given that several dealers

interviewed by CWA reported that prepaid custom-

ers made up the majority of their customers.

One

dealer reported that they were instructed to share

information about the transition with postpaid

customers only.

iWireless’ prepaid plans were

more flexible than those oered by other prepaid

carriers because they allowed customers to

purchase plans at 3-, 7-, 15- and 30-day intervals.

In contrast, Metro by T-Mobile only oers 30-day

prepaid plans.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

Small business owners: T-Mobile closed 90

percent of all iWireless locations operated by

authorized dealers, who were generally small

business owners or local telephone operators.

Some of the authorized dealers contacted by CWA

reported that they had just a few days’ notice

before they had to cease sales and surrender their

iWireless inventory.

Some authorized dealers

from rural areas reported that they received no

support or compensation for helping iWireless

customers transition to T-Mobile services. In one

case, T-Mobile representatives asked a former

dealer whose store was over 130 miles from the

closest T-Mobile store to help some of his custom-

ers that transitioned to T-Mobile, which he did

without compensation.

Most of the iWireless

authorized dealers contacted by CWA reported

that they would have wanted to remain as a T-Mo-

bile or Metro authorized dealer aer the transac-

tion, but T-Mobile did not give them the opportu-

nity to do so.

Postpaid customers: iWireless’ postpaid service

plans were less expensive and higher quality than

T-Mobile’s plans. iWireless’ least expensive unlim-

ited plan for a single line was approximately 23

percent less expensive than T-Mobile’s ONE

plans.

Unlike T-Mobile, iWireless’ unlimited plans

did not throttle high-speed data or limit video

streaming quality.

As a natural experiment, the iWireless case study

suggests that T-Mobile’s rhetoric about its com-

mitment to rural communities is in direct contra-

diction with its handling of the iWireless acquisi-

tion.

[T-Mobile] left us out in the cold. I don’t

like that, I don’t like it for myself, and I

don’t like it for my customers, because they

matter. When you rip the carpet out from

underneath them and they’re freefalling,

that’s not cool. That’s just not the way you

do it. They could have just closed one door

and immediately opened another one and

say, ‘Here is T-Mobile now. You’re covered

just like you would be with iWireless.’

SHELIA HALL

Former iWireless authorized dealer from Iowa Falls.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

iWireless Background

Map of iWireless

locations as of

October 2017.

FIGURE 1

Council Bluffs

Sioux City

Des Moines

Cedar Rapids

Ames

Waterloo

Iowa City

Dubuque

Davenport

Retail locations

iWireless

FCC Cellular Market Areas

Rural Service Areas

Metropolitan Statistical Areas

iWireless’ predecessor was formed in 1997 as a

joint venture between Western Wireless Corp.

and Iowa Network Services (INS) Inc. to expand

wireless personal communications services

throughout Iowa.

Iowa Network Services was a

consortium of 128 independent telephone com-

panies that eventually became part of the INS

Family of Companies, a business services com-

pany that rebranded itself as Aureon in 2016.

iWireless service was initially marketed under

Western Wireless’ VoiceStream brand, which

Deutsche Telecom acquired and rebranded as

T-Mobile in 2001.

Due to the partnership with

INS, Deutsche Telecom and INS rebranded

VoiceStream Iowa as Iowa Wireless.

As part of

the partnership, T-Mobile provided service to

iWireless customers who roamed outside of

iWireless’ network and iWireless provided

service to T-Mobile customers in Iowa.

T-Mobile

announced the iWireless acquisition in Septem-

ber 2017 and completed the acquisition in Janu-

ary 2018.

Prior to the transaction, T-Mobile held

a 54 percent equity interest in iWireless that gave

it “significant influence, but not control” over the

smaller company. iWireless operated as an inde-

pendent ailiate with its own services and

features that were distinct from those oered by

T-Mobile.

Following the transaction, T-Mobile

recorded the value of iWireless’ assets at $106

million.

iWireless in rural Iowa

Prior to its integration with T-Mobile, iWireless

had a strong retail presence in rural communities

in the eastern and northern parts of the state. At

the time of the transaction, iWireless operated

approximately 38 percent of wireless retail

locations in Iowa’s FCC Rural Service Areas

(RSAs), the most of any wireless carrier. In

contrast to other carriers, whose rural stores are

predominantly located in larger rural towns,

iWireless operated two-thirds of wireless retail

locations in places with a population of fewer

than 2,500 residents.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

iWireless authorized dealers began shutting

down in late 2017, prior to the completion of

T-Mobile’s acquisition.

Aer the transaction,

approximately 27 dealers remained open until

August 2018, when all iWireless locations and

authorized dealers ceased operations.

Of the

129 iWireless retail locations at the time of the

transaction, T-Mobile converted 18 stores to its

retail brands (6 T-Mobile and 12 Metro) and

closed 111 locations, approximately 86 percent

of former stores and authorized dealers.

addition to the retail location closures, T-Mobile

also closed iWireless’ call centers in Des Moines

and Cedar Rapids on September 30, 2018 and

laid o at least 27 workers.

Despite having a year to prepare for the transi-

tion, T-Mobile’s network of T-Mobile and

Metro-branded stores is only about half the size

of iWireless’ retail footprint prior to the transac-

tion. As of January 2019, T-Mobile operated 50

stores and authorized dealers, 12 T-Mobile stores

and 38 Metro stores in Iowa.

