AT&T’s Proposed Buy of T-Mobile Won’t Mean Duopoly, AT&T Official Says
AT&T formally sought permission to buy T-Mobile in a filing Thursday afternoon at the FCC. AT&T said it’s increasing its projections for how much of the U.S. it will be able to cover with wireless broadband if the deal is approved, from 95 percent to 97.3 percent, closer to the Obama administration’s goal of covering 98 percent of U.S. households within five years. The filing stresses the growing competition in the wireless market, from other carriers ranging from Sprint Nextel to LightSquared. AT&T also emphasized the spectrum that will be freed up as a result of efficiencies if AT&T and T-Mobile are allowed to merge.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
AT&T’s filing runs more than 100 pages and includes five supporting statements from AT&T and two from T-Mobile.
"AT&T faces network spectrum and capacity constraints more severe than those of any other wireless provider, and this merger provides by far the surest, fastest, and most efficient solution to that challenge,” AT&T said in the filing. “The network synergies of this transaction will free up new capacity -- the functional equivalent of new spectrum -- in the many urban, suburban, and rural wireless markets where escalating broadband usage is fast consuming existing capacity."
AT&T Vice President Joan Marsh, who met with reporters Thursday, said AT&T faces “spectrum exhaust” in many markets, not just urban centers like New York. “We model for spectrum exhaust in every market and quite frankly we face challenges in markets of many sizes -- urban, suburban and smaller markets,” Marsh said. “It really depends on what our customers are doing in each market and how many spectrum resources we have."
AT&T will need more spectrum in short order even if regulators approve the deal, Marsh warned. “It is not a permanent solution,” she said. “While it unlocks significant additional capacity in the assets that we have already … it does not create any new spectrum.” Most forecasts “indicate that the spectrum that’s currently available to the wireless industry is simply not sufficient for the types of volumes that we expect to see down the road, say 2015, going forward,” she said.
Marsh said the filing shows that the transaction will not mean an end to wireless competition. “It’s absolutely inaccurate to say this is a duopoly,” she said. “Our showing today will demonstrate the market is fiercely competitive today and will remain fiercely competitive.” The merger also won’t necessarily lead to layoffs, she stressed. “In prior acquisitions, AT&T has always dealt with personnel issues through natural attrition,” she said. “You can look at our record on this.”
AT&T’s filing stresses the level of competition in the market. Sprint “has reversed its earlier setbacks, added nearly 1.8 million net subscribers in 2010,” the filing said. MetroPCS and Leap “have signed a long-term mutual roaming agreement, offer nationwide service plans, and now sell service in markets covering more than 200 million Americans.” Clearwire “is the nation’s largest holder of spectrum” and LightSquared is “a spectrum-rich and well-capitalized wireless entrant” that “plans to deploy a 4G LTE network covering 100 million people by the end of 2012 and 260 million by the end of 2015."
The filing provides extensive details on how combining AT&T and T-Mobile, two GSM carriers, would allow more efficient use of spectrum. For example, AT&T will be able to integrate many existing T-Mobile cell sites into its network. “Upon network integration, the combined company can conduct instant ‘cell splits,’ effectively doubling the amount of traffic that can be carried over the same amount of spectrum in the area served by the original site,” the filing said. A merger would allow the “repurposing” of redundant control channels, used to transmit commands on the network, freeing up 4.8 to 10 MHz in many markets, the filing said. It would also allow the two networks to group their respective channels into larger pools, AT&T argues: “If a provider doubles the number of radio channels in a pool, it can serve significantly more than double the amount of customer traffic from that pool with the same statistical likelihood of network availability."
Sprint Nextel repeated on a call with reporters on Thursday many of its Wednesday criticisms of the deal.
"AT&T has chosen the marketing slogan ‘Mobilize Everything’ to sell this competition-killing deal, but it’s clear their real goal is to ‘Monopolize Everything,'” said Free Press Research Director Derek Turner. Public Knowledge President Gigi Sohn predicted AT&T will spend millions to win support for the deal and hire “battalions” of lobbyists. “All of that effort and all of that money cannot disguise the simple, fundamental fact that AT&T in this one transaction will fundamentally reshape the wireless industry in ways that will hurt consumers, raising prices, restricting innovation and limiting choice,” Sohn said. “The plain fact is that every one of the benefits AT&T promised to achieve can be accomplished without this merger."
"After carefully reviewing a post-merger AT&T and the impact that the increased spectrum holdings of such an already enormous entity would have on the mobile wireless marketplace, RTG has concluded that no merger-specific conditions would be sufficient to balance out the harms resulting from the proposed acquisition,” the Rural Telecommunications Group said.