AT&T will push back hard Friday when it files its formal response to some of the criticisms leveled against its proposed acquisition of T-Mobile USA, including strongly disputing claims that it is hoarding spectrum and does not need the additional airwaves it would obtain through the merger.
AT&T held a briefing Thursday with reporters to detail some of the arguments it will make when it files with the Federal Communications Commission in response to those urging federal regulators to block the merger. Friday is the deadline for reply comments.
Critics of the merger say it would harm competition and consumer choice by reducing the number of national wireless carriers from four to three; drive up prices, and hamper innovation.
Sprint, the nation’s third biggest wireless carrier, also disputed AT&T’s claims that combining its resources with T-Mobile USA’s holdings will help accelerate the combined firm’s buildout of its next generation wireless broadband service, also known as 4G LTE. AT&T says with T-Mobile’s assets, it will reach 97 percent of the nation’s population with wireless broadband service.
“AT&T’s alleged capacity constraints are contradicted by the facts. Even without the proposed transaction, AT&T has the largest licensed spectrum holdings of any wireless carrier,” Sprint wrote in its May 31 petition. It said AT&T is also the largest user of unused spectrum. “AT&T does not need to acquire T-Mobile to expand the reach of its LTE network. AT&T’s current spectrum holdings and network already reach approximately 97 percent of the population.”
Bob Quinn, AT&T’s senior vice president for federal regulatory affairs, said AT&T will argue that it has specifically set aside some of its spectrum holding for its 4G service. Quinn said if it used this spectrum to improve service for its 3G customers, it would not have the spectrum it needs for its 4G service.
At the same time, as AT&T begins the rollout of its 4G services in 16 markets by the end of the year, it still needs to maintain adequate service for its customers using 3G and 2G technologies. “That’s just rational spectrum management,” Quinn said. “That’s not hoarding at all.”
He also noted that the additional spectrum AT&T will acquire from T-Mobile will help it improve its capacity and its service in many markets, particularly those where there is already a spectrum shortage such as Los Angeles, New York, and San Diego.
In addition, the company will provide more detail on a claim CEO Randall Stephenson made at a Senate hearing last month that T-Mobile is not a major competitor for AT&T. “We have not been losing customers to T-Mobile for a very long time,” Quinn said. Firms that are taking away customers “are the folks you’re really competing hard against in the marketplace.”
In a blog post Thursday, AT&T Vice President Joan Marsh detailed other criticisms of the merger that AT&T aims to debunk in its 200-plus page filing including claims that the merger will result in a national duopoly for wireless service. She notes that this is a “flatly inapt description” of the marketplace, noting that three-fourths of Americans have access to at least five wireless providers.