Unlike iWireless,

T-Mobile’s retail operations are concentrated

almost exclusively in the state’s urban areas. As

of January 2019, there are no T-Mobile-branded

stores in Rural Service Areas and only eight of

Metro’s 38 stores are located in RSAs. As of Janu-

ary 2019, there are an estimated 550,000 Iowans

living in RSA counties that were previously

served by at least one iWireless location and now

have zero T-Mobile or Metro stores.

On average,

former iWireless locations in rural areas are

approximately 30 miles or a 36-minute drive from

the closest Metro store, and 64 miles or a 68-min-

ute drive from the closest T-Mobile store.

Approximately one-third, 32 percent, of former

iWireless locations in rural areas are more than

75 miles, nearly a two-hour drive from the closest

T-Mobile store.

FIGURE 2

Map of T-Mobile and

Metro locations as of

January 2019 shows

T-Mobile’s smaller retail

footprint compared to

iWireless.

!(!(

Council Bluffs

Sioux City

Des Moines

Cedar Rapids

Ames

Waterloo

Iowa City

Dubuque

Davenport

Retail locations

T-Mobile

MetroPCS

FCC Cellular Market Areas

Rural Service Areas

Metropolitan Statistical Areas

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

Impact of T-Mobile’s acquisition of iWireless

Rural Customers

T-Mobile’s decision to terminate most of iWire-

less’ authorized dealers le many communities

without convenient access to wireless stores

where customers could purchase or upgrade

devices, seek advice on service plans, and get

basic technical support. Despite the growth of

e-commerce and online shopping, brick and

mortar retail continues to play an important role

in wireless, with U.S. consumers purchasing

nearly 90 percent of mobile phones at physical

stores in 2017.

Physical retail is especially

important to elderly citizens, who generally

prefer to purchase items in-store rather than

online, and to low-income customers, who

generally have a higher propensity to shop

in-store compared to higher-income consum-

ers.

The residents of rural counties tend to be

older and poorer than in urban counties, making

physical stores an important element of rural

access to wireless telephone and internet

services.

Prior to the transaction, iWireless had stores in

48 dierent rural communities across Iowa

where no other wireless carrier had a retail

location.

While residents of some of those com-

munities may be able to purchase wireless

services from big-box retailers such as Walmart,

the closure of those iWireless authorized dealers

le a void that big-box retailers cannot fill. Local

dealers provide more personal and higher-quali-

ty service than big-box re-sellers.

The impor-

tance of carrier stores over big-box stores was

acknowledged by Sprint’s former chief service

oicer, Bob Johnson: “When customers really

want hands-on, quality service, they're going to

look for the Sprint shingle.”

Sarah Crock, a former iWireless authorized

dealer from Tipton, a rural community of about

3,200 residents in eastern Iowa, exemplifies the

value that local authorized dealers provided to

rural communities.

Ms. Crock ran her iWireless

dealership out of the oice where she and her

husband operate an insurance agency and a real

estate agency. Ms. Crock stated that although

iWireless was not a significant source of revenue

for her business, her iWireless dealership was

“much-needed” in the community.

According to Ms. Crock, her clients were very

upset over the loss of iWireless. Once she

stopped selling iWireless services, the only

choice for customers that did not want to travel

out of town was Walmart. “Some of [my former

customers] that I’ve talked to have been forced

get smartphones at Walmart, where they have no

customer service locally. There's no way to go in

and get help with the phone or nothing. That’s

forced [my former customers] to drive out of

town to wherever to take up a dierent compa-

ny.”

The closest T-Mobile store to Tipton is

located in Iowa City, about 32 miles away.

Ms. Crock also reported that there are group

homes in Tipton that support adults with devel-

opmental disabilities and the transition was “a

nightmare” for some of them, due to lack of

transportation. Ms. Crock stated that aer she

stopped selling iWireless services, some of her

former customers from the group homes were

unable to go to other wireless retail locations

because they didn’t have transportation. “It’s

things like that that made somebody local so

vital for people with disabilities that needed

something right here,” Ms. Crock added.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

Heath Heimer, a former iWireless authorized

dealer from Garner, told CWA about the value

that local authorized dealerships like his provid-

ed: “a lot of people don't like the fact that they

have to drive out of town to get support or help.

They like the small local guys like me, where

they knew me, and they knew who they were

dealing with, and what type of service they were

going to get. So, me being independent and

self-employed, you kind of care more than when

you're working for somebody else and I always

kind of helped them out and made sure they

were treated well.”

Mr. Heimer used to operate

his iWireless dealership out of his computer

repair shop in Garner, a rural community with

about 3,000 residents located in northern Iowa.

Rural customers transitioning to T-Mobile

T-Mobile’s decision not to re-open stores in rural

areas was especially challenging for former

iWireless customers that transitioned to T-Mo-

bile’s postpaid services. To incentivize iWireless

postpaid customers to sign up for T-Mobile’s

postpaid services, the company oered 20

percent o its T-Mobile ONE plans and equip-

ment installment plan balance forgiveness for

customers that ported their accounts to T-Mo-

bile.

In order to take advantage of the oer,

customers had to go to a store or call a toll-free

number.

However, going to a physical store was

impractical for most rural customers as there are

no T-Mobile-branded stores outside the state’s

urban areas. The average distance between

former rural iWireless locations and T-Mo-

bile-branded stores is approximately 64 miles or

a 68-minute drive, though some locations are

over 100 miles from the nearest T-Mobile store.

Jason Chase, a former iWireless authorized

dealer and mayor of Rock Rapids, a rural commu-

nity in northwest Iowa, told CWA that the lack of

local stores forced many of his former iWireless

customers to come to him for help with switching

to T-Mobile service. “You’re handing an older

person a piece of paper and telling them to call a

number and order a new SIM card to put in a

phone. They don’t even know what a SIM card is.

