Today, AT&T began to make its case to the FCC regarding the proposed $39 acquisition of T-Mobile. Along with the requests to transfer licenses from T-Mobile USA to AT&T, the nation’s largest mobile provider also filed a public interest statement suggesting the benefits that said merger would have for customers.
According to AT&T’s public policy blog, the papers filed with the FCC say that the proposed deal would benefit everybody involved, especially the customer. According to AT&T, both companies involved are facing capacity restraints, and combining the companies will allow them to address those constraints head on. That would be improved service for all, faster data transfer, and fewer dropped and failed calls (for the love of all that is holy, please).
From the policy blog:
We’ve been working tirelessly to address this data explosion through a wide variety of means. We have purchased additional spectrum on the secondary market; we have added thousands of cell sites and additional backhaul capacity to our network grid; we’ve deployed distributed antenna systems, we’ve built WiFi hot zones in heavy usage areas like Times Square and others, and we’ve set up more than 24,000 WiFi hotspots to off-load traffic from our mobile network. Since 2008, AT&T has invested $21.1 billion in capital expenditures to upgrade its wireless network – $15 billion of it in the past two years alone.
But it’s not enough. AT&T faces severe spectrum and capacity constraints and cannot simply wait for the next major auction to address them. T-Mobile USA also faces spectrum exhaust in certain markets. If unaddressed, the network limitations and constraints confronting both of our companies would lead to more dropped and blocked calls, slower speeds, and access to fewer and less advanced technology platforms and applications.
AT&T has been predicting vastly improved service for all since the announcement of the deal. CEO Randall Stephenson touted an immediate 30% lift in capacity in NYC alone on the day the deal finalizes.
Now, of course, one can’t just take AT&T’s word on these alleged benefits. In the debate regarding the impact of this acquisition, most opponents fear that it will absolutely crush competition in the world of wireless. The nation’s 3rd leading wireless provider Sprint has been quite vocal in its opposition of the deal, saying that it will create a duopoly that will leave no room for any competitors.
AT&T says that the increased capacity will improve competition, and that T-Mobile’s absence from the marketplace will not really matter in terms of competition:
Indeed, by alleviating capacity constraints and expanding output, the transaction will increase competition. Among the many providers that will continue to compete vigorously are Verizon Wireless, Sprint, MetroPCS, Leap, U.S. Cellular, Cellular South, Cincinnati Bell Wireless, Cox Communications. And let’s not forget Clearwire, and that LightSquared plans to deploy a 4G LTE network covering 100 million people by the end of 2012, and 260 million by the end of 2015.
With all of this competition, the absence of T-Mobile USA from the marketplace will not have a significant competitive impact. In fact, as an independent competitor, T-Mobile USA would face serious challenges. It has been losing market share the last two years, is confronting spectrum exhaust in certain markets with no ready means to acquire significant additional spectrum in the near term, and lacks a clear path to LTE.
Basically, this is AT&T’s argument in the case that the FCC must rule upon. If the deal clears the FCC, it still has to clear the Department of Justice at a later date.
All Things D quotes the non-profit group Free Press as saying today:
“No matter how many high-priced lobbying firms AT&T hires, it won’t be able to fool Americans into thinking the reconstitution of the Ma Bell monopoly is a good thing. Make no mistake, this deal is about eliminating a competitor and nothing more. 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.’”
It will be interesting to see how this all shakes out.