AT&T Doesn't Show Its Cards in FCC FilingBy David Hatch | Thursday, April 21, 2011 | 4:04 p.m. Photo: Spencer Platt/Getty Images
AT&T signaled tough negotiations lie ahead over its proposed $39 billion acquisition of T-Mobile by not volunteering any regulatory conditions in a 381-page filing with the Federal Communications Commission on Thursday that outlines the public-interest benefits of the deal.
Critics complain the transaction could result in higher prices, fewer choices, and obstacles for competitors, especially those requiring access to AT&T’s nationwide network.
By contrast, Comcast and NBC Universal, whose joint venture was strongly opposed by a coalition of cable networks and advocacy groups, made a series of pro-consumer commitments early on to assuage concerns about the combination, which won approval in January.
Instead, AT&T emphasizes in its submission that the wireless carrier is facing a severe shortage of spectrum and needs to combine with T-Mobile to free up more airwaves that it can use to deploy new services, including superfast 4G wireless broadband.
Joan Marsh, vice president of federal regulatory with AT&T, insisted at a briefing that it is “way too early” to discuss possible conditions. Gary Phillips, associate general counsel with AT&T, noted that the company already has acknowledged that it expects the FCC and/or Justice Department, whose approvals are required for the deal, to impose restrictions.
Marsh said the transaction is necessary for T-Mobile because it also faces spectrum constraints and has an added problem: no immediate plans for deploying 4G service. She argued that the wireless marketplace is sufficiently competitive to absorb this corporate union, which would remove the fourth-largest nationwide mobile carrier (T-Mobile) from the marketplace.
Despite the possibility it might have to divest some assets to win approval of the purchase, Marsh said AT&T would still fulfill its promise of extending 4G service to 97 percent of Americans.
Critics contend the acquisition would leave the new AT&T and Verizon as a duopoly dominating the wireless sector with control of roughly 80 percent of market share. “This kind of leverage could strangle competition and give AT&T the power to increase prices, threaten innovation critical to this industry, and eliminate American jobs,” Vonya McCann, Sprint’s senior vice president for government affairs, said in a statement.
She added, “This proposed takeover cannot be fixed with conditions and divestitures. We believe the facts and the law dictate that this transaction must be blocked.”
But Marsh said there will be strong competition from national carriers such as Verizon and Sprint, regional players like MetroPCS and Leap, and newer rivals, including Clearwire and Lightsquared.
"It is absolutely inaccurate to say it’s a duopoly,” Marsh said. “The market will remain every bit as dynamic after this transaction as before.”
Consumer groups opposed to the transaction also were quick to criticize AT&T’s filing. “Make no mistake, this deal is about eliminating a competitor and nothing more,” said Free Press Research Director S. Derek Turner.
Public Knowledge President Gigi Sohn warned the transaction would “hurt consumers, raising prices, restricting innovation, and limiting choice.” She added: “The plain fact is that every one of the benefits AT&T promised to achieve can be accomplished without this merger.”