They don’t know how to take the battery o,”

stated Mr. Chase. “So the fact that they think that

those customers could handle it was not cool,

especially when there was no [local] store for

support.”

TIPTON, IA

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

The closest T-Mobile-branded store to Rock

Rapids is located in Mankato, Minnesota,

approximately 137 miles from Rock Rapids; the

closest T-Mobile store in Iowa is located in the

Des Moines area, approximately 250 miles from

Rock Rapids.

Mr. Chase contacted T-Mobile to

inquire about becoming a dealer and told the

company about his concerns regarding the lack

of local stores. “The best they can say is they’re

opening stores in the Cedar Rapids and Des

Moines areas. When we expressed our concern

with that, being that it’s five hours each way to

get to a store, they didn’t have an answer for us,”

said Mr. Chase.

Mr. Chase also told CWA that due to the lack of

local stores, T-Mobile representatives asked him

to help some of his former iWireless customers

with SIM card installation or setting up phones.

“There was no [local] store for support. Aer we

were no longer an [iWireless] agent, T-Mobile

actually sent customers in to have us help them

put SIM cards in or get things set up. When I

talked to them, they said ‘Would you do this?’

and I’m like, ‘I’ll do it because it’s my customer,

but I’m not happy that you’re asking me to do it,

when you wouldn’t ask us to be an agent

location,’” stated Mr. Chase. “We did help our

customers because that’s what you do in a small

town, but it’s just really frustrating that you’re

helping them, but not getting any reimburse-

ment on it.”

Like Mr. Chase, other former iWire-

less authorized dealers from rural areas also

reported that they helped some of their iWire-

less customers transition to T-Mobile without

any compensation from the carrier.

Customers with technical issues that were more

complicated than switching a SIM card or setting

up a phone had no option but to drive the long

distances to go to a T-Mobile store. Shelia Hall, a

former iWireless authorized dealer from Iowa

Falls, switched her personal and business phone

lines to T-Mobile. Ms. Hall told CWA that her

husband’s phone started calling and texting

random numbers aer switching from iWireless

to T-Mobile service; the phone's double-SIM

feature also stopped working aer they switched

their service. Ms. Hall, who reported “loving”

iWireless services before the transaction, said

that she twice made the 100-mile round-trip to

Waterloo to get customer support at a T-Mobile

store.

Prepaid customers

The loss of iWireless had a disproportionate

impact on prepaid customers. iWireless’ prepaid

plans oered flexibility not oered by other

prepaid carriers. Most notably, iWireless allowed

prepaid customers to buy service at 3-, 7-, 15-

and 30-day intervals, which provided flexibility

to low-income customers who may not have

been able to aord to purchase service at 30-day

intervals. As of January 2019, none of the major

carriers in Iowa make this option available to

customers.

“They could get three days, they could get seven

days, they could choose how many days they

wanted to pay for,” stated a store manager at a

former iWireless authorized dealer in Muscatine.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

“They didn’t have to pay for 30 days or a certain

amount of minutes. Most places require you to

do a 30-day on prepaid. iWireless didn’t. And a

lot of our customers who live paycheck to

paycheck, even though it costs them more to go

weekly or biweekly, that’s how they had to make

it work, and that’s what they really enjoyed

about the service that they were getting from

us.”

Kyari Shipp, a store manager at a former iWire-

less authorized dealer in Waterloo that now sells

Boost Mobile products, expressed a similar

sentiment. “A lot of our customers didn’t have

very much money,” said Ms. Shipp. “Even now

that we don’t carry iWireless, and we haven’t

carried them for almost six months, people still

come in and they’re like, ‘I want to put a couple

days on my phone.’ And I can’t do that anymore

for them.”

In addition to less choice, consolidation of T-Mo-

bile’s and Sprint’s prepaid brands could impact

prepaid consumers more broadly. Christopher

Shumaker, a former iWireless authorized dealer

who currently runs a Boost Mobile authorized

dealer out of his pawnshop in Davenport, told

CWA that he believes consolidation in the

prepaid market could reduce the pressure on

prepaid carriers to oer port-in specials, which

allow customers to get equipment at discounted

prices or get other perks. According to Mr.

Shumaker, “all three of the majors are doing

those specials. If three of them become two,

now there’s less competition, there’s less

requirement for them to run those sorts of

specials.”

Mr. Shumaker added that he thinks consumers

will probably see a pretty significant increase in

the cost of purchasing new phones if those

port-in promotions dry up.

T-Mobile’s handling of the iWireless acquisition

suggests that T-Mobile prioritized the retention

of postpaid customers over prepaid customers.

T-Mobile did not oer any special incentives for

prepaid subscribers to switch to Metro or T-Mo-

bile’s prepaid plans.

Moreover, multiple iWire-

less authorized dealers expressed frustration

with T-Mobile’s lack of support and communica-

tion to iWireless’ prepaid customers during the

transition. “It was really hard for me to communi-

cate to the customer what they were supposed to

be doing, or how I could help them. At many

times, it was really frustrating for me to the point

I wanted to quit my job,” said Ms. Shipp. “It was

just customers yelling at me, and I didn't have

any answers for them because T-Mobile or iWire-

less, neither one of them had provided me with

the answers.”

The employee at the authorized dealer in Musca-

tine told CWA that while they did receive some

flyers to pass to customers, their iWireless agent

instructed them to share them with their post-

paid customers only.

