AT&T/T-Mobile Fire Back at Merger Critics in Joint Opposition
AT&T and T-Mobile made their case for why the FCC should approve their proposed merger in a 229-page “joint opposition” to the dozens of petitions filed by merger opponents last month (CD June 2 p4). Support for the merger is wide and deep and the deal is critical to getting AT&T the spectrum it needs going forward as demand for wireless continues to accelerate, AT&T argues. The filing invokes the name of the primary opponent of the merger, Sprint Nextel, more than 370 times, compared to, for example, only 35 times for Free Press and 17 for Public Knowledge.
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AT&T officials offered a preview of the filing Thursday (CD June 10 p3). The filing is the companies’ most developed to date explaining why the merger should be approved and why the company needs T-Mobile’s spectrum and cell towers. Numerous details were redacted as expected because they're considered competitively sensitive. For example, AT&T officials Thursday discussed an accompanying reply declaration that explores capacity growth in markets including New York and San Diego. But the percentages were taken out of the report as filed at the commission.
"Merger opponents -- consisting largely of Sprint and the applicants’ other wireless competitors, along with the same interest groups that reflexively oppose all significant mergers -- try to spin the transaction’s enormous benefits as anticompetitive, with grave predictions of ‘duopoly,'” AT&T/T-Mobile said. “That rhetoric is as empty as it is overwrought.” The real reason its competitors would prefer that the merger be rejected is readily apparent, AT&T said: “At bottom, these rivals would simply prefer to compete against a capacity-constrained AT&T and a standalone T-Mobile USA without financial backing from its parent and no clear path to LTE."
The filing highlights the growth of MetroPCS and Leap, suggesting they could supplant T-Mobile as a new national competitor. In Q1, MetroPCS and Leap together “added a remarkable 1.057 million net retail subscribers for cell phones, smartphones, laptop USB adaptors, and other personal computing devices, and many of those new subscribers came from traditional contract providers such as AT&T and T-Mobile,” the filing said. This figure is higher than net additions by AT&T and Verizon Wireless combined during the same period, at 1.026 million, the filing said.
Support for the merger is broad, the companies said, pointing in particular to endorsements from organized labor and high-tech companies. “AT&T is aware of no other major FCC transaction in the past fifteen years that has received such a broad level of support from organized labor,” the filing said. “That extraordinarily strong support is a complete response to claims by merger opponents that this transaction will harm American workers."
Much of the filing focuses on capacity constraints faced by AT&T and T-Mobile. The two have “uniquely complementary networks and spectrum positions” and “the network capacity of the combined company will far exceed the sum generated by its pre-merger parts,” the filing says. “The opponents cannot deny that network integration creates such synergies as a matter of basic engineering.” AT&T conducted a preliminary study of how AT&T and T-Mobile cell sites would fit together in San Francisco and Washington, D.C. The study demonstrates that T-Mobile “has a large number of sites at complementary locations from which AT&T could choose to help relieve AT&T’s current and future spectrum and capacity constraints and to help fill in gaps in AT&T’s cell grid."
AT&T/T-Mobile also argue that the FCC should limit the merger conditions imposed, ignoring calls for conditions that cap prices charged by FCC, mandate 700 MHz handset interoperability or address special access, privacy, receipt of universal service funding, early termination fees, bill shock, and other industrywide issues. “As the Commission has consistently determined and Sprint itself has previously emphasized, such issues should be addressed, if at all, in industry-wide proceedings, not a company-specific merger proceeding,” AT&T said.
"AT&T continues to avoid answering the multitude of questions and concerns that have been raised by companies, organizations, regulators, political leaders and consumers across the country about this takeover,” Sprint said in response. “At Sprint, we are proud to stand with the vast majority of the nearly 38,000 consumers who have filed comments with the Federal Communications Commission and asked it to block this takeover as we fight to preserve our country’s wireless future."
"The winners of the proposed merger with AT&T will be consumers, as the extra capacity will enable us to alleviate escalating capacity constraints, increase output, support the next generation of bandwidth-intensive mobile applications, and offer them faster data speeds, extended coverage and fewer dropped calls,” said Tom Sugrue, T-Mobile senior vice president, in a written statement. “We are pleased that the regulatory process is moving forward, and we remain confident that the FCC will weigh all the facts and approve this deal."