AT&T/Leap Would Take Key Roaming Partner Out of Market, Small Carriers Say
AT&T should be allowed to buy Leap Wireless only if it’s also required to divest spectrum in some markets and provide voice and data roaming on terms at least as favorable as those offered by Leap, the Competitive Carriers Association said in reply comments on the proposed deal. The FCC posted replies Friday on AT&T/Leap, wrapping up the comment cycle on a deal that is expected to be an early test of FCC merger policy under new Chairman Tom Wheeler. AT&T and Leap rebuked initial arguments against the deal in an Oct. 23 opposition (http://bit.ly/1ghoJcW).
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The deal exceeds the threshold levels in the FCC’s current spectrum screen in 38 cellular market areas, “a fact already acknowledged by AT&T,” CCA said (http://bit.ly/1aN8zCb). “The Applicants nonchalantly downplay the 38 CMAs that will be triggered under the screen, noting that ‘only’ seven million people are covered by these CMAs and will be affected by AT&T’s anti-competitive actions. But the Commission should not fall for AT&T’s cavalier attitude towards spectrum aggregation. Such aggregation of spectrum in these areas is excessive.” Roaming conditions are also key to maintaining robust competition, CCA said. The loss of Leap means “the loss of a reasonable roaming partner, which will likely result in increased roaming costs passed through to consumers,” CCA said.
Public Knowledge, Consumer Action and Writers Guild of America, West said the FCC should deny the merger. The groups said by their count, the deal would give AT&T spectrum in excess of the FCC’s spectrum screen in 40 CMAs, not 38. “The proposed transaction threatens the public interest because it would further consolidate wireless spectrum and harm competition in the prepaid wireless market,” they said (http://bit.ly/1aNaBSB). “The Applicants fail to meet their affirmative burden to show that these harms are outweighed by potential public interest benefits and ... also fail to address many of the concerns raised by the Petitioners and others in response to the proposed transaction. The Commission should accordingly deny the Applications."
The transaction raises the kinds of market power issues already of concern at the Justice Department, the Rural Wireless Association said (http://bit.ly/19jsxWv). “The only way to ensure that at least four carriers can adequately compete in a market is to ensure that no single” carrier “holds more than 25 percent of all suitable and available spectrum in that market,” said RWA, which was until recently the Rural Telecommunications Group. “If AT&T is allowed to acquire Leap’s spectrum, AT&T will exceed 25 percent of all suitable and available spectrum in 70 percent of the counties included in this transaction,” RWA said. “Accordingly, the competitive harms described by RWA, the FCC and DOJ will occur if the proposed transaction is allowed to go through. These harms outweigh any minimal public interest benefits such as operational efficiencies that may result from approval of the transaction.” Small wireless carrier NTCH also raised concerns about the effect on roaming (http://bit.ly/16StSFa). AT&T, “due to its dominance and market power, has neither need nor incentive to enter into reasonable roaming arrangements with smaller carriers,” NTCH said.