“Our representative had

told us over the phone that the flyers were only

to go to postpaid customers, and only them. We

weren’t to give the information to prepaid

customers,” said the employee.

T-Mobile’s filings with the Security and Exchange

Commission suggest that the company only

expected to retain about 22 percent of iWireless

customers, 13,000 postpaid and 4,000 prepaid.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

Although neither T-Mobile nor iWireless previ-

ously disclosed the number of iWireless’ prepaid

subscribers, most of the authorized dealers

contacted by CWA reported that prepaid made

the majority of their clients.

In general, post-

paid customers are more valuable to wireless

carriers because they have higher levels of

usage, higher data usage and lower attrition

rates, which all lead to higher levels of average

revenue per user.

Small business owners

T-Mobile closed 90 percent of iWireless' autho-

rized dealer stores.

iWireless and T-Mobile

started closing authorized dealers in late 2017,

weeks before T-Mobile completed the transac-

tion.

Authorized dealers that remained in busi-

ness aer the start of 2018 could only sell

prepaid time or equipment that they had prior to

the acquisition.

In late June 2018, the remain-

ing authorized dealers received a 60-day termi-

nation notice from T-Mobile notifying them of

their closure on August 24.

T-Mobile has previously dismissed the impact

that losing iWireless had on authorized dealers

because the majority of the dealers that it termi-

nated in August 2018 remained in business as

independent retailers following the acquisi-

tion.

However, T-Mobile’s claims hide the true

impact on former iWireless authorized dealers,

as the majority of iWireless dealers closed at the

end of 2017 and early 2018.

The company’s

statements also dismiss the fact that the loss of

their iWireless dealerships forced some of those

independent businesses that remained open to

lay o workers.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

I think it was the worst transition I’ve ever

been a part of. There was no support on the

side that built the business. The agent

locations are what grew Iowa Wireless to

where it was. I realize in order for it to grow,

and T-Mobile would have been a good

partner, but there was no thought put into

maintaining the distribution channel that

was there. They were just buying it solely

for the footprint and really felt that they

didn’t have any cares for [iWireless’] distri-

bution network.

JASON CHASE

Former iWireless authorized dealer and mayor of Rock Rapids

“iWireless was an important revenue stream for

my small business,” reported Mr. Heimer, who

used to run his iWireless dealership out of his

computer repair shop. “Direct sales from iWire-

less products and phone accessories, along with

the foot traic generated from iWireless custom-

ers accounted for about half of my business’

revenue. Losing iWireless business forced me to

lay o an employee, reduce the hours that I

worked at my business to part-time, and get a

second job. On top of the lost revenue, I was also

le with hundreds of dollars of phone accesso-

ries that I cannot sell.”

All of the iWireless dealers interviewed by CWA

complained about the lack of communication

and support from T-Mobile during the transition.

Multiple dealers reported that they asked T-Mo-

bile for information about becoming a Metro or

T-Mobile dealer, but they never heard back from

the company, or were told they would hear back

from the company at some future, unspecified

date. In some cases, rather than asking former

iWireless dealers to become Metro or T-Mobile

dealers, T-Mobile opened up new stores within

close proximity to former iWireless authorized

dealers.

Kyari Shipp, store manager at Stratus Communi-

cations, a former iWireless dealer in Waterloo,

told CWA that prior to the transaction, her

location was one of the best-performing iWire-

less retailers in their region and at one point

employed about five workers. Ms. Shipp said

they first found out about T-Mobile’s acquisition

of iWireless in December 2017.

The entire time I was still reaching out, trying

to ﬁnd answers, trying to ﬁgure out what the

transition was going to look like; how do we

become Metro? How do we stay in business?

How do we maintain our customer base? My

Moline location had been open for four years.

I’ve been an iWireless dealer [at the Davenport

location] for seven years. And so, we’ve got a

customer base built up that we want to main-

tain. We want to take care of our customers as

best we can. In the meantime, they’re not

telling us anything. Finally, in June, I closed

the location in Moline, just had to shutter it;

just wasn’t making money anymore, and it was

just too uncertain. My lease was also expiring

and before I was willing to sign a new lease on

that location or another location. I needed

some reassurances; they had none to oer.

CHRISTOPHER SHUMAKER

Former owner of authorized dealers in Davenport, IA, and Moline, IL

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

Ms. Shipp said “Our [iWireless] representative

told us nothing will probably happen, you will

probably become a Metro PCS store. So we kind

of felt like it really wouldn’t aect us very much.

And then, we didn’t hear anything else about it

until June or July,” when T-Mobile notified them

of the iWireless termination at the end of August.

Ms. Shipp told CWA that Stratus Communica-

tions applied to become a Metro authorized

dealer but the company never responded.

In 2018, Stratus Communications became a

Boost Mobile dealer to remain in business aer

losing the iWireless authorized dealer, but has

not been as successful as when they oered

iWireless and plans to close at the end of Janu-

ary. “We’re closing the doors to our store. That’s

the bottom line. We can’t aord to be open

anymore without iWireless,” stated Ms. Shipp.

T-Mobile eventually opened a Metro store three

blocks from the Stratus Communications store.

Christopher Shumaker contacted T-Mobile

multiple times because he wanted to convert his

Moline store to a Metro or T-Mobile dealer, but

his inquiries went unanswered. “Aer spending

the better part of two or three months towards

the end reaching out to our iWireless representa-

tive, trying to figure out if we could become

Metro PCS dealers and, potentially, even T-Mo-

bile dealers, we got no word back and finally had

to decide just to close the business. Aer I closed

the business, within 60 days, maybe 75 days,

suddenly there was a Metro PCS location that

popped up in the exact same location as the

store that I had just closed.”

