AT&T, T-Mobile Deal Is Necessary for U.S. Economy & Obama’s Broadband Plan, Says Former CongressmanBy: Abby Johnson - September 16, 2011
As the hearing date for the AT&T/T-Mobile merger draws closer, it seems the controversies surrounding it are only getting more complex. From the initial announcement back in March, consumer groups have spoken out against the deal. But the opposition has gotten much more intense recently with both the U.S. Department of Justice and Sprint filing lawsuits to block AT&T’s $39 billion planned takeover of T-Mobile.
AT&T, however, is standing its own ground and fighting for its acquisition to get approved. It filed a formal response to the DOJ lawsuit, in which it said the complaint “fails to come to grips with the significant efficiencies this transaction will generate.”
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The telecom giant, who would become the largest U.S. wireless operator if the deal goes through, is also receiving its fair share of support. Early on, the Heartland Institute, an organization that promotes free market initiatives, expressed their support for the merger and called it a “natural” business acquisition.
Large organizations including Microsoft and Facebook have also endorsed the proposed merger as well as numerous governors across the country. Most recently, 15 House Democrats wrote to President Obama yesterday encouraging his administration to settle the DOJ lawsuit in order for the deal to go forward.
The Internet Innovation Alliance (IIA) has additionally been very outspoken in its support of the merger, especially its Honorary Chairman, former Congressman Rick Boucher. He originated the House Internet Caucus and has a history of being active in Internet-related issues. He spoke with WebProNews specifically about AT&T’s bid to buy T-Mobile and told us that, while the opposition was loud, the support was actually larger.
“The level of support for this merger greatly exceeds the level of opposition,” he said.
The primary goal of the Internet Innovation Alliance is to promote broadband deployment. Through this merger, the IIA and Boucher believe that innovation would increase and that jobs would be created. In turn, both of these areas would result in an improved economy.
“We [IIA] think there are very few steps that could be taken that could do more to help the American economy today than deploying broadband to everyone nationwide,” said Congressman Boucher.
Earlier this year, President Obama laid out a broadband plan in which he said 98 percent of U.S. residents would have access to high-speed mobile broadband service over the next several years. According to AT&T, their merger would bring this access to 97 percent of Americans throughout the country.
“The President’s goal is almost entirely fulfilled simply by allowing this merger to go forward,” pointed out Congressman Boucher. “I, frankly, don’t see a way that the President’s goals of having 98 percent deployment within the near term can be met in the absence of this merger.”
He also pointed out that, through the merger, this initiative that would practically meet the President’s goal would be funded privately. In other words, it would not cost taxpayers anything, whereas other broadband endeavors would.
Congressman Boucher told us that the AT&T/T-Mobile deal would be especially beneficial for rural areas as well. Up to this point, the deployment of broadband to these areas has been largely prohibited due to the high cost it takes to string wires over mountainous regions. However, he explains that AT&T plans to deploy 4G wireless technology, which not only reduces the costs associated with wires, but also has speed that is said to rival the fastest broadband connections today.
In regards to the opposition over competition, Congressman Boucher told us that there were plenty of alternatives for consumers.
“Yes, this merger takes 1 competitor out of the space, but in the most densely populated, largest markets across the country, in 18 out of 20 of those, you would still have a choice of 5 or more providers of wireless service,” he said.
Price increases have also been a big concern for consumers. But, as he explained, when other wireless companies have merged in the past, prices have actually gone down instead of up.
Congressman Boucher told us that he did, in fact, believe that the deal would be approved. One reason he thinks it will is because Deutsche Telekom, T-Mobile’s parent company, clearly wants to exit the American mobile market. The company has stopped investing in T-Mobile USA and is not making plans to integrate 4G. For these reasons, it will eventually lose its subscribers unless someone buys it.
Some reports have speculated that Sprint should purchase it, but the Congressman said that Sprint has had trouble integrating previous acquisitions due to compatibility issues. He believes that a T-Mobile acquisition would turn out the same way.
While he does think that AT&T will be able to go forward with its purchase of T-Mobile, he did say that the terms of the deal would likely be negotiated. Congressman Boucher also told us that these terms are what the public should be focusing on instead of questions regarding whether or not the deal should go through.
“The discussion about the blanket ‘yes’ or ‘no’ – should the merger be approved- should be answered in the affirmative,” he said. “The real conversation needs to be about the conditions under which this merger will be approved.”
The status hearing for the merger is set to take place on September 21, and the presiding judge has stated that all parties should be prepared to discuss settlement options.
If the deal goes through, what terms would you like to see included?