Sprint, Cellular South Urge Regulators to Reject AT&T/T-Mobile Deal

"I would expect to see ever-increasing opposition as the Obama administration continues to ponder the deal,” said Sascha Meinrath, director of the New America Foundation’s Open Technology Initiative. “The merger will become an ever-increasing political headache the longer it remains pending -- for example, it begs the question of how President Obama can be for jobs, yet support a merger guaranteed to lead to thousands of layoffs."

"I'm sure as a matter of just sheer numbers we'll see more opponents come out of the woodwork when the application is filed,” said Free State Foundation President Randolph May. “Ultimately, what will matter most months down the road will be the competitive analysis performed by DOJ and the FCC and an evaluation of the public interest benefits. Whether they come out tomorrow or five months from now, competitors may be expected to use the merger review process to try to shackle the merging parties.”

Sprint officials fired first, lobbing some of their strongest criticisms of the deal to date in a call Wednesday morning with reporters. “We strongly oppose the proposed merger,” said Larry Krevor, Sprint vice president, during the call. “We don’t think there are any conditions that could remedy the competitive harm, the reduction in competition, and the harms that will create. We don’t think there are any conditions that can fix that. We think that this is one the DOJ and FCC should block and we will be arguing that over the next few months."

But Krevor conceded taking on AT&T won’t be easy. “I tremendously respect, and I think our company respects, AT&T’s capability as lobbyists, as a Washington player, as a corporation. They are busy signing up people and I think as a serious business they will put their best case forward and will marshal the resources needed.” Still, he said, “at the end of the day the facts and the law really are on the side of blocking this transaction.”

DOJ and the FCC “generally like to try to allow natural business transactions and marketplace development to occur” but AT&T/T-Mobile is unusual in that it is a “horizontal” merger that will lead to an effective duopoly for wireless, Krevor said. “This is a regulated industry because, ultimately, we're using the public airwaves, we're using a resource of the United States,” he said. “Attached to the right that we get to use it to serve the public and make a profit doing it is a public interest obligation.”

Krevor also questioned claims made by AT&T that the merger will help realize an administration goal of building out broadband to 95 percent of the nation. “Nobody, including AT&T, has a spectrum problem in rural areas,” he said. “The problem is money and they can [roll out broadband] with or without this transaction. In fact, it would take far less than $39 billion to build out the rural part of the United States. … It just doesn’t hold water and I think that’s going to become more apparent as people work through the claims that they've made."

"This is not AT&T versus Sprint; this is AT&T versus consumers,” said Sprint spokesman John Taylor. “AT&T has given more campaign cash to candidates for Congress, according to the Center for Responsive Politics, from 1989 to the 2010 election cycle … than any other company in America.” AT&T spent $15 million last year on lobbying, Taylor said. “We expect that they will ratchet up that spending significantly,” he said. “If this is a matter of matching AT&T dollar for dollar, AT&T will get this transaction approved, but that’s not what this is about."

Hu Meena, CEO of Cellular South, said during a separate call the 70 carriers that belong to the group are united in opposing the AT&T/T-Mobile deal. “We at the RCA are fighting as hard as we possibly can to prevent the AT&T/T-Mobile deal from going through and, on a large scale, prevent our industry from being controlled by two carriers, which will do nothing but raise prices in the long run,” he said.

Meena conceded that turning back the merger won’t be easy. “I think AT&T has done well in investing in lobbying efforts over the last few years,” he said. “They have lined up a strong team. They are committed to the effort. The only thing is they're on the wrong side of the issue when it comes to consumers.” Placing conditions on the merger won’t be enough, Meena added. “We've seen that movie,” he said. “There were supposed to be tough conditions related to the Verizon/Alltel deal a few years ago and that certainly did nothing to improve the competitive landscape in the United States.”

Meena also said he was pleased that Sprint joined RCA this week as an affiliate member. Under RCA bylaws, carriers with more than 10 million subscribers are not allowed to join as full members, but Sprint is paying at the top dues level and will participate in all activities of the group, though without representation on the RCA board. RCA members are worried, “but I felt a strong sense of urgency and passion toward this issue” at RCA’s annual conference this week, Meena said. “There was a lot of energy here that has really been generated by the AT&T/T-Mobile announcement.” Meena said RCA will miss T-Mobile’s support on many of the issues where it’s active at the FCC and on the Hill. “It is unfortunate they're sidelined,” he said. “We'll miss their help and their encouragement on these efforts and their pocketbook as well."

Derek Turner, Free Press research director, said, “Opposition to the proposed AT&T and T-Mobile merger will continue to intensify, because no matter how many high-priced lobbying firms AT&T hires, people can’t be fooled into thinking the reconstitution of the Ma Bell monopoly is a good thing.” “As more details emerge it will become irrefutable that this competition-killing merger will lead to higher prices, fewer jobs and will stifle investment and innovation across the entire wireless market."

"Sprint’s been ramping up on their number of lobbyists, so they may amplify their caterwauling after the filing,” said Less Government President Seton Motley. “Perhaps the terrible way the FCC abused the Comcast-NBC merger -- with the pages and pages of at-the-point-of-a-gun concessions -- has soured all but the most hard core anti-free market people from subjecting AT&T/T-Mobile to similar government abuse.”