Mr. Shumaker was

forced to lay o one employee and transfer

another employee to his pawnshop in Daven-

port.

Postpaid customers

By shutting down iWireless, T-Mobile eliminated

a carrier whose products and services were

distinct and, for the lowest-cost plans, more

competitively priced than those oered by T-Mo-

bile. This impacted not only iWireless customers

who may have been forced to sign up for plans

that were either more expensive or provided

fewer features than their iWireless plans, but also

Iowa consumers in general, as they no longer

have the option to purchase iWireless services.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

“We’re closing the doors to our store.

That’s the bottom line. We can’t aord

to be open anymore without iWireless.”

KYARI SHIPP

Store manager at a former iWireless authorized dealer in Waterloo

Since at least March 2016, iWireless ran promo-

tional pricing in most months on its unlimited

plans, and customers could typically get

single-line unlimited plans for $50 per month.

Consumers in Iowa no longer have the option of

signing up for iWireless’ less expensive plans,

which were 23 percent cheaper and operated on

the same network as T-Mobile.

Unlike T-Mo-

bile’s plans, iWireless’ unlimited plans did not

throttle data or limit video streaming quality.

As part of the takeover, T-Mobile did not allow

customers to be grandfathered into their iWire-

less plans. iWireless customers that wanted to

continue service had to sign up for T-Mobile or

Metro service by October 1, 2018. To incentivize

customers to switch, T-Mobile oered iWireless

customers 20 percent o T-Mobile One plans and

equipment installment plan balance forgive-

ness.

T-Mobile only made those incentives

available to iWireless’ postpaid customers.

The

20 percent discount available to former iWireless

customers leaves the T-Mobile ONE plan at $60

dollars, which is $3 more than iWireless custom-

ers would have paid for a single line without

mobile hotspot.

Moreover, even if customers took advantage of

the incentive, former iWireless customers are

likely to lose their discounts as they upgrade

phones or change plans, exposing them to signif-

icant price increases.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

Cost per month

Taxes and fees

Average monthly cost

Unlimited text and calls

Unlimited high-speed data

Video streaming

Mobile hotspot

iWireless Unlimited LTE

(promotional pricing)

T-Mobile ONE

$50

$7.90

$57.90

Yes

Did not limit video

streaming quality

$75

Included in price

$75

Yes

Up to 50 GB per month

Limits video streaming

to 480p

Yes, limited to 3G speeds

Conclusion

When T-Mobile announced the iWireless acquisi-

tion, T-Mobile’s CEO John Legere stated: “We’ve

been disrupting the wireless industry for the

benefit of consumers for the last five years now

and customers in Iowa will be able to experience

the benefits firsthand.”

However, T-Mobile’s

handling of iWireless’ acquisition ended up hurt-

ing former iWireless authorized dealers and

thousands of customers.

This is especially true for rural customers who no

longer have access to a local authorized dealer

where they could conveniently pay for wireless

services and receive basic customer support.

Prepaid customers lost access to an aordable

service that provided flexibility not oered by

any major prepaid carrier. Postpaid customers

lost access to lower-cost unlimited service plans.

Lastly, dozens of iWireless dealers lost an import-

ant revenue stream and source of foot traic,

which in some cases forced them to lay o work-

ers or close their business entirely.

The iWireless case study should serve as a

cautionary tale for regulators currently review-

ing the T-Mobile and Sprint merger. T-Mobile’s

acquisition and subsequent integration of iWire-

less is especially alarming given T-Mobile and

Sprint’s claims that rural America will benefit

from their proposed merger. T-Mobile’s handling

of the iWireless acquisition appears to have had

the opposite eect, as the company gutted a

carrier that previously provided convenience and

choice to thousands of rural customers.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

See “Acquisition of Iowa Wireless” in T-Mobile Q1-2018 Form 10-Q. Available at:

https://www.sec.gov/Archives/edgar/data/1283699/000128369918000026/tmus03312018form10-q.htm

Press Release. “T-Mobile to Acquire Remaining Interest in Iowa Wireless from Aureon.” September 26, 2017.

Available at: https://www.t-mobile.com/news/t-mobile-iowa-wireless-aureon.

In its press release on the acquisition, T-Mobile stated that iWireless had 103 corporate stores and authorized

dealers. The data in this report comes from a list of 129 corporate stores and authorized dealers retrieved by

data aggregator AggData from iWireless’ website on October 1, 2017. We believe that this discrepancy might be

due to iWireless’ structure, which allowed some local telephone companies to contract their own authorized

dealers. Former iWireless dealers from Tipton, Iowa Falls, and Garner told CWA that they were sub-agents to

local telephone companies.

iWireless’ retail footprint rivaled that of US Cellular and Verizon, which operated 121 and 103 stores respective-

ly. Our analysis excludes authorized dealers at big box stores and supermarkets, such as Walmart or Hy-Vee,

because small authorized dealers and carrier stores provide customer-focused approach, with a stronger

emphasis on eiciency and quality than big box stores. See: https://www.fiercewireless.com/special-report/-

mobile-retailing-flux-carriers-vs-big-box-retailers

T-Mobile’s website for aected iWireless customers. Accessed January 11, 2019. Available at:

https://www.t-mobile.com/customers/iowa-wireless-service

Call center closures based on phone conversation with iWireless Call Center Representative in iWireless’ Cedar

Rapids Call Center, August 18, 2018 via iWireless' customer service number at (888)-550-4497. T-Mobile and

iWireless filed a Worker Adjustment and Retraining Notification Act filing on July 7, 2018 for the closure of the

Cedar Rapids Call Center. Accessed January 14, 2019. Available at: https://www.iowaworkforcedevelop-

ment.gov/worker-adjustment-and-retraining-notification-act

CWA analysis of store closures. This figure accounts for any former iWireless locations rebranded as T-Mobile

or Metro stores as of January 14, 2019.

