Sprint CEO Says T-Mobile Sale to AT&T Poses Competitive Concerns
ORLANDO -- Sprint Nextel CEO Dan Hesse said competition could be harmed if AT&T is allowed to buy T-Mobile. Hesse commented Tuesday only under prodding by Jim Cramer, the host of CNBC’s Mad Money, brought in by CTIA to host its annual CEO roundtable. “My opinion doesn’t matter,” but the opinions of the FCC and the Department of Justice do, Hesse said of the $39 billion deal. “Today, the big two,” AT&T and Verizon, “have about 67 percent market share, and if that transaction is allowed to proceed, it would be 79 market share in the hands of two just providers,” he said. “I do have concerns that it would stifle innovation.” Some in the audience applauded.
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"We're certainly very interested in what’s going on,” said Dan Mead, CEO of Verizon Wireless. He said Verizon had built a “foundation” on “great spectrum,” through “many, many acquisitions similar to what’s being discussed here.” Mead said Verizon will monitor how the merger is evaluated market by market. Cramer drilled in, asking whether Verizon had considered making a play for T-Mobile. “We didn’t think that there was a need,” Mead said. “We've been through a series of great acquisitions and great integration into our company.”
AT&T Mobility CEO Ralph de la Vega said spectrum considerations played a big role, in response to a question from Cramer about whether those thoughts were behind the deal. “One of the key drivers was actually the need for more spectrum,” de la Vega said. “What we have found in our company … is that our data usage has grown 8,000 percent over the last four years. Few things in life grow 8,000 percent over four years.” The merger will help deal with “the spectrum exhaust” AT&T and T-Mobile face otherwise “in several major cities,” he said.
The wireless industry “clearly played a role” in the overthrow of Hosni Mubarak, Egypt’s leader until recently, Hesse said. “Dictators have historically been able to control information,” he said. “The folks most responsible for overthrowing the government in Egypt … never met each other face-to-face. They all did it by Twitter, Facebook.” De la Vega said “mobility creates democracy.” And he said “the power of the people, in my view, has never been better than with the capabilities that our industry has been able to bring to the table."
It’s a “myth” that the U.S. is falling behind much of the rest of world in wireless broadband, Mead said. “Especially when you look at 4G and what’s going on with 4G, we're seeing greater advancement in terms of broadband delivery.” Hesse said the U.S. has “come full circle” from being the leader in 1G to falling behind in 2G and 3G “and now being number one again in 4G.” Cramer, who said he’s a Verizon Wireless subscriber, asked, “Why am I subsidizing just complete data hogs?"
"The whole industry is looking at ’should there be caps, should we have metered billing?'” Mead replied. “So it’s more like you know your water bill at home, where you pay for what you use.” Hesse said Sprint is “monitoring usage very closely,” but has made no pricing decisions.