T-Mobile and Sprint’s Public Interest Statement provided to the FCC. June 18, 2018. Available at:

https://ecfsapi.fcc.gov/file/10618281006240/Public%20Inter-

est%20Statement%20and%20Appendices%20A-J%20(Public%20Redacted)%20.pdf

Euromonitor International. Retrieved September 18, 2017.

CWA analysis of iWireless, AT&T, Boost Mobile, Cricket, MetroPCS, T-Mobile, US Cellular, and Verizon store data.

iWireless store data acquired from AggData, which retrieved the data on October 1, 2017. Boost Mobile,

MetroPCS, T-Mobile, and Verizon data retrieved from each company’s websites in September and October

2017. Cricket data retrieved from Google Places API in October 2017. US Cellular data retrieved in November

2018, though the website’s map indicates that the list of US Cellular locations was current as of May 2018.

CWA Analysis. T-Mobile retail location data retrieved January 14, 2019.

T-Mobile set up an information page for iWireless customers transitioning to T-Mobile’s postpaid service, but

we did not find a similar page set up for prepaid customers transitioning to Metro or T-Mobile’s prepaid

services.

“As a result of the acquisition of IWS, we included an adjustment of 13,000 branded postpaid phone and 4,000

branded prepaid IWS customers in our reported subscriber base as of January 1, 2018.” See T-Mobile Q1-2018

Form 10-Q. Available at: https://www.sec.gov/Archives/edgar/-

data/1283699/000128369918000026/tmus03312018form10-q.htm

Five of seven authorized dealers told CWA that prepaid made up the majority of their customers. CWA

interviews with former iWireless dealers, January 8 to January 11, 2019. Phone conversation with Sarah Crock

in November 2018.

CWA conversation with an employee at a former iWireless authorized dealer from Muscatine on January 10,

2019. The employee gave to CWA permission to quote her on this report but asked to remain anonymous

because her employer did not want the business named on this report.

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

Notes

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

Archive of iWireless’ No Contract Plans information page. September 29, 2017. Accessed January 11, 2019.

Available at: https://web.archive.org/web/20170919210329/http://www.iwire-

less.com:80/store/PlansNoContract.aspx

Metro plans information page. Accessed January 11, 2019. Available at:

https://www.metropcs.com/shop/plans?icid=home%7Cmain%7Cshopplans

CWA Analysis. January 2019.

CWA interviews with Heath Heimer and Shelia Hall, January 8 to January 9, 2019.

CWA interview with Jason Chase from Rock Rapids, IA on January 10, 2019. The closest T-Mobile store from

Rock Rapids is in Mankato, Minnesota. See: https://www.google.com/maps/dir/T-Mobile,+201+Sioux-

+Rd,+Manka-

to,+MN+56001/Rock+Rapids,+IA+51246/@43.7952934,-96.1850263,8z/data=!3m1!4b1!4m13!4m12!1m5!1m1!1s

0x87f43a647bea8919:0x89563efa3b6b4faf!2m2!1d-93.952178!2d44.1691292!1m5!1m1!1s0x878c117053b2563d:

0x9bf3cea91b20289!2m2!1d-96.1758598!2d43.4271945

All of the dealers interviewed by CWA reported that they would have wanted to become Metro or T-Mobile

authorized dealers. Interviews from January 8 to January 11, 2019.

Comparison between iWireless’ Unlimited LTE plan for a single line at promotional pricing and T-Mobile’s ONE

plan for a single line without auto-pay discount of $5 per month. We used the promotional pricing for this

comparison because we believe that iWireless would have continued to oer its postpaid plans at a discount-

ed rate in order to better compete with national carriers. iWireless’ Unlimited LTE plan for a single line cost $50,

plus an additional 15.8 percent in taxes and fees paid by Iowa consumers; T-Mobile’s ONE cost $75 per month

and includes taxes and fees. Iowa wireless taxes and fees from “Wireless Taxes and Fees Climb Again in 2018”

report by the Tax Foundation. Available at: https://taxfoundation.org/cell-phone-taxes-2018/

iWireless unlimited plans information page. Archived on June 25, 2018. Available at: https://web.ar-

chive.org/web/20180625182821/https://www.iwireless.com/store/PlansInstallment.aspx

T-Mobile’s phone plans information page. Accessed January 15, 2019. Available at:

https://support.t-mobile.com/docs/DOC-36931

CWA Interview with Shelia Hall on January 9, 2018.

RCR Radio Communications Report. “Iowa team extends VoiceStream PCS.” October 13, 1997.

Press Release. “INS Family of Companies Announce Rebrand to Aureon.” March 29, 2016. Accessed January 11,

2019. Available at: https://www.aureon.com/blog/ins-family-of-companies-announce-rebrand-to-aureon

“Deutsche Telekom in the USA.” Accessed January 11, 2019. Available at: https://www.telekom.com/en/com-

pany/worldwide/profile/deutsche-telekom-in-the-usa-355832

See “IB Docket No. 00-187- Notice of Ex Parte Communications Deutsche Telecom/VoiceStream Merger.” March

6, 20122. Available at:

https://transition.fcc.gov/transaction/voicestream-deutsche/iowawireless_exparte030601.pdf

Press Release. “Iowa Wireless Services Changes Name to i wireless; New Name Reflects Growth of Local

Wireless Company.” Business Wire. January 24, 2004.

T-Mobile’s website for aected iWireless customers. Accessed January 11, 2019. Available at:

https://www.t-mobile.com/customers/iowa-wireless-service

Press Release. “T-Mobile to Acquire Remaining Interest in Iowa Wireless from Aureon.” T-Mobile. September 26,

2017 (See https://www.t-mobile.com/news/t-mobile-iowa-wireless-aureon). See “Acquisition of Iowa Wireless”

in T-Mobile’s Q3-2018 Form 10-Q. Available at: https://www.sec.gov/Archives/edgar/-

data/1283699/000128369918000060/tmus09302018form10-q.htm

See “Acquisition of Iowa Wireless” in T-Mobile’s Q3-2018 Form 10-Q. Available at: https://www.sec.gov/Ar-

chives/edgar/data/1283699/000128369918000060/tmus09302018form10-q.htm

See “Acquisition of Iowa Wireless” in T-Mobile’s Q3-2018 Form 10-Q. Available at: https://www.sec.gov/Ar-

chives/edgar/data/1283699/000128369918000060/tmus09302018form10-q.htm

iWireless operated 45 out of 67 wireless retail locations in FCC Rural Service Areas with a population of less

than 2,500. Population figures for Urban Areas from U.S. Census Bureau's 2012-2016 American Community

Survey 5-Year Estimates Table 01003, American FactFinder, available at https://factfinder.census.gov/-

faces/nav/jsf/pages/index.xhtml

CWA interviews with Heath Heimer, Sarah Crock and Sheila Hall. Mr. Heimer closed his iWireless business in

late 2017 or early 2018. Ms. Crock and Ms. Hall were subagents to other iWireless authorized dealers that

closed in late 2017 but became direct iWireless authorized dealers and remained iWireless authorized dealers

until August 2018.

CWA reviewed AggData’s list of iWireless stores listed on iWireless’ website as of October 1, 2017 and identified

28 stores that would be closing in August 2018, which coincides with the number of iWireless authorized

dealers mentioned by T-Mobile and Sprint in their response to CWA’s comment to the New York Public Service

Commission: “23 of were 27 iWireless authorized dealers remained in business as independent retailers or

transitioned to MetroPCS authorized dealers.” See “In the Matter of Joint Application of T-Mobile, USA, Inc. and

Sprint Communications Company L.P. Concerning an Indirect Transfer of Control.” Case 18-C-0396.

CWA reviewed AggData’s list of iWireless stores listed on iWireless’ website as of October 1, 2017. CWA

cross-referenced authorized dealer locations against a list of T-Mobile, Metro, and iWireless stores in operation

as of January 2019.

Phone conversation with iWireless Call Center Representative in iWireless’ Cedar Rapids Call Center, August 18,

2018 via iWireless' customer service number at (888)-550-4497.

Worker Adjustment and Retraining Notification Act filing. July 7, 2018. Accessed January 14, 2019. Available at:

https://www.iowaworkforcedevelopment.gov/worker-adjustment-and-retraining-notification-act

iWireless store location data acquired from AggData. Data retrieved by AggData on October 1, 2017. Available

at: https://www.aggdata.com/aggdata/complete-list-i-wireless-locations

Cellular Market Areas (CMAs) are standard geographic areas used by the FCC when licensing of cellular

systems. CMAs comprise Metropolitan Statistical Areas (MSAs) and Rural Service Areas (RSAs). See Federal

FR-2014-12-05/pdf/2014-28151.pdf

CWA Analysis. T-Mobile and Metro store counts retrieved from each brand’s respective websites on January 14,

2019.

CWA Analysis. Population figures from U.S. Census Bureau's 2012-2016 American Community Survey 5-Year

Estimates Table 01003, American FactFinder. Available at: https://factfinder.census.gov/faces/nav/jsf/pag-

es/index.xhtml.

CWA analysis of Metro and T-Mobile stores in Iowa and neighboring states as of January 17, 2019. Driving

distance and trip duration estimates calculated using Google’s Distance Matrix API on January 23, 2019.

The average distance for stores that are more than 75 miles from the nearest T-Mobile store is 1 hour and 47

minutes. CWA analysis of Metro and T-Mobile stores in Iowa and neighboring states as of January 17, 2019.

Driving distance and trip duration estimates calculated using Google’s Distance Matrix API on January 23, 2019.

Euromonitor Passport Data. Retrieved September 2017.

Online shopping preferences by age group as of 2017 from BigCommerce, available from Statista. Retrieved

January 16, 2019. Available at:

https://www.statista.com/statistics/242512/online-retail-visitors-in-the-us-by-age-group/

Online shopping by income group from “Likelihood of online vs. in-store spend” in “The Great Retail Bifurca-

tion” report by Deloitte. Available at: https://www2.deloitte.com/content/dam/insights/us/arti-

cles/4365_The-great-retail-bifurcation/DI_The-great-retail-bifurcation.pdf

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

DISRUPTING RURAL WIRELESS: HOW A T-MOBILE TAKEOVER HARMED CONSUMERS AND SMALL BUSINESSES IN IOWA

FEBRUARY 2019

Pew Research Center. “What Unites And Divides Urban, Suburban, and Rural Communities.” May 22, 2018.

Available at: http://www.pewsocialtrends.org/2018/05/22/demograph-

ic-and-economic-trends-in-urban-suburban-and-rural-communities/

CWA analysis of iWireless, AT&T, Boost Mobile, Cricket, MetroPCS, T-Mobile, US Cellular, and Verizon store data.

iWireless store data acquired from AggData, which retrieved the data on October 1, 2017. Boost Mobile,

MetroPCS, T-Mobile, and Verizon data retrieved from each company’s websites in September and October

2017. Cricket data retrieved from Google Places API in October 2017. US Cellular data retrieved in November

2018, though the website’s map indicates that the list of US Cellular locations was current as of May 2018.

Phil Goldstein. “Mobile retailing in Flux: Carriers vs. big-box retailers.” Fierce Wireless. Accessed January 14,

2019. Available at:

https://www.fiercewireless.com/special-report/mobile-retailing-flux-carriers-vs-big-box-retailers

Phil Goldstein. “Mobile retailing in Flux: Carriers vs. big-box retailers.” Fierce Wireless. Accessed January 14,

2019. https://www.fiercewireless.com/special-report/mobile-retailing-flux-carriers-vs-big-box-retailers

Population figure for the Tipton Urban Cluster. See U.S. Census Bureau's 2012-2016 American Community

Survey 5-Year Estimates Table 01003, American FactFinder. Available at: https://factfinder.census.gov/-

faces/nav/jsf/pages/index.xhtml.

CWA interview with Sarah Crock on January 10, 2019.

See: https://www.google.com/maps/place/T-Mo-

bile/@41.7695814,-91.6908611,9z/data=!4m15!1m9!2m8!1sT-Mobile!3m6!1sT-Mobile!2sTipton,+IA+52772!3s0x

87e385e6511ad44f:0x97b7e8ee7010085!4m2!1d-91.1279349!2d41.7697434!3m4!1s0x0:0xfcbfafe4547a4796!8m

2!3d41.6850918!4d-91.6012573

CWA interview with Heath Heimer on January 8, 2019.

Population figure for the Garner Urban Cluster. See U.S. Census Bureau's 2012-2016 American Community

Survey 5-Year Estimates Table 01003, American FactFinder. Available at: https://factfinder.census.gov/-

faces/nav/jsf/pages/index.xhtml.

T-Mobile’s website for aected iWireless customers. Accessed January 11, 2019. Available at:

https://www.t-mobile.com/customers/iowa-wireless-service

T-Mobile’s website for aected iWireless customers. Accessed January 11, 2019. Available at:

https://www.t-mobile.com/customers/iowa-wireless-service

CWA analysis of Metro and T-Mobile stores in Iowa and neighboring states as of January 17, 2019. Driving

distance and trip duration estimates calculated using Google’s Distance Matrix API on January 23, 2019.

CWA interview with Jason Chase on January 11, 2019.

The closest T-Mobile carrier store is located in Mankato, Minnesota. The closest T-Mobile store in Iowa is

located in Clive, which is located in the Des Moines area. See: https://www.google.com/maps/dir/T-Mo-

bile,+201+Sioux+Rd,+Manka-

to,+MN+56001/Rock+Rapids,+IA+51246/@43.7952934,-96.1850263,8z/data=!3m1!4b1!4m13!4m12!1m5!1m1!1s

0x87f43a647bea8919:0x89563efa3b6b4faf!2m2!1d-93.952178!2d44.1691292!1m5!1m1!1s0x878c117053b2563d:

0x9bf3cea91b20289!2m2!1d-96.1758598!2d43.4271945

See: https://www.google.com/maps/dir/T-Mobile,+10201+Universi-

ty+Ave,+Clive,+IA+50325/Rock+Rapids,+IA+51246/@42.4574652,-96.184602,8z/data=!4m14!4m13!1m5!1m1!1s0

x87ec20bdb49667b7:0x21b671c594d9f26d!2m2!1d-93.757532!2d41.6023999!1m5!1m1!1s0x878c117053b2563

d:0x9bf3cea91b20289!2m2!1d-96.1758598!2d43.4271945!5i2

CWA interview with Jason Chase on January 11, 2019.

CWA interviews with Sarah Crock, Heath Heimer, and Shelia Hall, January 8 to January 10, 2019.

CWA interview with Shelia Hall on January 9, 2018. Iowa Falls is approximately 50 miles from Waterloo. See:

https://www.google.com/maps/dir/T-Mobile,+University+Ave,+Ce-

dar+Falls,+IA/Iowa+Falls,+IA+50126/@42.5057319,-93.1265996,10z/data=!3m1!4b1!4m13!4m12!1m5!1m1!1s0x

87e555592e85e903:0x2e07d8f3e055c4!2m2!1d-92.4293441!2d42.5122591!1m5!1m1!1s0x87f1d7e5b8fe1d83:0

x8972876d3545919!2m2!1d-93.2645741!2d42.5198868

Based on the information on Metro, Boost Mobile and Cricket’s websites. Accessed January 15, 2019.

Available at:

https://www.cricketwireless.com/cell-phone-plans

https://www.metropcs.com/shop/plans

https://www.boostmobile.com/plans.html

CWA conversation with an employee at a former iWireless authorized dealer from Muscatine on January 10,

2019. The employee gave to CWA permission to quote her on this report but asked to remain anonymous

because her employer did not want the business named on this report.

CWA interview with Kyari Shipp, store manager at Stratus Communications, on January 9, 2019.

CWA conversation with Christopher Shumaker on January 10, 2019.